ASTM International, the international standards development organization, has proposed a cannabis standard for establishing retail cybersecurity protocols. Their D37 cannabis committee is currently working on the development of the standard.
The standard is designed to establish best practices for protecting critical databases in dispensaries, like inventory data, customer and patient information. The guide, developed by subcommittee D37.05, addresses “the company or government organizational need to mitigate the likelihood of cyberattacks and reduce the extent of potential cyberattacks, which can leave sensitive personal data, corporate information, and critical infrastructure vulnerable to attackers,” reads the scope of the project.
Technical Lead for the subcommittee and president of ezGreen Compliance, Michael Coner, says they hope to provide SOPs for retail operations to protect business data while staying compliant. “Cybersecurity is among the most prevailing issues concerning the cannabis industry as well as the global cannabis economy,” says Coner. “Establishing strong cybersecurity protocols for dispensary retail owners will help ensure the protection of data to maintain the integrity of cannabis consumers’ personal information.”
The ASTM committee is currently inviting stakeholders such as retailers and regulators to help with things like “identifying new data security issues that arise while operating active retail dispensary businesses.”
If you are interested in adding a new delivery option for your cannabis dispensary, choosing a third-party service is a great move. Generally speaking, the most significant selling points of third-party delivery services are overhead cost and convenience.
Not only will third-party delivery services run your entire courier operation under a single platform, but they will also streamline your sales process with the latest technology. In addition, working with a third-party vendor will help you avoid financial risk with workers’ compensation and auto insurance expenses.
Please consider the following points to build a successful partnership with a third-party cannabis delivery service.
Research Your Local Market Regulations
Before you can outsource a delivery option for your cannabis dispensary, you need to research if it’s legal to do so in your given market. Whether medical or adult-use, each state has unique regulations for delivery services. In addition, individual counties and municipalities within these states also have their own rules concerning cannabis delivery on a more granular level.
As an illustration, Denver, CO, has had an adult-use cannabis market since 2013, but the city just passed legislation approving delivery services. So, starting in late summer 2021, third-party vendors will be the only businesses allowed to deliver cannabis in Denver legally. As can be seen, just because cannabis is legal in a particular state doesn’t mean delivery is always an option.
How Do I Vet a Potential Delivery Partner?
You must be discerning when starting a partnership with a third-party cannabis delivery service. As these delivery companies will be representing your brand in the field, you want to make the best choice possible. Luckily, there are some specific parameters you can follow in vetting a potential delivery partner.
License: Perhaps the most critical part of vetting a delivery partner is ensuring they have the appropriate license. Especially in hotbeds like California, countless unlicensed cannabis businesses are in operation, including delivery services. Therefore, asking to see their paperwork should be the very first step in vetting.
App & User Experience (UX): Taking a good look at the User Experience (UX) provided by a third-party vendor’s app or website is a great way to vet them. In the end, delivery services are all about convenience. If their ordering software is robust and offers flexibility and great reporting, they will likely provide you the springboard to retain your repeat buyers.
OSHA Certification: Another critical factor to consider when vetting a delivery partner is OSHA training. Those companies who have taken steps to train their employees on safety protocol appropriately will likely make good partners.
How Does Online Ordering Work with My System?
Payment processes for cannabis dispensaries are incredibly complex. Moreover, since cannabis is still federally illegal, major credit cards and banks do not accept charges from dispensaries. Because of such complexities, the prospect of accommodating deliveries might prove to be a challenge.
Enter Scarlet Express. Third-party cannabis companies like Scarlet Express can integrate with your established system to seamlessly add delivery payments. They even offer customizable software that integrates with your menu provider and POS system while also importing essential brand elements like logos and colors.
If you are a small cannabis dispensary that has never developed online ordering, certain third-party vendors can also help you build out an eCommerce page on your website.
What About Compliance & Seed-to-Sale Tracking?
Compliance is one of the essential elements of running a successful cannabis business. However, compliance regulations can get tough to follow when you begin dealing with third-party delivery companies, namely because cannabis products change hands several times before they are finally sold to the consumer.
The state has thoroughly vetted any third-party delivery service that has received a license. Therefore, not only are they up-to-speed on compliance protocol for your given market, but they are also trained on the appropriate seed-to-sale software. With these controls in place, you can trust they assume legal responsibility for cannabis products after leaving the dispensary.
To operate compliantly, third-party delivery services time-stamp their orders, which can then be tracked through GPS in the delivery car. Finally, all cannabis products are stored within a secure lock box that is only opened at the time of delivery.
Adding a delivery option for your cannabis dispensary is a great way to entrench yourself with your clients. Working with a third-party delivery service is a painless way to expand your business.
When considering a partnership with a cannabis delivery service, be sure to thoroughly vet them and make sure they share your goals and vision. In doing so, you will ensure an invaluable partnership that will continue long into the future.
Cannabis, we have a problem. Legalizing adult use cannabis in California caused the demand for high-potency cannabis to increase dramatically over the last several years. Today, many dispensary buyers enforce THC minimums for the products that they sell. If smokeable flower products don’t have COAs proving the THC levels are above 20% or more, there is a good chance many dispensaries won’t carry them on their shelves. Unfortunately, these kinds of demands only put undue pressure on the industry and mislead the consumer.
Lab Shopping: Where the Problems Lie
Lab shopping for potency analysis isn’t new, but it has become more prevalent with the increasing demand for high-potency flower over the last couple of years. Sadly, many producers submit valid, certified COAs to the California Bureau of Cannabis Control (BCC), which show two to three times the actual potency value.
At InfiniteCAL, we’ve purchased products from dispensary shelves and found significant discrepancies between the analysis we perform and the report submitted to the BCC by the producer. So, how can this happen? Several factors are creating the perfect storm in cannabis testing.
Problems with Potency
Many consumers still don’t understand that THC potency is not the only factor in determining quality cannabis, and they are unwittingly contributing to the demand for testing and analysis fraud. It is alarming for cultivation pioneers and ethical labs to see producers and profit-hungry testing facilities falsifying data to make it more appealing to the unaware consumer.
