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Why the Cannabis Industry Must Combat Degree Inflation

By Tori Gates
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The hiring process is evolving: major U.S. employers are reconsidering the significance of higher learning. An employer’s undue emphasis on university education while hiring is called “degree inflation.” As the hiring manager for NisonCo, a cannabis public relations, marketing and SEO agency, I have learned a college degree is not the best predictor of employee success.

NisonCo was established during the dawning of the modern cannabis legalization movement. At the time, our small staff included individuals with and without college degrees. I evaluated both groups of employees and learned they gave equal contributions to the team. Limiting our pool of potential candidates to university graduates would have hindered the growth of our company.

Accordingly, at NisonCo a college degree is not required to work. We believe degree inflation impedes hiring, increases payroll, encourages turnover and perpetuates social injustice. For these reasons, NisonCo encourages your cannabis company to emphasize a candidate’s skills and drive during the hiring process rather than their education. 

Degree Inflation Increased in the Aftermath of The Great Recession 

The Great Recession in 2008 caused a massive downturn in the U.S. economy. By 2010, the workforce had lost nearly 9 million jobs. The unemployed entered a tight labor market, and employers had the luxury of limiting potential candidates to college graduates. After the economic downturn, the number of employers requiring a college degree increased by 10%. 

Employers added degree requirements to positions previously staffed by high school graduates. In 2015, 67% of job postings for production supervisors required a degree, while only 16% of current production supervisors possessed degrees. The Great Recession pushed Americans without a college degree out of the labor market. 

Technological Advancements and Social Movements Confront Degree Inflation

The importance of technical skills began declining when automation entered the workforce in the 1980s. Employers suddenly required soft skills like relationship management to serve customers and resolve conflicts with partners successfully. A technologically advanced economy requires problem-solving and people skills. These skills are not usually acquired while attaining a college degree.

Most employers confirmed degree inflation prevents them from hiring equipped employees.

During the Covid-19 pandemic, companies laid off millions of employees. Many unemployed people reconsidered their relationship with work and decided to leave unfulfilling jobs. Employers are now in dire need of staff, and they no longer have the privilege of requiring a college degree during the hiring process. This degree inflation prevents recovery from the economic downturn caused by the pandemic. 

The Black Lives Matter movement highlighted the need to deliver social justice to historically marginalized communities. Americans are learning these communities need economic opportunities to achieve social justice. For this reason, employers are reexamining hiring practices and identifying barriers to equity. Employers like NisonCo have recognized since company inception that degree requirements impede social justice.

Degree Inflation is Bad for your Cannabis Business

The Harvard Business School polled business leaders on their perception of the performance of employees with and without degrees. The polling revealed the hidden costs of degree inflation: pending positions, payroll premiums, poor productivity and high turnover. Undoubtedly, degree inflation is not suitable for your cannabis business.

Most employers confirmed degree inflation prevents them from hiring equipped employees. They admit that candidates without degrees may possess the skills needed to thrive in most positions. Often, degree inflation prevents the discovery of competent candidates without degrees.

Most respondents revealed that degree inflation places a premium on wages for college graduates. Many respondents also confirmed those with and without degrees provide equal contributions to their teams. Degree inflation adds unnecessary payroll and training costs to a company’s budget.

Many employers believe staff members with university degrees demand higher salaries and benefits than staff without degrees. Additionally, most respondents admitted employees with degrees demonstrate low productivity and experience high job dissatisfaction. As a result, employers witness increased turnover among college graduates. In my experience, degree inflation can prevent employers from finding productive, satisfied, and loyal employees.

5 Ways Your Cannabis Company Can Oppose Degree Inflation

  1. Review Your Company’s Job Descriptions and Assess Contributions to Degree Inflation 

I recommend reviewing your company’s positions and determining if they are prone to degree inflation. Evaluate job descriptions written by leaders in the cannabis industry to understand if your degree requirements contribute to degree inflation and consider dropping degree requirements for positions that are common contributors to degree inflation.

  1. Identify the Technical and Soft Skills Needed for Positions in Your Company

I advocate for analyzing the technical and soft skills needed for positions in your cannabis company. Review your job descriptions to determine if they require soft skills a candidate without a degree could possess. Delete degree requirements from job descriptions that do not need technical education provided by universities. Additionally, review the vetting process for candidates and remove onerous education requirements for positions requiring additional soft skills.

  1. Analyze the Costs of Your Company’s Contribution to Degree Inflation

Understanding your cannabis company’s contribution to degree inflation lowers the costs of sustaining it. Developing metrics for evaluating contributions to degree inflation helps assess the charges to your company. Realizing your company’s potential cost savings helps maintain a commitment to combating degree inflation.

  1. Develop Your Company’s Pipeline of Non-Degree Employees

Your cannabis company should develop alternative talent pipelines to attract non-degree employees. Investments in training create talent pipelines that give your company access to new pools of competent and productive candidates. Investments in training attract employees without college degrees and confront degree inflation. 

  1. Expand Your Company’s Territory for Recruiting New Employees

I recommend expanding your company’s geographic footprint while recruiting. Establishing relationships with partners in new territories provides access to new pools of non-degree talent. Expansion of your recruiting territory withstands degree inflation. 

The Cannabis Industry Should Commit to Combatting Degree Inflation

Legalizing cannabis began as a social justice movement to benefit historically marginalized communities, and the maturation of our industry can deliver social justice to these communities. The cannabis industry has a prime opportunity to be an excellent example for other sectors confronting degree inflation. Our industry must demonstrate how different sectors can resist the urge to support it.

aurora logo

Aurora Launches New Product Line in UK

By Cannabis Industry Journal Staff
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aurora logo

Aurora Cannabis announced today that they will be launching a new product line for patients in the United Kingdom. The Berlin-based company says they are debuting new cannabis extracts for the United Kingdom that meet EU GMP standards and are developed using, “a new extraction process has been developed to ensure the terpene profile of its products consistently remains at a high level,” according to the press release.

aurora logoThe new product line comes from Aurora Nordic, their facility located in Odense, Denmark. While the press release does not disclose exactly what kind of extraction technology and post-processing methods are involved, they claim their processes result in consistent concentrations of cannabinoids and rich terpene profiles.

