Tag Archives: dispensary

A Q&A with Everett Smith, Co-Founder & CEO of Presidential

By Aaron Green
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Infused flower and infused pre-rolls are two segments of the cannabis flower market sought after by consumers for their high THC content. Moon rocks are a type of infused flower product made by infusing flower with sticky concentrate and then rolling the sticky flower in kief. THC content of moon rocks often exceeds 50%.

Presidential is one of the largest infused flower cannabis companies and the third largest pre-roll brand in California, with products available in over 400+ retail stores such as MedMen, Gorilla RX, Sherbinskis, La Brea Collective and Royal Greens. Presidential’s success and growth has primarily been organic through word of mouth. Presidential recently launched the Presidential Suite in WeHo, a speakeasy-style lounge with entrance through a subway car inside a NY-style pizzeria, Esco’s. The suite offers events including exclusive cannabis industry nights as well as “pizza parties” held jointly with Esco’s.

We interviewed Everett Smith, co-founder and CEO of Presidential. Everett co-founded Presidential in 2012 following a professional basketball career in Europe. He has a background in marketing and brand development.

Aaron Green: Everett, how did you get involved in the cannabis industry?

Everett Smith: It was really just by chance. I was in Vegas after I was done playing ball overseas. I was working 9 to 5 at the convention center for a company called Freeman. I was out waiting for some clients and I met this guy who started talking to me about cannabis, about this company he was starting and how his friend was manufacturing the product for him. I didn’t love my job. I was looking for something exciting to do. So, I got their information, and I took him up on it and I called them every day for almost three months. Then it finally got together and long story short, we started.

Everett Smith, co-founder and CEO of Presidential

Green: What year was that?

Smith: That was in 2012.

Green: So, you met this person in 2012 and then three months later had it up and going?

Smith: Long story short, yes. After three months, we finally got together and got all the parameters figured out and then we started to create the brand, get the packaging, get the product, and put it out to the street. That all probably took six to eight months.

Green: Presidential is known for moon rocks and infused pre-rolls. How did you hit upon the concept of infused flower? Why did you make that your focus?

Smith: The gentleman I was talking about before – he’s no longer our partner – was manufacturing for his friend and that’s what he did, so that’s what we got introduced to and then as soon as we started selling it, I just found ways that it could be improved. I listened to the customers we were selling to. My old partner wasn’t willing to do that due to the manufacturing time, so we took it into our own hands and got an investor, my partner now, John Zapp, and we figured out how to manufacture it ourselves. We had zero idea what we were doing and we figured it out. I have to give credit to John, he is the one who figured out the formula we are using right now. There was a lot of bumping our heads, a lot of trial and error, a lot of figuring it out. And luckily, we did.

Green: You mentioned you felt like other companies weren’t doing it right. What was the difference that Presidential brought to the table?

Smith: Quality. These other companies were focused on profit margin. They weren’t using quality products. They were using the same product twice in different things, which is the ultimate no-no. I just found that if you started with high-quality raw goods, and put them together, you are going to have an even better product.

Growing up my mom was kind of a hippy. We just like stuff from the earth. Good organic stuff. So, we were taking flower that I knew was being grown organically at the time and then infusing it and it created a better product. We packaged it better than anybody else’s packaging at the time. I have a background in marketing so at that time, I was just trying to create a product and a brand that my friends and I would like. I thought we were our target user at the time. I was working in my late 20s.

Green: Where were you located at the time?

Smith: We were in Los Angeles.

Green: What were some of the challenges of launching a brand in Los Angeles back in 2012?

Smith: Some of the challenges included: education of the consumer; getting clients in the door and making them feel safe to come into a dispensary and purchase medicine at the time; and the legalities – maneuvering all the different propositions that were coming down and being able to do it legally and safely. The legal issues were probably our biggest hurdle. Then there was the challenge of introducing people to Moon Rocks. Infused flower was a brand-new concept, so we had to find as many people as we could to introduce the product to.

Green: I’m just imagining back to 2012, I think Moon Rocks would have been completely new to me. How did you get customers over the hump of trying something new?

