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Financing the Cannabis Industry Part 2: A Q&A with Pelorus Equity Group Managing Partner, Travis Goad

By Aaron Green
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Businesses often require outside capital to finance operating activities and to enable scaling and growth. Financing in the cannabis industry is notoriously challenging with regulatory obstacles at the local, state and federal levels. Recent market dynamics pose additional challenges for both financiers and cannabis operators.

We sat down with Travis Goad, Managing Partner of Pelorus Equity Group to learn more about Pelorus and to get his perspective on recent market trends.

Aaron Green: In a nutshell, what is your investment/lending philosophy?

Travis Goad: Our investment and lending philosophy is focused on being honest, upfront and doing what we say we’re going to do for both our borrowers and our investors. At Pelorus, we lend against cannabis-use real estate assets.

Every lender in this space is a hybrid between real estate and corporate lending. However, if you think about it as a political spectrum, with one side being pure real estate lending and the other pure corporate lending, Pelorus is as close as you can be to pure real estate lending in this sector while also being properly collateralized. What sets us apart from our recently launched lending peers is that we lend against the real estate asset value only, even though we’re collateralized by the real estate and license.

We lend between 60% to 75% of the value of the real estate, which means sponsors need to raise equity for the 25% to 40% remainder of the project cost. This allows us to be covenant-lite for our borrowers while giving them the flexibility to grow their business as they see fit.

Travis Goad, Managing Partner at Pelorus Equity Group

The other lending options in the space are much different. While our lending peers may call themselves mortgage REITs, they really are based on a business development company (BDC) lending model. While they may lend borrowers as much as 150% to 180% of the real estate value, they will require significant financial covenants, require control of major decisions and most often want a board seat. We’ve seen this model severely hamstring growth of companies.

The third option available to sponsors is a sale-leaseback. In this structure, lenders will buy your real estate for 100% of the value, but require you to enter into a 15-to-20-year lease that increases 3% each year. There is a temporary benefit to this model from a federal tax perspective, but that will go away when 280E is addressed, either by descheduling cannabis or amending the tax code.

While this structure means you don’t have to raise equity, it gives up the most valuable asset cannabis companies have in the early stages of the industry. Once you sell this asset, it hampers optionality for sponsors – and in a fast-growing industry like cannabis – optionality is the most critical thing a company has. Pelorus’ structure allows maximum optionality, as well as the ability to lower your cost of capital as the industry matures.

From an investor standpoint, they should know that the BDC and sale-leaseback models are a lot riskier than our model. While we’ve seen those models work well in mature industries, we think the cannabis industry is too early-stage and too volatile to go that far out on the risk spectrum. We have the longest history in the space of deploying capital successfully and seeing it returned. Prior to making any loans, we spend a lot of time underwriting the company we’re working with, the real estate and the projections. We look for strong sponsors, great projects and attractive markets.

Before we entered the cannabis lending space, our team at Pelorus had more than 5,000 transactions under our belt, worth $5B, and we leveraged our decades of underwriting experience when starting the Pelorus Fund. As the first dedicated lender in the cannabis space, we have more data and experience than anyone in terms of transactional volume – we’ve looked at more than 2,000 deals and have made 71 deals, worth $468M. We know the intricacies of every market, the particular ordinances, what the costs should be, and utilize the data to help our borrowers succeed. Through our deals and sustained success, we’ve made a name for ourselves as the most trusted and efficient lender in the cannabis space.

Green: What types of companies are you primarily financing? 

Goad: We finance construction and stabilized loans for a range of clients including MSOs, SSOs and ancillary companies. We don’t lend on outdoor cultivation, but are open to working with any cannabis-related business that has commercial real estate, strong financials and experience in the cannabis space. Today, our sweet spot is closing loans in the $10M to $30M per transaction range, but we can fund loans $100M+ and as low as $5M. Since 2016, we’ve financed 4.2M feet of cannabis-use properties for a total of $468M in loans – roughly 15% to 20% of the entire US market.

Green: What qualities do you look for in a cannabis industry operator or operating group?

Goad: We are meticulous in our underwriting process and underwrite the company, the real estate and the market. We’re one of the few lenders today that has capital to deploy, which has given us the opportunity to continue to take market share while also increasing the quality of our borrowers. Whether you’re an MSO, smaller state operator or ancillary business, we recognize quality across the sector. Brand affinity and shelf space are critical in this market, and we like working with companies that have a competitive edge in getting their branded product to customers. We try to target companies that offer a unique product, or have a unique position within the state they are located.

To qualify for our lending program, borrowers need to own their real estate. If the sponsors own the real estate or intend to own the real estate, we offer two main lending products: we provide construction loans that range between 60% to 75% of the project that are typically 18-month terms; and more recently implemented, we also lend on fully stabilized assets that are cash flowing and operational up to 75% of the value and up to a 5-year term.

By the time a borrower comes to us, they should already have a license (or be acquiring a license at closing), have their required equity raised to completely fund the project and have all local approvals to begin construction.

Green: Capital market dynamics have led to significant public cannabis company revaluations in 2022. How has this affected your business? 

Goad: As far as how market dynamics have impacted our fund, we’ve been pretty insulated because we are a privately held company. From our inception, we’ve worked hard to create an innovative model, and have had many firsts. We were: the first dedicated lender in the cannabis sector; the first lender to become a private mortgage REIT; the first to be issued an FDIC warehouse line of credit; the first to get an investment grade rating; the first to issue an unsecured bond with institutional investors; the first to update our fund to a billion dollars. Amid all these firsts, we made a conscious decision not to go public. This has been one of the best decisions we’ve made and has shielded us from much of the market volatility we are seeing.

