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The 3-Legged Stool of Successful Grow Operations: Climate, Cultivation & Genetics – Part 6

By Phil Gibson
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This is Part 6 and the final chapter in The 3-Legged Stool of Successful Grow Operations series. Click here to see Part 1, here to see Part 2, here to see Part 3, here for part 4 and here for Part 5.

Standard Operating Procedures (SOPs)

Figure 1: Precision aeroponics at FarmaGrowers GMP Facility, South Africa

Every objective has to have a vision and a vector of where you want to go and what you want to achieve. “Winging it” is okay for an innovative artistic endeavor where creativity is spontaneous and one-of-a-kind art is produced. Unfortunately, that is not how one creates a top-quality cultivation operation.

Customers expect guarantees of consistency; quality assurance means a purchase is safe to consume. Medicinal products around the world require Good Manufacturing Practices (GMP) certification. These are really just SOPs that document repeatable procedures to guarantee that the most recent batch offers the same results as the first certified effort. This brief covers the importance of documented operating procedures for a successful grow business with high quality customer results.

Figure 2: The objective – trichome covered flowers, DanCann, Denmark

Almost nobody gets excited about discussing quality, but experienced manufacturers know that quality control reduces waste and improves operations. Everyone learns that they have to implement feedback, improvement and quality control procedures to guarantee profitability and longevity in any business.

So, what is an SOP? A standard operating procedure defines ‘a task’ to be performed ‘at a location by a person or a role on a specific schedule.’ These definitions will include role definition, responsibilities, personnel training, equipment & service procedures, material handling, quality assurance controls, record keeping, approved procedures & instructions, documentation, references and appendices, all of which define your business and how it is to operate.

Now, you might ask, we are just growing plants, is all this really necessary? The short answer is, it depends. If you expect to export globally, do business in Europe and other markets, get licensed by Health Canada or some day be approved to ship to other States, then yes. If you are a regional craft cannabis supplier, maybe not, but there are many tasks that are required to grow where a better documented process can benefit your operation and the quality of the product delivered to your consumers.

Figure 3: Flower maintenance, DanCann, Denmark

We provide a bulleted list of recommendations in the full white paper but to touch on a few highlights that every operator should keep in mind, SOPs define the following structures for your business.

Personnel training is done for ‘this task, in this way’ & ‘this role is responsible’

Job descriptions reduce misunderstandings and increase worker ownership in your facility. Documenting your activities minimizes task overlap and conflicts that can lead to no one executing on something that may be important but not urgent. You want to eliminate employees thinking “I didn’t know it was my responsibility.”

Consultants or visitors must be aware of and follow the same requirements as your employees if you are to maintain the quality of your grow. Specific training should be given to anyone that handles or works around toxic chemicals. Safety sheets are not just paper; They keep people alive.

Equipment & Service Procedures

Be direct and specific in your task definitions, i.e., “Use 5ml of soap, clean until no plant matter or debris remains.”

Figure 4: Full GMP certified facility, FarmaGrowers, South Africa

Ideally, grow facilities, equipment and access will be designed with cleaning in mind from the start. This is not always possible but it is the mark of successful manufacturing or production companies.

Cleaning, cleaning, cleaning: think sterile, food safety and consumer consumption protections. SOPs should define cleaning methods and materials. This cleaning is done on schedule and aligned to your preventative maintenance and calibration requirements. Precise results require precise structure for any long-term operation.

We recommend that you integrate pictures and videos in the instructions for your procedures and training so that nothing is left to chance or misinterpreted.

Material Handling, Containers, Labels, Quality Assurance

Personnel contamination/cross-contamination are the death of any grow operation. Do everything you can to limit stray or wandering plant material, dust or debris from migrating from one grow room or area to another. Isolation is a good way to limit outbreaks to a specific room to minimize losses.

Figure 5: Documented SOPs must be followed & reviewed regularly

If something nasty happens to one of your rooms. Good labeling enforced by your quality assurance team is a simple way to increase the likelihood that employees will do a task as intended. This adds to your repeatability as people change jobs or roles are redefined.

Approved Procedures & Instructions

Quality assurance is all about repeatability and intended outcomes. Documenting procedures and intended use enables every new employee to follow the experience of the masters and duplicate their success. Testing, sampling and logging your results along the way enables you to know that you are on schedule and on process, so you can predict your results every time.

Part of your continuous improvement approach will be to deal with exceptions that are not covered by your procedures. Learning about those exceptions and capturing your experience with an improved method will lead to better outcomes the next time around.

Documentation, References, Appendices

Figure 6: Flower sealed & ready for export, DanCann, Denmark

You’ve done all of this hard work to capture your operation, so you need a complete library of your reference work and approach that employees can access. It does your operation no good if you capture your methods and no one ever looks at them again. Training cycles and reviewing your defined procedures is key to a consistent high-quality result.

Hero Award

Standard Operating Procedures (SOPs), Good Manufacturing Procedures (GMP) and Good Agricultural & Collection Practices (GACP), are all terms that will become more familiar as cannabis production joins into one global market. Professional results will be required and national or international certifications will be the guarantees that any global customer can trust that a product meets the standards they expect.

We have many customers in North America and around the world. but DanCann Pharma is the most aggressive when it comes to meeting international standards and results. Producing flower that is so pure that no irradiation is required for export, the DanCann operation is fully certified for production throughout Europe and they are sold-out of capacity for the coming year. They are currently expanding their operations in Denmark and are a solid example to follow for a well-defined repeatable operation. FarmaGrowers in South Africa is a close second in this race with multiple export certifications of their own. The future looks bright for both of these global operations.