Smith: I would get big jars of Moon Rocks. They look crazy. We saw people walk by and just watched the reactions. It was like, “Whoa, what’s that? What in the world is that?” Then we use the tagline: “World’s Strongest”. We’re starting with nice, tasty flower. We’re putting 90% THC distillate on it and then when we’re taking kief in the mid 40s 50s (% THC), and we’re covering it. So we’re putting THC on top of THC of on top of THC.

Putting “The World’s Strongest” on there and just putting big jars out in front of as many people, at as many conventions, and at as many dispensaries that would let us set up a patient appreciation day. That’s how we did it.

Green: You are in retailers across California. What were the keys to your success in building out your distribution network?

Smith: Sales. Knocking on doors. My partner comes from the car business. He was a fixer-upper helping dealerships all over the country become more profitable. So, just having that mentality of going out every day and knocking on doors trying to get every single possible client. I want to say it was like being a car salesman and Hollywood, or something similar. At first it was me and John every day knocking on doors. Then the business built on itself.

We have the same process now. Knock on the doors and send our brand ambassadors in there to do customer appreciation. They get our product in front of people and it’s worked for us. The marketing money we do spend we spend in the stores, because we see a direct correlation there. At the end, it really goes back to the knocking on doors.

Green: Do you notice anything different between 2012 sales and prospecting versus today now that your brand awareness has changed?

Smith: Absolutely. Everything is very corporate now. Before 2014, you could knock on the door and the person that you needed to see was sitting right there. The owner was the buyer. Now, you have to get through layers of people to get to the actual decision-maker because they’ve become so corporate. So that’s the biggest difference I see, but I wouldn’t say it’s a negative. I would say that our industry has become more positive. We can guarantee regular pay. We can guarantee that the products are going to be on the shelves and we can cut or markup the pricing. Those are the changes I see and they’re not always easy, but I think they’re for the better.

Green: What does the future look like for Presidential? More broadly, what does the future look like for the industry in terms of infused flower and pre-rolls?

Smith: Right now, the infused flower market is one of the fastest-growing markets. I see that becoming the norm, and the same for pre-rolls. We’re looking at expansion and trying to become one of the national players in this game. We’re swinging for the fences.

Green: What geographies are you looking at?

Smith: Right now we’re in California. We are in negotiations to launch in Nevada in July. We were getting ready to launch in Oklahoma, but had a deal fall through so now we are kind of switching gears. I would say by end of year we’ll be in Oklahoma, and my partner John is trying to close a deal for Michigan. So, those are the markets we have on the table right now. We’re looking to close those all before the end of the year.

Green: What trends are you following in the industry?

Smith: We have the number one selling blunt in California, but in terms of pre-rolls we are number four in terms of sales. The three companies ahead of us all sell minis and packs of minis, whereas we sell single 1 gram and 1.5 gram pre-rolls. So, in July, we’re launching three-packs of minis, so three 0.7 gram blunts and three 0.5 gram pre-rolls.

You can infuse the flower with pretty much any kind of concentrate the way that we do it. I’d like to come out with some diamond products, that’s hot right now. We’re following the wave and trends of the concentrates.

Green: What in your personal life or in cannabis are you most interested in learning about?

Smith: In my personal life, I’m interested in financial craftiness. You know, make your money and make your money work for you. I personally, in the business, would like to learn more about the smokeless form factors of cannabis. Things like beverages and capsules. I think that’s where the industry will end up going. So, I’m interested in learning more about the manufacturing of beverages and capsules and what it entails.

Green: Thanks Everett, that concludes the interview.

Smith: Thanks, Aaron.

One Month In: New Jersey Market Starts Growing

By Cannabis Industry Journal Staff
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Just over a month ago, a handful of dispensaries in New Jersey began selling cannabis to adults over the age of 21. The state issued licenses for adult use sales to seven alternative treatment centers (ATCs), otherwise known as medical cannabis businesses already established in the state. In total, thirteen dispensaries in the state started selling cannabis to adults over 21.

The seven companies awarded adult use licenses were Ascend, Curaleaf, GTI, Acreage, Verano, Columbia Care and TerrAscend. The state’s roll out created a lot of controversy over allowing already established, larger medical cannabis businesses and multi state operators to begin adult use sales before smaller businesses and social equity applicants get licensed.