As for the broader market, we’ve seen our sponsors that are publicly traded impacted pretty significantly by the recent market dynamics. We’ve also seen flow-on effects for non-publicly traded firms. Our loan book is performing excellently, but we’re in a very challenging market for marijuana-related businesses to raise equity, making debt even more attractive. For most of our competitors, who chose to go public, they’ve been unable to raise much capital to deploy, whereas our market share is increasing and we continue to grow in this tough environment. We remain bullish on the sector in the medium/long term and are finding excellent opportunities to lend in this challenging environment.

Green: Debt on cannabis companies balance sheets have increased significantly in recent years. What is your perspective on that?

Goad: Increased access to debt capital markets is a sign of a maturing market. The U.S. cannabis sector has a great tailwind with growth of new markets, but it’s facing some significant headwinds tied to tax inefficiencies and inadequate state-level enforcement. All of these issues can be solved with political action, but so far that hasn’t happened and it’s causing pain in the industry. These industry dynamics are set against a broader macro backdrop of risk-asset repricing and increased volatility, which leads to outsized volatility in cannabis due to limited liquidity. That increased volatility has made it very challenging to raise equity in this market.

For companies that have strong assets on their balance sheet, they’re still able to access capital via the debt markets. This is creating clear winners and losers, as companies that choose to sell their real estate have significantly fewer capital raising options than those that choose to keep real estate assets on their balance sheets. Overall, this increased debt trend has been great for our business – our pipeline has increased rapidly and we’re able to lend to strong operators with solid assets at attractive rates for investors. Our fund continues to have inflows, and since we’re one of the few lenders with capital to deploy, we’re still open for business and deploying capital in this challenging environment.

Green: How does the lack of institutional investor participation in the cannabis industry affect your business? 

Goad: The current regulatory environment impacts the type of investor that comes into this space. Rather than being dominated by institutions, this sector has largely been funded by retail investors and family offices. This has created challenges in aggregating large amounts of capital, both on the operator and the debt-fund side of the business. It can lead to delays in loan closings, as it takes borrowers a longer amount of time to raise the required equity to close their transaction. As we’re seeing with our publicly traded peer group, it can also lead to lenders having trouble raising capital to deploy. As for Pelorus, we’ve been very fortunate that our length of time in the industry and track record of successfully making loans and having them repaid has set us apart in fundraising. Our decision to stay private has been a critical factor in our fundraising success as well. Overall, the lack of institutional investor participation is a double-edged sword: the lack of liquidity has caused challenges broadly, but since we’ve had significant capital to deploy, it’s created great opportunities for us to make loans with attractive risk/returns in this challenging market.

Green: What would you like to see in either state or federal legalization?

Goad: Given the stalemate in the Senate and the sharp bipartisan divide, I don’t think federal legalization will happen during this administration. That said, there are incremental actions that the government should take to strengthen the cannabis sector. First of all, the Cole Memo needs to be reinstated to add additional protections for cannabis and cannabis-related businesses. As 280E has clearly been detrimental to the overall health of the cannabis industry, we also believe the tax code should be amended, or better yet, we should address the conflict between state and federal policy. We also need to get SAFE Banking approved in order to open up the cannabis sector to credit cards and potentially open up banking to the sector in a more material way. Unfortunately, there’s a choke point in the Senate to get SAFE Banking approved, since there needs to be 60 votes to be filibuster proof. And while there is some talk of SAFE Banking passing during the lame duck session, we are not holding our breath.

Green: What trends are you following closely as we head towards the end of 2022?

Goad: The biggest trends we’re following are on the legislative front (both federally and at state level), which heavily impact revenue and net cash flow growth for the industry. We’re following emerging state markets, such as Alabama and Mississippi, as well as current medical markets poised to transition to adult use in the near term, such as Missouri. The more addressable the population, the faster the industry can grow.

We’d also like to see current legal states address the often-heavy tax burdens that have led to additional challenges for legal businesses and kept illicit markets thriving. No state got everything right at the beginning, but we’re starting to see states address some of the inequities and harmful policies now. California has made some progress in this area, however there are many issues that still need to be addressed.

Federally, 280E is the other major headwind that needs to be addressed as extremely high tax rates are one of the biggest problems for the industry. We’d really like to see that addressed, as cannabis is the only new industry, I’m aware of in the U.S. that has had such disadvantages out of the gate.

Ask the Experts: Ensuring the Validity of Cannabis Lab Testing

By Cannabis Industry Journal Staff
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Cannabis testing laboratories are one of the major players in the industry for protecting public health. Ensuring that laboratory test results are reliable and valid requires a multipronged approach involving method validation, proficiency testing and performing frequent reviews of equipment and processes.

Cannabis testing laboratories often use a variety of different methods to conduct proficiency testing. Laboratories can either participate in programs run by ISO/IEC 17043-accedited proficiency testing providers or through intralaboratory comparison. Comparing different instruments, methods, technologies against pre-defined criteria is a must when validating methods for a specific type of test and ensuring the competence of the laboratory.

Beyond proficiency testing, there are a number of other stopgaps at a laboratory’s disposal for ensuring valid results, like using accredited certified reference materials, performing checks on measuring equipment frequently, reviewing reported results and retesting retained items. All of that and more is outlined in the ISO/IEC 17025:2017 standard, section 7.7.

labsphoto
What good is a test result if you cannot attest to its validity?

There’s a lot that goes into making sure laboratories provide valid results, much of which is detailed in the accreditation process. For more information, we sit down with Keith Klemm, senior accreditation manager for ANSI National Accreditation Board to learn about laboratory accreditation, method validation and other certifications and credentialing available in the cannabis industry.