For the complete white paper on Top Quality Cultivation Facilities, download the document here.

Department Stores for Cannabis: The CEOs of Remedy on Cannabis Retail

Remedy currently has two locations, one in Baltimore and one in Columbia, Maryland. The first thing you notice at these dispensaries are the large parking areas. When you step inside, you’re greeted by an entrance that is less like a waiting room and more like a lounge.

Their massive open floor plans offer space for brands to have their own area, akin to branded counters in traditional department stores. Remedy has partnerships with big cannabis brands like Cookies, Curio Wellness, Holistic, Rhythm, Trulieve, Green Thumb Industries and others for this reason: to create the “store within a store” feel.

We met Mitch Trellis and Brandon Barksdale, co-CEOs of Remedy, in Las Vegas last year. After hearing about their ideas and vision for the future of cannabis retail, we followed up with them for an interview.

Cannabis Industry Journal: Give us some brief background on your company. How did Remedy get to where it is today?

Mitch Trellis, Co-Founder & Co-CEO of Remedy

Mitch Trellis: I have been a patient and consumer since 1994. I have always loved and respected the plant. I spent much of my career on Wall Street, but really I’ve been an entrepreneur most of my life. I started looking at the cannabis space for my next venture. 2014 was a very exciting time for cannabis with a lot of other states were coming online around that time. Colorado had legalized adult use and California had been going for a while. I was looking for an opportunity to jump into the space. Maryland wrote a very progressive law legalizing the plant for medical use, marking the first time on the East Coast where cannabis could be prescribed for pain.

I saw some real business opportunities there so I reach out to my business partner, Blaize Connelly-Duggan, whose family has a long history working with alternative medicine. We were both born and raised in Columbia, Maryland. About a year after coming up with the idea, we submitted an application for a fully vertical license. We did not win the growing or processing license, but we found out we had won a dispensary license.

We decided to move forward in late 2016. We opened in December of 2017 and we just had our five-year anniversary of operating a dispensary in the state of Maryland. We have seen over 30,000 individual patients and we’ve done around 45 million retail sales over that time. We are on a good pace right now with our two stores, each of which we call “superstores” with around 10,000 square feet of space. We have built some pretty interesting retail experiences, what we call our in-store ad network. We are a little different than other dispensaries; we’re not going for the Starbucks or corner store model.

Brandon Barksdale: I came from professional services. I was in a management consulting practice and a leader within our cannabis industry advisory group. We were working with clients on performance management, business improvement and organizational maturity that would help drive operational excellence within complex compliance and legislative landscapes.

Brandon Barksdale, Co-CEO of Remedy

The clients that I had spanned over a lot of different states, so I think a lot of my initial experience comes from California in 2015 and 2016. Outside of consultancy, I stepped into operations within a vertically-integrated cannabis operation in Colorado. From there I gained the full breadth of experience in understanding the business from cultivation to manufacturing to retail. We were also operating on both sides of the market, medical and adult use. This put me at a little bit of an advantage for new markets coming online, understanding the economics and how things would play out, you know, history repeats itself, just faster and faster.

I met Mitch and Blaze through a mutual acquaintance and we shared a lot of the same vision and thoughts for where the industry was heading locally in Maryland and nationally. Ultimately, I came on board in an advisory capacity and then joined the team full time.

CIJ: Tell us more about this Nordstrom business model. What brand partnerships are you developing and how is your idea different from the traditional dispensary?

Mitch: We have basically built a platform for the brand and vendors to interact with the patients and the customers. There is a big gap between the two and we operate as a conduit between the two. In that plan, we need to have spaces for each individual brand to interact with the consumer, which is why we have such large floor plans. Brands set up semi-permanent stores within our store, almost like pop ups. Right now, on our floor we have Trulieve, Holisitic, GTI, Curio, Cookies, Sunmed and 2 or 3 more coming. That’s the equivalent of the Sephora and Nike in Nordstrom.

A Curio Wellness pop-up within a Remedy dispensary

We have a handful of our own brands we are working on bringing to the state of Maryland, which is kind of like those generic brands you see, like Nordstrom Rack or a 365 brand in Whole Foods. So, it is a more traditional retail model than what you might think of in the cannabis market.

People ask us, ‘well, what do you do differently?’ And really, we try not to do things differently. We try to do things like regular retail. At the end of the day, it’s about the experience, the price, the convenience, customer service, simple retail stuff.

The Curio product offering

Brandon: The differentiator that separates us from other dispensaries is that retail experience. On our floor, we have a massive amount of brand power coming from the strongest Maryland supplies and household brands entering Maryland from other thriving markets. From there, it’s really just about driving the patient and adult consumer experience, helping them come in and learn about brands, what makes them different, what drives their quality, price, etc. Ultimately it allows brands to present themselves the way they intended. That in itself is enough of a unique experience. Then it’s about execution. What we hope as we come into a new adult use market while we continue to support the medical market is that there will be a way for patients and consumers alike to learn about more products, wider brand selection and learn what best aligns with their values, their experience and the overall value proposition.

CIJ: With Maryland legalizing adult-use and the Virginia market expected to open soon, how do you expect your retail business will fare in the new, larger market?

Mitch: We have very large stores in incredible locations that are very well known with tons of parking and the ability to do tremendous volume. I think we are well prepared and our business is built for a larger volume scenario.

