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Flower-Side Chats Part 7: A Q&A with Max Goldstein, CEO of Union Electric and Founding Partner at OpenNest Labs

By Aaron Green
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In this “Flower-Side Chats” series of articles, Green interviews integrated cannabis companies and flower brands that are bringing unique business models to the industry. Particular attention is focused on how these businesses integrate innovative practices in order to navigate a rapidly changing landscape of regulations, supply chain and consumer demand.

The California legal flower market is the largest in North America. According to recent BDSA data, monthly cannabis sales in January 2021 were $243.5 million. Flower sales represented 35.6% of overall sales, or about $87 million, representing a $1 billion yearly run rate for 2021 flower sales in California.

Union Electric was founded in California in 2020 as one of OpenNest Labs’ first incubator brands. Its model is uniquely asset-light, and focused on filling an area of opportunity with a consumer-first approach, aimed at an underserved market: the working-class customer. The name Union Electric was inspired by the punching-in and punching-out aspect of working a union job — more specifically, the average cannabis user’s job. The name also represents the brand’s union of stakeholders: Customers, cultivators and retailers alike, working together to provide affordable, quality products.

Max Goldstein is the CEO of Union Electric and Founding Partner at OpenNest Labs. Max incubated Union Electric at OpenNest Labs, a cannabis venture studio he helped co-found, and launched the brand in 2020 the day after COVID lockdowns began in California. Prior to Union Electric, Max worked at Google managing a 90 person, 12-market partnerships team.

Aaron Green: How did you get into the cannabis industry?

Max Goldstein: I’ve had a fun entrepreneurial and professional journey.  I started my career in my 20s with Google working in the marketing department sitting at the intersection of new product development and customers. During that time, I really learned the ins and outs of bringing products to market and building brands. I had to understand how to value and champion the customer, or the user. At Google, I was sitting at the intersection of people building products that are affecting billions of people’s lives and users and customers that potentially have really cool insights and feedback. It was an incredible learning experience. I was able to focus on what I’m good at, which is that early stage of businesses and most importantly, listening to the consumer and developing products and services that they ultimately really want.

Max Goldstein, CEO of Union Electric and Founding Partner at OpenNest Labs

Near the end of 2018, I co-founded OpenNest Labs, a cannabis venture studio. We came together as a four-person partnership to form OpenNest, as an assortment of skill sets, with all of us contributing an area of focus that we could really combine our experiences to take focused and concerted efforts at building brands that resonate with different consumers across various form factors in cannabis and health. My partner Tyler Wakstein has been in the cannabis industry for several years and helped launch the brand, hmbldt (which is now Dosist) and a number of other projects in the cannabis space.

Green: Was Union Electric an incubation project out of OpenNest?

Goldstein: Yes. Union Electric is the first project we incubated out of OpenNest. We launched the day after the pandemic. So, it was interesting timing.

At Union Electric we’re focused on the core, everyday consumer of cannabis. I think a lot of folks, particularly the new money that have come into the industry, have often focused on new form factors or things that they think the new cannabis consumer is going to enjoy or appreciate. Because quite frankly, that’s their level of familiarity with the industry. For us at Union Electric, we want to hit the end of the market with exactly what they want and that is high-potency, affordable flower with a brand that really stands for something and has values.

Union Electric is positioned as an advocate for the legal cannabis industry as a whole. We look at the stakeholders and the work that needs to be done across the board. The idea of just being one member of the value chain and not trying to ultimately uplift and elevate everyone in that value chain, it’s just not going to work in cannabis. We’ve seen a lot of people trying to go at this alone and I think the pandemic, if anything, showed that you’re only as good as your partners. We truly believe that the investment in our partners, in the local communities and everyone that’s really touching this industry is critical to ultimately building success for one company because a rising tide raises all ships.

Green: How did you settle on the name Union Electric?

Goldstein: One of the things that we wanted to do was focus the brand on who we see as the core consumer, which is somebody that is working hard, like a shift worker punching in and punching out and putting in the long hours on a daily basis and using cannabis as a critical part of their personal wellness and relief. There are elements of that which we certainly want to tap into. The “Union” represents our stakeholder approach, which is, all of us are in this together and our tagline “roll together” represents that. The “Electric” part is what we’ve seen cannabis sort of representing culturally, and for people more broadly. This is an exciting product that’s going to change a lot of people’s lives and, and I just don’t think there’s anything else in our lifetimes that we’re necessarily going to be able to work on from a consumer-packaged goods perspective, that’s going to change as many people’s lives. It’s electric. That’s how we came up with the name.

The coloring and a lot of the brand elements that we focused on were about providing transparency and simplicity to the marketplace: big font and bold colors. There are little nuances with our packaging, like providing a window just so people can see the flower on our bags. We look at the details and made sure that we’re ultimately out of the way of the consumer and what they want, but providing that vehicle that they’re really comfortable with.

Green: You have an asset-light business model, focusing on brand and partnerships. How did you come to that model?

Goldstein: I think everyone who’s operating and working in cannabis right now is looking at strategy and what the model is that’s going to work for them. We’re ultimately going to find out what works, which is why this industry is so fun and exciting. Our specific approach is really under the assumption that vertical integration in a market that’s maturing as quickly as California is going to be hard, if not impossible – it’s just too competitive. There are too many things going on in order to be successful in California. You have to be really good at cultivation, really good at manufacturing, really good at distribution, and then ultimately, you have to be able to tell a story of that process to ensure sell-through and that you really resonate with the consumer.

I think the big, missed opportunities that we’re seeing are that a lot of great cultivators are not marketers or storytellers. They really do need people that are there to help amplify and provide transparency to their stories. There are amazing stories out there of sacrifice and what cultivators have done to create a new strain. We all enjoy Gelato. What’s the process to make that happen or to create any other new strain? It’s fascinating. It’s too hard for a lot of these cultivators to go out and tell that story themselves. So, we act as a sales and marketing layer on top of the supply chain to provide visibility, transparency and trust with the consumer so that they know who grew their product, how it was grown, when it was cultivated and that they can build a real strong relationship with that cultivator as well.

It’s also hard to be a brand that’s using 19 different suppliers, selling the same genetics and expecting the same results. As an example, we’ve gotten Fatso from one of our partners, Natura. We’ve also gotten Fatso from Kind Op Corp (fka POSIBL). We renamed one of the strains – by adding a number on the end – just so that the consumer knew that we’re not saying that this is the same product, because it’s not. It’s from a different farmer and there’s going to be differences. While it does create a little bit more complexity for the consumer, we ultimately believe that every consumer has a right and will expect to know that type of information in the future.