Basically, what’s happening is growers are contacting labs and asking, “I get 30% THC at this lab; what can you do?” When they see our COA reporting their flower tested lower than anticipated, they will go to another lab to get higher test results. Unfortunately, there are all too many labs that are willing to comply.
I recently saw a compliant COA that claimed that this particular flower was testing at 54% THC. Understanding cannabis genetics, we know this isn’t possible. Another product I reviewed claimed that after diluting an 88% THC distillate with 10-15% terpenes, the final potency test was 92% THC. You cannot cut a product and expect the potency to increase. Finally, a third product we reviewed claimed 98% total cannabinoids (while only looking at seven cannabinoids) with 10% terpenes for a total of 108% of the product.
These labs only make themselves look foolish to professionals, mislead laymen consumers and skirt under the radar of the BCC with basic mathematical errors.
The Pesticide Predicament
Frighteningly, inflating potency numbers isn’t the most nefarious testing fraud happening in the cannabis industry. If a manufacturer has 1000 liters of cannabis oil fail pesticide testing, they could lose millions of dollars – or have it retested by a less scrupulous lab.
As the industry continues to expand and new labs pop up left and right, cultivators and manufacturers have learned which labs are “easy graders” and which ones aren’t. Certain labs can miss up to ten times the action level of a pesticide and still report it as non-detectable. So, if the producer fails for a pesticide at one lab, they know four others won’t see it.
In fact, I’ve had labs send my clients promotional materials guaranteeing compliant lab results without ever receiving a sample for testing. So now, these companies aren’t just tricking the consumer; they are potentially harming them.
An Easy Fix
Cannabis testing is missing just one critical factor that could quickly fix these problems – checks and balances. The BCC only needs to do one of two things:
Verifying Lab Accuracy
InfiniteCAL also operates in Michigan, where the Marijuana Regulatory Agency (MRA) has already implemented a system to ensure labs are maintaining the highest testing standards. The MRA will automatically flag all COAs which test above a certain percentage and require the product to be retested by multiple labs.
Labs are required to keep a back stock of material. So, when test results come back abnormally high from Lab A, then Labs B, C and D are commissioned to retest the material to compare data. If Lab A reports 40% THC, but the other labs all report 18%, then it’s easy to see Lab A has made an error.
By simply buying products off the shelves and having them blind-tested by other labs, it would be simple for the BCC to determine if the existing COA is correct. They already have all the data in Metrc, so this would be a quick and easy fix that could potentially solve the problem overnight.
For example, at InfiniteCAL, we once purchased 30 samples of Blue Dream flower from different cultivators ranging in certified COA potencies from 16% to 38%. Genetically, we know the Blue Dream cultivar doesn’t produce high levels of THC. When we tested the samples we purchased, nearly every sample came back in the mid-teens to low 20% range.
Labs Aren’t Supposed to Be Profit Centers
At InfiniteCAL, we’ve contacted labs in California where we’ve uncovered discrepancies to help find and flush out the errors in testing. All too often, we hear the excuses:
“If I fix my problem, I’ll lose my clients.”
“I’m just a businessman who owns a lab; I don’t know chemistry.”
“My chemist messed up; it’s their fault!”
If you own a lab, you are responsible for quality control. We are not here to get rich; we are here to act as public safety agents who ensure these products are safe for the consumer and provide detailed information about what they choose to put in their bodies. Be professional, and remember you’re testing for the consumer, not the producer.
When it comes to small business opportunities these days, few phrases give people the old dollar-sign-eyes more than “legal cannabis”.
From states like Michigan where it’s been approved for both medicinal and adult use, to places like South Carolina where legalization has been a popular topic for ballots and voters, cannabis is slowly turning into one of America’s biggest businesses.
You don’t need us to tell you that – Investopedia reports that (as of Nov. 2020) over 340,000 American jobs were devoted to the handling of plants at various stages along the retail cycle, and the industry was estimated at over $13 billion as of 2019.
Not bad for a plant that’s still technically illegal under federal law, huh?
If you’ve read this far, it probably means you’re hoping to be among the lucky ones who can strike it rich with their own cannabis business. A noble undertaking, but are you really prepared to make your mark? In a field as competitive – and occasionally complicated – as cannabis can be, you really need to lead with your best foot forward, and make sure you’re as well prepared for the various challenges of a fairly new industry as possible.
With that in mind, below is a list of the five things you’ll need to double-check and make sure you actually have access to before embarking on your new business venture.
The right shelving & equipment
You see this a lot with smaller businesses as well as, er, ‘independent growers’. A lot of people assume that they can just buy some greenhouse shelves, line the walls of their business with it, and call it a day, right?
This approach leads to problems more often than not. Even above and beyond the inherent concerns of helping your plants grow safely (and productively!), the sort of equipment you use should reflect the sort of business you’re trying to run. A cannabis retail outlet, for example, is going to need different sorts of shelves and tables than a dispensary or growing facility, as the work being done is completely different.
It will take a little research, but it helps that a lot of businesses these days are starting to offer shelving specifically designed for various cannabis operations. Check to see if any of the big warehouse suppliers near you have gotten into the cannabis game yet – Shelving Inc, Metro, and Rack & Shelf are a few of the bigger shelving names with cannabis offerings as of this writing.
Long gone are the days when all you needed to be successful in cannabis was a booth at the shady flea market, a pun name and a big sign that said “Head Shop” to throw off the authorities.
Far too many cannabis businesses launch themselves headlong into a business plan without stopping to think of a good name, or just settling for the first one they think of. With as crowded as the playing field is quickly becoming, it might honestly be worth it to pay someone to help you come up with a decent logo and branding – it’ll go a long way towards helping you stand out against everyone else using a green font. Places online like High Hopes specifically offer these services for cannabis businesses, so you know they’ll be able to figure out what you’re about more quickly.