Adult use sales in Maryland are set to launch this year

Brandon: I am personally very optimistic. Maryland is leading the way in the mid-Atlantic market. We will continue to steamroll forward. Different states and neighboring states will be coming online at some point in the future. That potentially advanced runway will really pull us apart. Our strategy around retail is about growth and operational excellence. We’ll continue to find opportunities to support that broader market vision as it comes into view. We’re constantly seeking how we can expand our market footprint. When I think about Maryland in general, it is a pretty unique market. I don’t think we have seen a newer market come online that was as unique as this region, wrapped around this gray market and other states operating in this limbo.

I think we’ll see an increase in cannabis comfortability with the adult population in Maryland. I also believe that and other unique factors will drive a huge jump in the number of consumers and patients in Maryland as we mature into adult-use. There are a significant number of government employees in Maryland. There are other unique sensitivities to cannabis that will also become normalized. As Maryland moves forward with the rollout of the adult use program, that’ll be something that starts to pull uncomfortable stigmas away which will be increasingly favorable to the market.

CIJ: What are you excited about for 2023? Any new or exciting plans you can share with our readers? 

Mitch: We’re definitely watching all of our neighboring states and we’re keeping a close eye on our own state to see how everything shakes out. We will start our adult use sales in the state of Maryland very soon and we are moving forward in that direction. What do we look forward to? The beginning of adult use sales in Maryland. This is the start of our next big chapter and a culmination of a lot of work. 8 years later here we are.

Brandon: Maryland is next up. To Mitch’s point, that is where our main focus remains. We are constantly looking at opportunities within the state and nationally as well. I’d like to think of us as a market leader from a retail perspective. Our primary focus right now is how to capture a lot of the excitement in the Maryland market adult-use program, however, our eyes and ears are always open.

New York Launches Adult Use Sales

By Cannabis Industry Journal Staff
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On December 29 just before the end of 2022, New York officially launched legal adult use sales in the state, but at only one location. The nonprofit dispensary Housing Works Cannabis Co. held a grand opening party complete with music, speeches from politicians and regulators and very, very long lines.

Chris Alexander, executive director of the New York Office of Cannabis Management (NYOCM), had the honor of making the first legal purchase, a pack of gummies and an eighth of flower, at the dispensary on the afternoon of December 29. “It’s been a lot of work that’s come to get us to this point,” Alexander told reporters on location. “We do have a lot more work to do, a lot more stores to open.”

New York originally legalized adult use cannabis in early 2021. Following almost two years of setbacks, missed deadlines and failed promises, the state just barely met one deadline: opening a dispensary in 2022. Governor Kathy Hochul has previously said that twenty stores would be doing business before the end of 2022. According to NPR, 36 dispensaries have been licensed, the NYOCM has another 139 licenses they need to issue and there are roughly 900 applicants that are still waiting.

To many in the cannabis space, New York is expected to become a massive boon to the country’s cannabis economy. It is just taking a bit longer than expected to materialize. Roy Bingham, CEO of BDSA predicts it will be the second largest contributor to growth in cannabis sales through 2026, just behind Florida. “With nearly 15 million residents over the age of 21 and tens of millions more tourists visiting the state annually, New York is one of the most exciting cannabis opportunities in 2023,” says Bingham. “Despite some expected growing pains in the early years, the market is expected to be the second largest contributor to sales growth through 2026, following Florida.” More dispensaries in New York are expected to open their doors in the early weeks of 2023.

In another second-place finish, New York follows New Jersey as the second state in the tri-state area to legalize adult use sales. New Jersey launched its market in April of 2022.

2022 Cannabis Labs Virtual Conference: December Program

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

Sponsored by Avivatech & Millipore Sigma

Click here to watch the recording

Agenda

Potency Inflation: The Problem, the Causes and the Solutions

  • Sarah Otis, Quality, R&D Manager, Anresco Laboratories
  • Erik Paulson, Ph.D., Lab Manager, InfiniteCAL

THC potency inflation by third-party testing labs has been an escalating feature of the cannabis industry since its legalization. In California, market forces and lack of regulation have allowed potency inflation to intensify in both its flagrancy and its pervasiveness, particularly within the last year. Two third-party testing labs in California, InfiniteCAL and Anresco, discuss how the industry got to this point, the different methods that labs use to inflate potency, and steps that can be taken to combat it.

TechTalk: Avivatech

  • Shawn Kruger, Senior Vice President of Product & Strategy, Avivatech

The Laboratory Information Landscape in Cannabis Testing

  • James Brennan, Sales & Marketing Specialist, LabWare
  • Eugene Olkhov, Data Scientist, LabWare

This presentation will guide attendees through the data continuum in modern cannabis testing laboratories supported by various software solutions. The presenters will describe the business and regulatory benefits of laboratory informatics and system deployment options, challenges, and financial considerations.

  • The current flow of cannabis testing data
  • An overview of informatics solutions for cannabis testing labs
  • Laboratory informatics and regulatory compliance
  • The impact of digital transformation on cannabis testing data

TechTalk: MilliporeSigma

Cannabis Testing Regulations & Implications for Environmental Monitoring

  • Sarah Powell Price, Regulatory Expert for Food Safety & Cannabis for North America, MilliporeSigma
  • Anne Connors Weeks, Senior Field Marketing Manager, MilliporeSigma

Cannabis testing requirements are continuously evolving, as are analyte detection capabilities.  This presentation provides a high level overview of the latest US cannabis testing regulatory landscape and how environmental monitoring is an essential component of safety and compliance planning.