Sales totals in the first month of New Jersey’s adult use market

Earlier this week, the New Jersey Cannabis Regulatory Commission (CRC) held a public meeting where regulators discussed progress, sales totals so far, conditional license applications and more. According to the meeting notes, between April 21 and May 21, retailers in New Jersey did $24,201,875 in cannabis sales with 212,433 transactions. During the meeting, regulators considered 46 conditional license applications and four testing lab license applications.

According to NJ.com, six new dispensaries were awarded licenses to begin adult use sales. Of the six new retail locations, Curaleaf opened their Edgewater location to adult use customers and Ayr Wellness received approval to begin adult use sales at all three of their medical locations in Eatontown, Union and Woodbridge. Ascend and TerrAscend also received approval to begin adult use sales act their locations in Montclair and Lodi, respectively.

About two weeks ago, the CRC testified before the state’s Senate Judiciary Meeting to share progress on the legal cannabis market, just over a year after the CRC was established. Jeff Brown, executive director of the CRC, discussed the agency’s goals and some challenges ahead of them. Brown says the CRC will be focusing on additional rules for adult use, modernizing the medical rules, enforcing regulatory compliance and information sharing in the near future. He also mentioned a couple challenges the industry is currently facing that they wish to address, including: expanding access to capital for entrepreneurs , removing impediments to finding real estate, educating municipalities to open up opportunities for applicants and ensuring medicinal cannabis access is unimpeded by recreational sales.

“We have made great strides in all of these efforts, and when we look at how New Jersey compares against other states, we fair pretty well,” Brown told lawmakers. “Beginning recreational sales on 4/21/22 was an important milestone. But it doesn’t mark the end of the process, it marks an important step in a multi-year effort to establish New Jersey as the premier cannabis market on the East Coast.”

Rhode Island Legalizes Adult Use Cannabis

By Cannabis Industry Journal Staff
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Update: Governor McKee has signed the Rhode Island Cannabis Act into law, making it the 19th state to legalize adult use cannabis.

In Rhode Island this week, lawmakers voted to approve a bill that would legalize and regulate adult use cannabis. The state’s legislature passed the bill with overwhelming majorities in both the House of Representatives and the Senate.

The House voted 55-16 and the Senate voted 32-6 to approve the Rhode Island Cannabis Act, a bill that allows adults over 21 to possess, purchase and grow cannabis. The legislation contains a provision for automatic review and expungement of past cannabis convictions. Similar to other neighboring states, the bill also allows for allocating tax revenue from cannabis sales to communities most harmed by cannabis prohibition, such as low income neighborhoods.

Rhode Island Gov. McKee

Governor Daniel McKee has expressed support for the bill previously and is expected to sign it into law. According to Jared Moffat, state campaigns manager for the Marijuana Policy Project, Rep. Scott Slater, Sen. Josh Miller and Rep. Leonela Felix are to thank for their leadership in bringing the bill to a vote. “We are grateful to Rep. Scott Slater and Sen.Josh Miller for their years of leadership on this issue. Rhode Islanders should be proud of their lawmakers for passing a legalization bill that features strong provisions to promote equity and social justice,” says Moffat. “We’re also thankful to Rep. Leonela Felix who advocated tirelessly for the inclusion of an automatic expungement provision that will clear tens of thousands of past cannabis possession convictions.”

Among other provisions, the bill establishes a 10% sales tax in addition to the state’s normal 7% sales tax and 3% local sales tax. A quarter of all retail licenses will go to social equity applicants and another quarter of all licenses will be reserved for worker-owned cooperatives. The legislation also includes a “social equity assistance fund” that will offer grant money, job training and social services to communities most impacted by cannabis prohibition.

Cannabis M&A: Take Care of the Due Diligence Essentials

By Michael G. Lux
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As the regulated cannabis industry matures, M&A activity is expected to continue accelerating. Whether they are existing licensed businesses looking for acquisition opportunities or new investor groups seeking to enter or expand their positions in the industry, investors should recognize the special due diligence challenges associated with cannabis industry transactions.