Q: Why is method validation important for cannabis test methods? 

Keith Klemm: Because cannabis production, testing, and sales is regulated by each individual state, there are very few standard methods for testing cannabis and cannabis-derived products. Non-standard methods or methods developed by the laboratory must be validated to ensure the methods are fit for their intended purpose. What good is a test result if you cannot attest to its validity? There would be no confidence that the results are accurate. Additionally, while organizations such as ISO, AOAC and ASTM are developing standard methods for use in the laboratory, the wide range of products and matrices being tested require modifications to standard methods. Standard methods used outside their intended scope must also be validated, again to ensure the method remains fit for the intended purpose.

Q: We’re pretty familiar with laboratory accreditation. What other accreditations are available in the cannabis industry?

Klemm: Accreditation programs are available for product certification and personnel credentialing, in addition to laboratory accreditation. ANAB’s product certification program was launched in 2020 and is based on the requirements of ISO/IEC 17065. The program combines the requirements of this standard with specific scheme requirements to attest to the competency of certification bodies who then certify products within the scheme. Two schemes are in development specific to the cannabis industry: Cannabis Safety and Quality (CSQ) and PurityIQ. For personnel credentialing, a new Cannabis Certificate Accreditation Program (C-CAP) was developed and is based on ASTM D8403, Standard Practice for Certificate Programs within the Cannabis and Hemp Industries. It also includes any additional state Responsible Vendor Training requirements.

Q: What are the steps to becoming an accredited cannabis testing laboratory, product certification body, or C-CAP organization?

Klemm: The process begins with a request for quote. The organization prepares for the initial assessment by implementing the requirements of the applicable standards, regulatory requirements, and scheme requirements. ANAB believes in a partnership approach to accreditation with a focus on customer needs while ensuring accreditation requirements are met. Once the organization is ready, an initial document review is performed. The accreditation assessment is then performed on-site by technically skilled and knowledgeable assessors. If any nonconformities are encountered, the organization provides a response with cause and corrective actions. Once all nonconformities are resolved and technical review is completed, a scope of accreditation and certificate are provided to the organization. The technical review may vary depending on the accreditation that is being sought, but the general process of accreditation is the same. After accreditation is achieved, the organization moves into a cycle of surveillance and reassessment as defined by the accreditation program and any scheme requirements.

About Keith Klemm

Keith Klemm is a graduate of Manchester University with a B.S. in Biology.  Keith is an experience laboratory director and operations manager with 30 years’ experience in the laboratory environment and has worked as a senior accreditation manager for ANSI National Accreditation Board for the past five years.

Keith’s areas of expertise include:

  • Microbiological assays for food, medical device, and environmental test matrixes.
  • Environmental chemistry of water and wastewater.
  • Biocompatibility testing of medical devices.
  • ISO/IEC 17025:2017
  • AOAC International – guidelines for food laboratories program requirements
  • 21 CFR Part 58, GLP program requirements
  • EPA NLLAP program requirements
  • AAFCO program requirements
  • FDA ASCA Pilot program for Biocompatibility
  • Michigan Cannabis Regulatory Agency program requirements
  • ISO 20387 Biobanking

Bad Actors in CBD: How to Distinguish Quality Products From the Rest

By Joseph Dowling
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The success of reputable cannabis and CBD brands has inspired an influx of inexperienced and disreputable competitors in the market. These so-called “bad actors” in CBD advertise products that are not manufactured under current Good Manufacturing Practices (cGMP), which help to ensure that all products are consistently produced and controlled according to specified quality standards. cGMP helps guard against risks of adulteration, cross-contamination and mislabeling to guarantee product quality, safety and efficacy.

Joseph Dowling, Author & CEO of CV Sciences

CBD products without cGMP regulations are often inaccurately labeled and deceiving to consumers. In fact, in a test of over 100 CBD products available online and at retail locations, Johns Hopkins Medicine found significant evidence of inaccurate, misleading labeling of CBD content. The prevalence of such brands not only reduces consumer confidence in CBD but also limits the growth of the sector as a whole. Fortunately, CBD consumers and retailers can easily discriminate between a well-tested, reputable brand and inferior bad actors with a few straightforward, minimum requirements to look out for when selecting a product.

Why are “bad actors” a problem for consumers and the industry?

Bad actors in CBD sell products that are not produced under cGMP conditions and are typically not tested by third-party laboratories to ensure identity, purity, quality, strength and composition. This means they are not verified for contaminants, impurities, label claims and product specifications. This frequently results in misleading advertising with inaccurate levels of cannabinoids or traces of compounds not found on the label, like THC. To combat this, the FDA issues warning letters to actors that market products allegedly containing CBD—many of which are found not to contain the claimed levels of CBD and are not approved for the treatment of any medical condition. Still, bad actors manage to slip through the cracks and deceive consumers.

The structure of cannabidiol (CBD), one of 400 active compounds found in cannabis.

Bad actors that put anything in a bottle and make unsubstantiated medical claims hurt the reputable operators that strive to create safe and high-quality products. It is easy for consumers to be drawn to CBD products with big medical claims and lower prices, only to be disappointed when the product does not produce the advertised results. Inaccurately labeled products may contain unexpected levels of cannabinoids, including ingredients that consumers may not intend to ingest, like Delta-9 or Delta-8 THC. Along with unexpected levels of THC, many CBD products available now are not as pure as advertised, with one in four products going untested for contaminants like microbial content, pesticides, or heavy metals.