Back in 2019, the UK loosened their rules around medical cannabis and allowed a handful of cannabis-derived drugs to be prescribed. Shortly after the British government began loosening restrictions around hemp-derived CBD and medical cannabis, Aurora made its first foray into the UK market. Still, only a small number of patients actually get medical cannabis prescriptions and accessibility is still a hot button issue in the country.

UKflagTrisha Cassidy, managing director for Aurora Cannabis in the UK & Ireland, says they are still trying to get into the market further, working on accessibility, advocacy and reimbursement issues through the NHS. “We are dedicated to helping improve access to medical education for healthcare professionals and are happy to share our medicinal cannabis knowledge and expertise,” says Cassidy. “The effectiveness and tolerability of medical cannabis has already been shown in several clinical studies and even more data from 20,000 UK patients will become available once the first patient registry for medical cannabis in Europe is completed. The UK market is still young and much work needs to be done to dismantle the obstacles that continue to prevent patients from receiving the treatment they need. Aurora is committed to these patients and will continue its dedicated work in the UK.”

Ethan Zohn

A Q&A with Ethan Zohn, Brand Ambassador for Momenta, a Trulieve Brand

By Aaron Green
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Ethan Zohn

Cannabis has been used to treat symptoms of cancer and chemotherapy including severe and chronic pain, nausea and vomiting. Many athletes also turn to cannabis for pain relief, incorporating cannabis into their pre- and post-workout routines. Though many states have legalized cannabis for medicinal and recreational purposes, stigma still exists – even in legalized markets.

MSOs and brands will often employ a brand ambassador to help combat local stigma and gain traction within new markets. Trulieve, America’s largest cannabis multi-state operator with over 160 storefront locations, recently launched Momenta, an everyday wellness and overall well-being brand, in Massachusetts.

We interviewed Ethan Zohn, Brand Ambassador for Momenta, to learn more about his pathway to becoming a brand ambassador and how he incorporates cannabis into his running routines. Ethan is a former professional soccer player, Survivor: Africa winner, and two-time cancer survivor. Ethan is an active runner and incorporated cannabis into his training for the 2022 Boston Marathon. The interview was conducted on April 14, 2022.

Aaron Green: Ethan, tell me, how did you get involved in the cannabis industry?

Ethan Zohn: My entry into the cannabis industry was through cancer, unfortunately. I rarely smoked marijuana growing up and later became a professional soccer player, so cannabis just wasn’t part of my daily life.

Ethan Zohn, former professional soccer player, Survivor: Africa winner and two-time cancer survivor

After being diagnosed with a rare form of blood cancer in 2009, I found a lot of research on the benefits of cannabis mitigating the side effects of chemotherapy. At the time, I was being treated at Memorial Sloan Kettering in New York, where medical marijuana was not legal yet. This meant that none of my doctors could discuss incorporating cannabis into my treatment plan.

Having to resort to illegal methods just to obtain medicine was a horrible experience. At that time, I was very interested in changing minds and educating people about the benefits of cannabis, but it didn’t go particularly well. After initially having positive results from chemotherapy, I relapsed and had to go through it all over again.

That’s when I really leaned into cannabis and CBD. It just became a part of my daily routine and part of my wellness journey. So, that’s where I am now, leading into my partnership with Trulieve and Momenta.

Green: We don’t often hear the story of how a brand ambassador comes to be. How did you link up with Momenta?

Zohn: I was a keynote speaker at Boston Cannabis Week, and Trulieve was also attending the conference. I was already familiar with the brand based on their medical footprint in Florida and introduced myself to the team. During our conversation, I learned they were opening a new dispensary in Framingham, Massachusetts.

As I learned more about Trulieve, I grew to really love their passion and focus on research, patient education and providing quality products. From my experiences in the cannabis world, I just wasn’t seeing much of that. Trulieve was coming at it from a medical perspective, and that aligned more with where I stood. So, I pitched them this crazy idea, “Hey, why don’t I run the Boston Marathon on Momenta products?” From there, it took off as a campaign that included product launches, charity initiatives and even some celebrity support. I think it was a perfect combination of everyone coming together, and we’re all winning in this situation. I’m also running for Active Against Cancer because I support their mission to make exercise an integral part of cancer treatment.

Green: So, you had the sports background prior to cancer and then several years of treatment. What got you back into running?

Zohn: When I was diagnosed, I was training for the New York City Marathon and ended up not being able to run. Cooped up in my hospital room, I’d look out the window and I noticed people were just running up and down First Avenue. I said to myself, “Oh my God. If I get out of this thing alive, I’m going to run. I’m going to put on a pair of shoes. I’m going to break out of this cell and I’m going to just run the streets -and run with freedom.”

Zohn at the 2022 Boston Marathon. Image from his Instagram page

That’s when I really started running marathons. I ran my first marathon nine months after my first stem cell transplant. The second marathon was while I underwent chemotherapy.  Eleven months after my second stem cell transplant, I ran in the 2013 Boston Marathon, which was the year of the bombing. Amidst that tragedy, I was celebrating one year in remission.

I’ve always measured my health and wellness based on how I felt while running. It might sound weird, but I know I’m in good shape if I can run a mile in seven minutes. If it takes me 10 minutes, I need to work out a little bit more. Measuring my life in terms of fitness has always made sense.

It’s a goal of mine to use sports as a platform to educate others on healthy lifestyles. I have a charity called Grassroots Soccer, where we use soccer to teach life lessons to kids. I’ve also worked with the Leukemia & Lymphoma Society in training for triathlons to raise cancer awareness.

