Tag Archives: Focus Article

Are Triploids The Next Big Thing In Cultivation?

By Pam Chmiel
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It all starts with genetics. The possibilities for manipulating the cannabis plant through breeding and cultivation are expanding rapidly, and advancements in methods for achieving optimal plant expression are accelerating as the industry moves into 2026. Breeders and cultivators are increasingly banding together to share knowledge and resources, while high-tech equipment and analytical tools are being deployed to deepen understanding of the plant’s biochemistry.

As cultivation operations scale, operators are looking for ways to achieve higher yields, stronger plant vigor, improved disease resistance, and, most importantly, consistent outcomes from plant to plant. One approach is polyploid breeding, specifically the development of triploid cannabis plants.

John Keating, founder of Tesoro Genetics and leader of the genetics program at Advanced Nutrients, has been at the forefront of this effort. While triploids are widely used in large-scale agriculture, most consumers unknowingly encounter them in seedless fruits like watermelon and bananas. The approach remains relatively new to the cannabis industry and far from simple to execute.

According to Keating, his team spent several years refining the process before achieving reliable results and launching a line of triploid seeds at MJBiz 2025. I sat down with him to better understand how triploid cannabis works, why it matters for commercial cultivation, and what it could mean for the future of genetic innovation in the industry.

To understand why triploids are gaining traction, it helps to start with a basic explanation of ploidy.

Diploids, Triploids, and Tetraploids—Explained

Most plants, including cannabis, are diploid, meaning they carry two sets of chromosomes (2N)—one inherited from each parent, Keating explains. Each chromosome contains genes, and each gene exists in two copies, known as alleles, which influence traits such as plant morphology, cannabinoid production, and secondary metabolite expression.

During normal reproduction, a diploid plant produces gametes—pollen and ovules—that each contain a single set of chromosomes (1N). When pollen and ovule fuse during fertilization, those chromosome sets recombine, restoring the diploid state (2N) in the embryo.

“That’s the standard biological cycle,” Keating says. “You split the genetic material in half to make gametes, then bring it back together to rebuild the diploid organism.”

Polyploid breeding intentionally disrupts that cycle.

According to Keating, breeders can induce chromosome doubling in a diploid plant to create a tetraploid (4N) plant with four sets of chromosomes. Crossing that tetraploid with a standard diploid produces a triploid (3N) offspring.

 

Why Extra Chromosomes Matter

Changing the number of chromosome sets has immediate effects at the cellular level.

Polyploid plants, particularly tetraploids, have larger cells than diploid plants, Keating explains. Larger cells often correlate with larger leaves, thicker stems, and bigger flowers. More importantly for cannabis, polyploidy increases gene dosage, meaning the number of copies of key biosynthetic genes available for expression.

As Keating points out, the genes responsible for cannabinoid biosynthesis—THCA synthase and CBDA synthase—are located on chromosome 7 and are present in two copies in a diploid plant. In a tetraploid plant, there may be four.

“If all four copies are THCA synthase, you’ve got a strong THC producer,” Keating says. “If they’re all CBDA, you’ve got a CBD-dominant plant. Or you can have a mix, which produces a mixed cannabinoid profile.”

With more copies of these synthase genes available, the plant has a greater capacity to produce cannabinoids and other secondary metabolites, such as terpenes and flavonoids.

 

Where Triploids Create Commercial Value

While tetraploids offer enhanced metabolic potential, Keating says triploids are often the commercial end goal.

Triploid plants are typically sterile or near-sterile, meaning they produce little to no viable pollen or seeds. For cultivators, this can significantly reduce the risk of accidental pollination, one of the most persistent threats to flower quality in commercial facilities.

“When you remove reproductive pressure,” Keating explains, “the plant can redirect more energy toward resin production and secondary metabolites.”

That combination of enhanced gene dosage from polyploid breeding and the operational benefits of sterility is why Keating and other advanced breeders believe triploid cannabis could represent the next major leap in cultivation.

 

Where Triploid Breeding Can Go Wrong

While triploid cannabis holds significant promise, John Keating cautions that polyploid breeding is inherently unstable if it’s not executed carefully, which is why many efforts fail.

The first challenge arises at the tetraploid stage. When breeders force a diploid plant (2N) into a tetraploid state (4N), they’re pushing the plant into a condition it does not naturally want to maintain. Cells become larger, chromosome density increases, and unless every cell successfully converts to tetraploidy, the plant can end up as a mixoploid, a mosaic of diploid and tetraploid cells.

“That mixed state is a problem,” Keating explains. “Because diploidy is the plant’s natural condition, any remaining diploid cells can eventually dominate.” Over time, that instability can cause the plant to revert toward diploidy, undermining the entire breeding effort.

Gene dosage compounds the risk. Doubling chromosomes increases the

number of all genes, potentially amplifying undesirable traits. If a plant carries latent issues, such as a tendency toward hermaphroditism, those traits can become more pronounced when additional gene copies are introduced.

According to Keating, breeders who push lines too aggressively to maintain tetraploidy can also encounter low germination rates, inbreeding depression, and inconsistent phenotypes. The physiological stress of maintaining an enlarged cellular state appears to increase the likelihood that these problems will surface.

The key, he says, is stabilization.

Successfully working with polyploid cannabis requires time, repeated selection, and careful environmental management to allow plants to adapt to their new ploidy level.

 

Early Results—and What Still Needs to Be Proven

Despite the challenges, Keating says the performance gains he’s seen in commercial settings are incredible.

According to Keating, triploid cannabis consistently shows increases in potency and yield. While not confirmed, he plans to work with a research university to investigate whether polyploid plants develop thicker trichome walls that could help retain volatile secondary metabolites after harvest.

“That’s a big deal if true,” Keating says. “Terpenes and other secondary metabolites off-gas hard and fast once the plant is cut. If the trichome structure is physically holding more of that in, that has major implications for post-harvest quality.”

While that hypothesis still needs peer-reviewed validation, Keating says yield improvements are already showing up clearly at scale.

“What we’ve seen with the plants we’ve actually released into the world is dramatic increases in yield,” he explains. In multiple large-scale cultivation environments—not just isolated test lights—operators are reporting production levels approaching six pounds per light, a benchmark Keating says he had previously only heard discussed in theory.

“This isn’t one light or two lights,” he adds. “This is happening across larger facilities.”

The team plans to enter into clone licensing agreements with major players in different regions and work hand in hand with them. We plan to keep it limited, because we don’t want to flood the market like what happened with Blue Dream. As for seeds, they are producing rock-solid batches. We’ve picked our favorite ones that perform across all environments, are high-yielding, and have great appeal.

 

For the future, Keating says we will see double haploids, genuine F1s, further polyploidy, and rapid modification via gene editing.

Listen to John Keating talk about their work with triploids on the Innovating Cannabis Podcast.

 

 

 

New York’s Cannabis Boom Is Real, But So Are the Risks

By Hirsh Jain
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The Most Exciting US Market 

No cannabis market in the United States has experienced a more compelling growth trajectory over the past two years than New York. After a halting and often-criticized launch, the state’s legal adult-use market has accelerated at an unmatched pace. 

In 2023, New York generated a paltry $100 million in legal cannabis sales, far short of its expected market potential of (at least) $5 billion. In 2024, that figure expanded to approximately $900 million, nearly a tenfold increase. By 2025, sales climbed again to almost $1.8 billion, nearly doubling year over year.

Looking ahead, cannabis sales have the potential to approach $2.5 billion in 2026, reinforcing New York’s position as the most exciting growth market in U.S. cannabis. But rapid growth at the market level does not guarantee success for individual operators. 

In fact, the very forces driving New York’s expansion are also introducing a set of structural risks that cannabis businesses must be prepared to navigate.

Growth Fueled by Store Proliferation, and the Consequences

New York’s sales surge has been driven primarily by the rapid expansion of retail access. At the start of 2024, the state had approximately 50 licensed dispensaries open for business, far too few to adequately serve a state with a population of 20 million people.

By the end of 2024, that number had grown to more than 275 dispensaries, more than a fivefold increase. That torrid growth continued the next year; by the end of 2025, there were more than 525 dispensaries open in New York. Projections suggest the state will have more than 750 licensed stores by the end of 2026.

This dramatic increase in storefronts has undeniably improved consumer access, grown the legal market, and helped displace illicit sales. But it has also begun to strain retail economics. According to the New York Office of Cannabis Management (OCM), annualized retail sales per store declined from roughly $5 million in Q3 and Q4 of 2024 to approximately $3.8 million in Q2 and Q3 of 2025. 