Green: You launched Union Electric one day after the COVID lockdowns began in California. How did you navigate that landscape?

OpenNest Labs Logo

Goldstein: A lot of praying to the cannabis gods! It was really an incredibly challenging and difficult time. We were all concerned about the impacts of the virus. There were moments where we didn’t even know if dispensaries would be open, particularly in states that just legalized. You went from something being completely illegal to an essential business in 12 months. As a team, we were just trying to hold on to our hats and focus on product and partnerships.

Fortunately, with a brand like ours and the price point that we’re operating at, we just needed to consistently be on the shelves and available, and to be present with the bud tenders. So, we focused on that and shoring up our supply chain and just trying to wait it out. COVID forced a lot of cannabis companies to make a lot of decisions quickly and I think in some ways, because we have not been in the market for 24 months under one paradigm, we were pretty quick to be able to adjust and keep the team super lean to fit the emerging and rapidly changing environment. We learned a lot. We focused on partnerships and we leaned into the model that we set out to build which is being asset-light and focusing on the sell-through.

Green: I understand you have a 2% giveback program. Tell me about that.

Goldstein: The 2% giveback program was something that we wanted to put on the bag from day one. It’s on every bag that we made and put out into the market. We’ve seen a lot of cannabis companies come in and invest tens and hundreds of millions of dollars in infrastructure. Then, month 24 they realize “oh, crap, I gotta figure out what I’m going to do to get back and actually tap into the issues that are most important to cannabis consumers.” These are issues like social equity, equitable development of the industry, and ensuring that cannabis companies and its owners are active, responsible members of society.

What we’re going to focus on with our giveback program is working with our supply chain partners. We highlight the local communities, because when you look at the landscape in California, two thirds of its municipalities still don’t allow cannabis operations. We’re in a heart and minds battle still, even here in California, just proving that the operators here are not criminals and that they’re not going to bring negativity to local communities.

As we scale in California and scale to other states, the giveback program for us is a platform and a medium to work with our supply chain partners to make sure that we’re giving back and investing every step of the way. As founders and operators, it’s how we show that we are being mindful of the importance of equitable development of the industry. Ultimately, prosperity is going to come if everyone is getting a piece of the pie.

Green: What are you most interested in learning about?

Goldstein: I’m a student of history (I was a history major) and I was very fortunate to be part of a big evolution of technology development starting in 2011 working at Google and other tech companies. In some ways, this is the second generational industry that I’ve been a part of, and I have a lot of regrets about how the first one developed – not that I necessarily was the chief decision maker. The idea that large tech companies would always act responsibly (i.e. “Don’t be evil”) didn’t really pan out. I think it was an ignorant thought process as a person in my young 20s.

What I’m most interested in learning is: Can the cannabis industry develop consciously? Can you keep the greed and the things that bring industries down at bay? How can I, as an operator, be the best facilitator of that future? I’m always thinking how I can continue to bring in the people around us and around me as the CEO of Union Electric to ensure that we’re always focused on that.

Green: Great, that concludes the interview. Thank you, Max.

Goldstein: Thanks Aaron. 

From Union Electric: Union Electric Cannabis will be offering their first Regulation CF crowdfund raise in an effort to give everyday consumers a stake in one of California’s fast growing cannabis brands. Due to the ever-evolving legal status of cannabis in the US, there have been very few opportunities for individuals to invest early on in American cannabis brands. This decision to give everyday cannabis smokers access to investing in their favorite cannabis brand (for as little as $100) is a natural manifestation of Union Electric’s mission: Collective power and championing accessibility for the plant. You can learn more about their raise by visiting https://republic.co/union-electric

A Q&A with George Mancheril, Founder & CEO of Bespoke Financial

By Cannabis Industry Journal Staff
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Bespoke Financial was the first licensed FinTech lender focused on the legal cannabis industry. Founded in June of 2018, Bespoke offers four types of lending products: Invoice financing, inventory financing, purchase money financing and a general line of credit. With just over two years of originating loans to clients, they have benefitted from being a first mover in the cannabis lending space.

George Mancheril is the founder and CEO of Bespoke Financial. He has over fourteen years of experience in finance, with a special focus on asset-based lending, off balance sheet financing of commercial assets and structured credit. Following a stint with Goldman Sachs, he worked at Guggenheim Partners Investment Management’s Structured Credit Group in Los Angeles where he worked on structuring esoteric asset financing for a variety of commercial assets including airplanes, container leases and receivables.

Since 2018, Mancheril and his team at Bespoke Financial have deployed over $120 million in principal advances without any defaults and across eleven states. We sat down with Mancheril and asked him about the history of his business, how it’s been received so far and how the past few years of financial activity in the cannabis sector might shape the future.

Cannabis Industry Journal: What is Bespoke Financial in a nutshell?

George Mancheril: Bespoke Financial is the first licensed FinTech lender focused on the legal cannabis industry. Bespoke offers legal cannabis businesses revolving lines of credit that address the top problem in the industry – lack of access to non-dilutive, scalable financing to capitalize on growth opportunities and improve profitability. Due to the federal illegality of cannabis, traditional banking institutions cannot work with our clients even though these operators are working within the legal regulatory framework of their state. Bespoke solves this problem for businesses across the cannabis supply chain along with ancillary companies affected by the lack of access to traditional capital markets.

CIJ: How does your company help cannabis businesses?

George Mancheril, Founder & CEO of Bespoke Financial

Mancheril: Bespoke Financial offers 4 lending products – all are structured as a revolving line of credit but each allows our clients to access capital in a unique way based on their specific needs. Our Invoice Financing product, allows businesses to borrow capital against their Accounts Receivables in order to manage general business expenses, particularly if the borrower’s business growth is slowed due to a long cashflow conversion cycle. Inventory Financing and Purchase Money Financing allow our clients to finance payments to their vendors, which helps our clients achieve economies of scale by increasing their purchasing power. Lastly our general Line of Credit allows for the most flexibility for our clients to utilize our financing by either financing payments made directly to vendors or drawing funds into the client’s bank account to manage business expenses.

CIJ: I know the company is only a few years old, but can you tell me about your company’s success so far?