There are still many people out there who think of cannabis as an illicit or gateway drug, and I feel a responsibility to challenge those dated stigmas. I feel fortunate to work with Trulieve and educate people on how cannabis can be integrated into anyone’s daily lifestyle as part of their wellness journey. Cannabis has so many applications in my own life and has helped with my insomnia, pain and anxiety. I’m hopeful that my advocacy work around this plant will help other people who are just as invested in their mental and physical health to find relief in more natural ways.

Green: What does your running regimen look like with cannabis and how did you develop that?

Zohn: Before, I always kept sports and cannabis separate. Integrating cannabis into my running routine was a slow process, and I still don’t take any high-dose products when I’m running. Before each race, I take a five-milligram Momenta capsule and take another dose around the hour and thirty minute mark.

People talk about athletes getting into the zone, and I feel like cannabis gets me into the zone quicker. I can lock in and stay laser-focused. Cannabis also plays a huge role in my recovery regimen. I like to use Momenta’s THC-infused creams and cooling gels that come in a variety of cannabinoid ratios.

Green: What makes Momenta products unique?

Zohn: Momenta is a great entry point for anyone looking to incorporate cannabis into their exercise routine or wellness journey. Trulieve started as a medical brand and its products reflect the company’s ongoing commitment to research and quality. I also tend to seek out consistent products, especially when I’m exercising. In my own experience, a gummy will sometimes be too potent, and other times I don’t feel anything. Momenta products, on the other hand, deliver the same experiences every time. I don’t want any surprises on race day or when I’m getting into a workout.

Green: What’s next for Momenta?

Zohn: Momenta recently launched in Massachusetts at three of Trulieve’s locations but I’m confident that it will quickly become a local favorite. The wellness brand is also available in Florida and West Virginia, and I can see Momenta gaining traction among other medical patients interested in supporting their holistic health. I’m excited to watch Momenta grow into a recognizable national brand as Trulieve continues to increase its retail footprint across the country.

Green: Final question: what in cannabis or in your personal life are you most interested in learning about?

Zohn: There needs to be more research on cannabis and how cannabinoids and terpenes impact the body from a health perspective. Federal legalization will be a gamechanger on the research front, and I hope more members of the medical community will study cannabis’ applications for different health concerns. I’m a cancer survivor. My nephew is autistic. I think there’s a lot more exciting research to come.

It’s refreshing to look at cannabis as a new industry growing from the ground up. Whether it’s branding, marketing or technology, people are trying to figure this all out! A lot of what I do influences how cannabis is perceived in society. How can we use cannabis to share messages and draw awareness to what’s happening in the world and the environment? I love seeing cannabis play a role in social issues.

I’m also interested in developing more constructive ways to educate and deter teens from using cannabis. I currently volunteer for the Safe Roots Foundation, which raises money from the cannabis industry and invests those resources into evidence-based teenage drug prevention programs. The industry plays an important role in reducing substance use among minors, and I’m proud to be a part of a movement that educates the youth on safe cannabis use while arming adults with accurate information.

Green: Okay, great thanks Ethan. That concludes the interview.

Zohn: Thanks Aaron.

Cannabis Banking: The Ins, the Outs & the Unknowns

By Tamara L. Kolb, Amy Bean, Caitlin Strelioff
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As the legal cannabis market expands, banks and nonbank financial institutions (NBFIs) across the United States continue to explore how to safely provide banking and other financial services to cannabis-related businesses (CRBs) and other CRB ecosystem players. At the same time, these organizations are taking into account changes they might need to consider relative to their Bank Secrecy Act ( BSA), anti-money laundering (AML) and related compliance programs. 

Regulatory conundrum

The Controlled Substances Act (CSA) identifies the cannabis plant and all its derivatives as a Schedule 1 controlled substance. Schedule 1 controlled substances have a “high abuse potential with no accepted medical use,” and they cannot be “prescribed, dispensed, or administered.” Because cannabis remains classified as a Schedule 1 controlled substance, the CSA “imposes strict controls on possession, manufacturing, distribution, and dispensing” of cannabis.

Under the Money Laundering Control Act of 1986 (MLCA) and the BSA as amended, covered banks and NBFIs are prohibited from providing financial services to businesses that are engaged in illicit activities. Because federal law prohibits the distribution and sale of cannabis, financial transactions involving CRBs are therefore deemed to be transactions that involve funds derived from illegal activities.

As of Feb. 3, 2022, 18 states, two territories, and the District of Columbia have enacted legislation to regulate cannabis for adult use. Thirty-seven states, the District of Columbia and four territories have approved comprehensive, publicly available medical and cannabis programs. Eleven states allow for the use of low-THC, high-CBD substances for medical reasons in limited situations or as a legal defense.

The growing divide between federal prohibition and state legalization of the cannabis industry creates a precarious position for federally regulated banks and NBFIs with the main concern involving exposure to legal, operational and regulatory risk. The situation begs the question: How might the federal government and regulators pursue and prosecute players in the legal cannabis industry?

The current economic trajectory predicts that retail sales of legal cannabis products in the U.S. will surpass an estimated $41.5 billion annually by 2025, and many banks and NBFIs are eagerly awaiting the federal green light to do business with CRBs without fear of prosecution or legal ramifications.

From 2018 forward, Congress has made several attempts to pass legislation that would protect CRBs when cultivating, distributing, marketing, and selling cannabis products in their state-legalized form. These efforts to declassify cannabis-related activity as a specified unlawful activity have thus far been unsuccessful.

The House passing the MORE Act back in 2020

Passage of the Secure and Fair Enforcement Banking Act of 2021 (SAFE Banking Act) and the Marijuana Opportunity Reinvestment and Expungement Act of 2021 (MORE Act) would enable banks and NBFIs to provide financial services to CRBs. The SAFE Banking Act would provide a safe harbor for banks and NBFIs that provide financial services to CRBs. The MORE Act would deschedule cannabis from the CSA entirely.