Above all, investors should avoid the temptation to omit or short-circuit long-established due diligence practices, mistakenly believing that some of these steps might not be relevant to cannabis and hemp operations. Despite the unique nature of the industry, thorough and professional financial, tax and legal due diligence are essential to a successful acquisition.

Surging M&A activity

Over the past few years, as the cannabis industry matured and the regulatory environment evolved, M&A activity involving cannabis and hemp companies has undergone several cycles of expansion and contraction. Today, the expansion trend clearly has resumed. Although the exact numbers vary from one source to another, virtually all industry observers agree that 2021 saw a strong resurgence in cannabis-related M&A activity, with total transactions numbering in the hundreds and total deal values reaching into billions of dollars. Moreover, most analysts seem to agree that so far, the pace for 2022 is accelerating even more.

Today, many existing cannabis and hemp multistate operating companies are in an acquisitive mood as they look for opportunities to scale up their operations, enter new markets, and vertically integrate. At the same time, the projections for continued industry growth over the next decade have attracted a number of investment funds and private equity groups, which were formed specifically for the purpose of investing in cannabis and hemp businesses.

These two classes of investors often pursue distinctly different approaches to their transactions. Unlike the largely entrepreneurial cannabis industry pioneers now looking to expand, the more institutional investors are accustomed to working with professional advisers to perform financial, tax and legal due diligence as they would for a transaction in any other industry.

Among both groups, however, there is sometimes a tendency to misunderstand some of the transactional risk elements associated with cannabis M&A deals. In many instances, buyers who are generally sensitive to potential legal and regulatory risks will underestimate or overlook other risks they also should examine as part of a more conventional financial and tax due diligence effort.

For example, since much of the value of a licensed cannabis operation is the license itself, investors often rely largely on their own industry understanding and expertise to assess the merits of a proposed acquisition, based primarily on their estimation of the license’s value. This practice provides acquirers with a narrow and incomplete view of the deal’s overall value. More importantly, it also overlooks significant areas of risk.

Because cannabis acquisition targets typically are still quite new and have no consistent earning records, acquirers also sometimes eschew quality of earnings studies and other elements of conventional due diligence that are designed to assess the accuracy of historical earnings and the feasibility of future projections.

Such assumptions and oversights often can derail an otherwise promising transaction prior to closing, causing both the target and the acquirer to incur unnecessary costs and lost opportunities. What’s more, even if the deal is eventually consummated, short-circuiting the normal due diligence processes can expose buyers to significant unanticipated risk down the road.

Recurring issues in cannabis acquisitions

The most widely recognized risks in the industry stem from the conflict between federal law and the laws of various states that have legalized cannabis for medical or adult recreational use. The most prominent of these concerns relates to Section 280E of the Internal Revenue Code (IRC 280E).

Although its use is now legal in many states, cannabis is still classified as a Schedule I substance under the federal Controlled Substances Act. IRC 280E states that any trade or business trafficking in a controlled substance must pay income tax based on its gross income, rather than net income after deductions. As a result, cannabis businesses are not entitled to any of the common expense deductions or tax credits other businesses can claim.

The practical effect of this situation is that cannabis-related businesses – including growers, processors, shippers and retailers – often owe significant federal income tax even if they are not yet profitable. Everyone active in the industry is aware of the issue, of course, and any existing operating company or investment group will undoubtedly factor this risk into its assessment of a proposed acquisition target.

The challenge can be exacerbated, however, by other, less widely discussed factors that also affect many cannabis businesses. These issues further cloud the financial, tax and regulatory risk picture, making thorough and professional due diligence even more critical to a successful acquisition.

Several of these issues merit special attention:

  • Nonstandard accounting and financial reporting practices. As is often the case in relatively young, still-maturing businesses, acquisition targets in the cannabis industry might not have yet developed highly sophisticated accounting operations. It is not uncommon to encounter inadequate accounting department staffing along with financial reporting procedures that do not align with either generally accepted accounting principles or other standard practices. In many instances, company management is still preparing its own financial statements with minimal outside guidance or involvement by objective, third-party professionals. Significant turnover in the management team – and particularly in the chief financial officer position –is also common, as is a general view that accounting is a cost center rather than a value-enhancing part of the management structure.