An understanding of your consumer base
The exact sort of work your cannabis business performs is going to affect what your potential customer base can be – and vice versa.
Early on in the planning stages, make sure to figure out exactly who you’re going to sell your products to, as this will inform nearly every other decision your business makes. Do you want to sell directly to the customer, or to work as a distributor for CBD/cannabis retail outlets? Are you prepared to manage and run your own storefront, or are you just going to rent warehousing space to sell your plants to other retailers? If so, do you know who the businesses are in your area that you could work with? Or, if you are planning on entering the retail space, do you know how many other cannabis businesses could be operating in your desired geographical area? Finding an audience may be the hardest part of opening any business, but it’s important work.
Banking that understands your industry
Maybe the biggest drawback to being involved in an industry as comparatively new as cannabis, is that a lot of the old methods of doing business aren’t quite available to you. Many financial institutions of various sizes are limited in the ways they can help finance cannabis businesses, from not understanding the regulations and needs of your industry, all the way to being unable to assist cannabis businesses with banking in the first place.
It might be advantageous to look into banks, credit unions or financing companies in your area that specifically offer banking services (like business accounts and the like). A few examples include Aery Group from New Mexico, or Seed to Sale in Michigan. (It’s important to note that many of these companies, such as Aery Group, can only service the state they’re located in due to different state-by-state regulations – check ahead to make sure you find a place that can help you!)
Knowledge of the needed licensing and regulatory requirements
Getting a license to open any business is a tricky prospect on a good day, but for an industry as wide-ranging and varied as cannabis, getting licensed can require a lot of homework.
Even if you’re lucky enough to be setting up shop in a state that allows for the sale of cannabis, the licensing process can vary widely from state-to-state. In New Mexico, for example, it can take months to acquire a license simply due to the amount of paperwork, research and submissions required to cement your business. Before going too far down the rabbit hole of opening your business, make sure to take the time you need to completely research and understand the various local and state regulations you’ll need to adhere to for your business to get off the ground.
Obviously, there’s going to be a lot of other hurdles and requirements that come with starting a business – but by remembering these five things, you’ll be off to a much better start than many others.
The cannabis industry is quickly growing with the chance of sales tripling to $30 billion by 2023. With many rules and regulations that business owners must follow, marketing your cannabis business can be a challenge. While many may not know where to start with marketing, there are organic and simple tactics that owners can implement that can help drive more traffic to your website, resulting in more leads and sales.
Digital marketing is the most effective way to improve your brand’s online presence, reach your target audiences, rank higher on Google searches and ultimately drive more sales. Today, 81% of people turn to the internet before making a purchasing decision, but determining what digital marketing efforts are most valuable can be a daunting task for business owners. When looking to implement digital marketing strategies, businesses should leverage the 80/20 rule—focusing efforts on the 20% of the digital marketing tactics that yield 80% of the most impactful results. With this in mind, some of the key digital marketing tactics to implement today include:
Keep up with Reputation Management
Having positive reviews for your company is key to having customers come back, and for new customers to try your business out. With 72% of customers not making a buying decision until they’ve read reviews, companies should prioritize soliciting for reviews from customers and stay up to date on the reviews that are coming in. Businesses should respond to all reviews, whether good or bad, as this shows to customers that the brand cares and values the customers opinion and feedback and wants to continue creating a positive experience for everyone. Reviews should be shown prominently on the business’s website for customers to clearly read and can also be used in emails or social media posts.
Make Search Engine Optimization (SEO) Top of Mind
Focusing on developing a solid SEO strategy ensures that customers can find your company on Google when they are searching. In оrdеr to rank well in search engine results, websites need search engine optimization (SEO), which is a powerful tool and a must if your company wants to be found online by customers. With Google processing 12.18 billion search queries in July 2020 alone and 93% of all online experiences beginning with a search engine, making sure your business can be clearly found and seen online is imperative for your cannabis business’ success. Keeping your website and basic information—such as hours, contact information and prices—up to date will keep your SEO high.
Gathering customer emails is KEY and your business should have a solid plan on how to capture them, whether that’s an incentive for providing an email when they enter the site or one at checkout in the retail shop. Businesses should have the customer’s name, phone and email as a baseline to use to email or text blast out the latest promotions. From there, companies can also create a loyalty program for customers in order to give them an incentive to keep purchasing from your business. By creating targeted and personal messaging to customers with the help of CRM tools, loyalty is created to the brand, which can increase purchasing power and the amount spent.
Embrace Social Media
Social media is a part of almost everyone’s life and it’s the perfect opportunity to give customers an inside view into your company, the products you sell and any promotions or specials going on. Utilizing Facebook, Instagram and Twitter is essential for directly reaching your customer base with visually appealing and timely content. Social media is an opportunity to get personal with your brand and build relationships with your customers for them to see what kind of brand you are. Social pages should remain up to date and should be keeping up with the comments that followers are saying.
As more dispensaries and cannabis businesses pop up across the country, marketing your business may seem like a challenge for business owners, but simple and useful digital marketing tools can be incorporated into the business plan to create more quality leads and sales. Ensuring you have a strong digital presence for customers to find you and learn about your business online is the key to success.
Based on the recent string of cannabis thefts in Portland, Oregon, the spotlight is shining even brighter on the need for enhanced security measures at cannabis dispensaries throughout the country. According to the Oregon Liquor Control Commission, the Portland metro area alone has experienced more than 120 cannabis shop burglaries since March 2020, resulting in a reported total loss of more than $500,000 in cash and products.
Robbing a cannabis dispensary is as lucrative as robbing a bank. Cash is king in the shops until the Secure and Fair Enforcement (SAFE) Banking Act is passed to prohibit federal banking regulators from penalizing depository institutions that provide banking services to legitimate cannabis businesses. Until the Act is passed, it is widely known that all transactions must be done in cash—which makes cannabis dispensaries a prime target for thieves.