Questions to ask

Banks and NBFIs interested in providing financial services to CRBs should ask these questions:

  • Do we adequately understand our risk, and what are the implications for our organization? How should we augment our risk assessment process and our controls?
  • To what extent are we willing to accept the risk of banking CRBs? Do we have the ability to identify CRB customers, and if so, do we have any?
  • How should we advise the board of directors about setting risk appetite?
  • What customer due diligence (CDD) and enhanced due diligence (EDD) will we need to safely continue with existing customers and onboard new ones?
  • How will we monitor for unusual and suspicious activity? What will be the alerting and judgmental criteria?
  • How will our resource needs change so that we stay abreast of new processes and controls?

Risk appetite considerations

In order to determine whether to accept or prohibit CRBs, banks and NBFIs should identify the level of acceptable risk they are willing to take on. Several key components need to be considered, such as:

  • The board of directors’ stance on legal cannabis, given that good governance recommends and regulators expect that the board sets risk appetite
  • Cannabis laws in states within the customer footprint and the impact on customers’ communities
  • Risk profile, customer base, geographic location, products, and services
  • Relationship with regulators and any recent deficiencies or weaknesses in the BSA and associated compliance programs
  • Ability to implement appropriate controls and staffing

 Developing a strategic road map

If the decision is made to bank CRBs, banks and NBFIs should perform an assessment of compliance maturity for existing BSA/AML program processes and controls to identify potential gaps and develop a strategic road map that helps the organization achieve its vision for future state compliance and sustainable operations. 

A well-developed and well-articulated strategic road map visualizes what actions or key outcomes are needed to help organizations achieve their long-term goals. When creating the road map, banks and NBFIs need to demonstrate a keen understanding of their desired strategy, outcomes, markets, and products for onboarding and banking CRB customers. Specifically, banks and NBFIs need to define and explain how desired outcomes and business strategies create risk and exposure.

In addition to a road map, banks and NBFIs should develop and document a detailed risk-based approach that is aligned to the organization’s risk tolerance to determine necessary compliance steps when banking CRB customers.

Specifically, the following activities should be considered when developing a CRB banking program that meets regulatory expectations:

  • Identifying BSA/AML control gaps related to CRB risk identification and mitigation and formulating a plan to address them
  • Updating a board-approved policy framework
  • Updating detailed operating policies and procedures
  • Planning for capacity, developing job descriptions, and onboarding new personnel
  • Training for all three lines of defense, senior management, and the board
  • Developing and documenting a phased or full approach to acceptance of CRB customers
  • Developing and documenting a CRB program oversight policy

CRB risk framework

A three-tiered CRB risk framework first proposed in 2016 has quickly become the cannabis industry standard. The framework has evolved and expanded comprehensively to consider many types of CRBs, and evolving legal systems continue to refine the framework.

This framework is intended to help banks and NBFIs differentiate types of CRBs and their corresponding risks, and it separates CRBs into three tiers and details risks for each tier. The following exhibit summarizes the approach:

Risk framework by tier

Level Risk
Tier 1 Direct
Tier 2 Indirect with substantial revenue from Tier 1
Tier 3 Indirect with incidental revenue from Tier 1

Source: CRB Monitor

Even the most conservative of risk appetites equivalent to outright prohibition is not devoid of significant risk considerations. Residual risk frequently encompasses a large number of indirect connections in the total CRB ecosystem. Common examples are printers, lawyers, accountants, landlords, and even utilities and taxing authorities, and all of these are subject to regulatory scrutiny and, importantly, visibility to law enforcement. Also, policies to prohibit or restrict will be audited and examined for compliance, and exceptions will require explanations.

This panorama necessitates expertise and prudence in identifying and evaluating risks within the many layers of CRBs. For example, consider a bank or NBFI that banks a CRB’s employee or vendor. If a bank fails to properly implement controls that would allow it to identify and mitigate risk associated with banking CRBs, it will be susceptible to severe violations of the BSA, including civil money penalties, criminal penalties, and regulatory enforcement actions. 

Implementing necessary precautions

A well-developed road map should consider and implement the following activities:

  • Understanding the most current state and federal cannabis laws and regulations to ensure the bank or NBFI’s compliance
  • Understanding the local, state, or tribal program to ensure CRB customers are compliant with the program
  • Implementing a CRB risk assessment
  • Implementing executive approval practices for direct CRBs
  • Developing adequate risk ratings (possibly through a risk-based, tiered approach) and corresponding monitoring for CRB customers that includes:
    • Integrating various customer onboarding and AML solutions at both onboarding and periodic levels
    • Scheduling regular reviews to include recurring enhanced due diligence, site visits, and transaction monitoring
    • Monitoring for suspicious activity, including red flags, via open sources for adverse information about the CRB customers and related parties such as beneficial owners
  • Performing adequate CDD and EDD that will validate that the CRB-offered products, services, and programs are compliant with most current state laws and regulations by:
    • Collecting appropriate documentation as evidence of compliance, perhaps including a comprehensive onboarding questionnaire, beneficial ownership information, and contracts for the growing, harvesting, transporting and processing of the product
    • Reviewing applications and supporting documentation used to obtain a legal cannabis state license
    • Understanding the normal and expected activity of the organization’s CRB customers and their product usage
  • Developing adequate training programs and governance and oversight programs to address this customer type by:
    • Updating existing policies and procedures to review inherent risk presented by banking CRB customers
    • Updating annual training for employees
  • Auditing initial program design and periodic operational effectiveness

Moving forward cautiously

The ins, outs, and unknowns of cannabis banking are complex, and they require banks and NBFIs to be extremely vigilant with current policy and aware of new developments. Overall, the idea of creating a cannabis program might seem like a daunting task, but with appropriate guidance and care, organizations can provide services in compliance with laws and regulations.

Crowe disclaimer: Qualified organizations only. Independence and regulatory restrictions may apply. Some firm services may not be available to all clients. Given the continued evolution and inconsistency of various state and federal cannabis-related laws, any company should seek competent legal advice relating to its involvement in the cannabis industry, including when considering a potential public offering as a cannabis-related company.