Such conditions are not unusual in young businesses that are still largely entrepreneurial in spirit and practice. In the cannabis industry, however, this situation is also a reflection of many professional and business services firms’ longstanding reluctance to engage with cannabis operators – a hesitancy that still affects some organizations.

When customary business practices are not applied or are applied inconsistently, acquiring companies or investors should be prepared to devote more time and attention – not less – to conventional financial due diligence. The expertise of professional advisers with direct experience in the industry can be of immense benefit to all parties in this effort.

  • Restructuring events or nonrecurring items in financial statements. Restructuring events and nonrecurring items are relatively common in many new or fast-growing businesses, and they are especially prevalent among cannabis operations. In many instances, such companies have engaged in multiple restructuring events over a short period of time, often consolidating operations, taking on new debt, and incurring various one-time costs that are not directly related to the ongoing operations of the business.

The inclusion of various nonrecurring items within the historical financial statements can make it much more difficult for a buyer or investor to accurately identify and assess proforma operating results, especially in businesses that have not yet generated consistent profits. Here again, applying previous experience in clearing up the noise in the financial statements can help improve both the accuracy and timeliness of the due diligence effort.

  • Run-rate results inconsistent with historical earnings or losses. A company’s run rate – an extraction of current financial information as a predictor of future performance – is a widely used tool for creating performance estimates for companies that have been operating for short periods of time or that have only recently become profitable. In cannabis businesses, however, run-rate estimates sometimes can be unreliable or misleading.

Because it is based only on the most current data, the run rate often does not reflect significant past events that could skew projections or recent changes in the company’s fundamental business operations. Because such occurrences are relatively common in the industry, the results of run-rate calculations can be inconsistent with the target company’s historical record of earnings or losses.

  • Historical tax and structuring risks new owners must assume. Like many other new businesses, cannabis operations often face cash flow and financing challenges, which owners can address through alternative strategies such as debt financing, stock warrants, or preferred equity conversions. Such approaches can give rise to complex tax and financial reporting issues as tax authorities exercise their judgment in interpreting whether these items should be reported as liabilities or equity derivatives. The situation is often complicated further by various nonstandard business practices and the absence of sophisticated accounting capabilities, as noted earlier.

As a consequence, financial statements for many cannabis companies – including a number of publicly listed companies – often contain complex capital structures with numerous types of debt warrants, conversion factors and share ownership options. Although an acquisition would, in theory, clean up these complications, buyers nevertheless must factor in the risk of previous noncompliance that might still be hidden within the organization – a risk that can be identified and quantified only through competent and thorough due diligence.

Not as simple as it seems

On the surface, the fundamentals of the cannabis industry are relatively straightforward, which is one reason it appeals to both operators and investors. For example, participants at every stage of the cannabis business cycle – growing and harvesting, processing and packaging, shipping and distribution, and ultimately marketing and retailing – can readily apply well-established practices from their counterparts in more conventional product lines.

The major exception to this rule, of course, is the area of regulatory compliance, which is still shifting and likely will continue to do so for the foreseeable future. Outside of this obvious and significant exception, however, most other aspects of the industry are relatively predictable and manageable.

When viewed in this light and in light of the continued growth of the industry, it is easy to see why cannabis-related acquisitions are so appealing to existing business operators and outside investors alike. It is also easy to understand why buyers might feel pressure to move quickly to take advantage of promising opportunities in a fast-changing industry.

As attractive as such opportunities might be, however, buyers should take care to avoid shortcuts and resist the urge to sidestep established due diligence procedures that can reveal potential accounting and financial statement complications and the related compliance risks they create. The unique nature of the cannabis industry does not make these practices irrelevant or unnecessary. If anything, it makes professional financial, tax, and legal due diligence more important than ever.

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.

New York Adds More Conditional Cultivation Licenses

By Cannabis Industry Journal Staff
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Regulators in New York are continuing their push forward in launching the adult use cannabis market. They have approved 58 conditional licenses for hemp growers to begin cultivating cannabis for the adult use market. In just the past few months, the state has already awarded 146 conditional licenses for cultivation.

The Office of Cannabis Management (OCM) in New York also announced their “Get Ready, Get Set” virtual workshop series, designed to help social equity applicants prepare for license applications and better understand the conditional licensing program.