Mancheril: [Clarification, Bespoke was founded in June 2018 so we’ve been around for 3 years but we now have over 2 years of originating loans to clients.] Bespoke Financial has benefitted by being a first mover in the cannabis lending space as the first licensed lender specifically addressing the financing needs of cannabis operators, starting in early 2019. Over the past 2 years we have developed and refined our proprietary underwriting model to identify over 50 active clients spanning the entire cannabis supply chain. Since inception, Bespoke has deployed over $120 million in principal advances without any defaults to date and expanded our geographic footprint across 11 states. Our growth and success highlights our company’s expertise in structuring financing solutions which address the unique capital needs of cannabis companies.

CIJ: Can you discuss how the recent M&A activity, current and recent market trends, as well as the pandemic has affected your company’s growth?

Mancheril: The cannabis industry overcame a variety of challenges presented by the COVID-19 pandemic, ending the year with record sales in both new and existing markets. The support from state and local governments, evidenced by the industry’s essential business designation and the easing of regulations, coupled with increasing consumer adoption of cannabis combined to increase the industry’s demand for capital throughout the pandemic. Bespoke was well positioned to partner with cannabis companies across the supply chain and was proud to help our clients thrive during this pivotal period.

Jeeter was able to grow sales over 1,000% within the first year of working with Bespoke

Coming into 2021, the cannabis industry and investors shared a very positive outlook for the future based on the previous year’s experience and expectations of material easing of federal regulation. While M&A activity in the industry has increased over the past 6 months, the overall consensus has been that both the frequency of exit opportunities and the corresponding valuations will continue to increase as federal decriminalization opens new sources of capital and materially changes investors’ valuation assumptions. In general, we’ve seen cannabis companies focused on both capitalizing on the increasing opportunity presented by the industry’s organic growth and maximizing the benefits of future regulation changes by utilizing the resources and capital currently available to increase revenue, expand into new markets, and work towards profitability. All of these factors have further compounded the industry’s demand for financing and we expect to see continued growth in our lending activity in line with the industry’s growth.

CIJ: Who has been your most successful client?

Mancheril: We have a handful of cases studies and client success stories here on our website. One of the most exciting growth stories we have seen has been our client DreamFields whose in-house brand, Jeeter, is now the #1 pre-roll brand in the state of California. Prior to working with Bespoke, the brand was not ranked in the top 25 but was able to grow sales over 1,000% within the first year of working with us and achieve the #1 spot in their product category.

A Guide to Outsourcing Your Cannabis Delivery Service

By Claudia Post
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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. 

Payment processing can be a challenge in retail

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.

PlantTag
A plant tagged with a barcode and date for tracking

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.

Can Cannabis Get Even More Social?

By Mark Goldwell
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Cannabis has always had it tough when it comes to marketing. Part of it is simple logistics. A DTC playbook, heavily contingent on growing a brand’s audience and pushing folks to purchase products through digital marketing, isn’t a possibility for them. Despite its mainstream acceptance, most large ad platforms like Facebook and Instagram won’t touch it because of its tenuous legality. Banner ads don’t convert and only end up on specific platforms like Pornhub or Weedmaps anyway.

PlugPlay, a California cannabis brand, stays relevant with creative posts like these on Instagram

And because the legal status changes on a state-by-state basis, it’s extremely difficult for a brand to span across multiple markets. Just think: why would someone living in Florida care about a cool cannabis brand in Detroit if they weren’t in that industry or have ties to that state? This also makes influencer marketing tough because people aren’t finding the coolest people in their respective states to follow. They’re just finding people they think are interesting.

That leaves budtenders – point of sale experts – that hold a huge position of educating and steering folks towards products. Most folks are newer to cannabis – or cannabis has grown up a ton since their past casual experience with it. Budtenders offer an informative, hyper-local solution with extremely limited reach to a narrow market.

But the future shows promise. A new wave of platform marketing has emerged with new formats and lots of room to cultivate and grow for cannabis brands. With a little understanding of what’s driving the success of social media newcomers and evolving mainstays, cannabis companies can potentially find new avenues for marketing and brand-building success.

Going Native

There’s currently a lot of opportunity through the larger cannabis retail and native ordering apps – ones like Weedmaps, Leafly and others that have widespread brand recognition within the cannabis community and a growing array of social media-like features. These are places that already segment according to markets, with a built-in, educated audience open to creative approaches to branding and marketing.

These types of apps are also becoming the norm more and more. Especially since the pandemic, dispensaries are doing most of their volume through online orders and pickup. As a result, making sure you show up, look great and convey your unique position on these platforms is incredibly important.

Listening and Learning

Whether it’s Clubhouse or other upcoming rivals on the horizon, audio platforms are great because they can serve as a means to have an honest, direct and enlightening conversation about cannabis. This is great news for budtenders who can help a brand expand their reach by facilitating these sorts of conversational consumer relationships. As the cannabis market matures rapidly, people will need a safe place to normalize consumption, talk about dosage or about how normal consumers (not just stereotypical potheads, but every day, “constructive members of society”), are able to use cannabis effectively in their day-to-day lives.

A lot of other visually-based platforms are about curation or presentation of an ideal life and less about learning or sharing – a place where audio platforms can shine.

Old is New

In some cases, it’s not about just using new platforms but finding better ways to utilize old ones. For example, legal or not, a lot of folks are about discretion when it comes to their cannabis. They want to get questions answered and learn about brands and products via peers and experts, but they don’t want their bosses or grandparents knowing that they’re hitting a pen between meetings or before brunch.

That’s why time-based content platforms – Snapchat, Instagram, WhatsApp and others – that offer individuals and brands some measure of safety, as well as controlled messaging, will help continue to normalize cannabis.

Another non-cannabis example worth emulating is Psilodelic, a psilocybin gummy brand that’s super low-dose and decently branded, using Instagram in a creative way. Purposefully making their accounts private and going without a public hub, the only way to buy the product is to follow and DM them. “Hacking” the platform in this way means they have to shut down and open up new accounts all the time, but they’ve done an amazing job offering a product that, similarly to cannabis, is sometimes inaccessible, and have done it in a way that’s simple and feels more elite. That’s creative entrepreneurship.

In the end, using these changing platforms means approaching them as tools to foster a better relationship with people. The brands that succeed will have dead-simple instructions and information that really helps to empower folks to look at cannabis in a different way. Then, as we finally reach legalization, these brands will find themselves better equipped to step into the mainstream, confident in the meaningful relationships they’ve already cultivated.