FDAlogo

FDA Issues First Warning Letters for Delta-8 THC

By Cannabis Industry Journal Staff
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FDAlogo

In an unprecedented move, the U.S. Food & Drug Administration (FDA) has issued warning letters today to companies selling products containing delta-8 THC. In total, the FDA sent out five warning letters to companies for violating the Federal Food, Drug, and Cosmetic Act (FD&C Act).

Image from the FDA’s consumer update on Delta-8 THC

The violations include illegal marketing of unapproved delta-8 THC products as treatment for medical conditions, misbranding and adding delta-8 THC to food products. Back in September of last year, the FDA published a consumer update on their website, seeking to educate the public and offer a public health warning on delta-8 tetrahydrocannabinol, otherwise known as delta-8 THC.

Delta-8 THC is a cannabinoid that can be synthesized from cannabidiol (CBD) derived from hemp. It is an isomer of delta-9 THC, the more commonly known psychoactive cannabinoid found in cannabis. Delta-8 THC does produce psychoactive effects, though not quite as much as its better-known cousin, delta-9 THC. Many regulators and industry stakeholders are increasingly concerned about the rise in popularity of delta-8 products, namely because of the processing involved to produce it. Delta-8 THC is often synthesized using potentially harmful chemicals.

The FDA has a history of sending a lot of warning letters to companies marketing CBD products inaccurately and making drug claims. Earlier this year, they sent a number of letters to companies claiming that CBD can cure or prevent Covid-19.

FDAlogoAccording to Janet Woodcock, M.D., principal deputy commissioner at the FDA, they are getting more and more concerned about the popularity of delta-8 THC products sold online. “These products often include claims that they treat or alleviate the side effects related to a wide variety of diseases or medical disorders, such as cancer, multiple sclerosis, chronic pain, nausea and anxiety,” says Woodcock. “It is extremely troubling that some of the food products are packaged and labeled in ways that may appeal to children. We will continue to safeguard Americans’ health and safety by monitoring the marketplace and taking action when companies illegally sell products that pose a risk to public health.”

The FDA sent warning letters to the following companies selling delta-8 THC products:

  • ATLRx Inc.
  • BioMD Plus LLC
  • Delta 8 Hemp
  • Kingdom Harvest LLC
  • M Six Labs Inc.

Perfecting Your Packaging for Cannabis Beverages

By Julie Saltzman
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Some consumers participating in the legal cannabis market want to avoid inhalable products. They are concerned about the effects of the smoke or they want their usage to be discreet — without the pungent aroma emanating from burning cannabis flower. For those consumers, edibles are the preferred option and a growing product category.

Within the edibles space, the beverage segment — with limited product options in some states — may offer significant potential for growth. In 2021, cannabis-infused beverages accounted for only 1% of total legal cannabis product sales and about 5% of the edibles segment in the United States, reports market researcher BDSA. But cannabis beverage sales are growing around the U.S.

In California, cannabis drinks grew their market share in the edibles category from 4% in 2018 to 7% in 2021. Nevada saw beverages increase their share of edibles revenues from 7% to 10% in the same time frame. And cannabis beverages’ share of edibles sales in Massachusetts went from less than 1% in 2019 to 8% in 2021.

Pegged at $180 million in revenue last year, the cannabis beverage market is projected to reach nearly $500 million by 2026, predicts BDSA.

Today, gummies and chocolate products dominate the edibles category. Although beverages are currently a small segment of edible sales, they may have some inherent advantages — familiarity, faster-acting products from improved bioavailability, and taste and flavor innovations — over other cannabis products. Since beverages can incorporate many different flavors from fruity, cola and sweet to coffee, tea, sour and bitter, these myriad flavor variations can mask or minimize any off-tastes associated with THC.

Viewed as part of their everyday regimen, consumers drink beverages for hydration, nourishment, refreshment and enjoyment. Cannabis beverages are well-suited for consumers’ lifestyles, while gummies and chocolates may be perceived as sugary treats and special occasion items.

Cruise Beverage B Happy Nitro-Infused CBD Drinks.

Brand owners are beginning to recognize the limited availability of products and growth potential of cannabis-infused beverages and are looking to enter the category. Packaging plays a key role in cannabis beverages, with sustainability, regulatory compliance (e.g., child-resistant), labeling compliance (e.g., warning symbols and text), convenience and branding all contributing to the success of the expanding product category.

Sustainable Packaging

Consumers, especially younger generations, are concerned about the environment and support brands that align with their values. According to the 2020 Sustainable Market Share Index from the NYU Stern Center for Sustainable Business, sustainability-marketed products delivered about 55% of the market growth in consumer packaged goods (CPG) from 2015 to 2019 in the U.S. despite being only 16% of the market. Sustainability-marketed goods grew seven times faster than products not marketed as sustainable and nearly four times faster than the overall CPG market.

As a primary consumer touchpoint, packaging is a good way for cannabis beverage brands to show their commitment to the environment. But finding the most sustainable packaging option for a particular application may not always be as straightforward as it seems. Many considerations are involved — material choice (e.g., plastic, glass, or aluminum), recyclability of the material, the weight of the material, recycled content of the final package, package design (minimalist vs. excessive), transportation costs and other factors like reusability.

To help facilitate the process, Berlin Packaging uses life cycle analysis to determine a product’s environmental impact or carbon footprint over its entire life cycle, including sourcing & raw materials extraction (minerals resource use), manufacturing (energy and water usage), distribution (freight miles, fuel usage) and end-of-life (recovery, recycling, reprocessing).

We have the know-how to improve the sustainability of any packaging material — whether it be lightweighting, use of post-consumer recycled (PCR) content, greater recycling rates and more.

Regulatory Compliance

Because legal cannabis products are regulated by individual states and not at the federal or national level, the regulations for cannabis packaging requirements can vary widely from one state to another. However, there are some common rules that all states follow.

Child-resistant capable cap fits snugly over the top of a can.