Whether this decline persists remains to be seen. And it may be that there are other factors besides additional dispensaries driving the reduction in per-store sales. However, the recent decline has been significant and suggests that competition on a per-store basis may be intensifying faster than demand is growing.

If so, the implication is clear: simply opening a dispensary is no longer sufficient for financial success in New York. Retailers now face a much more competitive environment in which weak business practices, poor inventory management, undifferentiated product selection, or subpar customer experience can quickly threaten viability. 

The next phase of New York’s market will reward operators who invest in brand, service quality, and customer loyalty, and punish those who assume market growth alone will carry them forward.

Supply-Chain Risk and the Danger of a Credit Bubble

Notably, retail pressure may not stay confined to the retail tier. As some New York dispensaries struggle to maintain margins and cash flow, downstream effects are already emerging. In some cases, retailers have fallen behind on payments to distributors and manufacturers, creating stress across the cannabis supply chain.

The industry has seen this movie before. In California, the collapse of distributor HERBL in 2023 sent shockwaves through the market, leaving cultivators and manufacturers with millions in unpaid receivables. Many of these businesses ended up folding along with HERBL.

Perhaps this is too alarmist. New York, one might argue, is not California. But the risk is analogous. Some distributors in New York are already reporting difficulties collecting from retailers, raising concerns about a potential credit bubble forming beneath the surface of the market’s headline growth.

As such, all participants (retailers, distributors, brands) need to exercise caution in choosing partners, setting payment terms, and managing credit exposure. Growth without discipline can quickly become destabilizing, especially in a young market where balance sheets are still fragile. 

At a minimum, New York operators should monitor the OCM delinquency list, also known as the “C.O.D.” (cash on delivery) list, to identify businesses that have failed to pay suppliers on time and help ensure they do not become entangled with business partners that are not creditworthy.

Discounting Comes With Rules

In November 2025, New York’s Cannabis Control Board (CCB) approved updated marketing rules that allow dispensaries, for the first time, to offer traditional retail promotions, including discounts, coupons, loyalty programs, reward points, bundled pricing, and temporary sales. As they face increased competition, New York retailers may attempt to remain competitive through this newly allowed practice of discounting. 

But discounting in New York is far from a free-for-all, and operators who misunderstand the rules risk costly compliance violations. For instance, cannabis products may not be sold below their “market value”, defined as the minimum retail price, set at 1.5 times the wholesale price paid by the retailer for the discounted product. 

In addition, when a product is discounted, the retail excise tax must still be calculated on the pre-discounted price. If a $10 item is discounted to, say, $8, the excise tax is still applicable to the pre-discounted price of $10.

This requirement means retailers must ensure their POS systems are properly configured to handle discounted pricing without underpaying taxes. This is a nontrivial operational challenge for businesses already stretched thin.

The Illicit Market Still Looms Large

Even as the legal market grows in New York, the continued presence of unlicensed cannabis retailers remains a major threat to legal operators. Illicit stores continue to siphon demand, depress legal prices, and undermine the regulated market’s ability to fully realize its potential. 

By the OCM’s own admission, enforcement against illicit cannabis operators stalled in 2025 – with just 2,017 “enforcement actions” undertaken in 2025, compared to 5,215 such actions undertaken in 2024. 

The OCM has cited the completion of a well-funded 2024 multi-agency enforcement task force as a key reason for the dip in enforcement in 2025. This lack of enforcement against unlicensed activity helps explain much of the 25% decline in annualized retail sales per store – from $5 million to $3.8 million – that occurred in New York in 2025.

Given this concerning reality, legal operators must immediately press policymakers, particularly Governor Kathy Hochul and New York City Mayor Zohran Mamdani, to enforce existing laws against illegal cannabis sales. Such a commitment was glaringly absent from Governor Hochul’s “State of The State” address on January 13th, where other cannabis priorities were mentioned but New York’s growing illicit cannabis market was not.

And the case for enforcement should not be framed solely as an industry concern. Under the Marijuana Regulation and Taxation Act (MRTA), passed with much fanfare in March 2021, legal cannabis tax revenue is earmarked for non-profits, community organizations, and social programs. And so, any lapse in enforcement that politicians enable directly jeopardizes those commitments.

Legal cannabis businesses should be proactive in communicating this message, in partnership with the local non-profits and social organizations that depend on cannabis tax revenue. Working together, these parties should make clear that enforcement against illegal activity is essential to delivering on the social justice goals that political leaders like Governor Hochul and Mayor Mamdani so frequently and poetically invoke in their discussion of cannabis policy on the campaign trail.

And they should make clear that rhetoric alone is not enough from politicians. They must insist, vocally, that sustained enforcement is the only way to protect the legal cannabis supply chain and the long-promised public benefits tied to it.

METRC, Product Inversion, and the Integrity of the Supply Chain

Another looming challenge is the continued risk of product inversion, cannabis from outside New York entering the legal supply chain. This threatens compliant operators, particularly in-state brands that are already operating with limited capital and thin margins.

The ongoing implementation of METRC, currently being challenged by a recently filed lawsuit, is essential to protecting the integrity of New York’s market. But it must be handled carefully. 

Going forward, the state needs to provide operators, especially smaller ones, with adequate guidance, training, and technical support to comply with the METRC system. A chaotic or poorly supported rollout could disrupt the supply chain and inflict irreparable harm on businesses that are attempting to follow the rules.

At the same time, indefinite delays in METRC implementation would prove problematic. Without a fully operational track-and-trace system, bad actors will be able to continue to invert illegal product and legal operators would be disproportionately harmed. New York must thread the needle: implementing METRC effectively, without perpetual delay, while ensuring it does not become another unintended obstacle to legal commerce.

In addition, S.8951, a bill recently introduced by Senator Jeremy Cooney, can also help keep illicit cannabis out of New York’s regulated market. As the Empire State Green Standard Alliance, which advocates for New York cannabis consumers, has noted, the bill clearly defines cannabis inversion, makes it explicitly illegal, and backs enforcement with real consequences, including major financial penalties, license revocation, lab accountability, personal liability for responsible executives, and strong whistleblower protections.

Taken together, these measures, if successfully implemented, can help address the inversion that has tainted New York’s legal cannabis market.

A Market Worth Betting On, With Eyes Wide Open

The growth in New York’s cannabis market over the past two years has been extraordinary, and the runway ahead remains long. But this is no longer a market where every operator will rise with the tide. The next phase will separate disciplined, well-capitalized, customer-focused businesses from those unprepared for competition, compliance, and financial pressure.

For operators willing to navigate these challenges thoughtfully, New York remains one of the most important cannabis opportunities in America. For those who mistake growth for inevitability, it may prove far less forgiving.

New Study Shows Chromatin Accessibility as Key Factor in Cannabis Potency and Flavor

Genetics determines cannabis potency, flavor, and therapeutic value. Choose the right cultivar, stabilize the right traits, and the chemistry will follow. But a new in-depth biological study suggests that genetics may be only part of the equation.

A recent study published in Frontiers in Plant Science reveals that chromatin accessibility—an epigenetic mechanism that determines whether genes are “open” or “closed”—can significantly influence cannabinoid and flavonoid production, as well as trichome density, without altering the plant’s DNA. In other words, two genetically identical plants can perform very differently depending on how their genes are expressed.

These findings highlight a layer of plant biology that could redefine the next frontier in cannabis production.

 

Genetics vs. Epigenetics: Why Some Plants Outperform Others

To understand the study’s impact, it helps to distinguish between genetics and epigenetics.

  • Genetics determines which genes a plant has
  • Epigenetics determines whether those genes are accessible and active

Chromatin—the structure that packages DNA—can exist in either an “open” or “closed” state. When chromatin is open, transcription machinery can access genes and turn them on. When it’s closed, even high-value genes may remain largely silent.

The researchers liken this to a cookbook: owning a recipe doesn’t matter if the page is stuck shut.

 

Inside the Study: Comparing High- and Low-Trichome Cannabis

The research team analyzed two industrial hemp cultivars with starkly different characteristics:

  • One cultivar with dense glandular trichomes
  • One cultivar with sparse trichomes and lower secondary metabolite content

They used an integrated “multi-omics” approach, combining:

  • Metabolomics (what compounds the plant actually produces)
  • Transcriptomics (RNA-seq) (which genes were expressed)
  • ATAC-seq (which regions of the genome were epigenetically accessible)

The goal: determine not just what differed between the plants, but why.