Earlier this year, following an amendment to state law, the OCM launched the conditional licensing program to ensure that hemp farmers in the state with a desire to grow adult use cannabis could get started in the 2022 season.

Applications can be filed with the OCM for conditional licenses through June 30, 2022, with a $2,000 non-refundable application and licensing fee. The licenses are only for farms that have already grown hemp in New York State.

“New York is building the most inclusive cannabis industry in the country and including small farmers with an expertise is an essential component in accomplishing that goal,” says Chris Alexander, executive director at the OCM. “The growing season isn’t waiting for anyone and I’m grateful for the hard work of the CCB and my colleagues at OCM to ensure these licenses are being reviewed as quickly as possible so New York’s farmers can take full advantage of the growing season and cultivate the products that our equity entrepreneurs will be the first to sell when they open their dispensaries this year.”

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.

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.

Quality in the Retail Ecosystem: A Q&A with LucidaClub Founder Jack Roosevelt

By Cannabis Industry Journal Staff
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The cannabis retail market is very unique. What began as compassion clubs and wellness centers in the early days of legal cannabis, eventually morphed into dispensaries, quickly becoming the retail model that regulators around the country adopted and businesses implemented.

For most states with legal cannabis markets, the dispensary has been the only way for consumers to buy cannabis and cannabis products. Before the pandemic began, we started seeing a handful of states warm up to allowing delivery services. During the height of the pandemic, more states adopted curbside pickup, e-commerce in some shape or form and delivery services that finally expanded cannabis retail beyond the dispensary. Still though, regulations hamper commercial growth in the retail space and the dispensary remains, by far, the place where most people buy their cannabis.

When Jack Roosevelt, co-founder of LucidaClub

When Jack Roosevelt, co-founder of LucidaClub, entered a dispensary back in 2019 in Massachusetts, he shared an experience all too common in the cannabis industry: An overwhelming number of options, jargon like sativa, indica and strain names that make no sense to the uninitiated, confusing product types and an all-around unpleasant shopping experience. Jack saw all those barriers to entry for the canna-curious or novice consumer and thought that there must be a better way to shop for cannabis.

So he started LucidaClub, a membership-based platform that is designed to guide and educate consumers with the advice of experts who can help people understand cannabis products and make the right purchase decision without all of the frustration and trial and error that is so common.

The name, Lucida, comes from a Latin phrase meaning the brightest star in a constellation. Jack and his co-founder, Lucinda, want their company to be the guiding star on your cannabis journey. LucidaClub isn’t just for the cannabis newbie; their in-house curator and team of experts can help any cannabis consumer find products to better fit their needs for sleep, wellness, relaxation, stress or just to have a good time. We sat down with Jack to chat about the cannabis retail market, what his company is all about and what the future of cannabis retail might look like.Jack Roosevelt will be speaking on the cannabis retail experience at the Cannabis Quality Conference & Expo. Click here to learn more. 

Cannabis Industry Journal: Tell us about your background and how you came to the cannabis space.

Jack Roosevelt: I began my career in finance, working for JP Morgan and Barclays. I left Barclays and joined a renewable energy start up before eventually joining the cannabis space.

My move into the cannabis space was due to an event in the summer of 2019. Adult use cannabis had been legal in Massachusetts since November of 2018. Now, I smoked some weed in high school and college, but hadn’t touched it in at least 20 years. However, cannabis was now legal, so I said maybe there’s an opportunity to find something that would help me unwind at the end of the day, help with sleep and manage some of my stress.

Knowing that I smoked in high school and college, I figured that buying weed was buying weed. How difficult could this be? That took me to going to a dispensary for the first time. Walking through those doors made me realize that buying cannabis today is nothing like buying weed back when I was in college. It’s a fundamentally different experience.

I stood there looking at the menu of strains, with names that meant nothing to me, jargon like terpenes, and even the idea of sativa versus indica at that time was foreign to me. Twenty years ago, we didn’t pay attention to the strain name or anything like that. We’d walk into someone’s dorm room and your option would be ‘this is twenty bucks an eighth, forty bucks an eighth and sixty bucks an eighth.’ You weren’t paying attention to the strain or the name of anything like that.