All cannabis products — including beverages — require child-resistant packaging to meet the standards of the Consumer Product Safety Commission. For aluminum cans, Berlin Packaging offers a child-resistant capable mechanism that fits snugly over the top of a can. Available in polypropylene or a bio-based resin, the single-use device can be custom developed to fit the exact specifications of the customer’s cans. In-stock products are available for standard 202 can ends.

Along with child-resistant capable packaging, states also require some type of warning symbol and statement on the label to indicate the product contains cannabis. Depending on the state, the symbol may be a triangular or diamond shaped in a bright or contrasting color to call attention to it on the label. The symbol typically houses a cannabis leaf image or “THC”.

Convenience

Like any packaged drink, cannabis beverages need to check all the boxes for consumer convenience — easy to drink, portability, cupholder friendly and resealable.

Users can easily reseal PET and glass bottles with continuous thread or lug finish closures, but cans present a challenge. Berlin Packaging offers a solution with a resealable can that opens like a traditional stay-on-tab. Here’s how it works. Lifting the pull tab breaks the tamper-evident band and unlocks the slider mechanism. Pulling the slider opens the can and makes the familiar venting sound — even after reopening.

The configuration of the opening creates a smooth laminar flow to improve the drinking experience. Moving the slider back to its original position and pushing down the pull tab, which produces a clicking sound, reseal the closure. The tamper-evident band remains on the can underneath the pull tab.

Branding

Cannabis beverages come in drops, shots, syrups, carbonated, iced tea, lemonade, fruity, water, sports & energy, mocktails, tea, coffee and hot cocoa.

Because cannabis has been associated with medicinal uses, many consumers use cannabis products to manage their wellbeing and health. Thus, some cannabis products have been positioned to relieve stress, promote relaxation and sleep, reduce pain and inflammation, improve mental focus, enhance mood or simply for indulgence and enjoyment.

Product positioning and the experience the brand owner wants to create for the consumer can help inform the brand design, personality, and narrative or storytelling. It’s also important that the brand design and messaging resonate with the product’s target audience.

Studio One Eleven, Berlin Packaging’s in-house innovation division, can help cannabis beverage marketers with their product branding from concept to commercialization. We offer market research and consumer insights, brand strategy and visual branding design, brand name development, structural package design, and more. Our services are available at no additional charge in exchange for a customer’s packaging business.

Cruise Beverage distributes nitrogen-infused CBD drinks with all-natural ingredients in 12-oz aluminum cans under the B Happy brand. The team at Studio One Eleven helped Cruise Beverage and its B Happy brand tell their story of free-spirited enjoyment with updated branding, expressive flavor names (i.e., Loosen Up Lemon, Peaceful Pear, Mellow Mango, and Blissful Blood Orange), and unique packaging graphics.

Uplifting illustrations speak to the brand’s sense of freedom and relaxation, and the hand-drawn style reflects the craftsmanship of the CBD beverage product. A white background with flavorful pops of color says clean and fresh, while tiny bubble imagery communicates the delightful effervescence of the fizzy drinks.

2022 Cannabis Extraction Virtual Conference

By Cannabis Industry Journal Staff
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2022 Cannabis Extraction Virtual Conference

Sponsored by Hardy Diagnostics

View On-Demand Now

Click here to see all available CIJ events and webinars

Agenda

The Future of Cannabis Concentrates: in Hydrocarbon Extraction & Manufacturing

  • Michelle Sprawls, Director of Science, CULTA

This presentation delves into closed loop hydrocarbon extraction, what products can you make with this type of extraction method, advancements for manufacturing and new techniques.

Hardy Diagnostics Sponsored TechTalk

  • Jessa Youngblood, Food and Beverage Market Coordinator, Hardy Diagnostics

Extraction Optimization Through Artificial Intelligence

  • Dr. Markus Roggen, President & Chief Science Officer, Delic Labs

Attendees can expect to learn about:

  • Data is the basis for optimization, but which data is important and how to collect it.
  • What system exist for extraction optimization?
  • What is Bayesian Optimization, and how does it work?
  • What are the best parameters for extracting average cannabis?

How the Notorious CO2 Became a Superhero: SFC for Green Cannabinoid and Terpene Purification

  • Jason Lupoi, Ph.D., Director of Laboratory Operations, Thar Process

Attendees can expect to learn:

  • Assessment of the ways in which SFC can be used to purify cannabinoids as well as remediate THC from hemp products such that they are compliant with the Farm Bill.
  • The use of SFC for removing unwanted contaminants from product batches or chemical conversion processes such as those used in making delta-8-THC
  • The application of CO2 extraction and SFC for terpene refinement.

View On-Demand Now

The Rise of a New Market… And a New Consumer

By Christiane Campbell
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The adult beverage industry, like any other category of consumer branded products, is driven by trends. If you’re old enough to remember Bartles & Jaymes wine coolers, you probably also remember Zima and Smirnoff Ice, and more recently “healthy” options like Skinny Girl and Michelob Ultra. The sensation that was craft beer saw many brands being acquired by Big Alcohol so that while the brands remain, ownership and production have changed significantly. Gin, tequila and vodka have had their moments in the sun and the current market is undeniably saturated with what is probably the largest current trend – hard seltzers. However, with the seltzer craze waning, many are wondering what’s next. And with the growing sober/California sober trends, some are betting it is cannabis-infused beverages.

Cannabis-infused beverages offer both an alternative method of consumption of cannabis and are also an attractive alternative to alcohol. Infused beverages are more appealing to the new demographic of casually curious cannabis consumers. i.e., consumers that may not be interested in smoking a joint or vaping, but are comfortable micro-dosing from a can or bottle, as they would a seltzer or beer. The same type of consumer may be moving away from alcohol consumption to eliminate hangovers or other negative health effects.

The emerging market and curious consumer group present an enormous opportunity right now for cannabis-infused beverage brands. Of course, with opportunity and growth come challenges. And while cannabis-infused beverages face a host of legal and regulatory challenges relative to sourcing, manufacturing, packaging, labeling, shipping, marketing, distribution and sale, one of the most critically important business assets to address at inception is the brand.