Navigating the Complexities of Out-of-Home Cannabis Advertising Nationwide

By Matthew O’Connor
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Cannabis hit major milestones in the first half of 2021. Adult use cannabis is legal in five more states, bringing the total to 16 plus Washington D.C. In addition, two pieces of federal cannabis legislation were recently revived by Congress. Even with these developments, the cannabis industry faces an uphill climb to navigate state and local regulations levied on its sales, operations, taxes and advertising.

Advertising regulations present big hurdles for cannabis businesses to overcome. With cannabis illegal at the federal level, traditional advertising avenues like broadcast and radio are limited to the states where it is legal. Still, many networks won’t touch cannabis ads. Major tech companies like Google, YouTube and Facebook largely bar cannabis businesses from online marketing. With cannabis advertising laws that vary state to state, companies face a hodgepodge of regulations with little consistency.

So, how are brands working within this messy regulatory framework? They’re turning to out-of-home (OOH) advertising. Here’s what to know about legally advertising cannabis products and brands through outdoor media.

A state-by-state patchwork of regulations

Medicinal cannabis has been legal in California for more than two decades, and adult use cannabis is going on five years. Yet, debate rages on over how visible cannabis advertisements should be in daily life. This isn’t just happening in The Golden State. Other states like Colorado and Oregon with established legal cannabis industries continue to grapple with how to regulate cannabis advertising in print and outdoor formats. Not to mention that states just getting into the legalization arena are playing catch up to get rules and regulations in place.

With the right partner, cannabis companies can navigate the nation’s mélange of advertising regulations to share their products, services and marketplaces. The best online OOH buying platforms are even equipped with cannabis filters that seamlessly identify cannabis-compliant OOH ad inventory.

Growing and innovating with out-of-home advertising

This dispensary ad appeared on Variety.com

While it’s the oldest form of advertising, OOH is a far cry from an old-fashioned advertising avenue. It’s a hot, dynamic form of communication that is poised for big growth alongside the cannabis industry. Sure, OOH includes more traditional highway-side billboards. But it also spans eye-catching digital billboards, taxi-top advertisements, building wallscapes, and digital vehicle charging stations – all of which are accessible through OOH buying platforms.

Such platforms make it easy for cannabis brands to effectively target consumers compliantly. Brands like Cookies, Eaze, MedMen and MONOGRAM have launched laugh-inducing, Instagrammable, and thought-provoking campaigns to build brand awareness. The Northern-California brand Cookies has mastered the art of cross-product branding, building an entire clothing line around its brand. Real California Milk even got in on the fun with a dispensary-inspired pop up and an OOH media buy. With OOH, cannabis businesses have effectively connected adult consumers with their latest products, promotional offers and physical storefronts, but also sparked conversations about cannabis legalization and decriminalization.

What to consider when leveraging OOH for cannabis advertising

If you work in the cannabis industry, are an agency partner or a small-business owner managing the advertising process, here are some things to keep in mind when planning your OOH ads.

  • Know the rules of where you plan to advertise. This is a fast-moving space. New markets are coming online. Regulations are being established and challenged. It’s crucial to find industry partners who provide reliable, up-to-date information on the status of advertising rules in the markets you’re in so you stay compliant and don’t jeopardize your business license.
  • Both Ivyside and Weedmaps are featured on this page

    Get into the practicalities. What do local cannabis advertising rules mean for your brand? Are there regulations that impact more than the location of an OOH campaign? Rules on creative artwork or words that are banned? A guide to regulations is likely laid out at the state level (see the states of Illinois and Massachusetts), but will ultimately be governed by local municipalities (see the City of San Diego). There are workarounds here. Just because you can’t show people engaging in cannabis consumption, cannabis leaves or products, it doesn’t mean your creativity is limited. Look no further than Weedmaps. The company launched its Weed Facts campaign across hundreds of billboards in half a dozen or more markets to highlight the many benefits of cannabis. One read: “States that legalized marijuana had 25% fewer opioid deaths.”

  • Determine specific goals for your campaign. What do you want to achieve with an OOH campaign? Are you looking to build brand awareness? Share a new product? Drive foot traffic to a physical location or prompt customers to visit your website? Are you advocating for change? Laying out your goals will drive your creative and the locations in which you launch your campaign. Speaking of launching, with OOH – especially digital outdoor ads – your creative can be up and running in 48 hours. Outdoor ads are customizable and with location tools, verbiage and design, can be directed to a specific cross-section of the market.
  • Measure Success. Barring state and local regulations, the OOH possibilities for furthering and promoting your brand are almost endless. Once your campaign is launched, the right OOH buying platform will enable you to track goals and success. With the ability to track and isolate OOH, you’ll be able to attribute conversions, measure your return on investment, compare performance by unit and optimize your campaign.

As regulations at the local, state and federal levels change and evolve, OOH advertising will remain the tried-and-true standard for cannabis companies to get word out about their brand, market their products and drive traffic to their websites and storefronts.

Unnecessary Obstacles for the Canadian Edibles Market

By Steven Burton
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The edible cannabis market in Canada is still green. Delayed by a year from the legalization of dried flower, the edibles and extracts market poses significant opportunities for manufacturers. Edibles and extracts typically have higher profit margins than dried flower (“value-added” products) and consumer demand appears to be high and rising. So, what is causing trouble for cannabis companies trying to break into edibles and extracts? Below are four observations on the market potential of edibles in Canada.

Canada’s Edibles Market: The Numbers

In 2020, Canada – the largest national market in the world for cannabis products – grew more than 60%, largely as a result of the introduction of new products introduced in late 2019, often called “Cannabis 2.0,” which allowed the sale of derivative products like edibles. Deloitte estimates that the Canadian market for edibles and alternative cannabis products is worth $2.7 billion, with about half of that amount taken up by edibles and the rest distributed amongst cannabis-infused beverages, topicals, concentrates, tinctures and capsules. More recently, BDSA forecasts the size of the Canadian edibles market to triple in size by 2025 to about 8% of the total cannabis dollar sales.

Source: BDSA

In December 2020, the Government of Canada reported that edibles made up 20% of total cannabis sales; Statistics Canada data shows that 41.4% of Canadians who reported using cannabis in 2020 consumed edibles. While sales have gone up and down over the course of the COVID-19 pandemic, there are clear indications that there is a substantial demand for edibles and extract products, which can be consumed more discreetly, with greater dosage precision and with fewer adverse effects (as opposed to smoking).