Further, inaccurate labeling of products and their compounds also prevents consumers from establishing a baseline impact of CBD on their bodies, leaving them vulnerable to inconsistent future experiences. Such a poor experience can turn consumers off to the category as a whole, drawing their trust away from not only the bad actors but also the reliable, reputable brands on the market. The saturation of the market with these disreputable brands delegitimizes a category that has only just begun to break down the stigmas, creating stagnation rather than growth as consumers remain wary of low-quality products.

How can consumers identify bad actors in CBD?

There are several simple ways to identify a bad actor among CBD products and make certain that both consumers and retailers purchase quality, reliable and safe brands in legitimate sales channels. To start, consumers should avoid all CBD products that are marketed with unsubstantiated medical claims. This is a significant area of abuse, as brands that relate any form of CBD product to a disease state, like cancer, should not be trusted. The science to support such medical claims has not been completed, yet, product marketing is years ahead of the evidence to support such claims. Unsupported medical claims could also mislead consumers that may need more serious medical intervention.

Just some of the many CBD products on the market today.

Additionally, consumers must review the packaging, which should include nutrition information in the form of a supplement fact label. The label should include the serving size, number of servings per container, a list of all dietary ingredients in the product and the amount per serving of each ingredient. All labels should include a net quantity of contents, lot number or batch ID, the name and address of the manufacturer, and an expiration or manufacturing date. These signs of a reputable brand are easy to look for and can save consumers from the trouble of selecting the wrong CBD product.

What to look for when selecting a CBD product

With this in mind, products from reputable, tested brands can be identified by a few key factors. Reputable CBD companies are already compliant with the FDA regulations on nutritional supplements, including a nutritional or supplement fact panel on the packaging—just like vitamins. The information in this panel should include all the active cannabinoids in the product, both per serving and package. Clear potency labeling allows consumers to confidently select products that suit their needs and understand the baseline impact of CBD concentration on their bodies, thus helping them to tailor their experience with thoughtful product selection.

Reputable brands also include a convenient QR code on the packaging, linking the product to a certificate of analysis that details the testing results to demonstrate compliance with product standards and label claims. In terms of specific ingredients, consumers should be skeptical of high concentration levels of “flavor of the month” minor cannabinoids, which are often associated with unsubstantiated medical claims. Current scientific research has set its focus on major cannabinoids like CBD and Delta-9 THC, leaving additional research necessary for understanding minor cannabinoids. Minor cannabinoids are typically included in full spectrum products at concentrations found naturally in the cannabis plant, which is a safer approach to consuming CBD until more research is completed.

Consumers should not let the existence of unreliable, untrustworthy brands curtail their confidence in the CBD sector—there are many high-quality, safe and trusted brands on the market. With a knowledgeable and discerning eye, consumers and retailers can easily select top-quality CBD products that millions of consumers have found to improve many aspects of their health and well-being. Looking ahead, clear federal regulations for CBD products that require mandatory product registration, compliance with product labeling, packaging and cGMP will be crucial in weeding out bad actors and will allow compliant companies to gain consumer trust and responsibly grow the CBD category.

Financing the Cannabis Industry Part 1: A Q&A with AFC Gamma CEO & Partner Len Tannenbaum

By Aaron Green
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Business often require outside capital to finance operating activities and to enable scaling and growth. Financing in the cannabis industry is notoriously challenging with regulatory obstacles at the local, state and federal levels. Recent market dynamics pose additional challenges for both financiers and cannabis operators.

We sat down with Len Tannenbaum, CEO & Partner of Advanced Flower Capital Gamma (AFC Gamma, NASDAQ: AFCG) to learn more about AFC Gamma and to get his perspective on recent market trends.

Aaron Green: In a nutshell, what is your investment/lending philosophy?

Len Tannenbaum: AFC Gamma is one of the largest providers of institutional loans to cannabis companies nationwide in all aspects of production: cultivation, processing, and distribution. Cannabis companies, no matter the size, traditionally lack the lending opportunities that other enterprises have available, and that’s where AFC Gamma comes in. As an institutional lender, we provide financial solutions to the cannabis industry.

AFC Gamma is a commercial mortgage REIT that provides loans to companies secured by three pillars: cash flows, licenses, and real estate. We provide term loans, draw facilities, and construction loans. Each loan is unique and tailored specifically to meet the needs of our borrowers. This unique partnership approach with our clients allows us to find solutions to help them expand and grow alongside them.

Since starting AFC Gamma, we have completed almost $500 million of transactions. We provide capital to an industry that others do not and, in turn, allow these operators to build cultivation facilities, production facilities, and dispensaries.

Green: What types of companies are you primarily financing?

Len Tannenbaum, CEO & Partner of Advanced Flower Capital Gamma

Tannenbaum: AFC Gamma seeks to work with operators, ideally in limited license states. We make loans to companies secured by three pillars: cash flows, licenses, and real estate. We tend to lend to operators in regulatory-friendly states, such as: Ohio, Pennsylvania, New York, New Jersey, Maryland, Massachusetts, Arizona, New Mexico, Missouri, Illinois, Michigan, and Nevada. Traditionally, we shy away from states like California, Washington and Oregon given our approach to lending. We have 16 borrowers in 17 states, and what we look for are companies that we can grow with over the long term.

Green: What qualities do you look for in a cannabis industry operator or operating group?

Tannenbaum: We tend to work with three different buckets of operators. You have the large publicly traded multi-state operators (MSOs) we have lent to, such as Verano. Then you have the tier right below the top tier MSOs, where you have some public enterprises like Acreage, who is one of our borrowers, and then some private companies such as Nature’s Medicine and Justice Grown. The third tier are smaller operators. They’re single or two-state operators, and we’re typically coming in to help them build out licenses that they want or help them expand within that state. That’s why state-by-state dynamics are so important to us and why we typically only lend to limited license states.