While many security protocols—such as product traceability systems and security cameras—are mandated by each individual state, dispensary owners should take measures to actively secure their product, protect their employees and preserve their businesses as theft increases.
One of the quickest and most cost-effective ways to fortify shop security is by implementing rolling security doors. After determining what level of security is needed, consider these four tips to help deter criminal activity and ensure the safety of both employees and products.
Tip 1 – Defend The Storefront
Designed to prevent against looting events and burglaries, heavy-duty rolling steel doors offer cannabis business owners robust security. They can be retrofitted into existing buildings, are exterior mounted and are ideal for storefront defense—including protecting glass windows, which can be expensive to replace. Unlike more common rolling grilles, thieves can’t see merchandise when the rolling door is lowered. In addition to the door giving the building a secure look, blocking sight access is key to deterring criminals.
Heavy-duty steel doors must also be lift- and pry-resistant. Manufacturers put the doors through rigorous testing, and some security doors even meet Department of Defense forced entry standards, which can provide up to an hour of protection against violent attacks against the door to gain entry. Look for rolling security doors that can withstand heavy impact and resist pry attempts with common tools, as well as doors that are lift resistant. Some manufacturers offer doors with robust slide locks and rigid heavy-duty bottom bars, enabling the doors to withstand up to 4,500 lbs of lifting effort.
Tip 2 – Protect While Allowing Visibility and Airflow
If product visibility is desired, but more robust security is needed at the storefront—beyond a security measure such as impact glass—a heavy-duty security grille is an excellent choice. Security grilles are easy to custom order and don’t require structural modifications to fit individual spaces. They are easily installed behind storefront glass, are compact enough to remain out of sight when not in use and require little maintenance.
It’s important to work with a manufacturer to select a rolling grille that provides dependable, increased security. Choose grille curtains with rods that are spaced closer together and have heavier links. Security grilles with these features are harder to lift and pry than standard rolling grilles.
Rolling security grilles are also an ideal solution to protect counters inside the dispensary. They can be easily concealed in small headspaces where there is limited ceiling room.
Tip 3 – Fortify A Store Within A Store
For cannabis dispensaries located within high-end retail shops, it is important to consider additional security measures to separate the dispensary from the rest of the store.
A store within a store may be subject to different hours of operation as states often dictate specific operating hours for cannabis dispensaries. Altered operating hours necessitate an easy way to secure only a small section of a larger store.
If aesthetics are of concern inside retail shops, a woven metal mesh grille will provide both beauty and security without imposing looks while securing cannabis products as customers browse throughout the store. Manufacturers offer a variety of patterns and even logo designs as a way to bring more creativity to a grille’s aesthetics—making them rolling pieces of art.
Tip 4 – Secure Deliverables
Dispensary owners sometimes overlook the fact that thieves target deliveries. Deliveries that are made at the back of the store or in receiving areas may be the most at risk. It is of utmost importance to be aware of how deliveries are timed, who is present during them, and how the product is handed off.
Robust rolling service doors provide the best security for delivery entrances and are more secure than traditional rolling sectional doors. Made from slats of formed galvanized steel, aluminum or stainless steel, these rolling doors are completely customizable to meet existing building designs and are ideal for areas with limited overhead room.
By closely evaluating the levels of security needed, the layout of the building and where deliveries take place, security updates and enhancements are easily implemented with the right rolling doors. Every door is made for a specific opening, so each one is custom-made for its application. Choose a knowledgeable manufacturer that will help determine which rolling closure suits the dispensary’s needs.
As retailers accept the end of in-store shopping as we know it and start adjusting to e-commerce, an improved and more involved customer experience will be imperative for an e-retailer to grow, let alone stay afloat.
Jane recently announced a strategic partnership that combines Jane’s best-in-class product catalog and business tools with Leafly’s consumer marketplace and reach. Together, the companies will build solutions that empower cannabis retailers with fast and simple online shopping experiences that increase consumer purchase behavior. The partnership will seek to help instill consumer trust in the online shopping experience, build stronger customer acquisition tools for retailers, and help dispensaries grow their ecommerce capabilities with consistency and automation.
This strategic partnership comes after a massive year of growth for both Jane and Leafly. In the past year, Jane powered over 17 million orders and $2 billion in cannabis sales, while Leafly has seen more than 4,500 cannabis retailers in North America leverage their platform to bring new customers through the door.
We spoke with Socrates Rosenfeld, CEO of Jane to learn more about e-commerce and online marketplaces and how Jane and Leafly came together as partners, rather than competitors. Prior to Jane, Socrates was an Apache helicopter pilot for the US Army later transitioning to consulting with McKinsey.
Aaron Green: Socrates, thanks for taking the time today. What trends are you seeing and following in the industry?
Socrates Rosenfeld: Always happy to chat about the industry. Thanks for having me.
If you were to ask me that question a year ago, I’d say having a digital footprint was something that would give a dispensary or a brand a nice advantage. Today, it’s a must-have for survival. Where it used to be one or the other; online or offline, now we are able to merge the two by replicating a physical store into a digitized form to extend its reach far beyond its walls.
As things become more digitized, information becomes more necessary to run operations. With that we are able to meet the expectations of the consumers who are accustomed to convenience and curation. The omnichannel experience provides the best of both worlds. Access and ease of search with the ability to pick up or have the product delivered the same day from a locally owned and run business.
Reviews are one of the most important aspects of this unification of online and offline. It is something that is lost in solely offline purchases, that we’re now able to collect and organize. This product information allows us to provide customers the purchasing power to make a well-informed decision.
At Jane, we believe it is possible to create wins for the dispensaries, brands and customers – and digitization creates the opportunity for that to happen. I think there’s no better incubator in the world than the cannabis industry to prove that online and offline retail can work in harmony.
Aaron: Jane is the largest e-commerce platform in North American cannabis and Leafly is the largest marketplace in North American cannabis. What’s the difference between an e-commerce platform and a marketplace?