While sales of regulated edibles products continue to grow, edibles, extracts and topicals sales in Canada are facing a similar problem as dried flower sales: inventory growth is outpacing sales. Unsold stock sitting in inventory is growing at a dramatic pace, showing a clear lag in demand for these products on the legal market. How do we understand this contradiction?

1) Complex Regulatory Standards are a Major Barrier

Cannabis edibles compound the already existing problems around the conceptualization of cannabis products regulation. How should it work? Edibles can be considered in any of the following categories:

  • Cannabis as a pharmaceutical with medical application. Requires strict dosage and packaging requirements;
  • CBD as a nutraceutical with health benefits claimed. Requires specific nutraceutical regulations be followed;
  • Food product to be consumed. Must comply with food safety regulations around biological, chemical, physical hazards through a risk-based preventive control program. A full supply chain and ready-to-recall based system of regulatory standards need to be followed.

Incorporating elements from each of these three regulatory regimes into a single regulatory standards body is a confusing logistical and compliance challenge for both the regulators, and the producers and retailers of the product.

In mid-2019, the Government of Canada released the Good Production Practices Guide for Cannabis. This merged cannabis-specific regulations with food safety-specific regulations. Rigorous food safety requirements were combined with equally rigorous cannabis production and processing requirements, resulting in extremely laborious, detailed and specific regulations. These span everything from building design and maintenance, to pest control, to employee sanitation, to traceability – at all levels of the process. Navigating these regulations is a challenge, especially for many smaller producers who lack the necessary resources, like automation technology, to devote to understanding and tracking compliance.

2) Low Dosage Regulations Give an Edge to the Illicit Market

When edibles were legalized, THC dosage was capped at 10mg per package. For more experienced consumers, especially those who are dealing with chronic pain and other medical needs, this limit is far too low – and the unregulated market is more than able to fill this gap. One analyst from Brightfield pointed out that the dosage restriction, in combination with other regulations, will make it harder for the edibles market to grow in Canada.

It also makes the unregulated market almost impossible to beat. Barely more than half of cannabis consumers in Canada buy exclusively from government-licensed retailers, while 20% say that they will only buy unregulated products. According to a Deloitte report, 32% of legacy cannabis consumers said that unregulated products were better quality, and 21% reported that they preferred unlicensed products because there were more options available. Almost half of respondents also reported that quality was the biggest factor that would cause them to switch to regulated sources, and 28% said that higher THC content would prompt them to switch.

3) There is a Big Price Disparity between Legal and Illicit Edibles

As a result of dosage requirements and other factors, price per gram of regulated edible product is much higher than that of flower, unregulated edibles and edibles available through regulated medical distributors.

If you take the BC Cannabis Store’s price for Peach Mango Chews as an example: a 2pc package is $5.99. Since the dosage limits at 10mg per package, that’s the equivalent of $0.60/mg or $600/gram. A quick Google search reveals that an easily available edible from a medical cannabis distributor contains 300mg of THC and sells for $19.00, a price of $63.00/gram.

That means that not only is 10mg too low a dose for many users to achieve the result they were looking for, but the dosage restriction also makes the products less attractive from both a nutrition and cost standpoint. Deloitte reportsthat higher prices is the reason that 76% of long-time cannabis consumers continued to purchase from unregulated sources. The regulated industry as a whole is missing its legal market opportunity, where consumers prefer a lower price product with a greater range of dosage availability.

4) The Range of Products Available is Too Limited for Consumers

For most of 2020, chocolate edibles were the dominant product in this category in the Canadian market, garnering 65% of all edibles sales. But is this reflective of consumer wants? Despite a demand for other kinds of edibles like the ever-popular gummies, there are still only a few edible brands that offer the range of products consumers are asking for. According to research from Headset, there are 12 manufacturers in Canada making edibles but only two of them produce gummies. In comparison, 187 brands make gummies in the United States.

While some of this delay is likely due to the long licensing process in Canada and the newness of the market, there are other factors that make it challenging to bring a variety of products to market. The province of Quebec, Canada’s second-largest province, has banned the sale of edibles that resemble candies, confections, or desserts that could be attractive to children – giving yet another edge to unregulated sellers who can also capitalize on illegal marketing that copies from existing candy brands like Maynard’s.

When companies do want to introduce new products or advertise improvements to existing product lines, they are restricted by stringent requirements for packaging and marketing, making it harder to raise brand awareness for their products in both the legal and unregulated markets. Industry players are also complaining about government restrictions on consumers taste-testing products, which further compounds challenges of getting the right products to market.

In the meantime, illicit producers have also shown themselves to be savvy in their strategies to capture consumers. It is not uncommon to find illicit products packaged in extremely convincing counterfeit packaging complete with fake excise stamps. New consumers may assume the product they are purchasing is legal. Availability of delivery options for higher dosage, lower price illicit products is also widespread. All of this adds up to significant competition, even if it were easier to meet regulatory requirements.

Conclusion: Significant Room for Growth Remains Limited by Government Regulations

These four challenges are significant, but there are a number of opportunities that present themselves alongside them. A year and a half into the legalization of edibles, cannabis companies are getting a better picture of what Canadian consumers want and low dosages are proving to be desirable for Canadian consumers in some areas.

Some of the many infused products on the market today

In particular, sales of cannabinoid-infused beverages far outpaced other edibles categories last year, likely tied to the availability of these products in stores over the summer of 2020. BDSA’s research has shown that, in contrast with American consumers, the lower THC dosage for cannabis beverages is an advantage for Canadian consumers. Major alcohol brands like Molson Coors and Constellation Brands are investing heavily in this growing product area – though there the dosage limits also apply to how many products a consumer can buy at a time.

At the same time, the large quantity of unsold cannabis flower sitting in storage also poses an opportunity. While its quality as a smokeable product may have degraded, this biomass can be repurposed into extracts and edibles. Health Canada has also shown some responsiveness to industry needs when it shifted its stance to allow for Modified Atmosphere Packaging (MAP), which will help improve shelf life of products.