We look at portfolio diversity on a step-by-step basis rather than a borrower-by-borrower basis. We tend to focus on deals in limited license states and also deals that have real estate as collateral. We have found that REIT loans give our clients the most flexibility, and we are able to finance more companies this way.

Green: Capital market dynamics have led to significant public cannabis company revaluations in 2022. How has this affected your business?

Tannenbaum: Although capital market dynamics have made an impact on a significant number of public cannabis companies’ revaluations this year, our overall business hasn’t been affected too much and that’s because the other lending options available right now are not ideal choices for most borrowers. One of the ways a lender can achieve credit enhancements or securities is by raising capital in the public markets. When the markets are more challenging, those companies have a harder time accessing capital when they may need it most. In turn, this could cause slow growth overall, more cash conservation and it removes one of the benefits to lenders. We’d like everyone to have more robust equity from that standpoint, but the flip side is, if equity gets too high in price, those borrowers won’t come to us lenders and they’ll raise capital in the equity markets since the equity is cheap. We’re definitely conducting a lot of business because the equity market is not available to cannabis companies. If that were to change, while our loans would be theoretically safer, they would choose equity instead of debt.

Green: Debt on cannabis companies balance sheets have increased significantly in recent years. What is your perspective on that?

Tannenbaum: When equity markets were free and the valuations were high, cannabis companies raised money in the equity markets rather than take on debt. Now that the equity markets have been somewhat closed and valuations are much lower, we see their debt has increased over the past two years.

Green: How does the lack of institutional investor participation in the cannabis industry affect your business?

Tannenbaum: Right now, we are one of the biggest lenders in cannabis. Looking to the future, though, if the SAFE Banking Act passes, we could see an influx of institutional capital that would increase competition amongst cannabis-specific and mainstream lenders. From the outset, most of the competition will come from hedge funds, not big banks. This competition will drive down interest rates and attract borrowers like MSOs.

Green: What would you like to see in either state or federal legalization?

Tannenbaum: The Senate passing the SAFE Banking Act. Should this happen, lenders, including AFC Gamma, will be able to borrow cheaper, which will, in turn, allow lenders to lend cheaper. It will be a net positive for all operators. It could also be positive for lenders assuming they have the infrastructure and capabilities to scale and decrease the cost of capital once the money starts flowing and more deals are being made.

Green: What trends are you following closely as we head towards the end of 2022?

Tannenbaum: The most important trend we’re following is state by state trends. We’re excited to see new states getting their act together like New York. We’re excited about Georgia. We’re also looking forward to Missouri going rec. On the flip side, we’re also watching Virginia issue more than 400 licenses, diluting down the limited license states into basically an unlimited license state, which personally doesn’t make sense.

The other trend we’re watching across the country is cannabis prices. There is definitely a gray and legacy market that goes across border that should be enforced. That flow of cannabis product is depressing prices, especially in the unlimited license states. I believe there is a chance that trend starts reversing as many grows are now inefficient. The low end of inefficient grows are going to start closing, which may increase prices going into next year.

Commissioner Maria Del Cid-Kosso to Keynote CQC

By Cannabis Industry Journal Staff
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PARSIPPANY, NJ, October 17, 2022 – The Cannabis Quality Conference & Expo (CQC) just announced the newest addition to the event’s agenda. Commissioner Maria Del Cid-Kosso of the New Jersey Cannabis Regulatory Commission will deliver a keynote presentation at 1:00 PM EST on Monday, October 17.

Commissioner Maria Del Cid-Kosso of the New Jersey Cannabis Regulatory Commission

Commissioner Del Cid is an inaugural commissioner of the NJ Cannabis Regulatory Commission, the government body overseeing regulating the state’s new cannabis industry. Prior to being appointed by Governor Phil Murphy in February of 2021, she was the Director of Policy and Legislative Services at the New Jersey Department of Health. She was awarded the Union County Women of Excellence Award in Government, the Hazel Frank Gluck Award from the Eagleton Institute of Politics, Urban League of Union County Young Professionals Award in Government, and has been recognized as Insider NJ’s 2021 Top 6 Millennial; Insider’s 100 Cannabis Leaders; Insider’s 50 under 30; and Insider’s Top 100 Millennials (2018, 2019, and 2020).

Following Commissioner Del Cid’s keynote presentation, a panel discussion on The Future of East Coast Cannabis: Social Equity, Justice & Legalization will take place in the afternoon. Following that will be a panel on The Standardization State of the Union: Science-Based Resources for Driving Cannabis Safety with an overview of the New Jersey cannabis marketplace to end the first day.

The second day will kick off with a Keynote titled Centering Equity in Cannabis Policy, Quality & Business with Toi Hutchinson, President & CEO at Marijuana Policy Project. Other agenda highlights include:

  • The State of the State: An Update on New Jersey Legalization by Steven M. Schain, Esquire, Attorney at Smart-Counsel, LLC
  • Tri-State Cannabis: Pro Tips for Winning Applications by Sumer Thomas, Director of Regulatory Affairs and Russ Hudson, Project Manager at Canna Advisors
  • Navigating Cannabis Testing Regulations for Multi-State Operations by Michael Kahn, President & Founder of MCR Labs
  • Keynote by Edmund DeVeaux, President of the New Jersey Cannabusiness Association
  • A Guide to Infusion Technology | Design Experiences that Inspire and Innovate with Cannabis Ingredients by Austin Stevenson, Chief Innovation Officer at Vertosa
  • Valuable Analysis Ahead of Asset Acquisition by Matthew Anderson, CEO of Vanguard Scientific

Registration options are available for in-person, virtual and hybrid attendance.