Click here to watch the recording

Catching up with Jushi Creativity: A Q&A with Dre Neumann

By Cannabis Industry Journal Staff
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Jushi Holdings is a large multi-state operator with a massive national footprint and a presence in key markets, including Pennsylvania, Illinois, Virginia, Massachusetts, Nevada, Ohio and California. 

About a year and a half ago, Aaron Green interviewed Andreas “Dre” Neumann, Chief Creative Director of Jushi Holdings to learn about his journey to the cannabis industry, Jushi’s market presence, brand development and key trends in the marketplace. 

This time around, we’re checking in with Neumann to hear about his progress since the last time we spoke. In this interview, we delve deep into the world of creative influence, brand building, technology, what Neumann is working on now and what he is excited about in the future. 

Cannabis Industry Journal: It’s been a while since our readers have heard from you. What’s new at Jushi? What Are you currently working on? 

Dre Neumann: When I joined Jushi, we were building the foundation and laying the groundwork for a lot of the things we’re doing right now. One of them of course is our online pre-order platform. We have been focused on connecting all the dots in our vertically integrated markets to make sure our retail experience is really fine-tuned and represents what a diverse range of cannabis consumers find helpful and truly enjoy. In my time at Jushi, I have gained a much better understanding of the average cannabis consumer through constantly analyzing data from our retail spaces, and I very much look forward to analyzing more robust data that’s coming in through our new smartphone app. 

Andreas Neumann, Chief Creative Director of Jushi Holdings

The data we have now is allowing us to look at what product developments are most important for us to move forward with and what product categories we should be focusing most on. Because we may be on the cusp of a recession, the consumer value of our product is that much more crucial. With the introduction of new categories of fast-acting edibles and unique and exciting genetics and types of flower, we are paying close attention to how we can innovate in ways that will both excite our current customers and attract new customers to our brands. 

Jushi is interesting because the company really came together from two key pieces: the first being our strong financial and management backbone, and the second, the powerful creative team that I am a part of. We have such a special focus on the quality of products, with the goal of creating high-quality and consistency across our house of brands.

We have had a lot of acquisitions, which have played out very successfully over time, but early on, through these acquisitions, we found there were products and procedures that weren’t up to our standards. It takes time to fix those things from a quality, genetics and consistency perspective, and I’m thrilled to say we’re really getting there. Notably, we felt the need to improve our edible fruit chew brand, and we poured a ton of time into reinventing and relaunching simple, but high-quality, organic, 100% real-fruit chews. 

Now, we are really seeing the value in our three retail brands and the unique attributes of our branded flower, pre rolls, vapes and edibles. Also, we have been really focusing on improving sustainability as we move towards using much more sustainable, standardized mylar packaging across our product suite. This packaging not only reduces our carbon footprint, as mylar is a much more sustainable, recyclable and lightweight material, but also offers us more real estate to express Jushi’s personality through artwork on packaging and allows us to display our products with a larger presence in stores. 

CIJ: You mentioned Jushi’s new app and you sound so excited about it. Tell us more: how are you using the data to analyze what your customers want? 

The Jushi app, The Hello Club (THC)

Neumann: When we were building our online platform, we knew we needed to better understand our customers. What we found was that the most important marketing tools in cannabis are promos – specifically promos through text messaging. Our loyalty program has become our biggest channel to reach consumers, as we have over 200,000 people we can reach with a simple text message. The big problem with texting campaigns, however, is that mobile phone carriers can limit your deliverability if you don’t have the right verbiage and messaging. So working with and figuring out how to deliver the right message to our customers can be very challenging. 

Our smartphone app, The Hello Club (THC), came about as a natural progression of our customer loyalty program. Our team has a lot of experience working in UX and UI, so we were able to dive right in and build the app through Apple. We really took our time to build something that would add value to our customer, and it’s paid off. For instance, starting out we launched an exclusive weekly deal only available in the app. So, guess what happens? Just yesterday, on the 15th of November alone, 11,000 people downloaded the app. 

Their retail location in Alexandria, Virginia

The app will be something that we play around and experiment with as more and more customers download it. It provides us with a platform to be creative and have fun with our customers, where we can launch exclusive events and strain drops and grant exclusive access to our products before they’re available to the general public. 

The Hello Club was completely designed from scratch. It allows customers to choose their local, preferred store, with the ultimate goal of it becoming the central hub of their cannabis needs. The data we get from the app is so vast and there are so many opportunities on the horizon – we have only just scratched the surface. In the future, as we look to enter new markets, we’re excited to utilize the customer data from our app to guide us in deciding what to sell and where and create unique retail experiences tailored to each market. As we’re just in version 1.0, there’s tons of untapped potential ready to be unearthed and applied. 

CIJ: Around this time last year you said that PA was the most important market for y’all. Tell me about the states that Jushi does business in. Are you paying particular attention to any market more now given the midterm elections?

Neumann: Yes, so Pennsylvania is still our most important market today, mainly because we have so many retail locations in the state (18). Pennsylvania is interesting because it’s also the site of Jushi’s first acquisition ever. I think the inevitable move from medical to recreational in the state will be extremely significant; it will be one of the greatest transitions in cannabis history. Because of our footprint and brand presence in Pennsylvania, we are in an excellent position for when adult use comes online.