While strict regulatory obstacles remain, challenges will continue to outweigh opportunities and the illicit market will remain a strong player in the edibles market. As regulations become clearer and producers become more accustomed to navigating the legal space, barriers to entry into the regulated cannabis market and specifically the extracts and edibles market, will decrease. Meanwhile, those getting into the edibles market will do well to be wary of the challenges ahead.

Connecticut Legalizes Cannabis

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Update: Governor Ned Lamont has signed S.B. 1201 into law, officially legalizing cannabis in the state of Connecticut

On June 16, 2021, the Connecticut House of Representatives voted to pass their version of S.B. 1201, a bill that legalizes adult use cannabis. Following the House’s approval of the changes, the bill made its way back to the Senate on June 17, where they approved all changes. It now heads to the Governor’s desk, where Gov. Ned Lamont is expected to sign it into law.

Connecticut Governor Ned Lamont

With Gov. Lamont’s signature, Connecticut will become the 19th state in the country to legalize adult use cannabis. The bill is slated to go into effect on July 1, just a couple of weeks away.

Come July 1, adults in Connecticut can legally possess up to 1.5 ounces of cannabis in public and up to five ounces at their home. The bill allows for adults to grow at home, just not until 2023 unless you are an existing patient registered in the medical program.

According to the Marijuana Policy Project (MPP), the bill will expunge cannabis records for low-level crimes and puts “the bulk of excise tax revenues into a Social Equity and Innovation Fund, which will be used to promote a diverse cannabis industry and reinvest in hard-hit communities.” Half of the cannabis business licenses issued will go to social equity applicants that can receive funding, workforce training and other types of assistance from the program.

Connecticut state flag

DeVaughn Ward, senior legislative counsel at MPP, says the bill includes provisions to repair harm done by the prohibition of cannabis. “The Connecticut Legislature’s commitment to legalizing cannabis through a justice-centered approach is commendable,” says Ward. “For decades, cannabis prohibition and criminalization has harmed some of the state’s most vulnerable communities. This bill not only ends this failed and unjust policy, but it also includes measures that will work to repair the harm that it has caused. This state will be a model for others to follow.”

The bill includes strong protections for employees, tenants and students by limiting discriminatory actions based on positive drug tests. It also dedicates 25% of tax revenue from cannabis to go toward mental health and substance use treatment.

Interestingly, the bill has a THC cap in it. Cannabis flower sold at dispensaries is capped at 30% THC content and concentrates (except for vape carts) are capped at 60% THC. To read more about the nuances of the legislation, the MPP has a helpful summary of the bill you can find here.

Flower-Side Chats Part 6: A Q&A with Fabian Monaco, CEO of Gage Cannabis

By Aaron Green
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In this “Flower-Side Chats” series of articles, Green interviews integrated cannabis companies and flower brands that are bringing unique business models to the industry. Particular attention is focused on how these businesses integrate innovative practices in order to navigate a rapidly changing landscape of regulatory, supply chain and consumer demand.

The Michigan cannabis market is making pace with big time cannabis players like California (#1) and Colorado (#2). For the first quarter of 2021, combined cannabis sales in Michigan were nearly $360 million. At that pace, Michigan could see combined sales of $1.4 billion — well outpacing 2020 sales of $984 million.

Gage is the exclusive cultivator and retailer of world-leading cannabis brands including Cookies, Lemonnade, Runtz, Grandiflora, SLANG Worldwide, OG Raskal, and its own proprietary Gage brand portfolio in Michigan. The company recently secured a $50M investment in an oversubscribed round which included a $20M investment from JW Asset Management.

We spoke with Fabian Monaco, CEO of Gage Cannabis. Fabian started Gage in 2017 after meeting his operating partners in Michigan. Prior to Gage, Fabian worked as an investment banker racking up a number of firsts in cannabis industry financing and M&A transactions.

Aaron Green: Tell me how you got involved in the cannabis industry.

Fabian Monaco: My background is in investment banking – specifically 10 years of capital market experience. I was fortunate enough to be part of the initial team that brought Tweed, now Canopy Growth public. In fact, I worked on a lot of firsts in the industry: the first acquisition, the first $100 million financing, the first IPO in the space. Shortly after that, I went to XIB Financial, which co-founded Canopy Rivers with Canopy Growth. I was working on that when I encountered these two phenomenal operators. At the time, I had visited over 100 of these cultivation facilities and these were some of the best operators in the business. So that led me to start Gage in 2017.

Green: Where is Gage currently operating?

Fabian Monaco, CEO of Gage Cannabis

Monaco: In the U.S., we are purely operating in Michigan. We do have a licensing agreement with a small producer in Canada, so you will see the brand there.

Green: Tell me about your choice to settle the company in Michigan initially?

Monaco: If you look at Michigan as a historical cannabis market, it was the second largest cannabis market from a medical card holder standpoint for nearly a decade, only behind California. This was probably the case until 2019, where they went to adult use. So, for us, we knew this medical base was going to be a great platform to an outsized adult-use market. And already we see that April was $154 million in sales, adding up to over a $1.8 billion dollar run rate. That’s the third highest run rate in the country, only behind California and Colorado.

Green: What is it that makes Michigan different? You talked about medical cannabis already. Is there anything else about the demographics in Michigan or the consumer base that makes Michigan special in that sense?

Monaco: In Michigan, over 70% of the population is old enough to consume. So, when you take a look at how much of the population is 21-years-old plus, relative to other markets, the total addressable market in Michigan is just huge. Then when you take a look at their consumption habits, especially when it comes to flower, Michigan is consuming some of the highest amounts on a per capita basis. Those two stats set up a scenario where we foresaw the potential of the market. To be honest, the market has exceeded our expectations. We didn’t think it would be this strong this quickly. Right now, the state is looking to be a $3 billion market by 2024 – and it could easily surpass that.

Green: Any plans for expansion beyond Michigan?

Monaco: We’ve been to eight or so different states in the past 60 or 75 days really trying to educate ourselves on the licensing structure, the markets there and the key players in those respective markets. What are some of the costs, in terms of acquisitions? We really want to branch out the Gage brand into other states across the US. The thing is, we believe in the model that Trulieve deployed. They really focus on being the number one player in a very, very big market. For instance, Trulieve is obviously one of the top players in Florida. We’re trying to mimic that strategy.

Trulieve is a dominant market force in Florida

Once we have that deep market penetration, that market share, then we’ll start to get into other states. But for now, why would you want to go and rush out to another state when you’re already in the third largest market in the country?