Event Hours

  • Monday, October 17: 12 pm – 6:30 pm (ET)
  • Tuesday, October 18: 8 am – 5:45 pm (ET)
  • Wednesday, October 19: 8 am – 12 pm (ET)

Cannabis industry professionals also interested in the food industry can attend the Food Safety Consortium, which begins on Wednesday, October 19 – Friday, October 21.

About Cannabis Industry Journal

Cannabis Industry Journal is a digital media community for cannabis industry professionals. We inform, educate and connect cannabis growers, extractors, processors, infused products manufacturers, dispensaries, laboratories, suppliers, vendors and regulators with original, in-depth features and reports, curated industry news and user-contributed content, and live and virtual events that offer knowledge, perspectives, strategies and resources to facilitate an informed, legalized and safe cannabis marketplace.

About the Cannabis Quality Conference & Expo

The Cannabis Quality Conference & Expo is an educational and networking event for the cannabis industry that has cannabis safety, quality and regulatory compliance as the foundation of the educational content of the program. With a unique focus on science, technology, safety and compliance, the “CQC” enables attendees to engage in conversations that are critical for advancing careers and organizations alike. Delegates visit with exhibitors to learn about cutting-edge solutions, explore three high-level educational tracks for learning valuable industry trends, and network with industry executives to find solutions to improve quality, efficiency and cost effectiveness in the evolving cannabis industry.

The Cannabis Quality Conference & Expo Brings Education, Networking to New Jersey

By Cannabis Industry Journal Staff
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PARSIPPANY, NJ, October 17-19, 2022 – The Cannabis Quality Conference & Expo (CQC) heads to New Jersey October 17-19 this year. The agenda features three tracks of educational talks, panel discussions, keynotes and breakout sessions.

At this year’s event, the conference will debut two new features of the program: Lunch & Learn sessions and Happy Hour Roundtables. Matthew Anderson, CEO of Vanguard Scientific, will sit down with two experts in cannabis law for interviews during the lunch hour:

Investigations & Enforcement: A Former Federal Prosecutor’s Perspective

  • Matthew Anderson will interview Barak Cohen, Chair of the Cannabis Industry Group at Perkins Coie, to discuss federal investigations, Justice Department prosecutions and white-collar offenses. This Lunch & Learn will take place 12:00 to 12:25 PM on Tuesday, October 18.

Compliance is Key: Best Practices for Your New Jersey Cannabis Business

  • Matthew Anderson will interview Casey Leaver, Director of Regulatory Compliance at Vicente Sederberg, to discuss compliance culture, quality controls, New Jersey regulations and more. This Lunch & Learn will take place 12:35 to 1:00 PM on Tuesday, October 18.

Following the conference agenda on Monday, October 17 and Tuesday October 18, attendees are invited to join the cocktail reception for Happy Hour Roundtables. From 4:45 to 5:45 PM, subject matter experts will be available to chat, answer questions & offer guidance on the following topics:

  • Regulatory Compliance: Jason Thomas, Precision Quality & Compliance
  • Banking, Finance & Real Estate: Steve Schain, Esq., Smart-Counsel LLC
  • Licensing: Russ Hudson & Sumer Thomas, Canna Advisors
  • Certifications & Controls: Tyler Williams, CSQ
  • Compliance Solutions: Doug Plunkett & Zach Cicconi, ProCanna
  • Standards in Cannabis: David Vaillencourt, The GMP Collective
  • Social Equity & Justice: Ernest Toney, BIPOCANN

The conference will begin with a panel discussion on The Future of East Coast Cannabis: Social Equity, Justice & Legalization. Following that will be a panel on The Standardization State of the Union: Science-Based Resources for Driving Cannabis Safety with an overview of the New Jersey cannabis marketplace to end the first day.

The second day will kick off with a Keynote titled Centering Equity in Cannabis Policy, Quality & Business with Toi Hutchinson, President & CEO at Marijuana Policy Project. Other agenda highlights include:

  • The State of the State: An Update on New Jersey Legalization by Steven M. Schain, Esquire, Attorney at Smart-Counsel, LLC
  • Tri-State Cannabis: Pro Tips for Winning Applications by Sumer Thomas, Director of Regulatory Affairs and Russ Hudson, Project Manager at Canna Advisors
  • Navigating Cannabis Testing Regulations for Multi-State Operations by Michael Kahn, President & Founder of MCR Labs
  • Keynote by Edmund DeVeaux, President of the New Jersey Cannabusiness Association
  • A Guide to Infusion Technology | Design Experiences that Inspire and Innovate with Cannabis Ingredients by Austin Stevenson, Chief Innovation Officer at Vertosa
  • Valuable Analysis Ahead of Asset Acquisition by Matthew Anderson, CEO of Vanguard Scientific

Registration options are available for in-person, virtual and hybrid attendance.

Event Hours

  • Monday, October 17: 12 pm – 6:30 pm (ET)
  • Tuesday, October 18: 8 am – 5:45 pm (ET)
  • Wednesday, October 19: 8 am – 12 pm (ET)

Cannabis industry professionals also interested in the food industry can attend the Food Safety Consortium, which begins on Wednesday, October 19 – Friday, October 21.

About Cannabis Industry Journal

Cannabis Industry Journal is a digital media community for cannabis industry professionals. We inform, educate and connect cannabis growers, extractors, processors, infused products manufacturers, dispensaries, laboratories, suppliers, vendors and regulators with original, in-depth features and reports, curated industry news and user-contributed content, and live and virtual events that offer knowledge, perspectives, strategies and resources to facilitate an informed, legalized and safe cannabis marketplace.