Socrates: Great question. There is definitely some overlap between the two, which is why it makes so much sense for us to collaborate. Ultimately though, our focus and expertise are different. Jane’s ecommerce platform serves as the industry’s digital infrastructure that pushes digital products across various order origination points like a dispensary’s own website, a brand’s own website and now, Leafly’s marketplace. Paired with Leafly’s industry-leading content and market information, together we can complete the entire online cannabis shopping experience – from product discovery through order fulfillment.
Aaron: At first glance, one might think that Jane and Leafly are competitors. How did you see it differently? And how did this partnership come about?
Socrates: Not only is our tech complementary, but we are aligned on mission – to empower consumers, dispensaries and brands with the integrity of the plant in mind.
We want to make it simple for consumers to reach the products that will be most helpful for them. We want to make it possible for dispensaries and brands, regardless of their size, to be able to compete on an even playing field.
It all comes back to being good stewards of the industry. Education and access create a healthy demand for a diverse range of products. That means that the plant stays in the hands of many – safeguarding it from homogenization.
Aaron: How do consumers benefit from the partnership?
Socrates: It really is all about bringing this industry in line with any other retail vertical and meeting the customer where they are. It unlocks more avenues for customers to discover products and access a vast catalog of information and verified customer reviews. Bottom line, this partnership makes shopping for cannabis as simple as shopping online for everything else in the world, while also ensuring the success of the sellers.
Aaron: When you say the sellers, are you talking about the dispensary or the brands?
Socrates: Both, we want to provide value for the entire ecosystem. We can do that directly for dispensaries and brands by enabling an automated ecommerce platform that they can use to power their own website. At Jane, we know that technology can unlock value for everyone, where it is not a zero-sum game and success for one means success for the other. With Jane, both the dispensaries and the brands win.
Aaron: What kind of regulatory challenges do you face through the partnership?
Socrates: There are no real regulatory challenges for the partnership itself. The entire industry operates under regulatory challenges, but it is those regulations that have been the catalyst for innovation. I see the opportunity for legal online payments and national product distribution to play a large role in shaping the industry soon, and a partnership like this will ensure a seamless transition for the industry as things continue to evolve.
Aaron: Final question. What are you personally interested in learning more about?
Socrates: I’ve always been curious about disruptive models. The companies, not just in tech, but any company that has set out to do things differently and has been able to hold true to a vision. That’s what interests me, and I think I will always have something to learn and draw inspiration from.
Aaron: Excellent, that’s the end of the interview, Socrates!
Anyone owning and operating a cannabis business should know the value of proactive compliance management to operate successfully. For consumers, the view into the world “behind the budtending counter” is limited to the cool looking packaging, test results and the overall “vibe” of products they may want to try.
In our experience, as the oldest cannabis compliance firm, we’ve audited and visited hundreds of facilities and have seen the proverbial “Wizard behind the curtain”. We know “how the sausage is made.” And, as one can expect, it’s not always as glamorous in the back of the house as it appears on the shelf.
As markets expand and people buy into existing or new cannabis businesses, amid a world of thousands of competing companies and products, consumers need to ask themselves: “What do I know about the companies and products I consume?”
More and more, the question of consistent quality keeps coming up in the cannabis industry. Recalls are still ongoing in the news as products continually fail testing for potency and contamination.
Colorado, for example, is considered the shining jewel of the US industry in terms of experience, quality and integrity. However, consumers may be shocked to learn that a majority of dispensaries in the state do not operate by stringent SOPs, nor do they verify packaging and labeling for compliance, or review test results of products coming in and going out of their shops.
Starting January 1, 2021, these retailers finally have to develop and implement recall procedures in the event of contaminated products or cannabis that is causing adverse side effects. Later this year, vape pens will finally have their vapor tested instead of just the concentrate therein.
These liabilities or lack of compliance infrastructure may very well be a ticking time bomb no consumer in their right mind would want to deal with.
Bad Product/Brand Experience
Non-compliance and inconsistency on the part of operators translates directly into negative experiences for consumers. Whether its consuming a product that tastes like chlorophyll or enjoying a product the first time only to find a completely different experience the next time around, consumers experience the cost of non-compliance the most.
Beyond products, most consumers recognize their brand experience when shopping for products. Since the invention of Weedmaps, customers have always expressed their like or dislike for particular dispensaries and delivery services. Operators know these reviews from a customer’s experience can make or break their business and brand.
We always tell cannabis operators that a brand is a double-edged sword. As easily as it can strike through competitors, it can just as easily damage one’s own business.
Examples include SweetLeaf and Kushy Punch whose brands, once well-known and popular, are now synonymous with the worst of the worst given their histories of non-compliance and shut downs.
For consumers, finding consistent, quality products at a fair price is often the most important consideration to avoid the cost of a bad experience with cannabis. For visitors or first-time consumers, this could mean the difference between trying cannabis again or deciding it’s simply not for them.
Contamination & Illness
The worst-case scenario for consumers, especially patients, is the cost of consuming contaminated products or otherwise having adverse effects from the use of cannabis. While cannabis itself is one of the least harmful substances known to man, contaminated cannabis can be dangerous or deadly.
In the early days of the industry and in many emerging markets with poor to no oversight, these lessons are learned most severely. From the use of non-commercial washing machines being used for water-based extracts that tested positive for E. coli to recalled products ladened with Eagle 20 (which contains the harmful pesticide known as Myclobutanil), the industry has been reactive to safety measures and complying with best practices.
Still, some states persist with limited to no testing and simply label products with a warning to consumers that they are using cannabis at their own risk without testing for safety or efficacy.
Most consumers may be shocked to know that most cannabis companies do not adhere to good agricultural practices or good manufacturing practices (GAP/GMP) to ensure consistent quality and safety standards in similar industries such as nutraceuticals and food manufacturing.