Coming into the dispensary that day, I thought I’d walk out of there with an eighth of flower and something to help me unwind at the end of the day. I walked out of there with a tincture and it really wasn’t because they upsold me to a better product, it was because it was the least worst option I could see on the menu. It was something I felt that I could understand from a dosing standpoint and it was something that didn’t require knowing the strains or names that mean nothing to me. I was quite frankly looking for the easiest way to purchase something and get out of there as quickly as possible

Sitting in the car afterwards, I was mulling over that experience, the feeling of intimidation, how awkward it was, how frustrating it was. I am 6’8” and 300 pounds I am not a small guy, and I’m not a wallflower. I don’t intimidate easily, so if this was my experience, what was this going to be like for everyone else?

That made me reexamine and take a stronger look at the retail market and the potential growth. How do you engage the consumer like me, for whom there are lots of barriers to entry, most of which are perception-driven. Some of the barriers are regulatory and geographic, but most are perception based. Here in Massachusetts, a lot of the dispensaries are in inconvenient locations. Not all towns allow for rec sales, and not all of those towns that do will allow a dispensary to open on the High Street, so consumers often times have to drive out of their way to get to a dispensary.

So, for me understanding what this new consumer base would look like and how they would come into the market was key. Obviously there would be a natural growth progression for the cannabis market. However, if we could build something to help guide people, answer their questions and make them feel comfortable with what they were buying and how to consume, really hold their hand in the initial stage of a consumer coming back into the market or coming in for the first time, then we could help grow the market quicker and put that natural progression of growth on a faster track.

That experience made me start to do some market research, look at the market size, and what that potential market could look like. Our research shows that, depending on the maturity of the market in question, there are between 1.5 and 4 times the number of Cannacurious sitting on the sidelines than there are active consumers in a market. Here in MA, conservatively there are at least 1.5MM Cannacurious sitting on the sidelines, waiting to come into the market. Because our research showed such a large opportunity he in MA and the Northeast, where we live, we decided to focus our efforts here.. Because we are Cannacurious consumers ourselves, we have a natural understanding and empathy for the consumer. I was definitely not and still am not an expert on cannabis. But if we can find the right experts that can answer the questions that we have then we can do the same for the Cannacurious. For 70+ years, we’ve been told that cannabis is bad, smoking weed is bad and everything associated with it is bad. So, we want to break that negative perception, that stigma that is still lingering and open it up to a more mainstream consumer.

CIJ: What gave you the idea to start Lucida Club?

Jack: What I just told you sums it up pretty well. It was basically built out of personal frustration. I thought that if I had this problem, those feelings of intimidation, awkwardness and frustration, then undoubtedly a lot of other people would too. Therefore, we’re looking at how we can create a platform that would make the buying process as simple and convenient as possible, while educating the consumers at the same time.

CIJ: How does Lucida Club work?

Jack: It’s a concept of simplicity and convenience. There are two sides to this: The E-commerce side, when you sign up and become a member and you want to make a purchase, all you have to do is answer three questions: What experience do you want? Do you want to smoke something or not? And how much money what do you want to spend? We put together three experience packages with three key price points, around $100, around $150 and around $250.

It is based on available inventory, which products and price points match up with different packages. We have fully integrated with Flowhub and are doing the same thing with some other POS systems as well. We see the inventory for our retail partners on a live basis. When one of our members makes a purchase, if they choose the sleep, nonsmoking, $100 package and put that option in their cart, by the time it populates in their cart, our platform has already gone to the dispensary inventory, we’ve allocated their inventory by experience and by order preference. So it will put those top two or three or four items in the cart automatically. The consumer doesn’t have to worry about what brands are available.

We’ve done all the work for them. They just need to pay attention to what experience and price point they want and we take care of the rest.

The other side of our business involves our head curator who combs through all the inventories and manages the product selection. But he also works with with our members as a concierge. When you sign up for our service, you automatically get a free consultation with our head curator, which we encourage all of our members to do before they make their first purchase. That way, we can answer all your questions and make sure the package is really tailored towards you individually. You also get a follow up consultation, which helps to guide additional advice and make sure you get the experience you’re looking for. On top of that, we’re also trying to advance consumer education through a lot of content, answering common questions and help to guide consumers on their journey with cannabis and the role it can play in their lives.

