ASTM International has announced the approval of a new standard in development that could have potentially wide-reaching influence on the cannabis industry throughout the world. ASTM’s cannabis committee (D37) has approved the new standard (D8449) for development that aims to develop internationally aligned label specifications for all products containing cannabinoids.
According to the press release, The new labeling standard is the first of its kind, attempting to harmonize regulations throughout the cannabis industry with universally recognized labels that could be adopted by regulators anywhere in the world. ASTM member Darwin Millard has spearheaded the development of this new standard and believes it will have countless practical applications.
“Having the same information presented in the same manner across jurisdictions means consumers of products containing cannabinoids will have consistent information conveyed to them in a way they are familiar with,” says Millard. “This ensures consumers have the information they need to make an informed purchase decision, and will ultimately lead to increased consumer safety and confidence.”
ASTM International is a nonprofit, voluntary consensus-based standards development group. They are inviting feedback and input as they refine the standard and work on presenting it to the international cannabis community. “We welcome regulators, producers, and consumers from around the world to give us feedback,” says Millard. “This is intended to be a living document to remain relevant throughout this ever-changing landscape.”
Dr. Kathy Knutson, Principal, Kathy Knutson Food Safety Consulting LLC
Have you implemented GMPS? Do you have a quality management system headed by a dedicated Quality Manager? Yes! Great! Then you know that quality management is never done, and you desire continuous improvement. The cannabis industry will always have Good Manufacturing Practices (GMPs) along with Good Agricultural Practices, Good Laboratory Practices, and Good Distribution Practices from seed to sale. Beyond GMPs is the writing and implementing of a hazard analysis, preventive controls, and a recall plan for the manufacture of edibles. It’s what the food industry does in writing a food safety plan, and the cannabis-infused edibles industry is expected to do the same with an edible safety plan. As the cannabis industry continues to lead ahead of federal regulation, assessing hazards at your facility is the next step. This presentation will introduce you to the importance of a hazard analysis and prepare you to perform a hazard analysis of processing steps.
How to Create a Bulletproof Food Safety Plan: Supplier Controls & Other Preventative Strategies
Matt Regusci, Technical Director, CSQ
Food safety is the bare minimum in a quality and safety program for plant touching businesses in cannabis, and yet it is constantly being overlooked. One important element of a food safety plan in this industry is implementing proper supplier controls, considering whether your suppliers and/or Contract Manufacturers are including a 2nd or 3rd party auditing program in their standardization of processes. This is a crucial step for MSOs, because although brands aim to do everything they can to ensure the product remains consistent across borders, there’s no guarantee that each manufacturing facility will adhere to the same Good Manufacturing Practices (GMPs) as in your own facility. Why does this matter? At the end of the day, if your company has to undergo a recall due to a mishap in one of the partner facilities, this reflects badly on the entire brand, not the individual facility. According to long-time food safety expert Matt Regusci, when it comes to navigating safety & quality- quality is a mere strategy, but food safety is a requirement. During this discussion, Regusci will share insights to help brands craft a food safety plan, while keeping the entire supply chain in mind.
Mitigating Potency Loss in Cannabis Infused Beverages
Dr. Harold Han, Chief Science Officer & Co-Founder, Vertosa
THC and CBD are prone to losing potency when infused into beverages, leading to unknown cannabinoid concentrations and thus unpredictable effects for the end user — in other words, a brands’ worst nightmare. In this session, Harold will discuss the drivers behind scalping through packaging and oxidation reactions in the manufacturing process for cannabis-infused beverages. He will reference Vertosa’s studies on how antioxidants and the materials used to fabricate can liners affect cannabinoid potency over time, outlining the materials and additives most effective at mitigating cannabinoid potency loss holistically for longer shelf-life. Harold will end the session by explaining why consistent, stable products are vital in ensuring consumer safety and building a responsible cannabis industry.
Even the most traditionally-minded, tech-averse entrepreneur accepts their success relies on providing customers with a superior online experience in 2023. Trying to succeed without a robust web presence is akin to running the 100-meter with your legs tied together.
On that note, the legal cannabis industry might have a leg up over other sectors in providing superior experiences online. After all, the legal cannabis market is relatively new, meaning no legacy systems require any rehauling. Still, many dispensaries must start their websites from scratch.
A website bolstered by an excellent user experience offers many benefits (e.g., branding and additional revenues), but ground-up projects are daunting. Fortunately, the insights below will make your web design process more manageable.
Design Your Website To Click With Your Customer Base.
The primary commodity of all dispensaries is the same. Yet, each dispensary is different. They all have unique branding, voices, and stories they’re trying to tell.
Moreover, every dispensary wants to provide customers with a brand-specific experience. There’s no one-size-fits-all dispensary website for the above reasons.
A brand-specific experience can have a sense of familiarity that customers may desire
Even so, the following general best practices will be conducive to streamlined, successful dispensary website design. While every website designer or agency has their own process, this process has proven to be extremely effective for the dispensary clients we’ve helped:
Develop an outline and wireframe for the website’s structure and content:
A guiding principle during this process is to include the necessary pages and sections to optimize vital brand components and effectively promote products.
Other factors to consider are sections, features and calls to action.
Dispensary websites should contain educational content and resources.
Fluid, straightforward navigation should also be prioritized.
Move onto the front-end design:
Incorporate and harmonize multiple brand elements.
Identify aesthetically pleasing typographies and imagery.
Design each page outside of the content management system. This makes it easier to make changes and adjustments after the first draft has been completed.
Get feedback from relevant parties (e.g., clients, colleagues, management, or other stakeholders):
Transparency and open communication are paramount to this step.
This phase will ensure that all expectations for the new design are met while providing a platform for course correction as needed.
Use the feedback to create a foundational website framework:
Meet for a second feedback session before committing 100% to a web design framework.
Develop the website inside of your content management system of choice:
Now that the front-end design has been created, the website will be built out in the actual CMS platform, ex. WordPress.
Share every page with other relevant parties to maintain and foster the web design process’s fluidity.
By now, you should have a solid base for the website’s final form:
The stage involves fine-tuning as the launch date nears.
Also included at this point are the following:
Ancillary page development.
Dispensary menu integration.
Tablet/mobile optimization.
Speed/performance tests.
Contact form designs.
Lead capture setup.
One last guiding principle in web design is to view your website through a user’s eyes. Continually assess how intuitive and convenient it is to navigate your site as a customer.
Optimize The Customer Experience With Seamless Navigation
Dispensaries benefit by guiding visitors to their website’s most important sections.
It’s an understandable oversight only to prioritize seamless navigation to the menu page. However, customers will be less inclined to order if they can’t access educational content to learn more about your products. Plus, they may want to visit your physical store, so they’ll wish to view your location information.
Furthermore, visitors sometimes need clarification about what they want from your website. Build their pathway with insightfully structured navigation systems with clear prompts, calls to action and an emphasis on the following:
Specifics about store and location
Brand information
Where to find responses to FAQs
Lastly, be mindful of the mobile experience on your website. Your customers expect seamless navigation on their phones and tablets as much as on their laptops and desktops.
More people will visit and shop your menu on the mobile version of the website than the desktop version, so it needs to take priority in the design process.
Create an Intuitive Online Ordering Process
The ordering component of the customer experience is integral to receiving desirable returns on your online investment.
Intuitive, easy-to-parse menu systems are a must when optimizing online ordering.
Of course, every visit counts and brands are happy to educate consumers. A steady, always-growing stream of eCommerce transactions paints a winning picture of your site’s navigation. More to the point, success with online orders means you’ve optimized the ordering experience.
Intuitive, easy-to-parse menu systems are a must when optimizing online ordering.
Ensure that your customers are one click away from their preferred menu and location (if you have multiple locations), regardless of where they are on your website. It’s even better if those pages can rank on Google based on local searches (e.g., Pennsylvania dispensary menu).
Online shoppers also respond well to search filters on your menus, such as:
Products with the highest or lowest THC levels
Products with the highest or lowest CBD levels
Specific strain types (i.e., Indica, Sativa and Hybrid)
Product types (e.g., flower, concentrate, oil or edible)
Build A Robust Resources/Information Section
Almost every branded website has a resource/information section. In some instances, it’s a blog. For other brands, it’ll be eBooks, guides, case studies, press releases, videos or news articles.
Customers respond well to search filters on your menus
A resource/information section is uniquely vital to cannabis brands. Many prospective customers will be first-timers and require sure-handed wisdom to guide them through the experience. Also, many seasoned enthusiasts want to learn about the latest trends and the best new strains.
Furthermore, providing resources and information is a form of education. This “teacher” approach helps push back against stigmas by focusing on cannabis’s nuances and benefits.
Consider using a “pillar page” system to organize your informational content (e.g., blogs, videos, eBooks). Doing so will make it seamless for website visitors to learn about strains, terpenes, upcoming community events, consumption methods or information about local cannabis laws.
It helps to customize each pillar page with an icon and create an individual page for every post in a given category. This way, newly published content will automatically appear under its associated pillar page.
Other Considerations
We understand the budgetary challenges many dispensaries face when getting off the ground. You can grow your budget by making decisions and taking educated risks that generate returns.
Your customers’ online experiences are a worthy investment. Nonetheless, are you investing wisely by building (or redesigning) your website in-house? After all, your team’s expertise is in cannabis sales (or cultivation). They’re smart enough to learn as they go, but would this trial-and-error web design process be efficient or ideal for your dispensary’s bottom line?
Conversely, working with a Consulting Group like MOST who specializes in dispensary website design can ensure your website generates the desired returns and results. Contact us today to learn more.
By Andrew Solow, David Kerschner, Alessandra Lopez No Comments
In 2022, product liability lawsuits in the cannabis/cannabidiol (CBD) industry continued to focus on levels of THC and the psychoactive ingredient in cannabis, while federal agencies continued issuing warning letters for CBD products (including CBD-infused food and dietary supplements) that made misleading medical claims. Against this backdrop of ongoing litigation and regulatory enforcement, 2022 showed that at the Federal level, there is more recognition that marijuana is becoming increasingly normalized. For example, President Biden pardoned federal offenses of simple marijuana possession and requested a reassessment of marijuana’s classification as a Schedule I drug under federal law. Additionally, Congress passed its first standalone piece of cannabis reform with the Medical Marijuana and Cannabidiol Research Expansion Act (MMCREA) which, among other things, will ease restrictions on cannabis research and allow for more clinical trials. And even though the Food and Drug Administration (FDA) declined to act on CBD products, the agency announced that it will work with Congress to create a new regulatory framework for CBD products (2023 FDA Announcement).
These events of the past year provide a glimpse into what the future may hold for cannabis and CBD companies when it comes to product liability risks. This article looks at the types of product liability actions that the cannabis and CBD industry faced in 2022 and may encounter in the future, and provides some basic guidance on how to best mitigate, and if necessary, defend these potentially costly litigations.
Focus on Cannabis and CBD Risks
A central part of any product liability lawsuit—regardless of whether brought under a design defect and/or adequate warning theory—is that a product caused or was a substantial contributing factor to a Plaintiff’s injury or illness. Thus, any potential safety concerns over cannabis/CBD could end up as the subject of litigation in the future. In the 2023 FDA Announcement, the FDA recognized that “the use of CBD raises various safety concerns, especially with long-term use,” including potential harm to the liver and negative interactions with certain medications. The agency also noted that questions still exist on how much CBD can be consumed, and for how long, before causing harm. Furthermore, on December 2, 2022, President Biden signed the MMCREA into law, which is intended to advance research on the potential risks and medical benefits of cannabis and cannabis products.1 This additional funding will not only help researchers learn more about possible safety risks that may lead to future product liability claims, but will also allow for better exploration of the benefits of these products to possibly expand product indications and help reach new customers.
Given the FDA’s statements and the increased funding for new research, CBD and cannabis companies should ensure that they are properly monitoring both regulatory communications and new research regarding risks that may be associated with their products. As new information is released, companies should evaluate how their product labels and marketing messages should be altered. Announcements like this one by the FDA can be seen as providing industry participants with knowledge about certain risks, and how companies react could be analyzed, post hoc, in any litigation down the road.
2022 Product Liability Actions
Over the last year, misbranding/mislabeling issues presented some of the most prevalent litigation risks for industry participants.
An example of a warning letter the FDA sent to a CBD products company making health claims
For example, at the Federal level in 2022, the FDA issued thirty-three warning letters to CBD companies, a nearly 400% increase from 2021. These letters generally focused on CBD products that made medical claims. Some of these warning letters addressed misbranding, where the product labels provided inadequate directions for consumer use. In one letter, the FDA noted that because the CBD products were “offered for conditions that are not amendable to self-diagnosis and treatment by individuals who are not medical practitioners,” ranging from cancer to diabetes, labeling compliance was only possible if the product was an FDA-approved prescription drug with FDA-approved labeling. Other companies receivedwarning letters in March of 2022 for making misleading representations that their CBD products were safe and/or effective to prevent or treat COVID-19. Many of these representations were made via companies’ websites and social media platforms. The warning letters—often triggers for product liability actions, as well as consumer protection/fraud actions—serve as a reminder that companies cannot make medical claims on non-FDA approved drug products and must otherwise present accurate information to consumers not only on product packaging, but any form of marketing or advertising, including company websites and social media platforms.
Turning to state-level regulatory actions, Oregon’s Liquor and Cannabis Commission fined a cannabis company $130,000 and suspended the company’s license for 23 days over an alleged label mix-up between its CBD and THC products. According to the state’s investigative report, a company employee allegedly confused two product buckets with similar identification numbers, one that contained THC and the other CBD, and accidentally switched the labels of the two products. In addition to the fine and license-suspension, the state agency also issued a mandatory recall on the CBD drops based on the alleged undisclosed levels of THC.
This same incident also spurred a string of civil lawsuits, resulting in several settlements by the company in 2022.2 Numerous customers reported experiencing “paranoia,” “mind fog,” and feeling “extremely high,” with at least five people going to the emergency room with serious health issues due to use of the CBD drops. One lawsuit, which was publicly settled for $50,000 in January of 2022, alleged that the company failed to warn the plaintiff that the CBD drops contained THC or that the product may have been contaminated with foreign substances like THC, and that the company failed to exercise quality control standards that would have detected the THC.3 Nine other lawsuits made similar failure to warn allegations based on the same batch of CBD drops and were settled by January of 2022, although those settlements were not disclosed.4 In October of 2022, the company agreed to pay a settlement of $100,000 in a class action suit, which alleged that the company failed to disclose that the CBD product contained substantial amounts of THC.5 The class action focused on unlawful trade practices claims, including that the company falsely represented that the product had the characteristics, uses, and benefits of a CBD product that did not contain THC.6 Also in October 2022, the company settled a wrongful death lawsuit—alleging that the company failed to warn the plaintiff that the drops contained THC and had negligent quality control standards—stemming from the same CBD drops,7 where the plaintiff suffered stroke-like-symptoms, allegedly due to the tainted CBD product, and ultimately died.8
Other recent lawsuits have also focused on mislabeled cannabis products, alleging that companies failed to inform customers that products contained THC. For example, in Kentucky, a man who drove into a bus after using a CBD vape sued both the CBD manufacturer and retailer on December 14, 2022, claiming that he was not warned that the vape contained a substance that would make him intoxicated.9 According to the complaint, the store employees told the man that the vape was “all natural” but made no mention that the product contained THC.10 The man alleged that the vape actually contained Delta-8 THC and brought negligence, failure to warn, and state consumer protection law claims.11
As noted above, in addition to traditional product liability actions, companies are likely to face increased consumer fraud and false advertising actions in the absence of personal injuries. Two class actions brought in December of 2020 against a hemp tea maker alleged that the company’s website and the product’s packaging fraudulently stated that a tea contained zero THC.12 Plaintiffs claimed that they tested positive for THC after drinking the tea and that product testing similarly revealed that the tea contained some THC.13
Potency inflation marketing communications from a laboratory
Last year also saw a rise in cases focused on potency inflation, alleging that cannabis companies knowingly overstated the amount of THC in their products to charge higher prices.14 Again, while these actions focused on consumer fraud allegations rather than product liability claims, these cases underscore the importance of accurate labeling. Due to potency inflation concerns, states have started investigatinglicensedcannabis testing labs within their respective jurisdictions, resulting in product recalls and fines. Some states have also updated their regulations, requiring cannabis companies to test their products through two separate labs.
Finally, contamination and the existence of impurities and other byproducts has been a recent focus of several product liability lawsuits across the life sciences space, and this trend is something that cannabis and CBD companies should be aware of and take steps to mitigate.
For example, a Canadian cannabis producer reached a $2.31 million settlement over a class action brought in March of 2017 regarding pesticide-contaminated medical marijuana. The marijuana was recalled due to the presence of myclobutanil and bifenazate pesticides, neither of which were authorized for use on cannabis plants in Canada. The lead plaintiff experienced nausea and vomiting, allegedly from consuming the medical cannabis, and brought numerous claims on behalf of the class, including negligent design, development, testing, manufacturing, distribution, marketing, and sales.15 In the United States, California’s Department of Cannabis Control issued a mandatory recall on January 26, 2022 for a batch of cannabis flower that was contaminated with mold. On March 25, 2022, the New Mexico Cannabis Control Division recalled cannabis products sold by a local medical cannabis company because the product contained impermissibly high levels of mold. New Mexico’s Cannabis Control Division also required the company to immediately cease and desist operations at its production and manufacturing site.
A Look at the Future and What Companies Can do to Mitigate Product Liability Risks
The FDA’s 2023 announcement means that the industry will have to wait for Congressional action for the development of a regulatory scheme that can help standardize requirements and provide industry players additional defenses when facing product liability actions. Many of the proposed risk management tools in the FDA Announcement could help companies mitigate future litigation risks if implemented. These risk management tools may include “clear labels, prevention of contaminants, CBD content limits, and measures, such as minimum purchase age, to mitigate the risk of ingestion by children.” Although the FDA has had regulatory oversight over CBD and other hemp-derived products for nearly four years, the agency has not developed a regulatory framework for these products aside from issuing warning letters, leaving manufacturers and distributors without much guidance. The FDA has also left the states to fill the void, resulting in a patchwork of differing—and sometimes conflicting—state laws. Additional guidance and regulation on labeling at the federal level for cannabis and cannabis-derived products will make compliance a more straightforward proposition and may provide avenues for industry participants to explore preemption defenses in the face of future mislabeling claims.
Just some of the many CBD products on the market today
In addition to following the changing regulatory landscape and understanding how regulatory changes can impact litigation defenses, cannabis and CBD companies can continue to take various steps to help mitigate future litigation risks.
Quality Control: Adequate testing procedures and effective quality control procedures can help avoid contamination issues and situations where products are mixed up during the manufacturing process. For example, the company whose license was suspended in Oregon due to the alleged mix up between CBD and THC subsequently implemented new ingredient tracking protocols, adopted a policy to retain samples from each batch of product, and now sends additional samples to an independent lab to ensure product compliance before anything is sold.
Proper documentation of testing and quality control procedures, as well as maintaining records of compliance checks, can also help companies put together a defense to state regulatory actions or lawsuits relating to contamination or manufacturing defects. Indeed, in February of 2022, an Arizona marijuana testing lab was fined $500,000 for various incomplete records and documentation as well as improperly calibrated machines for contamination testing, with an inspector also noting that one of the employees was trained to use a technique that produced inflated potency results.
Ongoing Safety & Regulatory Review: Keeping up to date with regulations and science will play a key role in making sure labels are accurate and defendable. Working directly with regulators and seeking guidance from regulators on labeling can help potential defendants present a clear and compelling labeling defense. Moreover, the 2023 FDA Announcement made clear that the agency will not pursue rulemaking on CBD’s potential use in foods and dietary substances. Thus, industry players should monitor agency announcements and engage with the FDA’s Cannabis Product Committee (CPC) and Congress to better understand the potential structure of this new regulatory pathway.
Stay on Top of the Science: A boost in cannabis research is on the horizon, as the Medical Marijuana and Cannabidiol Research Expansion Act (MMCREA) will advance research on the potential risks and benefits of cannabis products and promote the development of FDA-approved drugs derived from marijuana and CBD. On the litigation front, causation is an essential element in most causes of action, and plaintiffs will have to prove that the cannabis caused their injury. Thus, industry players should be aware of the current science, including potential side effects.
Litigation Monitoring: Finally, companies will also be well served by following court decisions involving CBD and cannabis products. For example, courts in 2022 were split over the legality of Delta-8 THC, a substance typically manufactured from hemp-derived CBD. The Ninth Circuit held in AK Futures v. Boyd Street Distro that Delta-8 THC found in e-cigarettes and vape products is legal under the 2018 Farm Act, at least in the intellectual property context.16 But in Kansas, a federal judge ruled that the 2018 Farm Act does not make selling hemp-derived products such as Delta-8 THC legal.17 In Texas, litigation initiated in 2021 is ongoing over the legality of Delta-8 THC.18 There, a hemp company sued the Texas Department of State Health Services for its classification of Delta-8 THC as a Schedule I drug, making the sale of this substance a felony offense. A temporary injunction was granted on November 8, 2021—temporarily lifting the ban on sales of Delta-8 THC products—but the plaintiff’s request for a permanent injunction remains pending.19 As these lawsuits show, the legality of different products may vary by jurisdiction, whether by regulation or a judicial decision.
References
Medical Marijuana and Cannabidiol Research Expansion Act, Pub. L. 117–215, 136 Stat. 2257 (2022).
Agbonkhese v. Curaleaf Inc., No. 3:21-cv-01675, (D. Or. Jan. 5, 2022).
Agbonkhese v. Curaleaf Inc., No. 3:21-cv-01675, ECF 1, 6 (D. Or.).
See Crawforth v. Curaleaf, Inc., No. 3:21-cv-1432 (D. Or. Sept. 29, 2021); Lopez v. Curaleaf, Inc., No. 3:21-cv-1465 (D. Or. Oct. 6, 2021);
Williamson v. Curaleaf, Inc., No. 3:22-cv-782, ECF 1, 8 (D. Or.).
Williamson v. Curaleaf, Inc., No. 3:22-cv-782 (D. Or. May 30, 2022).
Estate of Earl Jacobe v. Curaleaf, Inc., No. 3:22-cv-00001, 19 (D. Or. Oct. 18, 2022).
Estate of Earl Jacobe v. Curaleaf, Inc., No. 3:22-cv-00001 1 (D. Or. Jan. 1, 2022).
Howard v. GCHNC3 LLC et al., No. 5:22-cv-00326 (E.D. Ky. Dec. 14, 2022).
Complaint at ¶ 11, Howard v. GCHNC3 LLC et al., No. 5:22-cv-00326 (E.D. Ky. Dec. 14, 2022).
Complaint at ¶¶ 15-33, Howard v. GCHNC3 LLC et al., No. 5:22-cv-00326 (E.D. Ky. Dec. 14, 2022).
Williams v. