Tag Archives: Focus Article

What Cannabis Branding Gets Right and Why Every Industry Should Follow Suit

By Will Read
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81% of consumers need to trust a brand before they’ll even consider buying from it.
But what happens when your industry is built on a shaky foundation—one full of stigma, skepticism, or confusion? That’s cannabis. And yet, some of the sharpest, most strategic brand-building I’ve seen is happening here… because it has to.

There’s no legacy trust to coast on. No Nike or Apple to borrow credibility from. Cannabis brands must earn legitimacy from scratch. In doing so, they’ve developed a blueprint for building trust through branding—one that applies to any industry trying to educate, normalize, or shift perceptions.

If you’re in an emerging or controversial market like clean energy, crypto, AI, alternative proteins, or even telehealth, you might have more in common with cannabis than you think.

Build a Brand That Belongs on the Shelf

When we launched our cannabis-focused creative agency, we had one rule: No clichés. That meant ditching the dripping paint-style fonts, overused pot leaves, and “green cross” tropes. These familiar signals might appeal to those who are already fans of cannabis, but they alienate everyone else.

If cannabis was ever going to be accepted as normal, it had to look normal. So we borrowed from brands doing it right:

  • Haus, the apéritif startup that made shelf-ready elegance look effortless
  • Function of Beauty, which turned personalized shampoo into an aesthetic experience
  • Oatly, which took a bland pantry item and made it bold, weird, and fun

We took cues from food, wellness, skincare, and beverages. The result? Clients who embraced this shift saw more traction from new consumers, more investor interest, and better retailer placement.

Lesson: Design like you belong. Legitimacy starts with presentation.

 

Don’t Only Market to the Converted, Speak to the “Maybe”

I’m that “stoner” guy. I love the plant, the culture, and the history. But cannabis brands don’t need to market to me. I’m already sold. 

If your brand looks like an inside joke, don’t be surprised when no one gets it. 

The bigger opportunity? The curious majority. People who are interested, but cautious. Think: your mom, your neighbor, your accountant. Most brands in misunderstood markets make the mistake of building for themselves—speaking in jargon, chasing trends, ignoring outsiders.

It’s the same trap crypto fell into with meme coins and “degens,” or early alt-meat brands that pushed sci-fi over sustainability. If your product needs education or reassurance to grow, build for the people still on the fence.

Lesson: Talk to the “maybe,” not just the converted. That’s where the growth lives.

 

Make Clarity the Core of Your Brand System

In cannabis, there’s no trust without clarity. Customers want to know:

  • Is this legal?
  • How will this make me feel?
  • Will this uplift or ruin my Tuesday?

That’s not just a product issue—it’s a branding one. A strong identity system doesn’t just look good; it helps customers understand what they’re getting, why it matters, and why they can trust you.

Some of our most effective work includes:

  • Educational icon systems
  • Clear, welcoming copy
  • Visual storytelling that demystifies the experience

Compare that to biotech, FinTech, or wellness, where opaque language and over-design often make consumers feel excluded or overwhelmed.

Lesson: If people don’t get it, they won’t trust it. And they definitely won’t buy it.

 

Branding Isn’t Just Design, It’s How You Earn Legitimacy

When your industry is stigmatized or brand-new, marketing isn’t optional. It’s how you show up in the world. Your brand is your handshake, your elevator pitch, your shot at saying: “We’re legit, and we’re here for you.”

We’ve seen this with cannabis, yes, but also with:

  • BetterHelp, which helped normalize online therapy by making mental health feel approachable
  • Thrive Market, which built trust in alternative food products through transparency and values
  • Lalo, the baby gear brand that made parenting feel less overwhelming through minimalist design and real-talk messaging

These brands didn’t win by shouting the loudest. They won by showing up smart, clear, and consistently human.

Lesson: Trust isn’t given. It’s designed, tested, and earned brick by brick.

 

The Takeaway for Any Brand in a Misunderstood Space

If your product or service lives at the edge of acceptance, the playbook is simple, but not necessarily easy:

  • Look like you belong: Ditch the clichés and project confidence
  • Speak to outsiders: Your future customers aren’t already bought in
  • Educate without overwhelming: Help people feel informed, not intimidated
  • Build for trust: Every brand touchpoint should reinforce credibility

When industries are battling stigma, regulation, or consumer skepticism, strategic branding isn’t a luxury; it’s a lifeline. Cannabis didn’t progress into a brand-forward industry because it was cool. It evolved that way because it had to. And now that it has, every brand with perception hurdles can take a cue from what cannabis got right.

 

Minnesota Continues To Break New Ground in Cannabis

By Pam Chmiel
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Minnesota has one of the most progressive markets in the US to normalize cannabis. Liquor stores can sell certain hemp-derived THC products, and restaurants are serving THC drinks. They continue to introduce new ways as they roll out their adult-use market.

Minnesota’s medical market has been in place since 2014; adult-use was legalized in 2023. While tribal nations quickly launched their markets, licensed state retailers didn’t open their doors until September 2025.

According to a recent press release from the state’s Office of Cannabis Management, “Since June 18, the state has issued 37 business licenses, including 23 licenses to microbusinesses with plans to conduct retail cannabis sales. Those businesses have been waiting for cultivators, manufacturers, and testing facilities to establish a supply of products to sell to customers. With Tribal-state cannabis compacts now in place with the White Earth Nation and Mille Lacs Band of Ojibwe, state-licensed retail businesses are working in partnership with Tribal Nations to procure safe, tested cannabis products at wholesale to stock their shelves.”

Why Minnesota’s Rollout Is Earning Industry Praise

Panelists at the recent MJBiz conference praised several policy decisions that have positioned Minnesota for a more successful adult-use launch than many earlier states. Chief among them was the legislature’s decision to prohibit local governments from opting out of allowing cannabis businesses in their communities.

“If you allow localities to opt out, many of them will—and the illicit market will be happy to fill the void,” said Jason Tarasek, partner at Vicente LLP. While the policy has generated pushback from some Minnesota communities that feel it is being forced upon them, Tarasek argued that opt-outs will undermine a balanced cannabis ecosystem. “If you want a legal, regulated marketplace, then you simply cannot allow local communities to opt out,” he said. Ensuring statewide access, rather than concentrating retail solely in major cities like Minneapolis and St. Paul, is critical to avoiding a lopsided market.

Minnesota is also breaking new ground with the nation’s first municipal-run cannabis dispensaries, a model similar to the state’s city-operated liquor stores. Several municipalities are preparing to open their own retail locations, and industry observers are watching closely, as Pennsylvania has considered the same model.

Tribal-State Compacts and a New Supply Chain Model

Panelists highlighted Minnesota’s tribal-state cannabis compacts as one of the most groundbreaking accomplishments of the state’s market design. Formed by the legislature and now available to all 11 federally recognized tribes in Minnesota, the compacts create a formal framework between the two sovereign governments.