Patients already weakened by disease states – including auto-immune disorders – are most at risk and understand all too well the costs of hospitalization, medical bills and loss of quality of life. For the average adult user, these risks are the same and there is often little to no recourse with the dispensary or product manufacturers if the product slips through contamination testing because of the non-compliance of product validation on flower or infused products.
For companies, outdated and inaccurate SOPs as well as production batches are the only line of defense to protect the company from product liability lawsuits filed by consumers in the event of contamination and illness. Most cannabis companies do not manage this aspect of their business effectively and simply assume they are sufficiently compliant without proactively measuring such compliance and adjusting operations as necessary.
Consumers would do well to remember that the modern industry is infantile in its development compared to other heavily regulated industries. Cannabis companies are babies learning to crawl while major food and beverage, pharmaceutical and nutraceutical, and alcohol and tobacco industries are far ahead of the game. The US industry, is arguably, already behind the compliance curve comparative to other nations already placing stricter regulations and standards on licensees.
For customers, this can be a confusing experience given that no two batches of flowers will taste the same let alone give a consumer exactly the same effect.
Already, customers are learning Sativa and Indica are imaginary cultural terms to describe generalized characteristics of major and minor cannabinoids and terpenes in each strain which produces a variety of effects – despite state limitations on labeling these active ingredients.
Vape pens are under increasing scrutiny as regulators discover long-term effects of vape use from the tobacco industry causing EVALI in consumers and being deemed as dangerous. As with anything new, the data and science simply aren’t there to truly tell customers what the effects may be over the long run. It has taken decades for tobacco, as an example, to go from doctor-recommended to carcinogenic.
Similarly, Big Cannabis of the future may be facing similar concerns that aren’t being warned about currently on their products and consumers could face unknown long-term consequences. In no way is this a condemnation of cannabis and early research shows cannabis is much safer than either alcohol or tobacco.
The point is to emphasize that over the long run, compliance is key to tracking the consistency and safety of products to avoid long-term liability and costs on consumers. Consumers would be wise to gravitate towards compliant brands and companies that focus on consistent quality and safety to minimize potential long-term negative impacts and costs.
Accountability & Transparency
Customers must first understand where the buck stops and who is responsible for what as it applies to cannabis and the cannabis products they consume. This can vary between states from vertically integrated models to horizontal models which allow for independent businesses to buy and sell cannabis between each other.
In the case of cannabis, the restrictions on METRC and other state “seed to sale” tracking systems make it nearly impossible for customers to return products and unclear on how to file complaints.
METRC and other seed to sale systems dictate that dispensaries must be able to track originating sources of cannabis back to another licensed facility. As such, once the consumer buys a faulty vape pen, for example, it’s gone from the dispensary inventory. Bringing it back in physically creates non-compliance issues for the dispensary as they cannot virtually account for the physical addition back into inventory.
No one ever said making sausage was a pretty or easy process. That’s why most consumers don’t want to think about how it’s done.
This example is a simple one to showcase the importance of compliance in the cannabis business and the complexities businesses must go through to operate. What is more applicable and important for consumers to understand is how non-compliance and inconsistency can affect them negatively – beyond messy fingers from leaky vape carts.
These types of unexpected issues represent significant costs for cannabis operators in recalls, fines, lawsuits and fees which is what most people think the “costs of non-compliance” mean.
However, and in addition to the literal cost mandated by regulation, there are the costs owners don’t think about: in the time and fees charged by the professionals to solve these issues, the time and stress spent on production, the increase or decrease in supply, mitigating product liability, and brand recognition and damage due to poor quality or recalls.
All of these factors simply drive up the costs of products for consumers and decrease the reliability of finding consistent, quality products and brands that customers can count on.
As we always say at iComply:
“It is always more cost-effective to be proactive, rather than reactive, when it comes to operational cannabis compliance management.”
Consumers would be wise to recognize which companies are proactive in managing their compliance. And companies would be wise to get ahead of these customer costs by being the proactively compliant companies that consumers want and need.
To say 2020 was a historic year is an understatement.
Arizona landed in a solid eighth place among the top ten most successful cannabis states thanks to its expansive medical cannabis program. To close out the year, voters approved Proposition 207, also known as the Smart and Safe Arizona Act (SSAA), making Arizona one of 15 states, plus Washington D.C., to legalize the adult use of cannabis, which is expected to rocket the state’s overall cannabis sales to new heights.
It’s essential to this conversation that we clarify the two sides of this rapidly growing industry. Medical cannabis is a form of treatment, the adult use and consumption of cannabis is a choice. During the pandemic, in many medical cannabis states, the medical cannabis industry was deemed an essential service and allowed to continue providing valuable medicine to patients and caregivers. As medical cannabis programs continue to provide safer therapeutic options which are complementary to or serve as an alternative to many traditional treatments and narcotics, especially opioids, patients can be confident the need for medical programs will continue. Arizona’s adult use cannabis program imposes greater limitations on quantity and potency, while also requiring higher standards for packaging. We saw a trend during the pandemic as again, many states prioritized and allowed their medical programs to continue, while limiting adult use facilities, in the same manner as other non-essential businesses.
It’s also worth noting that we have seen many inevitable changes in patient behaviors during the pandemic, including an increased need for medical cannabis. There was a patient demand for convenience, safety and no-contact services, increased online ordering, scheduling and curbside pick-up or delivery. Many of these services were already on the rise in popularity throughout the various legal states. While Arizona’s recreational program prohibits delivery until at least 2023, retail adult use consumers will expect some of these services to extend to the new market. As life after the COVID-19 pandemic continues on and the need for some of these safer more convenient options also continues, we hope to see them more permanently implemented from a legal and regulatory perspective. For now, here are the highlights we’ll see come into play in the first few months of 2021 as Arizona adopts its new adult use cannabis program.
Smart and Safe Arizona Act (Prop 207):
Legalizes the sale, possession (one ounce) and consumption of adult use cannabis for adults at least 21 years old.
Adds a 16 percent excise tax on adult use cannabis sales, in addition to the state’s 5.6 percent, totaling a 21.6 percent tax.