Lines are Blurring, Gaps are Being Bridged

The U.S. cannabis market is currently a geographic hamburger. Hear me out: Geographically, you have a relatively mature market out west and a relatively new and growing market along the east coast. These are the buns. You have a mixed bag in between, with some states coming online and allowing medical or adult use cannabis use and others that have not yet embraced any form of legalization. The landscape has lent itself to the development of regional brands, such that brands that are so similar they might otherwise confuse consumers, have been able to co-exist in different regions without issue, or because there is little to no trade channel or market overlap. Similarly, adult beverages and cannabis have historically been separate verticals, with an arguably low likelihood that a consumer would assume a particular cannabis product and adult beverage product emanate from the same source.

A drink additive, made by Splash Nano, that uses nano emulsion technology

However, lines are blurring and gaps are being bridged. Walls are breaking down. The increasing number of states coming online with legalized cannabis, and the proliferation of multi-state operators (MSOs), means that cannabis brands can grow to be more than siloed regional brands. This will inevitably lead to brands that previously co-existed bumping into one another and there’s bound to be some pushing and shoving. The advent of infused beverages likewise bridges the gap between cannabis products and alcoholic beverages. While the respective industries were not historically per se related, competing, or overlapping, now you’ve got infused beverages that bridge the gap between the two, and traditional alcohol brands (e.g., Boston Beer Company, Molson Coors, Lagunitas, Pabst.) entering the market (albeit under different brands). This makes a strong argument that cannabis and alcohol (or, more generally, adult beverages) are within each other’s logical zones of expansion, for purposes of a likelihood of confusion analysis.

The growing pains infused beverage brands will experience are analogous to those craft beers saw in the 2000 – 2010s. Many craft brewers had catchy, cheeky names and brands that contributed to their ability to engage consumers and develop a following, but failure to clear and protect the brands prior to launch detracted from the brands’ market values. Localized use prior to expansion also led to many brands bumping into one another and stepping on each other’s trademark toes. This was significant as the brands sought investment dollars or an exit strategy, making clear that the brand itself contributed heavily to valuation.

Mitigating Risks and Overcoming Challenges: Search and Protect 

The risks and challenges can be significantly mitigated and/or overcome with proper preliminary clearance searching and assessments, and by seeking and obtaining state or federal protection for the brand or brands, to the extent possible.

Quatreau CBD infused sparkling water

Of course, clearance searches and assessments come with their own challenges, as does federal protection. With respect to clearance searches, these typically look at U.S. federal and state trademark databases. These resources are not sufficient for purposes of clearing a proposed cannabis brand. Many brands are not recorded at the federal or state level and indeed may not even show up in a basic search engine. An appropriate search looks at social media resources like Instagram, Twitter, Facebook and known cannabis resources like Leafly and Weedmaps. Additionally, the scope of the search should exceed cannabis products and services and at least look at alcohol and merchandise. Adoption and use of a brand for a cannabis-infused beverage is high risk if that brand is similar to a prior existing alcohol brand. A current example is Cointreau’s taking aim at Canopy’s adoption and use of QUATREAU for an infused beverage.

A U.S. federal trademark registration presents its own unique challenges, but is incredibly valuable and beneficial to a brand since it provides the owner with a nationwide presumption of ownership and validity in a trademark, and can also secure priority for the owner with a constructive first use in commerce date that is years before actual use of a mark begins. The U.S. Trademark Office categorically denies protection of brands that violate its “lawful use” rule, and will treat as per se unlawful any applied for mark that covers marijuana, or that covers foods, beverages or pharmaceuticals that contain CBD. With respect to brands that cover products containing THC, since it is federally scheduled, use of the brand would violate the Controlled Substances Act (CSA). With respect to brands that cover CBD or products containing CBD, these may be lawful pursuant to the Farm Bill and the U.S. Trademark Office’s subsequent allowance of marks that claim CBD “solely derived from hemp with a delta-9 tetrahydrocannabinol (THC) concentration of not more than 0.3 percent on a dry weight basis,” however under the Food Drug Cosmetics Act (FDCA) it is currently federally unlawful to introduce CBD – even if it fits the definition above – into foods or beverages.

Even if cannabis is not specifically claimed in a trademark application, cannabis brands have a natural gravitation toward names and logos that can do some of their marketing for them, and announce to the world they cover cannabis. This increases the chances that a trademark application for the brand will get push-back from the U.S. Trademark Office, and if not at the initial review stage, then at the point in time when the brand must submit to the U.S. Trademark Office a sample of (lawful) use of the applied-for mark. While this all sounds like bad news for cannabis-infused beverages, all is not lost.

There are typically ancillary and federally lawful products and services cannabis companies offer under their brands that can be covered in a U.S. federal trademark application, and arguments to be made that registered protection of a brand for the ancillary items should be sufficient to enforce against third parties using the same or confusingly similar brands in their space. Some cannabis brands’ lawful ancillary products are actually product lines (e.g., beverages) offered under the same brand that contain no cannabis. Others may be more causally related, like online forums and blogs. The former is closer to the actual product, and the latter would be more beneficial to a brand that is inherently stronger and more distinctive. One note of caution: A trademark application and eventual registration that expressly disclaim cannabis (THC or CBD) may be difficult to enforce against a third party using the same or a similar mark on and in connection with cannabis. So, while there is a natural inclination to follow a U.S. Trademark Office request to disclaim coverage of cannabis, there may be enforcement consequences down the road.

The cannabis-infused beverage market is poised for explosive growth. The brands that survive – and succeed – will be those that position themselves for growth by clearing and buttoning up their brands as early as possible. The market leaders will be those that select strong and distinctive brands, with geographic and market space around them for growth and expansion; and those that protect and enforce their brands, to the extent possible, at the federal and/or state levels.

Biros' Blog

Happy 4/20, Blaze On!