About the Cannabis Quality Conference & ExpoCannabis Quality Conference & Expo logo

The Cannabis Quality Conference & Expo is an educational and networking event for the cannabis industry that has cannabis safety, quality and regulatory compliance as the foundation of the educational content of the program. With a unique focus on science, technology, safety and compliance, the “CQC” enables attendees to engage in conversations that are critical for advancing careers and organizations alike. Delegates visit with exhibitors to learn about cutting-edge solutions, explore three high-level educational tracks for learning valuable industry trends, and network with industry executives to find solutions to improve quality, efficiency and cost effectiveness in the evolving cannabis industry.

Dennis Bielik

Attract Employees by Offering a 401(k) Plan

By Dennis Bielik
1 Comment
Dennis Bielik

Even for the soaring cannabis industry, recruitment and retention of a qualified workforce remains a significant challenge in 2022. Although a tight labor market was not a new situation for many industries, the COVID-19 pandemic made it much worse and widespread, and the pain has yet to subside. In 2021, 47 million workers voluntarily left their jobs and nearly half of small businesses are experiencing worker shortages.

About 43% of workers who quit their jobs cited inadequate benefits as a factor in their decision. Among workers who cited benefits as a top concern, more than three-quarters said retirement plans are a “must-have” benefit. Most small businesses in the U.S. (74%) of 50 employees or fewer, however, do not check that box on a potential hire’s requirements list.

Offering a 401(k) plan, therefore, can help any company attract and retain workers. Even companies in emerging fields like cannabis can add 401(k) retirement savings plans to the roster of benefits for its employees.

In addition, there are tax benefits for the company should it offer a 401(k) plan and also match employee contributions. Employer contributions are deductible on the employer’s federal income tax return, so long as those contributions stay below the limitations described in section 404 of the Internal Revenue Service’s Internal Revenue Code.

Given the complexity of the cannabis industry and its hazy legal status in the U.S., however, it can be more challenging for cannabis companies to find benefits providers willing to create a program. Finding the right partners to navigate the process will help cannabis companies provide this significant employee benefit package.

Cannabis organizations have run into similar roadblocks finding banks and payroll providers willing to partner with them, and some large financial firms that offer retirement plans often decline to work with cannabis companies as well. But a growing number of boutique firms offer 401(k) programs and other benefits for this industry — it just requires the right partners to find the right plan.

Four tips for creating a 401(k) for cannabis workers

These four tips can help cannabis companies offer a 401(k):

  • Plan Structure and Objectives: Outline the goals of the 401(k) plan and how it will be set up, including how employees will be rewarded for participation. Consider developing a formal investment policy statement that includes monitoring the plan.
  • Matching Contributions and Auto-enrollment: Offering to match employee contributions tends to increase participation in retirement plans and increase employee satisfaction. There are a wide variety of paths the company could follow, but a good example would have the company matching 50% of salary up to 6%. Regarding automatic enrollment of employees into the plan, such a policy has shown to increase both participation and engagement.
  • 401(k) 101: The company may need to educate its employees on the basics of a 401(k) plan if one was not offered previously. Employees may be unfamiliar with how these plans work and how to optimize their investment choices. Cannabis companies need to offer clear information on the benefits of the program, including information on managing their portfolio. This approach will make workers feel more comfortable with their investments and encourage engagement.
  • Partner with 401(k) Experts: Emerging industries like cannabis can be complex. Cannabis companies that want to implement a 401(k) should partner with consultants who understand the intricacies of the sector and know what retirement benefits companies cater to the industry.

2022 Cannabis Labs Virtual Conference: September Program

By Cannabis Industry Journal Staff
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2022 Cannabis Labs Virtual Conference: June Program

Sponsored by Millipore Sigma

Click here to watch the recording

Agenda

Combating Laboratory Shopping

  • Michael Kahn, President & Founder, MCR Labs

In this session, Michael Kahn discusses:

  • Economics of lab shopping
  • Effects of lab shopping on public health
  • Creating incentive for honest testing and labeling

TechTalk: Millipore Sigma

  • Dr. Stephan Altmaier, Sr. Manager, Merck KGa Darmstadt

AOAC: Why Third-Party Accreditation Matters More than Ever

  • Anthony Repay, Laboratory Director, Method Testing Laboratories

Attendees will learn about the history the AOAC, the role of third-party accreditations in Cannabis microbiology testing and how to seamlessly integrate into your existing processes to enhance consumer safety. 

The Evolution of the Hemp Testing Market: An Introduction

  • Mikhail Gadomski, Principal Chemist, Deibel Laboratories

Attendees of this session will learn:

  • What is the Difference Between Hemp and Cannabis?
  • What are Natural and Synthetic Psychoactive Cannabinoids; THC 9, CBD, THC 8, THC 10, THCO, etc.?
  • Status of Federal and State Testing Regulations

Cannabinoid Extraction Efficiency for Potency Analysis: An In-Depth Look of Multiple Techniques

  • Melinda Urich, LC Solutions Scientist, Restek

Attendees of this session will learn:

  • The importance of extraction efficiency.
  • Variables to consider when choosing a sample preparation technique.
  • Understanding which technique is best for your testing lab.

Click here to watch the recording

budtenderpic

The Coming Cannabis Data Squeeze – And Why So Many Companies are Flying Blind

By Michael Blanche
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budtenderpic

“Data” is a hard concept to picture. It’s even harder to visualize what your data is saying about your business. Many important insights are processed on different systems, never to see the light of day.

In the digital advertising industry, we call this “data silos.” In the cannabis industry, we call this the cost of doing business.

Without traditional tech tools or a source of truth on market sentiment and trends, there’s no common picture that can show us the day-to-day behavior of today’s cannabis consumer. Companies are often guessing what consumers want based only on the data they have available.

To keep growing, dispensaries and brands have to modernize how they understand, activate and measure customer data. Luckily, it may be easier than you think to start making better use of your customer data right away, which means it’s easy to simplify how you connect to both existing and new consumers, driving more engagement and revenue.

Cannabis companies that started digital-first have a head start on legacy businesses: phone numbers, emails, customer preferences are all first-party data that can help you find and advertise to new customers.

Here’s how:

1. Build Your Customer Database with a Rewards Program.

A 2022 YouGov survey found that when cannabis consumers are asked about how they make purchasing decisions:

  • 36% said quality and safety
  • 34% said lowest price
  • 32% said location (proximity to home)
  • 31% said preferred products

Most cannabis businesses know the power of rewards programs, but usually depend on steep discounts to get customers back in the door. Rewards programs can also offer promotions for new product releases, exclusive access, community events and other things that offer information about things you know your customers already care about.

The most valuable thing about a rewards program isn’t just the sales – it’s the data. If a customer makes a profile with an email and a phone number, you have the basic building blocks for a first-party data strategy. Just make sure you have a way to keep that data organized on the back-end.

Want the real secret? Segment your email and SMS list by what you know your customers want. Send different communications for different customer groups and behaviors – like edible users and pre-roll buyers or monthly buyers and weekly buyers. Figure out what resonates and repeat!

2. Budtenders that Care. 

A relationship with a budtender is sometimes transactional. Other times, it’s confessional, fun, or, if a consumer is new to buying cannabis or trying different products, educational.

As one survey found: 22% of customers always decide what to buy based on budtender advice and 69% said they seriously consider their opinions.

Good budtenders get to know the customers and can become advocates for staying in touch. Training them to sign up customers for a rewards program or exclusive offers can help build the relationship that keeps people coming back and allows you to stay in touch. This is how you can link your data efforts with your frontline employees.

3. Find a Secure Way to Manage Your Customer Data. 

To segment customer data and build customer profiles with additional information – like purchase history or demographics – you need to find a solution built for a growing customer database. Some options, like an email marketing platform, can get you halfway there. But a lot of companies still rely on Google Sheets, which can take hours to understand and end up exposing a lot of customer data out in the open.

The right customer data platform should help you connect and integrate all your different data sources, from website and ecommerce platform to point-of-sale. This allows you to understand macro and micro market trends by making your customer segments transparent and easy to manage as they move down the path to purchase. You can also identify which segments drive the most value over time and what attributes and behaviors they have in common.

By managing customer data from one platform, you can dramatically increase the transparency across all the valuable insights that affect your business. And then make use of those in your next big advertising campaign.

Combining Co-Marketing with Community

You can avoid the cannabis data squeeze by modernizing how you handle customer data. Dispensaries with advanced data management practices are often processing thousands of transactions a day and constantly enriching their understanding of customers and their target markets. Unlike dispensaries, brands don’t have the same volume of new data. This has a lot of implications when you’re trying to reach new customers, because when a brand launches a digital advertising campaign, a lot of budget can get wasted if the audiences are based on a limited dataset.

That’s where co-marketing digital advertising campaigns can help. Cannabis companies collaborate to activate events and retail displays. To really build awareness and drive sales, cannabis brands should reach a dispensary’s existing customers and advertise in coordination with the dispensary. With the right dataset, you can show ads just to a dispensary’s best customers, and the ones most likely to buy your product.

The most exciting part about the future of the cannabis industry all comes down to data. The community grew together, and now businesses can innovate together – building a better customer experience by understanding every stage in the journey. In a relationship-first industry, cannabis digital advertising has to be as personalized as a budtender’s recommendations.

2022 Cannabis Extraction Virtual Conference: September Program

By Cannabis Industry Journal Staff
No Comments

2022 Cannabis Extraction Virtual Conference: September Program

Sponsored by Vanguard Scientific 

View On-Demand Now

Click here to see all available CIJ events and webinars

Agenda

Solvent Remediation – The Last Step for Safe, Clean Hemp Extraction

  • Tom Bisbee, Production Director, EcoGen Biosciences

Attendees can expect to learn:

  • Understanding solvent remediation technology and processes
  • Residual solvents present huge risks
  • Consumers deserve transparency

Advancing Cannabinoid Therapeutics Through Regulated Drug Discovery

  • Matthew Anderson, CEO, Vanguard Scientific
  • Nick Herbst, VP of Engineering, Vanguard Scientific
  • Brian Brandley, Ph.D., Laboratory Director, Biopharmaceutical Research Co.

A panel discussion with Dr. Brian Brandley, the CSO of Biopharmaceutical Research Company, a DEA-licensed pharmaceutical company that is pioneering the legal cannabis space in the U.S. through the development of federally compliant active pharmaceutical ingredients (API) for plant-based therapeutics, and Nick Herbst, VP of Engineering at Vanguard Scientific, and the Lead Engineer for the Company’s MIDAS SCCO2 Extraction Program. During this 45-minute round table discussion moderated by Vanguard’s CEO Matthew Anderson, the panelists will provide an overview of what it takes to make ‘pharmaceutical-grade’ cannabis products. The conversation will range from facility requirements, methods development, equipment qualification, process validations and more.

GMPs for Cannabis Extraction: Don’t Overcomplicate it

  • Andrew Cole, Director, Client Delivery Audits, Cannon Quality Group

Attendees can expect to learn:

  • Understanding the basics in plain English.
  • Learn what you need to do to meet minimum Industry expectations for Quality and Scalability.
  • Implementation Strategies – Keep it simple.

View On-Demand Now