Allocates an estimated $300 million in Arizona revenue to be divided between community college districts, municipal police, sheriff and fire departments, fire districts, highway funds, public health programs, infrastructure, and a new Justice Reinvestment Fund.
Allocates more than $30 million annually for addiction prevention, substance treatment, teen suicide prevention, mental health programs, and justice reinvestment projects.
Provides opportunities for expungement of certain lesser cannabis-related crimes such as possession, consumption, cultivation or transportation.
But of course, state law is just one part of the equation. Adult use cannabis facilities must be licensed separately from state to local levels, including counties to cities to local municipalities, all of which may also adopt rules and requirements through zoning and land use ordinances. Swift and certain timelines established by the Smart & Safe Act dictate the speedy launch of this new program, first utilizing the existing medical cannabis infrastructure.
Many Arizona consumers are under the impression that they’ll be able to walk into a dispensary on January 1, 2021 and buy cannabis. But that is not the case. They’ll have to wait until the Arizona Department of Health Services (AZDHS) completes the early applicant licensing process, which begins in January 2021. Currently, local and multistate operators are waiting for AZDHS to complete the rules and regulations for the adult use cannabis program. Here are two of the most significant steps to be navigated in the upcoming weeks:
Smart and Safe Arizona Act (Prop 207) – Step 1: The Rulemaking Process
AZDHS has been tasked with developing the rulemaking process for the Smart & Safe Act. The first draft of the adult use cannabis program rules has already been released, primarily consisting of the application requirements for the early applicant process. AZDHS collected its first round of public comments for consideration on Thursday, December 17, 2020. The exact details and parameters of the adult use cannabis program will not be finalized or known for certain until AZDHS completes the rulemaking process. We anticipate the next draft of adult use cannabis rules to be released sometime in early January.
Smart and Safe Arizona Act (Prop 207) – Step 2: The Application Process
AZDHS will begin accepting early applicants under the Smart & Safe Act on January 19, 2021, closing the process on March 9, 2021. Current medical cannabis license holders who apply for and acquire an adult use license in the early applicant process will be authorized to a dual-licensed dispensary (both medical and adult use license), as well as one offsite manufacturing facility (which may later be amended to include both medical and adult use manufacturing license), and offsite cultivation.
Early adult use license applicants are reserved for those that currently hold in good standing at least one Medical Marijuana Registration Certificate (“Medical Marijuana License”) and applicants applying to counties with no current operating dispensaries. Any county with a single operating dispensary (a medical cannabis dispensary) will be allocated an adult use license (dual license) as long as the medical license holder is in good standing for the application. All adult use licenses allocated to those counties without a current operating dispensary must keep that dispensary within that county.
AZDHS will have 60 days to process each application. Adult use licenses for counties without a current operating dispensary will be allocated through a random selection process, if more than two applications are received for that county. Additionally, upon the conclusion of the early applicant process, any adult use license that has not yet been awarded through that process, will be available to the general public and allocated through a random selection process.
This brings us to later phases of implementation of the Smart & Safe Act: within approximately six months of the adoption of the initial recreational program rules, AZDHS must develop and adopt the rules and regulations for the Social Equity Ownership Program (SEOP). The primary goal of the SEOP is to allocate 26 adult use licenses to “communities disproportionately impacted by the enforcement of previous cannabis laws.” In other words, communities disproportionately and negatively impacted by cannabis criminalization. Smart & Safe is light on the exact manner and process at this point, so Arizona voters and cannabis companies will look to AZDHS for the development and implementation of this important part of the adult use program. Stay tuned.
The cannabis industry is growing so quickly that even COVID-19 can’t slow it down. Before the pandemic, the industry amassed $13.6 billion in U.S. legal cannabis sales in 2019 – a figure that is expected to more than double to $30 billion in the next five years, according to New Frontier Data. In states where cannabis is legal for medical or recreational use, dispensaries have been deemed necessary, essential businesses – especially when it comes to calming stress and anxiety in our ever-changing times.
Cannabis legalization and newly budding dispensaries have expanded across the U.S., which may come with an unfortunate counterpart – a higher incidence of crime. Despite lower prices in states that have legalized cannabis, as compared to states where it is still illegal, theft has run rampant across grow operations, warehouses and, most often, dispensaries.
Dispensaries can be targeted more frequently. Robbers may perceive them as an easy target, because they are businesses that have larger amounts of cash on hand. Many dispensaries only accept cash because payment processors and financial institutions aren’t willing to work with them. This is primarily because cannabis is still deemed an illegal substance under federal law, and the actions of financial institutions are governed by federal, not state, laws. Once the Secure And Fair Enforcement (SAFE) Banking Act is approved, cannabis businesses will be able to work more easily with banks, in turn reducing the amount of cash on site and erasing the dollar signs in opportunistic thieves’ eyes.
However, cash isn’t the only high thieves seek when they break into dispensaries. There’s also the product itself. Protecting it – and providing peace of mind to the facilities’ owners and occupants – is a concern for dispensaries, grow operations and warehouses. Robbers are motivated by the opportunity to make even more fast cash through reselling the product found onsite.
To eliminate such easy targets, security requirements for the cannabis industry are a necessity. They are also involved, complicated, and vary from state to state. A number of security specifications apply between state laws and local ordinances. Inventory must be properly surveilled and managed at all stages of transportation and storage. Any discrepancies in inventory can result in large fines and other penalties. To aid in understanding security compliances, the National Cannabis Industry Association (NCIA), a national trade association, recommends that start-ups obtain attorneys to guide businesses through their state’s laws and regulations.
This is why, especially for new business owners, it is critical to consider the best, most advanced security solutions – especially when it comes to doors and points of egress – that are easily integrated into buildings during the design phase. These solutions protect the products, properties, and people throughout the cannabis supply chain.