By Aaron G. Biros
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Happy 4/20! The cannabis holiday with unclear origins is today and with it comes hundreds and hundreds of marketing and story pitches landing in every journalist’s inbox. Some of those pitches are impactful, some lack substance, some celebrate anniversaries, most offer discounts and sales and some are truly bizarre.

Every year, April 20th marks the cannabis holiday that people around the world celebrate with copious amounts of cannabis, concerts, festivals, deals, sales and marketing gimmicks. This year, here are some noteworthy (and weird) happenings going on as we celebrate the wonderful plant that brings us all together:

Leafly rings in the holiday on the NASDAQ: Leafly CEO Yoko Miyashita, surrounded by her colleagues, rang the opening bell for the NASDAQ Stock Exchange. The company began publicly trading on the NASDAQ as ‘LFLY’ back in February.

Smoke em if ya got em: Leafly CEO Yoko Miyashita, surrounded by her colleagues, rang the opening bell for the NASDAQ Stock Exchange

Americans for Safe Access (ASA) turned twenty on April 19: The policy, action and advocacy organization has been influential in passing medical cannabis laws throughout the country for twenty years now. The organization has trained thousands of public defenders, worked with thousands of incarcerated medical cannabis prisoners, organized protests all over the country, worked with regulators in dozens of states to pass safety rules, published reports, launched their Patient Focused Certification program and much more. Happy birthday ASA!

Emerald Cup and SC Labs celebrate thirteenth anniversary: The couple has been together now for thirteen years, with the Emerald Cup heading into their eighteenth annual competition next month. For the past thirteen years, Santa Cruz-based SC labs has worked with the Emerald Cup as their official testing partner, verifying COAs for potency and purity, gathering data on terpenes and classifying products and strains. Happy anniversary you two!

Smoking’ sandwiches: The cannabis-inspired, Arizona-based sandwich shop chain Cheba Hut celebrates the holiday with $4.20 “nugs” (pretzel nuggets) served on a frisbee and two PBRs for $4.20.

NORML stays busy: Executive Director Erik Altieri called for reforms in a press release: “While we have undoubtedly made immense progress in recent years, hundreds of thousands of our fellow citizens are still arrested each year for simple possession of a plant. That is why we are calling on all Americans to take time out of their day on 4/20 to help us finish the fight, both at the federal level and in those states that still are living under the dark ages of prohibition. We have an overwhelming mandate from the people and we intend to make sure that elected officials abide by it.”

New Jersey, a day late and a dollar short: The Garden State will begin adult use sales on April 21st at thirteen dispensaries. The delays, licensing process and regulatory hurdles have created confusion and frustration for the industry, but the state is moving forward with their plan and dispensaries will serve adults over 21 tomorrow, a day after the holiday.

Cannabis-infused Mac and cheese, a dangerously cheesy combination.

Sluggish Senate: The SAFE Banking Act has passed the House six (six!) times so far, most recently in February of this year. Sen. Cory Booker has long said he opposes the cannabis banking bill without wider legalization legislation (say that six times fast). Sen. Chuck Schumer also announced last week that his cannabis bill introduction is delayed. The CAOA won’t come until August now he says.

Cannabis Cuisine: Celebrity chef Todd English curates a “cannabis-curious cuisine” with infused Mac & Cheese via LastLeaf.

Erotic infusions: This CBD company offers 20% off their infused lubes, massage oils and products with code oOYes20. OoYes! CBD Lube is a female-founded formulations company focusing on the sex positive, “cannagasmic” hemp-derived CBD products space.

Backwards down the number line: Phish plays their first night back at Madison Square Garden in New York for a four-night run. Correctly guess the opener for tonight in the comments below and win a free beer and a burger with me at this year’s Cannabis Quality Conference & Expo.

That’s all folks! Thanks for reading and blaze on!

Blast from the past: Here’s a little treat if you’ve made it this far. This is me ten years ago today (back in college), smoking a joint on April 20, 2012. Time flies.
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FDA Warning Letters: Stop Claiming CBD Prevents COVID

By Cannabis Industry Journal Staff
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FDAlogo

Once again, the U.S. Food and Drug Administration (FDA) has issued a number of warning letters to companies selling hemp-derived cannabidiol (CBD) products. This time around, the FDA sent these warning letters to companies that had statements on their website claiming CBD is an effective treatment or prevention of Covid-19.

In this latest round, the FDA sent a total of seven warning letters to:

Just some of the many hemp-derived CBD products on the market today
  • Greenway Herbal Products LLC
  • UPSY LLC
  • Functional Remedies, LLC dba Synchronicity Hemp Oil
  • Nature’s Highway
  • Heaven’s Organic LLC
  • Cureganics
  • CBD Social

Earlier this year, a slew of preliminary research studies went viral for shedding light on promising signs that certain cannabis compounds could help treat or prevent Covid-19. The conclusions from most of that research is: It is still too early to tell if any of these studies will show evidence of cannabis treating Covid-19, let alone if they mean cannabis products can be used as a treatment or preventative for Covid-19. However, the research is significant and we should keep an eye on any developments that come from those studies.

The hemp-derived CBD market has a history of clashes with the FDA over health claims. Since the Farm Bill legalized cannabis with less than 0.3% THC back in 2018, the hemp-derived CBD market has proliferated, with all sorts of companies seizing the opportunity. Jumping on the health and wellness trend, companies incorporated this messaging into their marketing campaigns. Over the past four years, the FDA has issued dozens and dozens of warning letters and threatened enforcement actions to companies making unsubstantiated health claims about CBD.

While CBD definitely does have medical benefits, such as being used as an anti-inflammatory or anticonvulsant, preliminary research alone is not enough to say it does. Products need to be approved by the FDA with a new drug application (NDA) in order to make those claims. Therefore when companies make unsubstantiated health claims about their CBD products, like claiming it can prevent Covid-19, they are violating the FD&C Act by marketing “unapproved new drugs” or “misbranded drugs.”

The bottom line is companies that are marketing CBD products need to ensure that their marketing materials and labeling comply with FDA requirements and avoid making unapproved drug claims.