The Palm Springs retail location

We call Virginia the sleeping giant because it’s a market we have really cornered. We will have six stores in northern Virginia, close to Washington D.C., in areas with large populations, very diverse demographics and a lot of young people. Our retail locations in the state are freestanding buildings with ample parking – key attributes that benefit customers and lift sales, as we found from the data we collected in Pennsylvania. Virginia has incredible potential because we have made such a formidable early presence with our vertically integrated, IKEA-sized grow operation there. We have applied our findings from other states to Virginia, and we’re thrilled about the opportunity for us to showcase high-quality products in this market. 

California is such a tough market to be in, as it’s the most competitive cannabis market in the world, with some of the most discerning customers, so operators often fear entering the market. But it’s proven to be great for R&D for us, and we continue to learn how to navigate and work in this competitive market through our Palm Springs, Grover Beach and Santa Barbara retail locations. By necessity, we’ve been particularly creative with our marketing and operational strategies to carve a place in the market; we have to show people we have better products and a better experience, which is very difficult with stringent regulations in places like Palm Springs. So California, for us, continues to be a proving ground where we are learning how to be as competitive as possible, and this benefits Jushi as a whole.

2023 Dispensary Design Trends

By Melanie Coddington
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This year we have seen some awesome evolution in the design industry. Retail cannabis design is leading the way. Here are some trends to keep an eye out for as we approach the new year and look at the artistic elements that are elevating the cannabis retail experience.

Bold Color

House of Jayne dispensary interior

Goodbye all white Apple store. Hello bright colors of the rainbow. Design pioneers are tired of the safety of neutrals. Pattern mixing, bold use of colors, lights and art that blur the lines between ‘wildly tacky and holy cow that’s amazing.’ We’re not talking about a few fun pops of color; we’re talking full walls of color, bold displays and fixtures. Cannabis isn’t for the meek and it’s so exciting to finally see it reflected in design.

Experiential Retail & Sensory Immersion

The new vision for cannabis dispensaries (specifically in adult use locations) is one that absolutely combines multiple sense-touching points within the space and flexes the space to include adjacent hybrid areas. This is mostly driven by the Gen Z consumer. A quick example would be if the dispensary has florals or greenery, the shopper will want to feel like they’ve been transported to the great outdoors. Feel the wind, smell the grass, hear the birds. You get the idea, a full immersion into whatever theme or vibe the brand is putting out there. Customers love being transported to a new place and interior retail design is absolutely the coolest way to do it. This ties into the recent social media trend, ASMR (autonomous sensory meridian response), where you can experience a tingly euphoric feeling triggered by a carefully created clip. We love the way our environment can sway the senses away from the everyday and into somewhere extraordinary.

Ounce of Hope dispensary interior

The goal here is to pull customers into the store and offer them something far more than a quick and dirty sale. Experiential spaces will also have those hybrid areas that merge the brand with something other than cannabis. This is tricky due to compliance, but we are loving the mixture of yoga, spa, lounge, arcades, art gallery and even bowling within a dispensary. If you’ve shopped at Sheels, you know all about this. A full ferris wheel, restaurant, aquarium and spa inside the sporting goods store. This is definitely a trend that reshapes the standard shopping model and is unique to cannabis.

Digital Forward

Are we being bombarded with digital, phygital and AI in our everyday lives? Maybe. And cannabis customers love every drop of it. More and more we are seeing interactive, digital, full-on wall displays that make you feel like you’re at a museum exhibit. The initial investment can be spendy, but the ultimate flexibility and control (and shopper ooh’s and aah’s) make it all worth it. Imagine an incredible wall showing farm footage, where you can touch the image of the plant and an info bubble pops up describing the terpene and showing it being distilled into a tincture. Bored? Flip it to footage of your latest social event. Whatever you want your customers to see and interact with is completely up to you. More and more we are seeing the digital arts incorporated into dispensary design.

First Pharma vs Cannabis Clinical Trial Moves Forward

By Christina DiArcangelo
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Affinity Bio Partners on Working with Zelira Therapeutics to Complete Enrolment for Diabetic Nerve Pain Drug Trial

It’s an exciting time in the medical cannabis community as Zelira, a global leader in the research, development and commercialization of clinically validated cannabinoid medicines, and Affinity Bio Partners, a leading, global clinical research organization, have completed enrollment for a diabetic nerve pain drug trial. The Institutional Review Board (IRB)-approved head-to-head trial read out is expected in Q1 of 2023. Two years in the making, the study’s clinical management, clinical trial site monitoring, subject recruitment, regulatory submissions and review and query of data have brought us to a pivotal point that could pave the way for how future clinical studies are conducted in the medical cannabis community. As someone who comes from traditional pharma and biotechnology industries, heading up a clinical study in the medical cannabis realm has been a significantly different, eye-opening and informative experience that reinforces the dire need for mainstream, medical cannabis education.

Difficulties of Enrolling Subjects in a Cannabinoid-Based Clinical Study 

There are a number of reasons that enrolling a cannabinoid study is very challenging. One of the biggest challenges to overcome is creating educational clinical study material that will be approved by the Institutional Review Board while educating potential subjects who are interested in enrolling. In other words, one must fully understand the regulatory landscape that they’re operating in, and we all know cannabis is a tricky one, while still educating potential subjects.

When screening subjects, it is important to be able to thoroughly share facts regarding cannabinoids, terpenes and other ingredients utilized in the study material. Also, sharing information on the endocannabinoid system is important, and a must for subjects to understand. In addition, it is integral to share and contrast between the traditional pharmaceutical products versus the cannabinoid study drug. Meaning, most subjects understand and are familiar with pills and other treatments approved in the traditional FDA regulated pharmaceutical space. Therefore, you must ensure that you create a bridge between a study’s educational materials and the lack of mainstream education about cannabinoid-based therapies.