Understanding State Security Regulations While there are no federally recognized security requirements for the cannabis industry, there are similar requirements across all states that have legalized cannabis, including:
Maintaining strict access control throughout the facility – this is especially important for grow operations and warehouses
Functional alarm systems
Documented standard operating procedures
Video surveillance systems – many states mandate very precise requirements, such as length of storage time and even video resolution specifications
Notifying appropriate regulatory agencies immediately or within a strict timeframe after a security incident or theft
Securing all records and record storage
While these are common, state-mandated security requirements, it is critically important to know and understand all rules, regulations, and laws concerning the industry within the business’s specific state. Making sure the business is compliant with all aspects of state laws for security and preventing violations, including the hefty financial penalties that can accompany them, is key.
States require cannabis facilities to implement sophisticated security features for several reasons. One of the most obvious is the fact that the industry supplies a high-value product and is a cash-intensive business. Integrating security features into the building can be a challenging task for architects and designers. To help tackle these challenges, manufacturers have introduced products to the cannabis industry, creating easier, more effective and aesthetically pleasing security solutions.
Integrated Designs For High Level Security Security shouldn’t be a constraint when considering design aesthetics. Certain elements can be discretely tucked away, including cameras and security doors by way of specifying a concealed rolling door, conveniently disguised in the ceiling during operating hours. These doors can even close under alarm eliminating the need for manual intervention. Other security measures, such as bullet resistant glass, are hidden in plain sight.
Untrustworthy employees, smash-and-grab thefts or meticulously planned heists mean secure building design is of the utmost importance. In order to have the most effective security, there needs to be design vision – a clear intent for incorporating advanced security into the facility, whether visible or not.
Suggested security measures include video surveillance around the outdoor perimeter of the property as well as inside the facility. Physical barriers, such as specialized entrance locking systems – including fingerprint-scanning biometric technology – and security doors that may also include intrusion detection and automatic closure systems are recommended. All systems may be paired with 24/7 visual monitoring by security personnel.
Many state regulations also require restricted access to specific areas within dispensaries, grow operations and warehouses, with employee names and activities logged for reference. These necessary measures aid in inventory monitoring and control, further reducing the likelihood of internal theft.
When specifying building security, it’s important for architects to consider what type of building they are designing. There are differences in providing security for dispensaries versus warehouses and grow operations. Dispensaries and storefronts are frequently out in the open and in locations that are well-known to consumers. Warehouses and grow operations are usually tucked out of the way, rarely publicized, and less noticeable.
Rolling Grilles And Doors Deter Dispensary Theft With a high-value product and cash on hand, dispensaries in particular have unique security challenges. And because they are retail businesses, egress and fire codes must be strictly adhered to, in addition to special security regulations.
In light of this, security doors require special consideration. They are necessary to provide secure protection against theft but shouldn’t distract from the architectural vision of the building or interior design.
Rolling security grilles are the ideal solution to protect the counter inside the dispensary and may also be ideal for the front of the store. They fit in small headspaces where there is limited ceiling room and can be easily concealed when not in use.
Even heavy-duty rolling doors used to protect the glass storefront of the dispensary and prevent intruders from entering the building’s dock area can be hidden when not in use. If building code allows, architects may specify a rolling door that coils up into the door’s header, residing behind an exterior soffit. These robust security doors’ lift-resistant bottom bars also can be obscured from sight.
Heavy-duty security doors at the front of the dispensary block sight access and provide a visual deterrent. They give the building a secured look when in use, but heavy-duty rolling doors don’t need to be imposing to customers during the dispensary’s operating hours.
Robust Visible Protection For Grow Operations And Warehouses
Grow operations and warehouses usually opt for more visible security doors to deter criminal activity. They also have different design considerations because of building layout and production needs. For instance, larger grow operations house plants and supplies which require heavy equipment to move throughout the facilities.
Heavy duty rolling security doors can be made with up to 12-gauge steel with interlocking slats and tamper resistant fasteners – making them stronger than standard garage doors. They provide high-end security at loading docks and limit access to restricted areas inside.
Rolling doors can also be used to block employee access to off-limits areas common in grow operations and warehouses. Because they are heavily reliant on utilities and infrastructure, such as water mains and humidity and temperature controls, warehouses and grow operations are ideal applications for rolling doors. If unauthorized personnel with ill intentions access these utility areas, it could spell disaster with ruined crops and damaged or unsafe products – turning into substantial financial losses. From a design standpoint, these doors do not need to be concealed. In fact, their visibility signals restricted access areas and hints at the security measures taken to protect these facilities.
Enhanced Security Features
Whether designing a dispensary, a grow operation facility, or a warehouse, rolling doors may be paired with automatic protection features to enhance the building’s security and help workers feel safe. These automatic closing systems allow the security doors to be immediately activated by a building alarm or the push of a panic button in emergency situations. The doors also feature advanced locking systems – some of which are hidden in non-traditional locations – providing further tamper resistance.
Some rolling door manufacturers offer in-house architectural design groups to guide architects and designers in choosing the ideal security doors. These groups can address and solve any design dilemmas that arise during the project. Every rolling door is built to a specific opening, making each product unique to that area of the project. Because of this customization, manufacturers can meet virtually any specification.
Meeting Insurance Requirements
Selecting the correct rolling door along with other advanced security features aids in meeting insurance requirements. Each insurance company has individual minimum-security conditions in its policy. Many insurance companies will not provide theft insurance if cannabis businesses do not have adequate security or cannot demonstrate they have it.
Planning Leads To Integrated Protection The technical and legal aspects of securing dispensaries, grow operations, and warehouses can be overwhelming and, at times, confusing. Legal counsel, state agencies, industry associations, and manufacturers encourage new cannabis businesses to use them as resources as they unravel the nuances of the industry’s security regulations.
By combining robust security features such as video surveillance, proper access controls, rolling doors or grilles and automatic closure systems, cannabis facilities can meet state and insurance requirements and deter theft. With thoughtful design consideration and planning, these security features also have the capabilities to seamlessly blend with interior and exterior design aesthetics.
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