“Cannabis compacts sit at the intersection of sovereignty and cannabis law,” said Mitch Chargo, Esq., who works closely with tribal clients in the state. He described compacts as negotiated agreements designed to clarify regulatory standards, enforcement authority, and intergovernmental coordination, with the goal of reducing uncertainty and conflict across the supply chain.

Under the compact model, tribes such as the White Earth Nation operate their own cannabis regulatory authorities, which oversee both on-reservation and off-reservation cannabis operations. These tribal regulators coordinate directly with Minnesota’s Office of Cannabis Management, which has dedicated staff focused on tribal relations. “The most important part of the compact is establishing a constant and reliable line of communication between the two governments,” Chargo said, noting that the collaboration is designed to protect tribal sovereignty while ensuring public health and safety through consistent testing and compliance standards.

While panelists acknowledged that friction is inevitable when multiple sovereign regulators operate in the same marketplace, they emphasized that Minnesota’s compacts proactively include processes for resolving disputes through ongoing communication rather than enforcement escalation. “The goal is to resolve issues before they become conflicts,” Chargo said, pointing to in-person coordination as a key feature of the framework.

Tarasek, who has worked on multiple Minnesota tribal compacts, said the model is drawing national attention. “The opportunities in Minnesota for tribal nations are incredible,” noting that the compacts allow tribes to operate cannabis businesses beyond tribal land while maintaining independent regulatory authority. As a result, Minnesota could soon have a dozen cannabis regulators operating in parallel, including the state Office of Cannabis Management and 11 tribal regulatory bodies.

“That simply does not exist anywhere else in the country,” Tarasek said. “Other states and other tribal nations are watching Minnesota very closely.”

Strong Intentions for Social Equity

Panelists agreed that Minnesota’s social equity framework was designed with well-intentioned goals, but some provisions have created challenges for applicants rather than protection.

Minnesota moved early to support social equity applicants that include individuals impacted by cannabis prohibition, veterans, residents of high-poverty areas, and emerging farmers. “When we talk about who our social equity applicants are, it is important to remember that more than half of them are veterans,” said Jen Reise, founder of North Star Cannabis Consulting. “That veteran application pathway was simply much easier for people to get through.”

One of the most debated aspects of the program is the requirement that social equity applicants maintain at least 65 percent ownership of their businesses. The rule was intended to prevent predatory behavior and out-of-state interests from co-opting equity licenses. In practice, however, panelists said it has significantly limited access to capital.

“That 65 percent ownership requirement did a huge disservice to social equity applicants,” said Chargo, “Trying to raise money when you can only sell 35 percent of your company makes it virtually impossible, especially for microbusinesses that already face serious financial constraints.”

Chargo added that the ownership structure often forces social equity operators into retail because it is the least capital-intensive option. “You may be able to get licenses for cultivation or manufacturing, but without capital, most of these businesses end up funneled into retail simply because it costs less to launch,” he said.

Panelists also discussed Minnesota’s microbusiness license, which was created to support small, vertically integrated operators. Reise noted that while the license aligns with the spirit of social equity, the low barriers to application have resulted in many first-time operators entering a complex and highly regulated industry. “We have a large pool of excited but inexperienced operators who are trying to stand up businesses and need significant support to have a real chance at success,” she said.

Tarasek echoed concerns raised by national equity advocates. “Social equity is a wonderful idea, but one of the best ways to help these applicants may be to give them flexibility,” he said, referencing feedback from the Minority Cannabis Business Association. Tarasek noted that not all social equity licensees will be positioned to operate long-term and that allowing license transfers or sales may become a critical exit option for some.

“I hope they all succeed, but the reality is that not everyone will,” Tarasek said. “Some of these applicants have no business experience, no cannabis experience, and limited capital. For some, selling a license may be the most viable way to create value.”

Minnesotans Embrace Craft Brands

Panelists said Minnesota’s licensing structure and canopy limits were deliberately designed to prevent market domination by large multistate operators. “They kept the canopy limits restricted, and that has largely succeeded in keeping the big MSOs out,” said Tarasek. While the rollout has not been without delays, Tarasek noted that the market is now moving and that opportunities remain for experienced operators, investors, and entrepreneurs. “There are still plenty of licenses available, and there are quality operators in Minnesota who are actively looking for capital and partners,” he said.

For many panelists, Minnesota’s greatest opportunity lies in its support for craft cannabis and differentiated brands. “One of the strongest attributes of our program is the ability to build a craft business and tell a story that distinguishes your product from your neighbor’s,” said Chargo. “If you want to create a brand that tells a story, Minnesota is the market for you.”

Is The Industry In Danger of Losing Its Prized Genetics?

By Michael Kudrewicz
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In cannabis, everything begins with genetics. Before lighting, curing, irrigation, or any cultivation technique, there is the seed. And within that seed lives more than chemistry. It holds history, culture, and potential. Genetics are the soul of cannabis. They determine whether a cultivar expresses citrus or earth, calm or clarity, relief or joy. They decide how a plant grows, how it finishes, and how it makes you feel. Unfortunately, many cannabis brands are ignoring genetics, the very foundation of the plant, and are instead chasing high THC percentages. This is an approach that will fail in the long term. Here’s why.

Every cultivar carries its own blueprint, a genetic code that dictates how cannabinoids and terpenes develop, how the plant responds to stress, and what kind of experience it ultimately delivers. When cultivators and consumers focus solely on THC, they flatten that expression. The result is potency without personality; high numbers with low resonance.

Strategic cannabis companies seek cultivars that preserve complexity and depth. For example, landrace and heirloom strains that contain rare cannabinoid combinations and terpene structures work in harmony. These genetics invite the consumer into an experience that unfolds slowly and lingers with intention. It’s not about acceleration. It’s about elevation.

A lower THC percentage combined with a robust terpene profile does not dull the experience; it refines it. These cultivars offer layered effects that feel grounded and personal, supporting mood, focus, creativity, or calm in ways that are both nuanced and enduring. Rather than a sharp spike and sudden drop, properly bred genetics create a high that breathes and evolves over time. This is where cannabis becomes more than a product and transforms into a true experience.

The industry’s fixation on THC has come at a cost. When potency becomes the only goal, terpene diversity diminishes and minor cannabinoids disappear. These compounds are essential to the plant’s character. They drive entourage effects, enhance therapeutic value, and influence how the body and mind respond. High THC without balanced genetics is like turning the volume to ten on one instrument while muting the rest of the band. It’s loud, but not music.

Choosing cannabis should never be about chasing the highest number on a label. It should be about choosing intention. Cultivars with preserved lineage and authentic expression don’t overpower; they meet you where you are and elevate you from within. This approach honors the plant, the cultivator, and the consumer alike.

More people are beginning to realize that cannabis is about more than THC. It is about expression, connection, and the quality of effect. The next chapter of cannabis culture will not be written by percentages but by those who respect genetics and preserve what makes each cultivar unique.

Genetics matter because cannabis is more than a commodity. It is a living lineage, carried forward through cultivation with passion, precision, and purity. Choose strains with a story, flower with roots, and genetics that invite you into the full spectrum of what cannabis can be.