The Impact This Will Have on Future Cannabinoid-Based Clinical Studies

There is a lot of hope that by working on a study of this magnitude, that we will pave the way for many more companies to bravely enter the clinical trial space as it pertains to medical cannabis. Everything that is being performed in this Zelira clinical study is in accordance with all applicable laws and regulations. The team is utilizing an electronic patient reported outcomes and electronic data capture system to receive data directly from the clinical trial sites as they are seeing the patients. As more patients, groups, communities and organizations learn about this, we hope that other large players in the cannabis industry invest their money wisely and perform clinical studies on their formulated products. Companies are unable to make claims of product safety and efficacy legally without these clinical studies. As we approach 2023, it is time for us as an industry to begin forecasting future clinical studies that will help power the therapeutic benefits this plant has to offer in responsible, controlled settings.

No Green Wave This Time, But Two More States Legalize Adult Use Cannabis

By Brett Schuman, Jennifer Fisher, Jeremy Lateiner, Allyson McCain, Amy Arnelle, Whitney Williams
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Five states voted on adult-use cannabis legalization. These results increase the number of states that have legalized cannabis for adult-use from 19 to 21. Similar ballot measures failed, however, in Arkansas, North Dakota and South Dakota. The continued expansion of legalized cannabis at the state level, combined with President Biden’s recent initiation of an administrative process to review expeditiously how cannabis is scheduled under federal law, is likely to increase pressure on Congress and the rest of the federal government to either decriminalize or legalize cannabis under federal law.

Here is a snapshot of the cannabis-related election results:

November 2022 Cannabis Referenda Results

Maryland

On November 8, 2022, Maryland voted to pass Maryland Question 4 (the Marijuana Legalization Amendment), by a margin of 65.5% to 34.5%. Maryland Question 4 amends the Maryland Constitution to add a new article, Article XX, which authorizes adults 21 years of age and older beginning in July 2023 to use and possess cannabis, and directs the Maryland legislature to pass laws for the use, distribution, regulation, and taxation of cannabis within the state.

Maryland legalized medical cannabis in 2014.

Interestingly, unlike most other ballot measures, Maryland Question 4 actually originated from the Maryland legislature. On April 1, 2022, the state legislature sent implementing legislation that was contingent upon the approval of the Marijuana Legalization Amendment to Governor Larry Hogan’s (R) desk. House Bill 837 (HB 837) was passed by the state House on February 25, 2022, by a vote of 92-37. The state Senate passed an amended version on March 31, 2022, by a vote of 30-15. The House concurred on April 1, with a vote of 89-41. Governor Hogan decided not to sign or veto the bill, allowing it to take effect upon approval of the amendment.

HB 837 temporarily expands decriminalization from January 1 to June 30, 2023. It decriminalizes the possession and use of up to 1.5 ounces of cannabis with a civil fine of up to $100. Before the passage of the Marijuana Legalization Amendment, the decriminalized amount was 10 grams. It also reduces the penalty for possession of more than 1.5 ounces but not exceeding 2.5 ounces to a civil fine of up to $250.

Beginning July 1, 2023, HB 837 legalizes the personal use and possession of up to 1.5 ounces or 12 grams of concentrated cannabis for individuals 21 years of age or older. It also legalizes the possession of up to two cannabis plants. It changes the criminal penalties for persons found possessing cannabis under the age of 21. The bill also automatically expunges convictions for conduct that is now legal, and individuals serving time for such offenses will be allowed to file for resentencing.

The bill also requires specific studies on the use of cannabis, the medical cannabis industry, and the adult-use cannabis industry. It also establishes the Cannabis Business Assistance Fund and the Cannabis Public Health Fund.

The Marijuana Legalization Amendment does not establish any licensing or regulatory framework for adult-use cannabis sales.

Missouri

On November 8, 2022, Missouri voters passed constitutional Amendment 3 by a margin of 53.1% to 46.9%, legalizing the purchase, possession, consumption, use, delivery, manufacture, and sale of cannabis for anyone over the age of 21. The law also imposes a 6% state tax on all cannabis sales and allows local governments to impose an additional tax of up to 3%. The law will go into effect December 7, 2022.

Missouri legalized medical cannabis in 2018.

Under Amendment 3, private residences may contain no more than twelve flowering plants at one time, and both the plants and any cannabis produced by such plants in excess of three ounces must be kept in a locked space and not be made available to the public. Individuals may obtain a license to cultivate up to six flowering plants, six non-flowering plants, and six clones.

In addition, those individuals currently serving a sentence for certain cannabis-related offenses are now able to submit a petition for release from incarceration and/or expungement of the offense, and those previously convicted of certain cannabis-related offenses may petition for expungement.

Arkansas, North Dakota & South Dakota

Voters in Arkansas, North Dakota and South Dakota rejected adult-use legalization efforts in their respective states. Each state’s ballot measure would have allowed adults to possess up to one ounce of cannabis. In addition, among other things, Arkansas’ Issue 4 would also have expanded the state’s medical cannabis program to permit licensed businesses to sell to cannabis to adults; and North Dakota’s Initiated Statutory Measure 2 would have required the establishment and implementation of a program for the production and sale of adult-use cannabis by October 1, 2023.

Medical cannabis remains legal in Arkansas, North Dakota and South Dakota. Although there has been a trend in a number of states where legalization of adult-use cannabis follows prior legalization of medical cannabis and the establishment of a medical cannabis program in the state, that trend does not appear to hold true in these “red” states. For example, after North Dakota voters passed a ballot measure to legalize medical cannabis in 2016, they have now rejected ballot measures that would have legalized adult-use cannabis in both 2018 and 2022. In South Dakota, voters passed a ballot measure to legalize adult-use cannabis in 2020, which was later invalidated by South Dakota courts in response to a challenge brought by Governor Kristi Noem. Two year later, voter interest dwindled and a similar measure failed.

A Look Ahead to 2023

Oklahoma

On the horizon for 2023 is a second chance for Oklahomans to decide on State Question 820, which would legalize adult-use cannabis for individuals 21 years of age and older after the Oklahoma Supreme Court denied a chance for voters to decide on the measure this November.

Oklahomans for Sensible Marijuana Laws (OSML) petitioned State Question 820 for the November ballot on July 5th, submitting nearly 164,000 signatures one month in advance of the August 1st deadline. Despite the Secretary of State Brian Bringman’s office advising OSML that the counting and verification process for signatures typically takes 2 to 3 weeks to complete, the office took nearly seven weeks to certify that 117,257 signatures were valid – well over the required minimum of 94,911 signatures. The severe delay caused OSML to miss the August 26th deadline for the measure to complete a 10-day protest period, finalize the measure, and print State Question 820 on the ballot. The Oklahoma Supreme Court ruled on September 21, 2022 that the measure would have to be postponed until a future election. “At this point in time, SQ820 is not in full compliance. There is still a possibility of rehearing in two of the protests, which prevents this Court from fully resolving those objections in compliance with [state law]. That, in turn, prevents the Secretary of State and the Governor from taking their final steps in compliance with [state law].” Nichols v. Ziriax 2022 OK 76, ¶14.

On October 18, 2022, Governor J. Kevin Stitt issued an Executive Proclamation declaring a special election to vote on State Question 820 – a proposal to legalize adult-use cannabis, which will take place on March 7, 2023.

A greenhouse grow facility

Challenges Abound for Cannabis Industry Growth in 2023

By Jay Virdi
1 Comment
A greenhouse grow facility

With an adverse regulatory environment, labor shortages, supply chain disruptions and the always-present threat of property damage and product recalls, cannabis operators are fighting an uphill battle to stay viable in today’s environment.

According to Politico, more than 20 of the largest publicly-traded cannabis companies lost about $550 million on revenues of nearly $4.5 billion in the first half of 2022. High taxes and barriers to interstate commerce continue to challenge the industry as well, while lenders and investors are demanding more detailed proof of future profitability. Those pursuing new capital must show how they will grow financially and present their risk management strategy for insuring themselves against losses.

Higher costs for fertilizer, building materials, packaging and more, along with rising inflation are hurting the industry’s bottom line as well, but the industry is hesitant to raise prices.

These challenges are expected to continue in 2023. However, the industry’s fast pace of growth, myriad opportunities for product development and increased access to insurance capacity offers the cannabis industry every reason for optimism.

Prioritize risk strategies

Cannabis facilities face hazards from the very components and systems required to cultivate plants, including high intensity discharge lighting, chemical exposures and butane in oil extractions. As a condition of insuring a property, underwriters are inspecting the equipment used in production and fire suppression systems.

Property policies typically don’t cover out-buildings for cannabis growers located near a hurricane or wildfire zone, and more carriers are limiting or excluding coverage for losses from large-scale natural disasters. Even coverage for crop losses from catastrophic events is limited and often prohibitively expensive.

Cannabis companies are shoring up their risk strategies and analyzing policies to ensure they’re aware of any gaps in coverage and planning how to address them. This includes adding cyber insurance, as cyber also remains a significant loss-driver in the industry.

Beware of new risks

The cannabis industry is introducing products to the market at a breakneck pace, causing new challenges to emerge. New products — such as THC-infused beverages, sugar-free cannabis tarts and cannabinoid-containing baking staples— require additional research and development for extraction, packaging, storage and distribution. And many products require refrigeration and bottling, adding complexity to distribution.

The continued growth of the cannabis edibles and beverages market is also driving companies to create new formulas, products, and strengths. But this innovation does add risk. States issued dozens of recalls in 2022 for marijuana edibles, including mislabeling and mold and salmonella contamination. These incidents have attracted the attention of plaintiffs’ attorneys, who have filed suits on behalf of consumers claiming injury from these mislabeled or contaminated products.

Invest in your staff

Although the number of jobs in the cannabis industry grew 33% between 2021 and 2022, and the need for new workers shows no signs of slowing, cannabis companies are experiencing high turnover rates and a skilled labor shortage. This is forcing operators to spend additional time and money to attract and retain employees.

Personalized benefits programs offer a partial answer. Personalizing benefits to meet individual employee needs results in positive employee experiences, helping build a workplace that attracts and retains workers. Many companies are adding health insurance and offering 401(k) plans, raising wages and adopting other worker-friendly practices to attract and retain workers.

control the room environment

Cannabis companies with solid risk management plans and advisors to help ensure their insurance policies cover exposures, will be well-positioned to overcome industry challenges, grow, and succeed in 2023. Here are four considerations to help develop a tailored strategy that will protect your bottom line, support your workforce, and build resiliency next year.