CIJ: How do you think you are innovating the cannabis retail experience?

Jack: When I was sitting in the car that fateful day back in 2019, I looked at retail the same way everyone else does: you build a store, an e-commerce platform, you have a product you’re trying to sell and focus on the product itself. What opened my eyes being the consumer that day was that cannabis unique.

We’ve been told for decades about how bad cannabis is for us and for society and these negative connotations have been drilled in to us. We need to look at the retail space from the consumer’s perspective and the barriers to entry that they feel. It’s not something that a regular retailer can do easily.

By definition, a brick-and-mortar retailer, needs to be everything to everybody, for all of their customers. They have to work with the connoisseurs, the regulars that have been consuming for a long time, who really understand what they’re looking for. At the same time, they need to engage with the canna-curious, the newbie that’s walking in the door for the first time. It’s difficult to focus on one market segment for them. If they were to focus all of their efforts on just the canna-curious, they would be missing out and losing traction and not engaging properly with their other customer bases.

We have the ability to engage with a very specific market segment, the Cannacurious, which is a very large group of people by the numbers but still niche. Our research shows that there are at least 1.5 million Cannacurious in Massachusetts alone that are either sitting on the sidelines or engaging in the market in a very small way. We’ve spoken to a lot of people that have other people make purchases for them, their sister or brother going to a dispensary that feels comfortable picking up a single package of edibles for them. That’s a form of hand holding that we want to provide. We want to make consumers feel comfortable and educate them on how they can choose products for the experience they want.

In my mind when we look at the cannabis space, it’s about how we can help people come into the marketplace, how we can help open their eyes to a litany of other opportunities for them and also how to approach things from a consumer perspective.

CIJ: What do you think the future of retail in cannabis looks like?

Jack: That’s a tough question because so much of that is driven form a regulatory standpoint. I know where I think it would go if regulators were just there to make it easy for consumers and for everyone to do business. It changes so much state to state and market to market. In retail in general, so much is moving online and on to e-commerce. Where you have a situation where people actually understand what they want and they tend to buy the same products on a regular basis, e-commerce is great and easy for them to make a purchase. Delivery opens a lot of doors as well with that. But again, it’s really difficult to look at what is going to happen because the market is so fragmented from a regulatory standpoint.

It won’t develop in one direction easily. Delivery is an option but we don’t have it on a mass scale in Massachusetts. It’s the same with e-commerce. Technically in Massachusetts, purchasing online is not an easy thing to facilitate. It still has to be done at the point of sale in-person with pickup and it hampers e-commerce. This potentially slows down how the market could develop. I definitely know where it could go, but looking into that magic eight ball will still be very cloudy if you ask it for an answer. Sorry, I have to obfuscate things a little there because it’s just so hard to figure out what the regulators will greenlight next and where they want the market to go.

We really just don’t know. There are so many ways to look at that question. If you’re a brick-and-mortar dispensary right now and you’re looking at how the market itself is growing in the state of Massachusetts, it’s tough to say. We went from about sixty licensed retailers during the height of the pandemic to well over 200 now. There’s going to be some consolidation. Whether that means that the growth of MSOs will proliferate and everything will be homogenized going forward, I don’t know what that could mean because at the moment it’s very difficult to have that full homogenization when you’re only allowed to have a handful of retail licenses. How do any of the MSOs gain real traction with three locations? If that changes, if you go somewhere like Florida where the rules are different, you see the true growth of the MSO with dozens of retail locations. Here, we still have a lot of mom-and-pop retailers along with a lot of much smaller MSOs who might have locations in one or two other states.

E-commerce will bring a lot to the market and help brands grow significantly. How we grow depends almost entirely on what the regulatory environment looks like. There are so many different things we could do with our platform, but we are so hampered by the regulations in just this one market alone. We built our platform and business model the way we did because it allows us to be flexible and adapt. As we move into a new market, we can build relationships and new markets open up. It’s all about being flexible if you can be.

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.

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.