Listen to an interview with the founders of Raven View Genetics on the Innovating Cannabis Podcast. Or watch on YouTube.

Cannabis Banking Today: Navigating Verification, Compliance, and Regulatory Change

By Kevin Hart
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Banking for cannabis businesses has come a long way. Ten years ago, most banks wouldn’t even consider it. Conversations would stop almost as soon as they began. “Too risky,” they’d say. “Too unclear.” Or, “Maybe someday, but not now.”

Fast forward to today, and Green Check Verified works with more than 180 financial institutions across the U.S. and over 17,000 licensed cannabis operators. Together, these accounts move more than $1.3 billion each month safely and transparently. That number doesn’t just reflect dollars. It tells a story about the gradual normalization of cannabis banking and what actually works when compliance, verification, and operational realities intersect.

 

From “Impossible” to Operational

The biggest shift hasn’t been in the laws themselves. It’s been in the mindset. Banks have moved from outright refusal to cautious curiosity, and now to adoption. They want to know how to serve these businesses safely. What changed their perspective? Proximity tied to Opportunity. Banks started reviewing real compliance data, not assumptions. They saw that cannabis operators were running tightly regulated, heavily documented businesses, not risky enterprises. Suddenly, what looked like a red flag on paper became routine once they understood the daily operations.

For operators, the challenge hasn’t disappeared. Even with a willing bank, verification requires documentation at a level most other industries never encounter. Multi-state operators must track licenses, deposits, and reports across different tax systems. For newer operators, establishing an account before revenue begins is often the biggest hurdle. Those early relationships, while tricky, are essential. 

 

Where Banking Works and Where It Still Doesn’t

In established markets, compliant operators can now open and maintain accounts with a level of predictability that was unheard of just a few years ago. In newer states, however, financial institutions remain cautious. Some move slowly, and in many cases, businesses begin operations before their banking accounts are fully set up. The most difficult situations involve operators who are still finalizing licenses or have yet to establish a financial track record. In these cases, the solution isn’t just waiting for revenue streams; it’s education and communication on both sides. When both banks and operators understand each other’s processes, requirements, and expectations, access becomes far more achievable, and the groundwork for long-term, compliant banking relationships is laid.

 

The Role of Technology and Advisory Services

Banking platforms that combine verification, detailed transaction monitoring, and compliance dashboards make a real difference in cannabis banking. They give banks the confidence to take on new clients while giving operators a clear view of what’s expected. When sales reports, licenses, and transactions are easy to see and understand, it removes friction, helps accounts get opened faster, and makes lending possible. Today, about four in ten financial institutions serving cannabis businesses offer a variety of loans, and that number keeps growing as trust builds on both sides.

 

Misconceptions That Still Persist

Operators often expect free banking because it’s their money, but that overlooks the compliance infrastructure required. Cannabis banking isn’t just deposits. Cannabis banking requires careful attention to detail. Banks need to verify operations, keep up with ongoing reporting, and make sure every transaction meets compliance standards. Yet some institutions still rely on old assumptions that the industry is risky or that operators can’t be trusted. In truth, licensed cannabis businesses are heavily regulated. Every product, every sale, and every employee is recorded and tracked, often more closely than in many other industries. When data replaces fear, the risk profile becomes far less intimidating.

 

Regulatory Lessons

From the ground up, cannabis banking already works. Licensed operators build compliant systems in accordance with the rules currently in force. Every compliant account represents millions of dollars that are traceable, reportable, and integrated into the financial system. Which is the exact outcome policymakers claim to want. Reform isn’t about possibility, it’s about consistency. Federal guidance aligned with state programs would reduce friction, expand access, and make operations easier for all businesses.

 

Looking Ahead

The next chapter in cannabis banking isn’t just about opening more accounts. Financial institutions must focus on connecting compliance, payments, lending, and reporting into systems that can scale. Manual processes won’t be enough as businesses expand across states or prepare for federal rules. Banks that treat cannabis as a long-term growth segment, rather than a compliance headache, will be the ones that succeed.

Operators also need to treat transparency as a priority. Keeping accurate records and openly sharing information with banks builds trust, supports safer communities, and makes oversight easier for regulators. These practices create stability that cash-only operations can’t provide. Businesses that put these systems in place now will be better positioned to succeed as the industry grows and regulations evolve.

 

Can NY’s Legal Stores Compete with an Eight-Billion-Dollar Illicit Market?

By Pam Chmiel
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The recent Business of Cannabis Summit in New York City brought together industry professionals at the trendy Wythe Hotel in Williamsburg, Brooklyn, for a day focused on tackling the cannabis industry’s toughest challenges: price compression, retail survival, and the slow but steady shift from legacy to legal markets. The conversations offered a candid look at what it takes to survive and thrive as New York’s regulated cannabis industry matures. Many speakers agreed that while consumer demand is there, the framework that supports retailers is still developing, creating a volatile environment.

Joanne Wilson, owner and CEO of Gotham Dispensaries, offered a candid take on the current retail climate, warning that now is not the time to buy when asked about future expansion plans. “The market’s going to fall,” she said, predicting that many New York dispensary owners, especially small operators who invested personal and family funds, will face financial hardship as taxes and operating costs outpace returns. “It’s really… the whole thing is just a shambles,” Wilson added. Many panelists throughout the day were blunt about their dissatisfaction with the Office of Cannabis Management’s rollout of the New York market. Several attendees said they remain hopeful, but stressed the need for more consistent enforcement and clearer rules of engagement for retailers and brands.

David Vautrin, CEO of Fluent, echoed her caution, advising new entrants to start small. “Go for a smaller space,” he said. “A lot of folks went big in the beginning, and the overhead is enormous. Your costs are only going up while your margins are going down. The tax situation is grim.” With sales volume softening and price compression tightening profits, Vautrin said retailers must operate lean and avoid getting “too far over your skis.”

Vautrin points to being brand-centric. “Because we’re restricted to three adult-use stores, our biggest opportunity has really been in wholesale,” he said. “Our wholesale business is growing very rapidly, and we’re servicing a few hundred customers already.”

From a retail perspective, Vautrin said success stresses the importance of having the right SKU selection to build sticky customer relationships. There is a dizzying number of strains available. “Retailers need to have a great menu, a good variety, and a very well-educated team in order to sell these products and help move people up the value chain,” he said. His team partners with SeedTalent to train budtenders so they can serve as informed guides for consumers, ideally emphasizing terpene profiles and product effects, not just high THC numbers.

 

Has the Market Reached Its Limit?

“I think we’re there,” said Wilson. “And what’s equilibrium anyway? In ten years, maybe, but five years from now you’ll see a lot of large brands—maybe Gotham will be one of them.” She went on to explain her vision for a balanced ecosystem similar to other mature retail sectors. “There will always be large department-store-style dispensaries, but you’ll also have smaller neighborhood shops, like the local wine or nail salons, where you know the owner and just need something quick. That’s where we’ll end up in terms of balance.”

Wilson said the illicit market remains a major issue. “Every cop in New York City knows where these underground places are, and they have to be stopped, because that’s business they’re taking away from us,” she said. “If you’re going to grow a business, then give us the tools to grow a business. If they did this in the tech industry, you wouldn’t have the big tech companies you have today. They would have all walked away.”

Vautrin countered that true equilibrium is still a long way off. “We’re far from that stage,” he said. “We haven’t even captured a material chunk of the illicit market yet. In the long run, it’s going to be a branding game—brands that can build authentic relationships with customers will end up winning.” He pointed out that “gummy consumers tend to be the most loyal because they want to repeat that experience, while flower consumers tend to be the least loyal because of the variability,” suggesting that future growth will depend on how brands educate and build brand awareness.

 

Bridging Legacy and Legal Markets

Vladamir Batista, co-owner of Happy Munkey dispensaries, offered a more optimistic take, praising the OCM for creating “bridges instead of moats” that allow legacy operators like himself to enter the legal market. “New York has created a program where somebody who was in the illicit market can create a brand, open their own dispensary, and come to the legal market,” Batista said. “I’ve already seen that happening with people I know, and it’s going to continue.”

New York’s legal market has generated around $2 billion in revenue so far this year, and many at the summit predicted the illicit market could be $4 billion. Batista thinks it’s far higher than official estimates and is worth $8 to $10 billion. “New York City is the highest-consuming cannabis city in the world,” he said. “I keep my ear to the ground, the legacy market is definitely shrinking—it’s not as conducive as it once was because price compression in the legal market also drives down prices in the illicit market.”

He believes that as more legacy creativity and customer loyalty migrate to the regulated space, the industry will strengthen rapidly. “As more of that creativity crosses over to the legal market, more consumer emails and databases will get converted to the legal market. It’s going to get really robust, really fast,” Batista said.

Despite acknowledging challenges, he credited the state for giving social equity entrepreneurs a chance to participate. “Without programs like this, you’d lose the battle against the legacy market every time,” he said. “At the end of the day, they’ve been around for 80 years. You’re not going to overtake them—you can only embrace them and help them cross over.”

International Trade and Cannabis Decontamination Considerations

By Jeff Adams
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With shifting perceptions, economic incentives, and the evolution of international regulatory frameworks, more countries around the world are starting to embrace legal cannabis for its medical and recreational uses.

One of the hotspots of legalization remains the European Union, where countries like Malta and Luxembourg have legalized cannabis for adult use, and Switzerland and the Netherlands have pilot programs in place. These pilot programs are temporary, limited initiatives that are implemented by a country’s government to test and gather data on the effects of legalizing and regulating the sale of cannabis. Rather than diving headfirst into full-blown adult-use legalization, many nations will take this approach to study the impact different regulatory models can have in a smaller, controlled environment.

As of May 2024, twenty-one of 27 EU states have legalized cannabis for medical use, with one of the most prominent being Germany. After passing the Cannabis Act (CanG) in April 2024, Germany’s medical cannabis industry expanded rapidly as the legislative action improved patient access and removed some administrative burdens for prescribing physicians.

Reliance on Foreign Partners for Optimal Market Growth and Efficiency
As legal cannabis use spreads globally, nations will need to continue to build and rely on partnerships with one another to provide ongoing support for safety and quality assurance and foster symbiotic market growth. For example, Canada legalized cannabis for adult use in 2018. In the years that followed, the country faced challenges due to oversupply. In 2020, Health Canada reported an excess of 600,000 kilograms of unpackaged dry cannabis flower and an additional 46,413 kilograms of packaged flower. To help counteract the buildup of excess product, Canada has now emerged as the largest exporter of medical-grade cannabis to EU states with thriving medical cannabis markets like Germany.

Quality & Safety Controls for Medical Cannabis

To be able to import cannabis for medical purposes into the EU, it must meet stringent rules and regulations for safety and quality control. Contaminated cannabis has the potential to cause harm, especially to medical patients who are immunocompromised or have respiratory conditions. Several types of contaminants can be found in cannabis, including microbial, particulate, and chemical. Microbial contaminants, including bacteria, viruses, yeast, and mold, can be introduced to the product from the environment, raw materials, equipment, or personnel.

Good Agricultural and Collection Practice (GACP)
A first step in quality assurance for medical cannabis is the Good Agricultural and Collection Practice (GACP). GACP provides broad technical guidance on collecting high-quality medicinal plant materials for herbal goods classified as medicines, including medical cannabis. The goals of GACP are to ensure the quality of medicinal plants by providing a broad guide on quality, safety, and efficacy, establishing standard operating procedures, and encouraging and supporting the sustainable cultivation and collection of high-quality plants for medicinal purposes.

European Union-Good Manufacturing Practice (EU GMP) Certification

Developed by regulatory agencies such as Health Canada, the U.S. Food and Drug Administration (FDA), and the World Health Organization (WHO), the European Union-Good Manufacturing Practice (EU GMP) certification is one of the most stringent sets of standards in the international pharmaceutical industry. Regardless of where the cannabis originates from, the product must be GMP-compliant to be sold in the EU.

Under GMP standards, products must be:

  • Of consistent high quality;
  • Appropriate for intended use;
  • Meet the requirements of the marketing association or the clinical trial authorization.

Cannabis must pass regular quality control testing to ensure the product meets the standards for potency, purity, and consistency. The flower must be tested for the presence of microbial contaminants. The goal of a manufacturer following GMP standards is a contamination rate as close to zero as possible. If contaminants are found, the product must be decontaminated and retested, or it risks being rejected and destroyed.

Additional Considerations for Decontamination Tech

Since quality control testing is a significant step in meeting EU GMP compliance, decontamination technology may also play a crucial role in the process. Tech using X-ray, gamma-ray irradiation, ozone gas, or radiofrequency, among others, may be used to decontaminate cannabis of specific microbes.

For example:

  • X-ray decontamination – Highly effective on mold, bacteria, and spores.
  • Gamma-ray irradiation – Highly effective against all microbes, including spores, but can be harmful to the plant because of intense doses.
  • Ozone gas – Effective for mold, mildew, and bacteria. Decontaminates at the surface level only.
  • Radiofrequency – Kills mold, yeast, and bacteria. Has the potential to heat the plant and affect its integrity.

While the technology itself does not need to be EU GMP certified, the decontamination technology and process must be compatible with the EU GMP processes of the cultivator and manufacturer, or risk negating their certification.

My company, XRpure, specializes in producing decontamination systems – our models include the XR16 and the XR12 – that allow X-rays to penetrate through cannabis flower and neutralize microbes while preserving its cannabinoid profile.

We recently announced our company’s expansion into Canada to service cultivators and producers exporting medical cannabis to the EU. We are currently implementing several advancements to our technology to align with EU GMP processes, as well as achieving new milestones to demonstrate compliance with foreign directives.

We are currently implementing several changes to the technology’s user interface, including the addition of user profiles in the software: a user profile, an administrator profile (used to set up new users), and an engineer profile (used to set up new recipes). Additionally, we are currently seeking to obtain the CE mark for electrical safety on our decontamination systems. A CE mark signifies that the manufacturer has declared the product complies with all applicable EU directives for safety, health, and environmental protection.

Depending on the system and the process of the cannabis cultivator or manufacturer, other changes to the technology may be required to comply with their EU GMP processes.

As the global cannabis industry continues to expand, countries will continue to rely on foreign partnerships to foster collaboration, innovation, growth, and support for their burgeoning markets. The EU remains an area for cannabis industry expansion, especially in medical markets such as Germany. To support a large base of medical cannabis patients, Germany relies heavily on import partners like Canada for its supply.

 

For countries seeking to balance growth with safety and compliance, meeting EU GMP and GACP standards is crucial. Technologies like decontamination systems demonstrate how innovation and regulatory oversight can work in tandem to ensure product safety, consistency, and intended use. By continuing to progress alongside evolving international frameworks, the global cannabis industry can achieve sustainable, long-term growth and deliver high-quality products to patients and consumers.

 

 

 

Drug Policy Alliance Founder Fires Up The Audience At The Business of Cannabis Event

By Pam Chmiel
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The highlight of the Business of Cannabis event, held at the Wythe Hotel in Williamsburg, a hip neighborhood in Brooklyn, New York, was the keynote speaker. Ethan Nadelmann, founder of the Drug Policy Alliance, has since retired from his position but continues to mentor and serve on the board of Green Thumb Industries. He kicked off the afternoon panels with a fiery address that had the audience cheering him on.

 

“I’m guessing the vast majority of you have no idea who I am. Simplest way to say it is, I’m your fucking daddy, and you don’t even know.”

 

The crowd erupted with laughter as Nadelmann launched into a passionate reflection on his three decades leading the fight to end marijuana prohibition. He reminded the room that before there was an industry, there was a movement built on outrage, principle, and justice.

He recounted how, in 1996, he helped lead the campaign that made California the first state to legalize medical marijuana, and later founded the Drug Policy Alliance to fight the broader drug war and reframe addiction as a health issue rather than a criminal one.

 

“I didn’t do this for the industry,” he said. “I did it because I was pissed off—pissed that people were being arrested, discriminated against, lied to, and locked up for smoking a plant.”

 

He explained that the legalization movement was not driven by corporate interests but by philanthropists and activists from across the political spectrum who believed Prohibition was unjust. “From 1996 to 2016,” he said, “the role of industry in funding reform was almost zero.”

Nadelmann reflected on how unimaginable today’s market once seemed. In the 1980s, only 23 percent of Americans supported legalization. Dispensaries were not even a concept when he began organizing. “We knew marijuana had legitimate medical value,” he said, “but we had no idea how incredibly diverse this could become.”

Turning to the present, he noted that “half the country is now legal,” citing Virginia’s recent progress and growing optimism in Florida and Pennsylvania. “I know most of you focus on New York and New Jersey,” he added, “but I’m a big-picture guy.”

He warned that unresolved federal issues could reshape the industry overnight, particularly the ongoing debate around intoxicating hemp products. “Do we know what’s going to happen with the Farm Bill and that loophole? Will the whole thing be turned upside down? And if they close the Farm Bill loophole and allow the hemp beverages, will they actually enforce it?”

Nadelmann questioned whether hemp and cannabis markets might inevitably merge, given that THC from hemp and cannabis is virtually indistinguishable. “In blind tests, people cannot tell the difference between cannabis products and the hemp THC stuff,” he said. “From a health perspective, when they’re properly regulated, there is no difference. Doesn’t it seem inevitable that the markets are just going to eventually merge?”

He also raised concerns about price compression, competition, and the potential for market consolidation. “Is New York going to become like Michigan? Are we going to see a race to the bottom in terms of price?” he asked, noting that while the illicit market may eventually decline in a well-regulated system, its persistence continues to complicate state programs.

Reflecting on broader economic trends, Nadelmann wondered whether national legalization would lead to massive consolidation or a revival of small operators. He compared cannabis to other industries that evolved over time. “When I moved back to New York 30 years ago, there were hundreds of small coffee shops until Starbucks came along and wiped them out. Now there are more single-owner coffee shops than there were before. The same thing happened with alcohol after Prohibition—large corporations took over, then decades later, we saw the rise of microbreweries and craft distilleries. So we don’t really know how this plays out.”

When asked if legalization was truly “locked in,” Nadelmann cautioned against complacency. “We don’t have to worry about rollback, right? I don’t know,” he said. “Support for legalization peaked two years ago. A couple of polls show Republican support dropping 10 to 14 points just in the last year and a half. Some organizations are already trying to reverse ballot initiatives in states like Massachusetts. If they succeed, that affects the national picture. What happens in New York or Massachusetts matters everywhere.”

He warned that despite the industry’s success, public perception remains fragile. “We know cannabis is a psychoactive substance. We all know people who use it too much or who shouldn’t be using it. We don’t want kids waking and baking. We got lucky that teenage use stayed constant after legalization, but if those numbers start to rise, never underestimate the ability of this country to do something really stupid when it comes to drugs.”

Drawing on history, he reminded the audience that the United States was the only nation to impose a constitutional amendment banning alcohol. “That’s how stupid we were,” he said. “This country can do stupid stuff over and over again, and it’s therefore incumbent upon people in this industry to be smart about how we proceed.”

Still, he offered reasons for optimism, citing growing evidence that cannabis may substitute for opioids in pain management and that cannabis beverages appear to be replacing alcohol for some consumers, which he called a net public health benefit.

 

But he urged balance and responsibility. “We know more people are using cannabis daily. For many, that’s fine, but for some, it’s not. You talk to psychiatrists, and they’ll tell you they’re seeing more young people with cannabis use disorder. You can’t ignore that,” he said.

 

As he closed, Nadelmann widened his focus to the broader “psychedelic renaissance,” calling it one of the most exciting social and scientific movements of the past few decades. He drew parallels between today’s psychedelic reform efforts and the early days of marijuana legalization, with states like Colorado and Oregon already leading through therapeutic programs. He predicted a multi-billion-dollar medicinal psychedelics industry on the horizon. He suggested that pharmaceutical companies—once obstacles to cannabis reform—could now play a positive role in legitimizing plant-based medicines.

 

“They may, in fact, be playing a helpful role,” he said, “because as they figure out which components of the cannabis plant are truly medicinal, they’ll help to legitimize cannabis as something positive.”

 

He then challenged the audience to think even bigger: “Are we going to become a society that allows people to use the substances they want to alter their state of consciousness without being punished, and regulate it in a smart way? Or are we going to find ourselves rolling back suddenly?”

Nadelmann likened the cannabis movement to the fight for marriage equality—two social revolutions that seemed impossible a generation ago but are now broadly accepted.

“These things were inconceivable 40 years ago, and they now seem locked in,” he said. “But they’re not totally locked in. We have to pay attention.”

 

How Does the X-Ray Method Work in Decontamination?

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As cannabis production scales and testing standards tighten, cultivators face increasing pressure to ensure their products are free from harmful microbes without compromising quality. Decontamination, the process of removing or killing microorganisms, has become a common step in post-harvest processing. Traditional methods come with trade-offs that can alter the plant’s potency, aroma, or appearance.

Until recently, most producers relied on heat-based techniques, such as pasteurization, or surface treatments, including ozone and ultraviolet (UV) light exposure. While effective in food and agriculture, these methods often fail to penetrate dense cannabis flowers, allowing microbes hidden deep inside to survive. Other approaches, such as gamma and electron-beam (E-beam) irradiation, have been used safely in the food industry for decades to sterilize spices, produce, and packaged goods without affecting nutritional quality or taste.

Now, X-ray decontamination is emerging as a promising adaptation of these proven methods for cannabis. The technology penetrates through the entire flower, destroying microbial DNA while leaving cannabinoids and terpenes intact.

 

Jeff Adams, founder of XRPure, explains the process through a simple visual analogy:

“If you imagine a single mold spore as the size of a golf ball,” Adams says, “the DNA strands inside that spore are about the size of a needle. The X-rays, on that same scale, are the size of those needles—they pass through the ‘golf ball’ and target the DNA directly.”

 

Because plant cells are vastly larger on this scale, roughly fifteen feet in diameter, the X-rays pass through them virtually untouched.

 

“They’re targeting only the things that are on their size scale,” he adds, “which makes X-ray particularly effective at killing microbes while leaving the rest of the plant unharmed.”

 

By contrast, chemical or fog-based decontamination methods rely on molecules that interact with terpene and cannabinoid compounds of similar size, raising the risk of chemical reactions that can degrade flavor and aroma. X-ray avoids this issue entirely by working on a different physical scale.

Finally, Adams and his team note that X-ray systems meet the highest FDA safety standards and are sealed to prevent any radiation leakage. Operators don’t require special protective equipment or restricted rooms. “It’s a very safe, simple, and efficient technology,” says Sales Manager Joseph Bancheri, “that’s already built to comply with federal safety protocols if and when national cannabis legalization arrives.”

The Industry Has A Mold Problem

Despite the technology’s promise, decontamination in general is an ongoing debate within the cannabis industry. Some purists argue that remediation of any kind undermines the plant’s natural integrity, insisting that skilled cultivators should be able to grow clean cannabis without relying on post-harvest interventions.

Jeff Adams, founder of XRPure, acknowledges that sentiment but believes X-ray remediation represents a fundamentally different approach from heat or chemical-based methods. “One interesting thing about X-ray,” Adams explains, “is that the wavelength is almost exactly the same size as the DNA strand in a microbe. As it passes through the flower, those DNA strands absorb energy from the X-ray, which breaks them apart and essentially kills the microbe. It’s not a chemical reaction with the plant; it’s literally targeting the microbial DNA.”

That precise mechanism is what makes X-ray decontamination less likely to alter the plant’s terpenes and cannabinoids. “We completely understand the concern about maintaining quality,” Adams says. “Ideally, everyone would grow perfectly clean cannabis. But the reality is that the same environment that’s good for cultivating a plant is also good for growing microbes. Even the best operations in the country struggle with mold and mildew contamination.”

For producers operating at scale, those challenges can be costly. Adams points out that even small microbial contamination can lead to failed lab tests, lost batches, and reputational damage. “We provide a way to address contamination immediately after harvest—before packaging—so the product stays stable and clean on the shelf,” he explains.

Regardless, there’s a stigma. Cannabis that has been “treated” or “remediated” often sells for less, and many growers choose not to disclose the use of decontamination technology. “That’s just the reality of the market right now,” Adams says. “But we believe that clean cannabis is actually better for consumers. No one wants to inhale mold spores, and medical patients can be especially sensitive.”

Interestingly, consumer perception may be shifting. Adams cites a recent survey the company conducted showing that while 90% of respondents wanted transparency about whether a product had been remediated, 56% said they would be more likely to purchase treated cannabis, particularly in the medical market.

Sales Manager Joseph Bancheri adds that skepticism often comes down to scale and economics. “Some of the smaller or legacy-style growers, what I call the ‘tree-hugger naturalists’, don’t want to use any kind of remediation,” he says. “I get it. But if you’re losing 10% of your crop to microbials, that’s a big hit. Once you’re producing 100 pounds or more per month, it starts making sense to have an in-house system or send it out for treatment.”

Bancheri also points out that testing standards vary dramatically by state. Nevada allows up to 10,000 colony-forming units (CFU) per gram of microbial matter, while Illinois caps it at 1,000, and some states go as high as 100,000. “At 10,000 CFU, you’re in a reasonable middle ground,” Adams notes. “It protects medical patients but still allows growers to operate realistically. At 1,000 CFU, it becomes challenging, even for the cleanest facilities.”

Aspergillus, the common black mold sometimes found in household bathrooms, remains the biggest microbial culprit and is strictly prohibited in most states. “It’s airborne, it’s everywhere,” Adams says. “Even a sealed HVAC system can’t completely prevent it. And when you’re inhaling, your lungs don’t have the same defenses your stomach does when you eat contaminated food. That’s why this matters for public health.”

For now, the patchwork of state regulations keeps the debate alive. “Every state is its own island,” Bancheri adds. “Some base their limits on food safety data, others make up their own thresholds. Until there’s federal legalization, it’s going to stay inconsistent.”

Cost vs. Benefits

But for many growers, cost remains the deciding factor. “The biggest complaint out there,” Adams concedes, “is that people don’t want to add one more expense to their production. X-ray technology is more expensive than other remediation methods. But when you look at the numbers, the payback can happen very fast. Cannabis is a valuable product, and your losses can pile up quickly.”

To help make the technology accessible, XRPure offers leasing programs that spread costs across three- or four-year terms, covering both the machine and its maintenance. “That way, you don’t have to come up with a big chunk of money all at once,” Adams says. “For cultivators producing 300 to 400 pounds per month, the math works out—they’re actually saving money. For smaller growers, there are toll processors that can run the service for them, and we’re about to launch a mobile system that can drive right up to your farm, process your flower, and move on to the next.”

While X-ray delivers what Adams calls “the very best decontamination process,” it remains one piece of a broader post-harvest preservation puzzle—from packaging to retail storage. It’s challenging out there, but investing in technology that protects the plant’s integrity and keeps customers coming back can pay off in the long term.

 

Adams adds, “We’re just one piece of the puzzle, but hopefully a helpful one. As the industry moves toward medical markets and stricter standards, clean cannabis will equal quality cannabis. And organizations like ASTM are already laying the groundwork for those federal-level best practices once legalization happens nationwide.”

You can hear Jeff and Joe’s full interview on the Innovating Cannabis Podcast. 

The State Of New York’s Cannabis Industry 2025

By Pam Chmiel
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Jason Ambrosino, a disabled Army veteran and founder of Veterans Holdings, entered the New York market in 2019 under the state’s hemp program with the goal of cultivating and manufacturing cannabis. But despite holding a 5,000-square-foot indoor cultivation license, he decided not to build out his facility. The reason, he says, is simple: “The registered organizations (ROs) in New York State own the flower industry. They own it. You’re not going to break in.”

Ambrosino explained that the state’s vertically integrated ROs, many of which started as medical operators, dominate the adult-use flower market with massive 100,000-square-foot indoor canopies and the ability to negotiate favorable energy rates. “The number one driver of indoor flower price anywhere is electricity cost,” he said. “Where I am in New York State, it’s 23 cents a kilowatt hour. The ROs can negotiate directly for 7, 8, or 9 cents per kilowatt-hour because of their size. There will never be a day when I can operate in the market alongside them, because it costs me twice as much to grow as it does them.” He said that disparity makes small-scale cultivation unviable for most new entrants.

Ambrosino estimates that it could cost him roughly $600 per pound to grow cannabis, while the ROs can do it for about half that. “You don’t really think about it until you end up paying for a license, only to find out the utility prices are so high that you can’t make it work,” he said.

He believes the state’s adult-use rollout created an illusion of opportunity for small hemp farmers and microbusinesses. “They used the illusion of inclusion to gain public support,” he said. “They built protections that were meant to keep ROs out for three years to create a level playing field, but these protections were stripped away after enough lobbying dollars were spent.”

According to Ambrosino, large operators pressured lawmakers by withholding financial commitments to social equity programs until they received favorable terms. “They held them hostage,” he said. “They told lawmakers, ‘We’re not going to pay you any of that money until you give us a more favorable law.’ So, they changed it.”

The result, he says, is a market where ROs hold most of the canopy, while smaller cultivators face high costs, limited access, and few realistic paths to profitability. “Right now, microbusinesses are structured for failure,” Ambrosino said. “They’re trying to sell flower at $60 when dispensaries can get indoor-grown product from ROs for $30 or $35. You can’t compete with that.”

Mismatched Policy, Manipulated Data, and a Market Set to Run Dry

Ambrosino says the Office of Cannabis Management (OCM) has failed to recognize the growing imbalance between large registered organizations and small cultivators. “The data OCM puts out is very manipulated and questionable,” he said. “They conflict with what they report from one day to the next. One day, there’s not enough canopy, the next day, there’s too much. It’s all over the place. They’ll show you all the potential canopy of adult-use license holders, but the reality is 80% of them aren’t growing, or they’re only using part of their allotted space. Meanwhile, the ROs are operating at a massive scale.”

He believes this disconnect has led policymakers to think there’s an oversupply problem when in reality there’s a shortage of affordable biomass. “OCM looks at flower canopy, not biomass canopy,” Ambrosino said. “We don’t have enough biomass to produce distillate, and distillate is what sets the price for everything.”

Ambrosino, who sits on the board of the Association of New York Cannabis Processors, says the solution starts with expanding outdoor cultivation. “We’ve been lobbying the state to raise the outdoor cap from one acre to five,” he explained. “They keep saying there’s enough canopy, but that’s not true if you want a functioning processing and manufacturing sector.”

He also believes OCM steered small farmers in the wrong direction. “They convinced these guys to grow indoors when they had no capital to begin with,” he said. “Outdoor grows are cheaper, more sustainable, and can produce terpene-rich material that’s perfect for extraction. Giving up those outdoor licenses was the worst thing they could have done.”

Ambrosino sees the industry’s structural problems fueling a deeper issue: product inversion. “Inversion is like a cancer tumor,” he said. “Everyone — dispensaries, processors, cultivators — is supporting it. If OCM just cuts it out overnight, the market will bleed to death. We have to shrink the tumor first. The only way to do that is to expand cultivation enough that it doesn’t make sense to invert.”

Licensing Gridlock and Market Whiplash

Dispensary operators say New York’s market isn’t just constrained by bureaucracy, it’s tangled in its own rules. Jon Paul Pezzo, owner of NYC Bud dispensary, believes the state’s proximity restrictions have unintentionally frozen the licensing process. “You have a lot of people that are holding proximities because they’re in the December queue or they just have a proximity,” he explained. “Some may have abandoned their license or run out of money, but those spots are still locked up. That means someone with an actual license can’t move forward.” Pezzo said that while rolling out the market slowly may have helped at first, the process has caused problems on all sides.

Now that the agency is considering waiving its 1,000-foot proximity rule to allow more dispensaries to open, Pezzo worries it’s too soon for such sweeping changes. “The industry isn’t even five years old,” he said. “Let it play out before you start rewriting the rules. If we had known these laws would change this quickly, maybe we would have invested differently.”

He added that while OCM claims to solicit feedback from operators, the process feels one-sided. “I’ve been to many OCM meetings where everyone’s frustrated, and the regulators just sit there getting yelled at,” he said. “At some point, they just shut down. I don’t think they’re really listening to logic.”

The Data Gap: METRC, Testing, and a Lack of Standards

Ambrosino believes New York’s lack of standardized testing and tracking has left the industry vulnerable to chaos. “If you want a juicy nugget, I’ll tell you where to look,” he said. “It’s in the testing, and it’s in the labs. If you dig deep enough, you’ll find that all of our labs are invalid because they were supposed to be updated by Wadsworth Labs, the state police lab that never got the equipment. Because of that, every lab is operating under its own standard. There’s no standardization between labs, and nobody knows.”

That lack of consistency, he warns, could have far-reaching financial consequences. When potency-based taxes were imposed, each lab’s different results meant the state effectively collected taxes on unverified data. “Don’t be surprised if people start demanding money back for what they overpaid in potency taxes,” Ambrosino said.

A long-promised track-and-trace system could have helped prevent some of this disarray, but the rollout has been repeatedly delayed. After three years, the agency now says METRC will finally be implemented in January.

Jon Paul Pezzo says the delay has left retailers struggling with manual systems that are prone to human error. “In a perfect world, this should work like a supermarket—product comes in, product goes out, and it’s all scanned into one universal system,” he explained. “Instead, we’re manually entering everything, and that leads to mislabeled products and bad data. For something that’s a controlled substance, that’s unacceptable.”

He believes a fully integrated METRC system could finally bring order to the process. “You’d have cultivators logging shipments, dispensaries scanning them in, and all the details automatically syncing,” Pezzo said. “It would make everyone’s life easier and protect the business as a whole. I just don’t understand why it’s taken this long.”

The Hemp Loophole is Undermining New York’s Legal Market

“The entire industry is using the hemp loophole,” Ambrosino said, describing a troubling double standard: OCM forced him to remove hemp-derived products from his website even though the regulations permitted out-of-state sales for products under the .3% threshold, while companies like Sluggers continue to sell high-potency “THCA hemp” products directly to New Yorkers online.

“This stuff they’re calling hemp, it’s not hemp, it’s marijuana,” he said. “We have to be smarter. It’s deceptive, and it’s hurting the legal operators who are trying to play by the rules.”

Ambrosino says that without proper lab oversight and product tracking, hemp-derived cannabinoids like THCA are slipping through regulatory cracks, further undermining the licensed market.

How ESOPs Can Save Cannabis Businesses A Ton of Money While Doing Good

By Darren Gleeman
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What most people don’t realize is that there is an entirely legal, proven way to increase a company’s profit margins. It’s called an Employee Stock Ownership Plan, or ESOP.

In cannabis, it sometimes feels like every financial conversation ends the same way: “If not for 280E, we’d be thriving.” That line gets repeated in boardrooms and investor decks across the country, and for good reason. Section 280E has choked margins, slowed growth, and kept great operators from building real wealth.

What most people don’t realize is that there is an entirely legal, proven way to increase a company’s bottom line. It’s called an Employee Stock Ownership Plan, or ESOP.

The problem is that when people in cannabis hear “ESOP,” they often imagine a maze of red tape, confusing tax rules, and loss of control. Some think it sounds too good to be true. Others assume it’s only for Fortune 500 companies.

None of that is accurate. ESOPs have been part of U.S. tax law for fifty years. They’ve been tested, audited, and refined by Congress and the IRS many times over. What’s new is how we’re applying them to cannabis.

Let’s separate fact from fiction.

 

Myth #1: ESOPs Are Too Complex for Cannabis Businesses

Fact: ESOPs aren’t complicated; they’re structured.

Complex doesn’t mean chaotic. The ESOP process is built on structure—specific steps, professional oversight, and a framework that’s been refined for decades. Cannabis operators already deal with licensing, banking, and compliance frameworks that make ESOP implementation look simple by comparison.

With the right team of advisors, setting up an ESOP is no more difficult than selling to a private equity group. The difference is that an ESOP retains the value within your company, rather than transferring it to outside investors.

 

Myth #2: You’ll Lose Control of Your Company

Fact: ESOPs are designed to be flexible. You decide how and when ownership changes hands.

An ESOP doesn’t take your company away overnight. It lets you sell shares over time, at your pace, while continuing to lead. You remain the CEO, set the strategic direction, and determine when, or if, you step back. Employees become shareholders, but they don’t manage the business day-to-day.

 

Think of it as succession planning with stability built in. You can gradually transfer ownership without losing control of what you built.

 

Myth #3: ESOPs Don’t Deliver Fair Market Value

Fact: The law requires ESOPs to pay fair market value, which independent valuation firms verify.

When you sell to an ESOP, the price is based on the same valuation principles used in mergers and acquisitions. There’s no “friends and family” discount. And because ESOPs qualify for capital gains deferral under Section 1042, sellers often end up with more after-tax value than they would in a traditional sale.

You’re selling to your employees, not giving the business away. The transaction adheres to the same financial standards as any other corporate transaction.

 

Myth #4: ESOPs Create Too Much Debt

Fact: ESOP debt is paid with pre-tax dollars, and it pays for itself, and if the company is 100% owned by an ESOP, the company pays zero income taxes

Unlike conventional debt, ESOP loans are self-liquidating. The company makes contributions to the ESOP trust, deducts them from taxable income, and those contributions repay the loan.

In cannabis, that’s a game changer. Under 280E, many companies lose 60 percent of their profits to taxes. With an ESOP, those profits stay in the business. The Gleeman Model eliminates the 280E burden entirely. With tax pressure lifted, operators can shift their focus from survival to strategy. The money that once went to the IRS can now be used to fund expansion, new equipment, or well-deserved bonuses for their teams.

 

Myth #5: ESOPs Only Work for Big Companies

Fact: Most ESOPs are small to mid-sized, founder-led businesses.

Across the U.S., the average ESOP company has between 50 and 200 employees. These are construction firms, food producers, and professional services businesses, not global corporations. They succeed because ESOPs align ownership with culture, giving employees a vested interest in the company’s success.

Cannabis companies with EBITDA exceeding $ 2.5 million are ideal candidates. These firms are entrepreneurial, closely held, and value legacy and employee retention. Those are the companies that benefit most from employee ownership.

 

Myth #6: Employees Can’t Handle Ownership

Fact: Ownership doesn’t mean management. It means alignment.

ESOP participants don’t vote on business strategy or day-to-day operations. They hold shares in a trust and earn value as the company’s value increases. That structure provides employees with a tangible reason to care about the company’s performance. When people have a genuine stake in the outcome, they pay closer attention to quality, take ownership of their work, and seek ways to improve efficiency.

 

Myth #7: ESOPs Don’t Work in Highly Regulated Industries

Fact: ESOPs were created to function in regulated environments.

They fall under the oversight of the Department of Labor and the IRS, and every plan undergoes an annual valuation and compliance review. In contrast to the constantly changing rules in cannabis, ESOPs offer a level of structure and predictability that’s rare in this industry.

They’ve worked for defense contractors, banks, and utilities—sectors with far tighter oversight than cannabis. The framework is clear, tested, and fully compliant with federal standards.

 

Myth #8: Selling to Private Equity Is Easier

Fact: Private equity is not necessarily faster, and it often comes at the cost of your culture.

Selling to private equity usually means an aggressive timeline, leveraged buyouts, and a complete change in leadership. ESOPs, on the other hand, let founders exit gradually, keep jobs local, and preserve the company’s mission.

Private equity is designed for short-term return. ESOPs aren’t built for quick wins. They’re built to last. The best structure for you comes down to what kind of business you want to leave behind and who you want it to serve when you’re gone.

 

Myth #9: ESOPs Don’t Offer Real Tax Benefits

Fact: No other ownership model comes close.

A 100 percent ESOP-owned S-Corporation pays no federal or state income tax. Ever. Sellers can defer capital gains indefinitely. Combined, these two features make ESOPs the most tax-efficient structure available.

For cannabis operators paying crushing 280E rates, that’s not a minor advantage; it’s a survival strategy. Freeing up that much cash flow can double profitability and open the door to expansion or acquisitions that once felt impossible.

 

Myth #10: ESOPs Are “Too Good to Be True”

Fact: They’re underused and misunderstood.

Thousands of American companies are owned by an ESOP, which, together, employs more than 14 million people. Think Publix, W.L. Gore, or New Belgium Brewing. All are proof that when employees share in ownership, companies tend to last longer and grow stronger.

The only reason ESOPs sound extraordinary is that most cannabis owners have never seen one in practice. However, the model has already been proven in more than 10 cannabis companies.

 

The Bottom Line

ESOPs aren’t a tax trick or an accounting loophole. They’re the product of decades of bipartisan legislation designed to reward broad ownership and long-term growth.

Skepticism is understandable, especially in cannabis, where operators are constantly warned to avoid anything that sounds unconventional. But in this case, the “too good to be true” option is actually the one most deeply rooted in U.S. law.

For business owners still battling the 280E tax, ESOPs are no longer a fringe idea. They’re a lifeline. They transform a broken tax environment into an advantage, align teams through shared ownership, and enable founders to exit with both wealth and integrity intact.

Ignoring ESOPs isn’t cautious; it’s costly. The facts are there. The framework is legal. The opportunity is real.

The question now isn’t whether ESOPs work. It’s whether the cannabis industry is ready to use them.

You can hear Darren Gleemans’ full interview on the Innovating Cannabis Podcast to dive deeper into ESOPS.