  1. Be transparent with your broker. Let your broker know what changes you’ve made to the business, so there are no surprises during renewal. Review exposures and insurance needs at least 90 days prior to policy renewal, so your broker can identify the best options.
  2. Prepare for a product recall. The odds of experiencing a product recall are high. Your first line of defense is your internal policies and procedures, and that includes thoroughly vetting your vendors and partners. Be thoughtful about the general liability and product liability coverage you purchase and ask your broker to clearly explain the differences in coverage.  
  3. Build resiliency within your company. With more carriers offering specialty coverages for the cannabis industry, now is the time to look at how best to protect your executives and build resiliency by insuring against director and officer liability claims, business interruptions and cyberattacks. Your broker can help identify the best policies for your company.
  4. Establish solid employee benefits. The cannabis industry can have access to the same benefits as other industries, including 401(k) plans. Talk to your broker about taking your benefits program to the next level with highly personalized options that won’t break your budget.

Even amidst the challenges, there is every reason for optimism in the new year because of the industry’s fast pace of growth, myriad opportunities for product development and increased access to insurance capacity.

Addressing Cannabis Price Compression With Science

By Mark Doherty
1 Comment

Cannabis cultivators across the U.S. are confronting plummeting wholesale prices and tighter profit margins. Operators in Pennsylvania say flower prices have fallen from around $4,000 a pound to around $3,000, on average, and prices in the more mature markets of California, Oregon and Colorado have experienced extreme volatility. Prices in those states are averaging around $700 per pound but of course, that’s an average. There are whispers that prices are as low as $150, revealing how bad the situation really is.

Oversaturation of legal cannabis affects commercial growers everywhere. For example, when Oklahoma opened its free-wheeling medical cannabis program with unlimited business licenses, the pipeline of cannabis from legacy markets in California was disrupted and a glut of flower from the gray market began to influence pricing within the state’s legal market. Although cannabis is not federally legal and interstate commerce is banned, what happens in one state definitely affects what happens in another.

Competition in legal markets has also increased dramatically in recent years as multistate operators expand their footprint and consolidation proliferates. Vertically integrated cultivation, manufacturing and retail is becoming unsustainable for many mom-and-pop businesses, while MSOs can leverage their cash and resources to weather the current storm.

Economic Viability Meets High Quality Production

All of this news is not necessarily negative, but it’s a definite cautionary tale: Being complacent opens opportunities for others. Growing cannabis is complex. It is working with a living and breathing machine. Some businesses fail because operators are not able to find the perfect blend of horticulture, plant science and manufacturing efficiency necessary for success. Some see it simply as a manufacturing concern, others a scientific endeavor, and still others as an artform. An understanding of growing cannabis as a blend of all three is paramount.

Just like the LED evolution, other new cultivation technology is here to stay and should not be brushed off as just experimental

Squeezing more high-quality product out of existing facilities is essential. Costs for labor and electricity are relatively fixed, so operators must turn to technology to improve yield, quality, consistency and plant health without increasing operating expenses.

Over the years, growers have often resisted change surrounding what they view as “the way” or “the best,” but with the industry in such distress, the time is now to address facility inefficiencies.

Much like the evolution of LED use, there might be an initial skepticism at the cost and real value of new cultivation technology, but the economics are too compelling to ignore. The majority of all indoor grows now use LED. The progression from single-ended bulbs, to double-ended HPS, to LED is analogous to plants on the floor of a grow facility, to rolltop benches, and now to vertical farming using racks.

Vertical Cultivation Science

Crop steering applies plant science directly to commercial production. The methodology is based on the idea that plants can be manipulated to grow and perform a certain way. For cannabis plants, the science really comes into play with inter-canopy airflow.

When airflow occurs under the surface of the leaf of the plant, the stomata opens and gas exchange increases as water vapor and oxygen are released and carbon dioxide is absorbed. The micro-barrier of air trapped against the leaves is broken and the exchange of gasses and energy in the cultivation environment is improved, enabling the entire grow to increase its yield. And while CO2 supplementation is widely used and has been for years with positive effect, the under-canopy airflow provides greater efficiency relative to the operating expense of pumping CO2 into the grow room. Money can be saved by applying science to encourage the plant to uptake the extra CO2 that has been naturally released.

Proper Drainage Is Also Key

Controlling the space with proper drainage will keep a host of problems at bay

Drainage issues like the puddling of water in vertical farming are detrimental to the efficiency of a cultivation facility. Even when growers use precision irrigation techniques to give the plants pinpointed irrigation volumes over different time periods, rack systems can still suffer from drainage issues. That means that affected plants are not receiving the precision irrigation strategy and the entire purpose of the scientific application is defeated.

Precise drainage is critical because standing water opens the door to root born disease, pests, and microbial issues. Spray regimes can address this problem, but they cost money. The key is to reduce dependency on mitigation efforts by better controlling the agricultural space and improving outcomes with a scientifically approached plan.

Greenhouses, warehouses and vertical farming facilities all have potential environmental issues that reduce their economic viability, but with proper vertical air movement, drainage equipment and an understanding of microclimates and how to address them scientifically, efficiency and product quality are enhanced.

Time to Embrace Change

As with any industry, there is resistance to adopting new technology in cannabis cultivation. The original and legacy players will always claim they know how to best grow their plants, but the reality is that the business needs must be addressed.

As canopies increase within a facility, advancements like robotics, LEDs and advanced airflow technology define how the industry operates and continues to improve. Efficiency keeps business alive—cannabis growers must continually assess their operations and make the capital investments that will pay off as wholesale prices continue to decline.