 

How This Differs From Tissue Culture and Genetic “Cleanup”

Tissue culture is already a foundational tool in modern cannabis breeding and propagation. Breeders routinely use micropropagation and meristem culture to eliminate pathogens such as viruses and viroids, stabilize elite cultivars, and preserve valuable genetics over time.

That process addresses plant health and genetic integrity. Epigenetic regulation, by contrast, addresses plant performance.

When a cultivar is cleaned through tissue culture, its DNA sequence remains unchanged, but that does not guarantee consistent expression of cannabinoids, flavonoids, or trichome density once the plant is grown at scale. Two plants derived from the same clean mother can still exhibit markedly different chemical profiles depending on how their genes are activated during development.

This is where the new research adds an important layer of understanding.

The study shows that chromatin accessibility—an epigenetic mechanism—determines whether key metabolic pathways are actually switched on, even when the underlying genetics are identical and disease-free. In high-performing plants, chromatin surrounding flavonoid biosynthesis and trichome development genes is more “open,” allowing those genes to be expressed at higher levels. In lower-performing plants, the same genes exist but remain less accessible.

Simply put, tissue culture ensures breeders are starting with a clean, stable genetic foundation. Epigenetics helps explain why that foundation does not always translate into consistent potency, flavor, or secondary metabolite richness in commercial production.

Rather than replacing tissue culture, epigenetic insights are an opportunity to manipulate a plant’s performance and increase its value. They suggest that the next frontier for breeders and cultivators may lie not only in preserving elite genetics, but also in understanding how cultivation conditions, plant hormones, and developmental cues influence chromatin state and, ultimately, chemical output.

 

Flavonoids: Directly Controlled by Chromatin Accessibility

One of the clearest findings involved flavonoids, compounds that contribute to color, aroma, antioxidant activity, and therapeutic nuance.

In the high-trichome cultivar:

  • Chromatin surrounding flavonoid biosynthesis genes was significantly more open
  • These genes showed higher expression levels
  • Flavonoids such as kaempferol and quercetin derivatives accumulated at much higher levels

In other words, chromatin accessibility directly governed flavonoid production. When the chromatin opened, the chemistry followed.

For brands focused on full-spectrum formulations or flavor-forward products, this finding is particularly significant.

Cannabinoids: An Indirect Epigenetic Effect

Cannabinoid regulation turned out to be more complex.

While cannabinoid levels (including THC-related compounds and cannabichromene) were higher in the high-trichome cultivar, the chromatin accessibility of the core cannabinoid synthase genes (such as CBDAS and OAC) was not dramatically different between cultivars.

Instead, epigenetics influenced cannabinoids indirectly by activating pathways that control:

  • Fatty acid biosynthesis (key cannabinoid precursors)
  • Glandular trichome initiation and density
  • Flowering and jasmonate hormone signaling

The takeaway: epigenetics doesn’t just control the “factory,” it controls the supply chain and factory size.

More precursors, more trichomes, and greater flowering activity ultimately led to higher cannabinoid accumulation.

Trichome Density is a Critical Epigenetic Lever

Because cannabinoids are synthesized and stored in glandular trichomes, trichome density is a decisive factor in potency.

The study found that genes responsible for trichome development—such as GLABRA2—were both:

  • More epigenetically accessible
  • More highly expressed

Hormone-responsive genes tied to methyl jasmonate (MeJA), a known trichome stimulant, were also epigenetically activated in the high-performing cultivar.

This suggests that epigenetic regulation of trichome development may be one of the most powerful levers for increasing cannabinoid yield.

 

Why This Matters for the Cannabis Industry

 

For cultivators

The findings help explain why identical genetics can perform differently across environments. Light spectrum, stress, hormones, and cultivation practices may influence chromatin state—and therefore chemical output.

For breeders

The study points to epigenetic markers that could complement genetic selection.

For brands and formulators

This research adds scientific weight to the “entourage effect,” showing that chemical complexity is biologically coordinated rather than accidental. It also supports investment in cultivars bred for consistent metabolite expression, not just headline THC numbers.

Cannabis Quality Just Took A Step Up

Ultimately, the study reframes cannabis richness as a three-layer system:

Chromatin accessibility → gene expression → metabolite production.

Rather than asking only which genes a plant carries, the industry may increasingly need to ask which genes are accessible—and under what conditions.

 

 

 

 

Platform Launches Insurance Coverage for Medical Cannabis

A Cleveland-based health-tech company, EM2P2, has launched a platform that could change how Americans pay for medical cannabis. Its new product, CannaLnx, claims to make cannabis care reimbursable, compliant, and accessible by finally allowing patients to apply health-benefit dollars toward cannabis purchases in legal states.

Developed as the exclusive tech partner of the American Council of Cannabis Medicine (ACCM), a “member-first health network,” CannaLnx serves as the technology backbone of ACCM’s Elevated States initiative, which is rolling out this month through licensed insurance brokers ahead of open enrollment. The program enables patients to receive monthly reimbursements, typically $100 to $175, for medical cannabis and related doctor visits.

 

How It Works

Unlike previous attempts to blend cannabis and healthcare, CannaLnx doesn’t sell insurance or create new plans. It’s a technology layer that connects existing health insurance plans and wellness benefits programs via a secure, HIPAA-compliant platform.

The legal and operational foundation runs through third-party administrators (TPAs)—companies already licensed to manage wellness benefits under traditional insurance. These TPAs bundle standard health insurance from major carriers with supplemental wellness benefits. Inside that package sits a monthly stipend, which can be applied to qualified therapeutic expenses, including medical cannabis, in states where such purchases are legal.

When a patient submits a reimbursement claim through CannaLnx, the platform validates the patient’s eligibility, purchase, and physician authorization under state law, then securely routes the claim to the TPA for reimbursement. The TPA—not the insurance carrier—funds and administers the stipend, keeping the process compliant and shielded from federal exposure.

 

“It’s private, state-compliant, and auditable,” says EM2P2 CEO Gennaro Luce. “No taxpayer money. No federal entanglements. No creative accounting.”

 

Bridging Cannabis and Healthcare

This model allows individuals, families, gig workers, and even Fortune 500 companies to offer medical-cannabis benefits as part of broader wellness packages. It’s available across all 39 states where legal medical cannabis programs can integrate into ERISA and health-sharing plans.

In other words, CannaLnx isn’t a workaround—it’s a structurally legal bridge. “We don’t bend or avoid rules; we work within the rules that exist,” says Luce. “CannaLnx’s role is to ensure those rules are followed.”

By integrating with electronic medical records and dispensary point-of-sale systems, the platform makes reimbursement traceable and compliant, giving dispensaries verified patient transactions and offering employers and brokers a way to meet growing demand without taking on federal risk.

 

Early Adoption and Industry Impact

Early partners include TPAs such as Detego Health, 90 Degrees, and Iron Health, as well as broker groups like United Agencies, which are already onboarding employers for the program.

“This is the first time brokers can offer transparent, compliant health-benefit programs that include medical cannabis,” says John Miller, program director at United Agencies. “It brings structure and accountability to an industry that has long needed it.”

The ACCM, which has long advocated for national medical-cannabis integration, says the collaboration represents a turning point. “This is the digital backbone behind a new chapter in medical cannabis,” says Scott Rancie, ACCM spokesperson. “It’s how we finally connect patients, providers, and dispensaries to legitimate, regulated health-benefit programs.”

 

A Step Toward Normalization

The CannaLnx platform may not represent the final form of cannabis coverage, but it could mark the beginning of mainstream adoption. By fitting cannabis into the same benefit frameworks that already cover acupuncture, fitness stipends, or smoking-cessation programs, CannaLnx positions itself as the first fully compliant bridge between healthcare and cannabis.

“We’re proving reimbursement can be done transparently, lawfully, and at scale,” says Luce.

 

Listen to the podcast interview with Mathew Rothman, CannaLynx Chief Science Officer, to learn more about the cannabis health insurance program.

Treating Cannabis Like A Fine Wine

By Sean Creamer
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The experience in both wine and cannabis starts with ritual: swirling, inhaling, letting heat or air coax the plant’s chemistry to life. Where wine has long relied on sommeliers to guide that moment, cannabis has spent decades without an equivalent voice to explain how cultivation, curing, and preparation shape what a consumer feels.

The emergence of the Ganjier is an attempt to fill that gap. Created by a group of cultivators, hashmakers, historians, and retailers, including figures like Kevin Jodrey, Swami Chaitanya, Nick Tanem, and Derek Gilman, the Ganjier Council is designed to professionalize cannabis evaluation and service. Think of it as the cannabis world’s version of the Court of Master Sommeliers: a certification built around sensory training, product knowledge, and the language needed to communicate quality.

Reverence for process is exactly what the Ganjier certification program aims to formalize. Kevin Jodrey, the renowned cultivator and original architect of the curriculum, describes Ganjiers as interpreters. “Ganjiers fit into the conversation as translators, somebody who clarifies language, so that when you say something to me, and I say something to someone else, it means the same thing.” It mirrors the work of sommeliers, a comparison Jodrey makes explicitly: “That’s really what sommeliers do, they translate wine into language that allows people to understand what to expect.”

As legalization accelerates and price compression pushes products toward uniformity, this shared language, the ability to turn sensory experience into common understanding, may be cannabis’s most powerful differentiator.

 

Meet the Experts Teaching the World to Taste Cannabis like Fine Wine

The modern Ganjier began as something far more personal. Jodrey recalls its earliest moment taking shape at home. “The Ganjier was invented in my kitchen. My son came up with the name, he said, ‘Dad, you’re a Ganjier, you’re a cannabis culturalist. You’re all things cannabis.’” What started as a family nickname soon resonated more widely. As legalization gained momentum, Green Flower founders Max Simon and Derek Gilman approached Jodrey with a proposal. “They came to me and said, Hey, Kev, we have an idea that we would like to create a program that highlights the nuances of cannabis in a way that allows the complex world to be brought to light so that customers, new people, consumers can see the picture in a way they haven’t.”

Shaping that clarity took work. Over several years, Jodrey and a team of eighteen practitioners debated how to define cannabis quality in a way that could stand the test of time. “It allowed the 18 of us, over the course of  7,000 hours in a multi-year period, to brawl it out and determine how to look at something in an objective manner. It was an idea of how to create cannabis connoisseurship that has a hundred-year life.”

Tanem, a California-based hashmaker and founding Ganjier Council member, remembers how the Council ultimately formed around that mission. “Derrick Gilman collected a number of us professionals that had skill sets in different areas throughout the industry, from breeding to cultivation to the law to history to extraction, you name it. The goal was to cover all bases via a program that would teach what quality is in cannabis. “People don’t really know how to assess quality, and so that’s a big part of what the Ganjier does,” said Tanem. “We really give a full background of the industry, from cultivation to law to the history to extraction to customer interaction protocols, etc.”

The path cannabis is now traveling mirrors the evolution of other connoisseur markets. Jocelyn Sheltraw, founder of The Budist, a cannabis scoring and education platform, notes that wine, beer, and coffee all matured through codification. “It’s just understanding how other connoisseur markets have evolved, and really studying the history of how consumers come to appreciate products. Whether you look at wine, beer, or coffee, they all use the same 100-point system created by Robert Parker in the late 1970s and early 1980s.” 

She emphasizes that no scoring system gains traction without guidance for interpreting it. “It took the Sherpas, it took the educators to translate that to consumers across all of those industries.” Competitions and community forums also played a role. “Competitions were a major part of drawing light on quality, and the oldest wine competition in the United States actually dates back to the 1850s.” 

Cannabis is now following the same arc, with its own judging culture, from legacy region cups to large-scale events like the upcoming MJBiz Con awards on December 2nd-5th, which bring brands, cultivators, and reviewers under one roof to evaluate products on shared terms. Cannabis connoisseurship is now entering that same phase: a shift from tradition held in pockets to a shared, teachable system of evaluation. The Ganjier is its first attempt at building a unified language.

Training and the Craft of Evaluation

If the origins of the Ganjier reflect cannabis culture’s past, the curriculum represents its future. The program is designed to function much like formal wine education, combining sensory discipline, technical learning, and service training. Students work through extensive online modules and then take part in in-person instruction led by multiple council members with different palates and professional backgrounds. 

Tanem describes the value of that diversity. “Students who come through the Ganjier program not only do two days of in-person training, but they also do anywhere from two weeks to two years of online training where they go through all of the different aspects of the industry.” Once students come out for the in-person class, there are four or five instructors or council members who provide different opinions and education. “For instance, from Swami [Chaitanya], who wants a smoother smoke and a well-cured product he calls vintage, to people like myself who have the ears to the streets,” said Tanem. “We have a lot of council members that are in retail today, in cultivation, in extraction. Having that variation in how we present what quality is, because quality can be subjective.”

A major part of that training is undoing the industry’s fixation on THC percentage. “We teach away from promoting high THC products,” Tanem says. “People want the highest THC, and we really want to educate people against that. We talk about the other volatile compounds, from sulfurs to esters to terpenes. There is a lot more to cannabis than just high THC numbers.”

The structure for this deeper analysis comes through the Systematic Assessment Protocol, or SAP, the sensory backbone of the curriculum. Jodrey explains it as a guided way to evaluate cannabis in stages. “The SAP is basically a digital scorecard with criteria that, when you touch the category, allows you to understand what this category is and how we look at it.” First up, according to Jodrey, is aroma, followed by appearance, then combustion or flavor, and then experience. The approach distinguishes between objective traits and subjective preferences. “Very volatile cannabis indicates good storage and good production,” he notes. “But a variety with low aroma might be perfect for someone who lives with their family, and the smell of pot offends them.”

Even outside the formal Ganjier curriculum, people who cultivate, process, and evaluate cannabis are running into the same limitation: combustion obscures the very subtleties the SAP is designed to measure. Former cultivator and current PAX Labs VP of Marketing Justin Tacy says this was a constant frustration long before he ever entered the device world. 

“As a cultivator, it was always frustrating to have people take what I spent years and years developing and just throw it in a bong and rip the whole gram in one go,” said Tacy. “That gives you the psychoactive effects, but it doesn’t really give you appreciation for the nuances around different terpenes and flavors.” 

Glassware and devices in cannabis are a crucial vehicle for connoisseurship. The same way wine glass design affects aroma delivery and perception, the tools used to consume cannabis can either sharpen or blunt the sensory experience. 

“It [dry air vaporization] really allows you to taste the genetics the way the cultivator intended, and pick up some of those more nuanced effects that only come from vaporizing certain terpenes versus combusting them,” Tacy noted. 

The point underscores a larger shift within cannabis connoisseurship, which is how you smoke matters. Just as glassware shapes how wine expresses its structure, the way flower is heated determines which compounds rise to the surface and which are muted or lost. That emphasis on controlled, repeatable sensory experience is exactly what the Ganjier SAP aims to formalize. 

“Wine is picking up complexity and notes and creating identification so people can understand,” Jodrey says. “We provide that, but we also provide other factors that wine does not have, which are the sustainability of aroma and penetration of aroma.” 

Behind the scenes, the Council built the curriculum piece by piece. “We broke this thing into pieces: cannabis science, law, history, retail, cultivation.” The team then went and found the people who fit into all those pieces, enabling the creation of the curriculum. “The Ganjier is a book; we all wrote a couple of chapters each in this book,” said Jodrey. “We created a common respect that was collaborative, and it was a golden time to create a language that we knew would hold up.”

That language now feeds into the broader connoisseurship ecosystem. Sheltraw describes the relationship between the Ganjier program and consumer platforms like The Budist. “Ganjier is the educational platform, equivalent of the sommelier program. Budist is the commercial platform where you apply that knowledge. Budist would then be the Wine Advocate, or Budist would be Vivino.” She emphasizes the importance of consistent judging methods. 

The SAP supplies the structure behind those evaluations. “With the SAP, there are 50 different data points. You are looking at trichome density, bud texture, and the complexity of flavors and aromas. Just to assess one flower can easily take over an hour.” And at the consumer level, the system becomes more approachable. “At Budist, we still use that same 100 point system, like all of these other major industries, but simplified for consumers. There are really four key attributes: aroma, appearance, flavor, and effect.”

Together, these elements turn the Ganjier curriculum into something much larger than a training course. It is a shared methodology, one that moves cannabis evaluation away from potency myths and toward a transparent, structured language of quality.

How Ganjiers Will Reshape Retail, Cultivation, and Brand Strategy

The rise of the Ganjier is beginning to reshape how cannabis is bought, taught, and experienced. What started as a sensory certification is now influencing every corner of the industry, from retail counters to events to tourism. 

“We are now having Bud Bars at weddings and events instead of alcohol bars, where Ganjier would be the budtender at a Bud Bar at a wedding,” Tanem said. “We are also seeing Ganjier in so many different spaces and aspects of the industry from buyers for dispensaries to QC to the head of distro, the head of sales departments, lead cultivation techs, and femmers [A femmer is someone who carries out the processes used to create feminized cannabis seeds, typically through controlled stress techniques, colloidal silver sprays, or silver thiosulfate (STS) applications that suppress male flower development.].  Tanem notes that recreational smokers and industry participants want to become Ganjiers for a whole host of reasons. 

As such, the credential has begun to create its own global community. “Every single time I go out in the field, whether I am in Hawaii or Barcelona or Berlin or Thailand, I will pull up at an event, and there are other Ganjiers there, and it is a congregation. They know each other; they can build from that,” Tanem says. These gatherings reinforce a shared standard, which then filters back into consumer education.

But even as connoisseurship gains ground, most consumers still operate via narrow decision-making looks built around potency, price, and whatever happens to be familiar. Without time or instruction at the point of sale, people default to what they know, a pattern that obscures the meaningful aspects of quality. Tacy, who spent a decade cultivating flower before joining PAX, sees this as one of the industry’s largest hurdles. 

“The market rushed to easy-to-understand numbers, high THC, weight, and maybe the color of the product, ” said Tacy. “Those are driving a lot of the industry versus what’s the value and experience you’re getting for that dollar.”

The point echoes what Ganjiers confront daily: as long as potency remains a stand-in for quality, the nuances cultivators labor to express remain out of reach for consumers. 

Jodrey frames the market context driving this need for guidance. Disposable income controls the purchase. Ninety to ninety-five percent of all purchases in cannabis are fundamentally price-driven,” he said. Education becomes the tool that helps consumers choose based on fit rather than strength or discount. Retail environments are already adjusting. “What you have to do is create a situation that lets people feel relaxed, and Ganjiers help you understand what is available in the world of cannabis so you can make better choices. That changes entire businesses,” said Jodrey. 

This vision aligns with the broader consumer landscape that Sheltraw sees emerging. “It will be very similar to what we see in wine. You are going to see your Ganjier working at cannabis retail, and as tourism evolves, you will see Ganjiers at farms educating consumers.” That presence will be omnichannel. “Wherever the consumer is, whether it is digital, social, dispensaries, or farms, we are going to see Ganjiers assisting customers.” Consumer knowledge is limited, and people are doing what they’ve done in the past; consumers are purchasing based on price point and THC level. Professional evaluation helps bridge that gap, and brands are beginning to realize that connoisseurship can also be a strategy. “Brands in cannabis recognize that this can be the impact of what we are doing to get out of this price and potency trap,” says Sheltraw. 

In a market where sameness is easy and differentiation is hard, the Ganjier offers something rare: a way to raise the value of cannabis through understanding, story, and experience.

Cheers!

The same rituals that open a glass of wine or a jar of cured flower remind us that tasting is as much interpretation as it is sensation. 

As cannabis moves from prohibition to professionalism, the Ganjier represents the shift from novelty to craft, from a scattered vocabulary to a shared one. Nick Tanem sees that future taking shape as new markets mature and consumers search for guidance on quality. Kevin Jodrey frames it even more directly. 

“The Ganjier is just really meant to create a language, fundamentally a language, that everyone speaks from store to store. So that when you say a strain does this, it translates to that somewhere else. It is language. It is understanding.” In that understanding lies the foundation of cannabis connoisseurship espoused by the Ganjier Council.

Get your Ganjier certificate here.

Hear more from Kevin Jodrey on the Inovating Cannabis Podcast.

Hear more from Nick Tanem on the Innovating Cannabis Podcast.

 

The Fight Against New York’s METRC Monopoly Heats Up

By Jason Ambrosino
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There is a growing fear among New York cannabis operators that the lawsuit challenging Metrc’s Retail ID program will “kill track and trace” and return the state to the chaos of inversion and inventory failures experienced last year.

That fear is understandable. It is also wrong.

Retail ID is not track-and-trace. Retail ID is a financing mechanism, and understanding how we arrived at this makes that clear.

How We Got Here

New York did not design its cannabis compliance system around Metrc.

The original seed-to-sale contract was awarded to BioTrack, whose system—like every other mature cannabis jurisdiction—tracked cannabis at the lot and batch level, not the individual retail unit. BioTrack’s New York implementation was fully digital and did not rely on physical RFID-based identifiers.

Under that contract, BioTrack was permitted to charge $0.10 per digital identifier, explicitly tied to:

  • lots,
  • batches,
  • and packages.

That $0.10 was understood to be a cost-recovery fee, intended to help maintain servers and software—not a profit center and not a tax on every gram sold. BioTrack bid and won the contract on that basis.

Then BioTrack exited the market, and Metrc acquired the New York contract.

This is the inflection point that matters.

 

Metrc’s Problem Was Never Safety — It Was Contract Math

Metrc was and is a batch-based company.

In 2024, Metrc announced a new product, Retail ID, a unit-level serialization layer that immediately faced resistance nationwide and has not been successfully rolled out at scale anywhere. New York is the first—and only—state where Retail ID has been made mandatory. Functionally, New York is the test market.

When Metrc stepped into the New York contract, it inherited a system with three immovable constraints:

  • The digital ID fee was capped at $0.10,
  • Physical tag markups were restricted,
  • and the state did not fund ongoing system operations.

At the same time, Metrc introduced physical RFID tagging to a system that had none before. This created a new vendor choke point that did not exist under BioTrack and introduced significant operational and logistical burdens for license holders.

Critically, Metrc could not charge its usual rate for physical RFID tags. The $0.10 fee likely covers little more than manufacturing cost—if that—while licensees pay shipping and handling. The limited contract funding tied to the original bid was nowhere near sufficient to operate a physical-tag-based system at New York’s scale.

The contract, as written and priced, is not economically viable.

Retail ID was the escape hatch.

By pushing a reinterpretation of New York’s pre-established regulatory definitions—specifically expanding “lot” and “batch” to include individual retail units—Metrc could claim it was merely providing the same digital identifier BioTrack once provided, while “giving away” the physical RFID tag. In reality, this reinterpretation transformed the $0.10 digital ID from a marginal cost-recovery fee into the primary revenue driver of the entire contract, multiplied by hundreds of thousands or millions of units.

Retail ID did not emerge from a safety study. It did not follow a recall failure. It was not demanded by law enforcement.

It emerged because the contract could not otherwise be made to work.

 

Track-and-Trace Worked Before Retail ID — and It Still Can

This is the point most operators need to hear clearly:

Track-and-trace does not depend on Retail ID.

Track-and-trace has always relied on:

  • batch integrity,
  • package custody,
  • transfer manifests,
  • physical segregation,
  • and audits.

That is how recalls work in every other state. That is how they worked in New York before Retail ID. That is how they will work if Retail ID is removed.

The inversion and inventory failures New York experienced six months ago were caused by:

  • system transition instability,
  • naming and syntax enforcement errors,
  • and vendor rollout failures.

Retail ID did not prevent those failures. It arrived after them.

 

Retail ID Does Not Improve Recall — It Breaks It

Recalls are population-based.

You recall a batch because it shares:

  • inputs,
  • time,
  • conditions,
  • or contamination risk.

Retail ID atomizes that population into millions of individual records that must later be reassembled during a recall.

That is not precision. That is friction.

If Retail ID were removed tomorrow, New York would still be able to:

  • identify affected batches,
  • identify where they were shipped,
  • identify which dispensaries sold them,
  • and execute recalls faster, not slower.

Retail ID adds no recall capability beyond what batch-level tracking already provides.

 

The Real Cost Is Not $0.10 — It Is Labor

Even if New York paid every penny of Metrc’s fees tomorrow, Retail ID would still be devastating.

Because the real cost is human labor.

Retail ID:

  • multiplies scan events,
  • multiplies error surfaces,
  • multiplies reconciliation work,
  • multiplies training burden,
  • and multiplies audit exposure.

This system inherently favors:

  • large, automated operators,
  • conveyor lines,
  • machine vision,
  • and robotics.

It punishes small businesses, craft producers, and labor-driven operations—the very people New York legalization was supposed to protect.

 

New York is effectively operating as Metrc’s live pilot environment for Retail ID.

Retail ID was announced nationally in 2024. It encountered immediate resistance and has not been successfully deployed at scale elsewhere. In New York, it was made mandatory.

That reality explains:

  • inconsistent guidance,
  • missing or incomplete SOPs,
  • shifting interpretations,
  • and trial-and-error compliance with real inventory at stake.

In most industries, pilot programs are:

  • voluntary,
  • limited in scope,
  • and subsidized by the vendor.

Here, license holders are paying—in money, labor, and risk—to validate a system still being operationally proven.

That is not implementation. That is field testing.

License Holders Are Paying to Generate the Data That Powers the System

Retail ID also fundamentally changes who bears the cost of regulatory infrastructure.

Under this model, license holders:

  • pay per identifier,
  • absorb the labor of scanning and reconciliation,
  • and generate the data that gives the system its value.

That data:

  • trains workflows,
  • validates assumptions,
  • improves vendor tooling,
  • and enables future monetization.

In effect, New York licensees are:

  • financing the system,
  • operating it,
  • debugging it,
  • and supplying its data exhaust—

all while having no ownership stake, no pricing power, and no ability to opt out.

This is not a public utility model. It is private infrastructure built on compulsory participation.

 

Why the Lawsuit Matters

This lawsuit does not threaten public safety. It does not threaten compliance. And it does not threaten track-and-trace.

It challenges a system that forces license holders—especially small businesses—to subsidize a private vendor’s economic shortfall through:

  • per-unit fees,
  • uncompensated labor,
  • and coerced participation.

If Metrc cannot operate under the contract that was bid and awarded, the solution is not to quietly redefine compliance.

The solution is for New York State to fund its own regulatory infrastructure transparently, as other states do.

But even that is not enough, because even a free Retail ID system would still destroy small operators through labor.

 

The Choice in Front of Us

New York has two options:

Keep Retail ID

  • Accelerate consolidation
  • Crush small operators
  • Expand compliance labor
  • Centralize data in a private vendor

Remove Retail ID

  • Preserve track-and-trace
  • Restore batch-based recall
  • Reduce labor burden
  • Protect small businesses

There is no third option that works.

 

Final Thought

Retail ID is not about safety. It is not about recalls. It is not about diversion.

It is about who pays—and how quietly.

If you care about:

  • workable compliance
  • real recallability
  • small and mid-sized operators
  • and a sustainable legal market

This lawsuit deserves your support.

To learn more, ask questions, or get involved, email:  nystrackandtrace@gmail.com

Fear thrives in confusion. This lawsuit exists to replace confusion with facts. More than 20 license holders have already committed to the suit. What are you waiting for?

 

Listen to more of Jason’s insights on the New York market in his interview with the Innovating Cannabis Podcast.

 

Why Most Cannabis COGS Would Fail an Audit — and How Operators Can Fix It

By David Kay, CPA, CMA, CFE
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For cannabis operators, the cost of goods sold (COGS) is far more than an accounting line item.  It’s the most critical financial number in the entire business.

Under IRC Section 280E, most ordinary business deductions are disallowed, making COGS the primary mechanism for reducing taxable income.  At the same time, COGS drives pricing decisions, product profitability analysis, capital investment planning, and ultimately enterprise value.

Yet in practice, many cannabis operators run COGS systems that would struggle to withstand audit scrutiny—and even more concerning, fail to reflect the true economic cost of producing their products.

The result is dual exposure: elevated tax risk on one side, and distorted business decision-making on the other.

COGS Defensibility Is Not an “Aggressive Tax Strategy”

A common misconception about cannabis is that maximizing COGS is primarily a tax exercise.  Operators often focus on what they believe can be included rather than what can be consistently substantiated, documented, and operationally supported.

True COGS defensibility rests on four pillars:

  1. Substantiation – Can each cost be supported by payroll records, invoices, time tracking, inventory movements, and production documentation?
  2. Consistency – Are allocation methodologies applied the same way, period after period?
  3. Traceability – Can costs be directly tied to physical production activities and inventory flows?
  4. Operational alignment – Do accounting numbers reflect how the facility actually operates?

When any of these pillars are weak, audit exposure increases — and financial insight deteriorates.

Importantly, defensible COGS isn’t only about minimizing tax liability.  Accurate costing enables operators to understand true unit economics, identify profitable SKUs, set pricing intelligently, evaluate yield performance, and allocate capital effectively.  Tax optimization becomes a byproduct of operational discipline rather than a risky accounting maneuver.

 

Why IRS Scrutiny Is Increasing — Not Decreasing

Some operators assume that potential federal rescheduling will materially reduce audit pressure or eliminate the importance of rigorous COGS practices.  That assumption is premature.

Even if cannabis ultimately moves to Schedule III, timing remains uncertain, implementation will take time, and open tax years will remain subject to existing 280E rules.  Historical returns remain examinable, and enforcement activity does not unwind retroactively.

At the same time:

  • The IRS has developed greater institutional knowledge of cannabis operations.
  • Digital payroll systems, banking records, and seed-to-sale data have improved audit visibility.
  • Prior enforcement cycles have highlighted recurring weaknesses in labor classification and inventory controls.

Audit standards are tightening, not loosening.

Where Most Cannabis COGS Break Down

Across cultivation, manufacturing, extraction, and retail operations, several failure patterns consistently appear.

Labor Misclassification

Production labor is often blended with administrative, compliance, or sales functions.  Without time studies, job costing, or consistent labor tracking, allocations become subjective and difficult to defend.

Unsupported Overhead Allocations

Facilities frequently allocate rent, utilities, depreciation, and indirect labor using informal spreadsheets or percentage assumptions that are not grounded in measurable production drivers.

Inventory Accuracy Gaps

Cycle counts are inconsistent.  Work-in-process tracking is incomplete.  Adjustments lack documentation.  Reconciliation between physical inventory, accounting systems, and seed-to-sale platforms is often weak.

Manual Processes and Spreadsheets

Critical cost calculations are often stored in individual spreadsheets with limited version control, audit trails, or governance.

Weak Documentation Culture

Standard operating procedures, allocation methodologies, and change management processes are rarely formalized.

Individually, these issues may seem manageable.  Collectively, they undermine both audit defensibility and business intelligence.

Seed-to-Sale Systems Are Not Cost Accounting Systems

State-mandated seed-to-sale platforms were designed primarily for regulatory traceability, not financial accuracy.  They track weights, transfers, and compliance events, but they don’t calculate labor absorption, overhead allocation, yield efficiency, or true unit economics.

Operators often assume that because inventory exists in the seed-to-sale process, COGS must therefore be accurate.  That assumption is incorrect.

Seed-to-sale data must be reconciled and integrated into accounting systems using disciplined costing logic before it becomes financially reliable.

Why COGS Accuracy Improves Business Performance

Defensible COGS delivers far more than tax protection.

When costs are properly captured and allocated, operators gain:

  • Accurate SKU profitability – Identifying which products truly drive margin versus consume resources.
  • Pricing discipline – Setting prices based on real cost structures rather than market guesswork.
  • Yield optimization insight – Revealing where losses, rework, or inefficiencies erode margin.
  • Capital allocation clarity – Understanding which processes justify automation or expansion.
  • Financial credibility – Strengthening lender confidence, investor trust, and exit readiness.

In short, accurate costing becomes a management tool, not just a compliance requirement.

What Defensible COGS Looks Like in Practice

High-performing operators increasingly implement:

  • Time tracking and labor studies to support production labor classification.
  • Bills of material and routings to establish standard production models.
  • Documented allocation methodologies tied to measurable operational drivers.
  • Routine cycle counts and reconciliations across physical inventory, accounting records, and seed-to-sale systems.
  • Formal SOPs and change controls governing costing logic.
  • Automated accounting workflows to reduce spreadsheet dependency and strengthen audit trails.

These controls improve both audit readiness and operational clarity.

Practical Steps Operators Can Take Now

Operators don’t need enterprise-scale systems to materially improve COGS integrity.  Several foundational actions create immediate value:

  1. Document current labor classifications and identify inconsistencies.
  2. Validate overhead allocation logic against real production drivers.
  3. Implement regular inventory cycle counts with reconciliation discipline.
  4. Standardize cost calculation templates with version control.
  5. Formalize costing policies and assumptions in writing.
  6. Reconcile seed-to-sale quantities to accounting balances monthly.
  7. Treat COGS as a management system, not merely a tax calculation.

The Bottom Line

Most cannabis operators do not fail COGS audits because of aggressive intent.  They fail because their systems, documentation, and operational alignment are not mature enough to support the numbers they report.

Building defensible COGS strengthens tax compliance, improves decision quality, enhances financial credibility, and positions the business for sustainable profitability and long-term value.

In an industry facing margin compression, capital pressure, and increasing regulatory scrutiny, accurate cost intelligence is no longer optional.  It’s strategic infrastructure.

 

Building a Cannabis Banking Eco-System with Terry Mendez

By Pam Chmiel
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The cannabis industry is still operating within a cobbled-together financial system—one defined by workarounds, instability, and uncertainty.

Most major banks remain unwilling to work with cannabis businesses due to the risk and compliance burdens associated with serving a federally illegal industry. In 2014, former Safe Harbor Financial CEO Sundie Seefried helped establish one of the first scalable models for compliant cannabis banking, setting standards for how financial institutions interpreted FinCEN’s marijuana guidance. The framework outlined how banks and credit unions could serve state-legal cannabis businesses while still meeting their Bank Secrecy Act and anti-money laundering obligations, giving institutions the confidence to engage with the industry.

Today, Safe Harbor is led by CEO Terry Mendez. In an interview, he explained that the company has evolved beyond compliance and is building financial safety nets to protect cannabis businesses from operational disruption when a bank abruptly exits the industry, leaving clients scrambling to access their own capital. “We have more than one cannabis-friendly bank on our platform,” explained Mendez. “If, for whatever reason, one of those banks decides they want to exit the cannabis industry. We have a place for you to go that doesn’t disrupt the flow of your business.”

Mendez pushed back against the assumption that federal rescheduling, or even full legalization, would automatically open the door to large national banks. He noted that several fully legal industries—including gambling, cryptocurrency, and even businesses operating on tribal lands—continue to face persistent banking challenges. For major financial institutions managing billions or trillions in assets, perceived regulatory and reputational risks often outweigh the potential upside. As a result, Mendez said, it is typically regional and state-chartered banks, along with credit unions, that step in to serve these underserved sectors by capturing market share where larger banks remain unwilling to engage. He did add that while rescheduling doesn’t address safe banking, it sends the message that the federal government, under a conservative administration, sees a path forward.

 

Making Cannabis Banking Work for Financial Institutions

Mendez explained that Safe Harbor’s core value proposition is to remove the regulatory and financial burdens that keep most banks on the sidelines. In the company’s early years, its systems were under constant regulatory scrutiny, ultimately becoming a national benchmark for compliant cannabis banking. Today, regulators across the country rely on Safe Harbor’s platform much like banks outsource payroll to firms like ADP—maintaining responsibility for compliance while leveraging an established, regulator-tested infrastructure.

Rather than forcing banks to build costly in-house cannabis programs—which can require $500,000 to $1 million in staffing, software, and compliance investments—Safe Harbor enables institutions to “rent” a turnkey framework. The platform embeds enhanced due diligence requirements unique to cannabis, including verifying product SKUs, ensuring regulated supply chains, preventing youth access, and continuously monitoring license status. These are obligations traditional banks are not designed to manage, and that can cost thousands of dollars per account to maintain independently.

Mendez emphasized that Safe Harbor’s role is not just to vet cannabis operators but also to protect banks, lenders, and ancillary businesses, such as law firms, from sudden account closures. He pointed to recent real-world examples of businesses that were abruptly forced out of non-cannabis-specialized banks, jeopardizing payroll and operations overnight.

 

Growing the Network

Drawing on his background at Fortune 100 companies, Mendez said the cannabis industry lacks institutional infrastructure that other regulated industries take for granted. Cannabis operators often have limited access to capital markets, professional services, and back-office support, such as complex financial, accounting, and compliance responsibilities, which impede growth.

Large multi-state operators may require loans in the tens or hundreds of millions of dollars, amounts that many regional banks and credit unions cannot support. Mendez pointed to a loan syndication program they are working on that will allow multiple banks to bid on a loan to spread out the risk, an option commonplace in more mature sectors. Until cannabis companies can access the same financial and operational tools available to other regulated industries, he said, scaling will continue to require workarounds rather than standardized systems.

 

RULES, RULES, RULES!

Mendez described compliance as one of the biggest deterrents keeping regional banks on the fence about serving the cannabis industry. Most banks are not typically equipped to oversee cannabis compliance, including local jurisdictional rules, product restrictions, and preventing minors from accessing dispensaries. These requirements can vary not only by state, but by city and municipality, creating a patchwork of regulations that institutions must navigate to avoid penalties.

While many banks attempt to manage this complexity through software alone, Mendez argued that technology without cannabis-experienced guidance can create additional risk. Compliance systems may surface issues, but banks still need to understand how to interpret the data, respond appropriately, and communicate with regulators during audits. Without expertise, institutions can expose themselves to costly enforcement actions, especially in a high-stakes, low-margin industry.

Mendez noted that many operators are already in survival mode, with a growing number entering receivership, since bankruptcy isn’t an option because it’s a federal legal process. Failing to understand the regulatory “game,” he said, leaves businesses vulnerable to audits, enforcement actions, and financial disruption they may not be able to recover from.

 

Filling The Gap For New Entrepreneurs

For most entrepreneurs, access to startup capital is the most challenging part of getting a business off the ground, and SBA-style lending is largely unavailable without years of operating history and proven sales. This catch-22 stops many new companies from ever opening their doors. Mendez supports BIPOCann, an incubator program that guides social equity and minority entrepreneurs through the business planning process and helps them secure capital. He said he wishes there were more programs like it.

Mendez described this as a working-capital desert, where lenders are wary of early-stage risk and many first-time operators lack the experience or financial history banks are looking for. Even established cannabis-focused institutions say “no” far more often than yes. One way Safe Harbor is beginning to address the imbalance, he said, is by rethinking how risk is evaluated and shared. Syndicated and participation-based lending, typical in other industries, allows multiple lenders to split exposure on a single loan, making it possible to support newer entrepreneurs without forcing any one institution to shoulder all the risk.

But access to capital is only part of the problem. Day-to-day banking for cannabis remains unusually burdensome, with heightened transaction reviews, delayed wire transfers, and jurisdiction-specific rules that can change with little notice. Mendez pointed to situations where operators have suddenly lost access to funds due to processor exits or regulatory uncertainty, causing disruptions that can jeopardize payroll and operations overnight.

Mendez does not believe a single policy shift will solve those challenges overnight. Even with rescheduling or broader federal reform, banks will still need industry expertise to help establish compliant frameworks before meaningful capital flows into the sector. In the meantime, Safe Harbor plans to continue building services designed to reduce disruption where traditional financial institutions remain reluctant to participate. Until then, cannabis businesses will continue to depend on regional institutions, credit unions, and specialized financial partners.

You can hear Terry Mendez’s full interview here.

Target Just Opened the Door — Is Your Brand Compliance-Ready for Mass Retailers?

By Pam Chmiel
2 Comments

Will Target’s move to sell THC drinks be the catalyst the industry needs to push for higher standards?

Target’s decision to start selling hemp-derived THC beverages marks a major milestone for the cannabis industry and a reality check for brands hoping to follow. Selling into mass retail is not just about scaling production or packaging appeal. It requires proving that your product meets the same safety and manufacturing standards as food, pharma, and cosmetics.

As Darwin Millard, Technical Director at CSQ Certification, explains, “Retailers like Walmart and Target protect their liability by only buying from GMP-certified producers. That certification is their shield.” Without an accredited Good Manufacturing Practices (GMP) certification, cannabis brands may not make it past the first round of vendor qualification.

The cannabis industry has traditionally operated in a silo, selling B2B to other licensed operators that rarely demand third-party certifications. Mass retailers operate differently. They rely on accredited certification programs to verify every layer of the supply chain, from ingredient sourcing to packaging. This mitigates risk and ensures traceability if something goes wrong.

Many hemp brands rely on co-manufacturers already bottling for alcohol and alternative beverage industries, but those manufacturers are often not GMP-certified for cannabis products. Existing food safety schemes, such as SQF or BRC, do not yet recognize cannabinoids as approved ingredients. Target may have overlooked this gap when approving its current selection of hemp beverages, but this is likely to be addressed going forward.

Target’s move could push the entire cannabis supply chain to adopt GMPs to protect consumers and ensure consistent quality. As Millard warns, “It could be the thing that gives our industry its biggest black eye if something goes wrong, or the moment that raises the bar for safety and quality once and for all.”

 

What It Takes To Get GMP Certified

GMP certification is a rigorous, multi-step process that demonstrates a company’s commitment to verified quality and safety standards. While companies may perform internal audits or have business partners review their processes, the most widely recognized and trusted method is third-party certification.

Third-party certification involves an independent organization auditing every aspect of your operation to ensure compliance with established GMP requirements. This provides a clear, objective verification that processes, documentation, and product handling meet global standards.

Not all third-party certifications carry the same weight. Accredited certifications are independently verified by an external authority and recognized internationally as meeting stringent standards for quality and safety. Unaccredited certifications, in contrast, may offer internal assurance but generally do not hold the same credibility with regulators, retailers, or international partners.

For brands targeting mass retail or global trade, third-party certification serves as proof that safety, traceability, and quality standards are adhered to.

 

What Compliance Looks Like

Not only does the cannabis industry need to embrace standards for scaling to mass retail, but it also needs to embrace standards for global trade. That includes accredited GMP certification rather than a certificate from an unverified auditor.

Cultivation falls under Current Good Agricultural Practices (GACP), ensuring that every stage of plant growth and harvest meets rigorous safety and quality benchmarks.

Effective cultivation standards cover both indoor and outdoor grow environments and include strict protocols for:

  • Water quality and irrigation management
  • Equipment sanitation and maintenance
  • Crop protection and propagation materials (including clones, seeds, and tissue culture)
  • Temperature and atmospheric control during drying and curing

Once plants are harvested, the process transitions from GACP to GMP standards, marking the shift from cultivation to manufacturing. “Harvest is the hard line,” says Millard. “Once you start to process the plant in a controlled environment by trimming, curing, or packaging, you’re operating under GMP.”

The CSQ Cultivation program also covers flower handling, grinding, and pre-roll production, but stops short of infused or extracted products. When it comes to post-harvest remediation techniques like irradiation, CSQ doesn’t explicitly prohibit them but requires detailed, documented procedures.

“We treat drying and curing like refrigerated or frozen food storage,” Millard explains. “There are specific temperature and environmental conditions that must be maintained to preserve product safety and quality.”

In the extraction process, standards define best practices for processing and handling cannabinoid materials. Standards cover everything from raw extracts, such as live resin or rosin, to refined materials, including distillate or purified cannabinoids. They also include formulation, risk assessment, and allergen implications for products intended for inhalation, ingestion, or topical use.

 

The Last Mile: Warehousing and Distribution

Once cannabis products leave the manufacturing facility, maintaining safety and quality becomes the responsibility of distributors and warehouse operators. Mass retailers will expect vendors to follow the same high standards throughout storage and transit as they do during production.

Controlled storage environments are a requirement for ensuring product preservation. Temperature, humidity, and atmospheric conditions must be monitored and documented to preserve volatile compounds in concentrates, infused products, and THC beverages, similar to perishable food or beverage items.

Proper warehousing protocols also protect against contamination, degradation, and liability. Companies that can prove systems for handling, tracking, and storing products across the supply chain will have a competitive advantage with mass retailers.

 

Retail Responsibility: Preserving Quality and Mitigating Liability

Once cannabis products reach the retail shelf, the responsibility for maintaining safety and quality shifts to the retailer. Like perishable foods, cannabis products can degrade if not stored under proper temperature, humidity, or lighting conditions. For high-end concentrates or infused products, even minor lapses in any of these factors can significantly impact potency, consistency, and the overall consumer experience.

If products degrade, retailers could face legal liability or incur costly recalls. In some cases, manufacturers may prove that products left the facility compliant with Certificate of Analysis (COA) standards, but without proper storage at the retail level, those standards cannot be maintained.

Standardized operating procedures (SOPs) for storage, handling, and temperature monitoring remove liability from the retailer and make sure consumers receive the quality product they are promised. Batch records, documented storage conditions, and adherence to best practices allow them to demonstrate that they took all reasonable steps to maintain product integrity.

High-end extractors and other manufacturers often worry that retail infrastructure is not yet equipped to handle sensitive products. Improper storage can result in financial losses and reputational damage. Embracing certifications and best practices will become increasingly essential as the industry matures and customers demand higher quality.

Consumers expect cannabis products to be safe, consistent, and accurately labeled. Maintaining quality throughout the supply chain ensures that products match what is promised. Otherwise, what reaches the shelf may be nothing more than THC content with degraded flavor, aroma, or texture, far from the intended experience.

 

Raising the Bar For Cannabis Quality

Target’s entry into hemp-infused beverages marks a turning point for the cannabis industry. Success in mass retail requires rigorous quality standards, including GMP and GACP practices, temperature-controlled storage, and documented SOPs, to protect consumers and retailers while preserving product quality. These practices position brands for mass retail and prepare the industry for international trade, where standards are even more stringent.

Dive deeper into standards with Darwin Millard on the Innovating Cannabis Podcast.

While Everyone Waits for 280E Relief, Smart Cannabis CEOs Are Creating Their Own

By Darren Gleeman
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For years, cannabis executives have built their financial strategies around a single hope: that Section 280E would vanish with federal reform. But hope has quietly drained billions from balance sheets. Every year, operators “wait it out”; they forfeit the one thing they can’t afford to lose, cash flow.

It’s an understandable reflex. No one likes paying taxes they shouldn’t owe, and 280E has always felt temporary. But the reality is clear: Washington doesn’t move on cannabis at the pace business requires. Operators who treat legislative change as a business plan are gambling with time, liquidity, and their company’s future.

 

The Cost of Waiting

Under 280E, cannabis companies can’t deduct ordinary and necessary business expenses, resulting in effective tax rates that often exceed 70%. That burden has crushed margins and stalled reinvestment. The irony is that while leaders lobby for relief, the IRS already provides a legal framework that can make 280E’s impact completely irrelevant: the Employee Stock Ownership Plan (ESOP).

An ESOP, when structured properly, allows companies that are 100% employee-owned to operate entirely income-tax-free at both the federal and state levels. In cannabis, where every after-tax dollar counts, that can double available cash flow.

ESOPs work by selling ownership of the company to a trust that holds shares on behalf of employees. The founder receives liquidity, the company gains a massive tax advantage, and employees become genuine stakeholders in its success.

An ESOP allows a company to keep more of what it earns. Instead of sending large sums to the IRS, those funds stay in the business where they can support growth and stability.

Proof in Practice: Theory Wellness

When Theory Wellness became the first cannabis company in the U.S. to sell to its employees via an ESOP, it didn’t just make history. It proved what was possible. By transitioning to employee ownership, Theory Wellness created a structure that aligned purpose with profitability. The company retained its culture, rewarded long-time staff, and unlocked a permanent tax exemption that removed the vice-grip 280E had on the company’s finances.

That move wasn’t theoretical; it was financial engineering in action. In many industries, companies that share ownership with their teams tend to keep employees longer and run more efficiently. When people have a real stake in the outcome, they’re more invested in helping the business grow.

Cannabis remains capital-starved. Banks are hesitant, and equity investors often require terms that founders don’t want. An ESOP is a sale to an employee trust at fair market value. It delivers liquidity now, potential deferral of capital gains for the seller, and powerful company-level tax benefits, zero federal and state income tax when 100% ESOP-owned, so cash flow rises. Founders can stay to manage the business post-sale and, if structured correctly, receive warrants that allow a future buyback at today’s low equity value. 280E becomes irrelevant, the board still governs, and the company stays independent of outside buyers.

Additionally, ESOPs are fully compliant with current IRS regulations. This is the farthest thing from a loophole or gray area. It’s an established structure used for decades in mainstream industries. Brands like Publix, King Arthur Baking, and Clif Bar have thrived under employee ownership. Cannabis companies can do the same, yet few know it’s possible.

 

A Shift in Mindset: From Operator to Financial Engineer

The next phase of cannabis leadership requires a shift in perspective. Founders and executive teams can no longer afford to think only like operators; they must think like engineers of capital. Waiting for Congress to fix 280E is not a strategy. It’s an expensive form of denial.

When structured with discipline, an ESOP allows leaders to:

  • Eliminate income tax entirely for employee-owned entities.
  • Reinvest tax savings directly into expansion and talent retention.
  • Secure liquidity for founders while maintaining operational control.
  • Build lasting employee loyalty through true ownership.

The Call to Action

As 2026 approaches, the winners in cannabis won’t be those who waited for policy change. They’ll be the ones who engineered their own relief. They’ll be the CEOs who saw 280E for what it was, a constraint that forced financial creativity and turned it into a competitive advantage.

For decades, ESOPs have helped companies outside cannabis grow faster, last longer, and outperform peers. Now, they’re poised to do the same here. The model is legal, repeatable, and transformative. The only question is whether leaders will seize the opportunity or keep waiting for a political rescue that may never come.

The future of cannabis finance belongs to the builders, not the bystanders. In this industry, time is the one asset that’s still taxable.