Green: Are there any criteria you look for in a potential expansion state?

Monaco: We look at consumption habits. We want states with similar demographics to Michigan. Close proximity states also allows us to quickly go from one state to the other without having to take a multi-hour flight to get there. States we’re considering are Northeast and Midwest states, like Illinois, Pennsylvania, Ohio, New Jersey, Massachusetts and Maryland.

Green: What kind of consumer trends are you seeing in Michigan as it relates to products?

Monaco: Flower continues to dominate. In a market like Michigan, we have some of the top flower consumers in the country on a per capita basis. We specialize in flower and flower only, so this created a perfect scenario where we are able to ramp up our brand quite quickly, from a flower standpoint.

Now that we have that brand equity, that brand power, we are going to potentially delve into other categories, including extract-based products, such as vape carts and concentrates. You hear talk about these new beverages, but we’re not seeing that take off in this market as much as people think it would. Flower still remains at the top and that’s something we highly anticipate going after for quite some time.

Green: Can you tell me about your vertical integration strategy?

Monaco: We’re one of the larger retail portfolios in Michigan right now. We have 13 locations. Nine are operational. So, we’re really in a great spot overall in terms of how big of a platform we do have – one of the larger ones – and, frankly, in one of the larger markets in the country.

The Cookies flagship dispensary in Detroit, Michigan

We actually have a little bit of a unique scenario on the cultivation side of things. We have our own three cultivation assets that are going to be producing, on average, about 1,000 pounds of product over the next couple of months as they fully ramp up. We’ve actually contracted out a lot of our cultivation. Cultivation is time consuming, and it’s also very, very costly to build out. Luckily for us, we’re a really well-established and strong brand. We had the opportunity to contract out our growing. So, we have 10 different contract growth partners. These are phenomenal cultivators, again, some of the best in the state. They grow Gage and Cookies branded product for us. We have a great breakdown from a financial standpoint. We share the retail revenue with them on a 50/50 basis. They pay a little bit too, for packaging and testing. So, basically for $0 we’re getting product on the shelf where we’re achieving 50% plus gross margins. It’s a phenomenal setup for us on the cultivation side where we went from two cultivation assets in the latter half of last year to now eight different cultivation assets, moving to 13 by the end of the year.

On the processing side, we’re just actually finishing our processing lab. We should have extract-based products launched in Q3. We’re really excited to have our own line of extract-based products. We plan to focus on vape carts to start – a very popular category in Michigan on the retail side of things.

Green: Are those cultivations all indoor?

Monaco: Yes, we’re big proponents of indoor flower. It allows us to control the quality of our flavors and consistency in our strains when we grow indoors. From our consumers, there is a very strong demand for indoor grown high-premium, high-quality products.

Green: What sets Gage apart from other competitors in Michigan?

Monaco: I think focus. We just focused on our flower. We focus on our post-production process. We hang dry everything, we hand trim everything, and we hand package everything. That’s a little bit more time consuming. It’s a little more costly. But all that effort shows in the end product which is key.

A lot of people think you can grow great quality product, you cut it down, you dry it and put it in the pack and it’s going to be great. You really need a strong attention to detail, especially in a big consuming market like Michigan, because again, they are a refined consumer. They’re looking for the best. They’ve already been consuming some of the best quality products in the country for many years now. So for us, we put a painstaking process in place for flower production, not only from the growing standpoint, but also through the end of that post production process.

Ancillary to our cultivation process is also consistently providing new varieties of flavors on the flower side of things to the consumers. When you look at the successful brands in California, what makes them special is that they’re consistently pheno hunting, coming out with new flavors. This is similar to the wine industry where the best wineries come out with a new kind of grape or mix and consumers get excited, they rush out and buy half a dozen bottles or a dozen bottles.

It’s a very similar scenario in the cannabis industry. I hate when people say that cannabis is a commoditized industry. It’s so far from the truth. You look at brands like us or Cookies, Jungle Boyz and you can see their constant innovation, their constant drive. They are always bringing something new for the consumers to try. That’s what really sets apart the best brands.

Green: What’s got your attention in the cannabis industry? What are you interested in learning more about?

Monaco: I’m always intrigued with new ways of consuming. Across the U.S. and well-developed markets like California and Colorado, you see all these interesting new ways to consume the product. You’ve got patches, sublingual strips, etc. There are so many unique ways. I am currently seeing how they play out. Are they fads? Do people get excited about them initially, and then go back to their vape carts, pens and typically dried flower pre-rolls? I’m always trying to educate myself to see what’s on the market. What’s new? Who has a new drink? How does it hit? Are people excited about it?

Also, I am constantly learning about new brands that come out. There are so many new small brands that don’t necessarily have the scale or the capital to really expand, but are producing some of the best products in the country in a cool, unique form of packaging, etc..

Green: Alright, great. That concludes the interview!

Monaco: Thanks, Aaron.

The Importance of Smart Cannabis Packaging

By John Shearman
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Regardless of their size, all consumer package brands spend a significant amount of money and resources on packaging to attract consumers’ attention. We are all very visually oriented and gravitate to items that pique our interests. Cannabis brands are no exception when it comes to branding their products. Packaging plays a big part in carrying their brand forward and standing out on the dispensary shelves. When I was in Las Vegas at a CBD tradeshow in early 2020, I visited a dispensary, and it was beautiful. I remember commenting to a colleague that was with me how spectacular the product packaging was in the glass cases. One had unique artwork on each different product they offered, and it was indeed art. Yes, I did purchase this one that pulled me in.

The cannabis industry in the United States presents a challenge to brands because there is no overall federal guidance for packaging. Each state is controlling the cannabis legislation and, with it, the packaging guidelines. So multi-state operators (MSOs) have to manage each state as a separate entity and abide by the packaging regulations, which is not very efficient and adds a cost burden. As the industry matures and becomes federally legal across the country, packaging regulations will be easier to implement.

Louis Vuitton bags are one of the many goods that are commonly counterfeited
Image: UK Home Office, Flickr

Let’s take a look at counterfeit products across all product categories. There is a significant global problem with counterfeits, as articulated by the below statistics.

The total global trade in fakes is estimated at around $4.5 trillion. 

Fake luxury merchandise accounts for 60% to 70% of that amount, ahead of pharmaceuticals, entertainment products and representing perhaps a quarter of the estimated $1.2 trillion total trade in luxury goods.

Digital plays a big role in this and perhaps 40% of the sales in luxury fakes take place online.

Customs and Border Patrol confiscated $1.3 billion worth of counterfeit goods in the U.S. for Fiscal Year 2020. (The value of 2020’s seizures are actually down compared to the $1.5 billion worth of counterfeit goods seized by CBP in 2019).

Unfortunately, the figures above are concerning, and the cannabis industry will face the same counterfeit issues that will add to these stats in the future. What can be done to help fight the problem and alleviate the pain for cannabis brands? Smart technology.

The trend towards “smart technology” varies by sector, but the underlying concept involves building levels of technology systems designed to impede or limit the highly sophisticated counterfeiter from replicating or replacing products. These levels typically include a forensic level control on the product, digital systems to track the material and customer facing systems to articulate the underlying value to the consumer.

Building these levels of smart technology into cannabis-products and packaging allows consumers to authenticate real versus fake, and in the case often in cannabis, legal versus illegal. Molecular technology is one forensic level of control option that can be used as a unique identifier for product authentication. Each brand would get its unique identifier to apply to the raw materials that make up its product, such as oil or an isolate. Then a sample can be tested at the origin point and subsequent nodes in the supply chain using a remote testing device. All the digital data is captured in a secure cloud database for traceability and transparency to the end consumer, to show them the authenticity of the product they are consuming. The same molecular technology can be applied to the ink or varnish for packaging and labels. A great application to help combat counterfeits and product diversion across the globe.

Counterfeiters can create near duplicate versions of the original

Another engaging platform is called StrainSecure by TruTrace Technologies. Their SAAS platform allows cannabis manufacturers to track all their product batches and SKUs tied to a blockchain. It also facilitates the interaction between the manufacturer and third-party testing facilities to conduct product testing and reporting. The data is captured within the platform, and with easy access dashboard views, it provides the insights to authenticate products at any time.

A company out of Australia called Laava is producing a product called Smart Fingerprints. It’s the next evolution of QR codes. The Smart Fingerprints can be applied to each package, providing a unique identifier that consumers can read with a mobile phone application. The consumer is provided with information concerning the product’s authenticity and any additional information the brand wants to share with the user. Smart Fingerprints are a great example of customer engagement at the point of activity that is secure.

The above three solutions show the availability of advanced technologies the cannabis industry can implement on its packaging and products to ensure authentic and safe products are sold to consumers. It provides consumers with vital information and insights about products so they can make informed buying decisions. There is no one silver bullet solution that provides all the answers. As with every high value product, counterfeiters will work to create near duplicate versions of the original until it becomes unsustainable to do so. It will take a technology ecosystem to seamlessly connect and provide actuate and timely information between supply chain partners and ultimately the end consumer. As the US works to separate the legal from illegal production for both the adult use and medical supply of cannabis, the looming challenge will be on protecting and communicating authenticity, packaging will be the first step in this.

Growing the Seed of Sale: Integrating Security with Business Opportunity

By Ryan Schonfeld
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Anyone in the cannabis industry is well aware that theft of crops can economically devastate a grower. Security is critical, and thankfully, growers and dispensaries have many tools available to protect their investment. There is simply no excuse for not having a solid security posture to keep your business in compliance, from public-private partnerships to advanced security tools – in fact, it’s required in most jurisdictions.

In 2020, nationwide cannabis sales increased 67%, and support for legal marijuana reached an all-time high of 68%. New Frontier Data found that U.S. legal cannabis market is projected to double to $41.5 billion by 2025.

The industry’s advancement impacts numerous areas such as job and tax revenue creation and providing a wide variety of valuable opportunities. For cannabis facilities to keep up with the market expansion and experience success, they must face two significant challenges: achieving adequate security and efficient business operations. Though both can be seen as separate concerns, growers and producers must merge processes and solutions to tackle the issue as a whole.

Dispensaries are prime targets for burglary. Defending your storefront requires a comprehensive security plan

Along with rapid growth, dispensaries face traditional security risks, such as workplace violence and retail theft, while cybersecurity risks have also become more prevalent. These potential issues make it clear that the stakes are high, and as the potential impact on a business rises, the need for real-time, predictive response increases. Insider threats are another issue plaguing the industry when you look at the rate of theft, diversion and burglary that is attributable to employees.

The cannabis market is complex: it’s expanding rapidly, has to meet essential regulatory requirements and faces high-security risks. Therefore, security needs to be looked at holistically since it can be challenging to determine where a potential threat may originate.

With security top of mind, it is critical to move away from responsive behaviors and seek ways to manage security in a manner that gets ahead of threats, prevent them before they happen and respond to them in real-time. But does a grower or retailer have the time and expertise to manage all this while keeping an eye on how security affects the business?

Remote Security Operations

The ability to comply with government regulations and protect a valuable cannabis crop at all stages of its journey from seed to sale makes security systems a mission-critical asset for cannabis growers. Security operations centers create a safer and more productive environment and provide state-of-the-art tools to protect employees, retail locations and grow facilities. But some businesses in the cannabis market may not have the resources or space to have their centralized security operations, leading them to piece-meal security together or do the best with what they can afford at the time. Running these facilities can also be prohibitively expensive.

Security operations centers create a safer and more productive environment and provide state-of-the-art tools to protect employees, retail locations and grow facilities.

But new options take the process of security off the table. The business can focus on the growth of its core functions. Remote security operations services allow companies to take advantage of advanced security services typically only possible in larger enterprise environments. These services are offered on a subscription basis, delivered through the cloud, and are entirely customizable to detect risks unique to your business operations while saving each company significant expense.

Centralized security operations centers leverage intelligent tools, standard operating procedures and proven analytic methods to provide cannabis facilities with the information and guidance necessary to mitigate issues like retail or grow theft before they can have a significant impact.

The integrated, holistic response center staffed by experienced operators and security experts delivers a comprehensive security and regulatory compliance method. This approach is designed to provide complete data about what is happening across a cannabis business, from seed to sale, and how individual events can impact the company as a whole. As a result, stakeholders get the security intelligence they need, without the high overhead, personnel investments and complex daily management.

For those businesses in the cannabis market looking to supplement their security operations with other workforce but may not have the budget or infrastructure to do so, remote security operations services are something you should consider. With the experts handling all the heavy lifting, leaders can focus on growth. And, right now, in the cannabis industry, the sky is the limit in terms of opportunity.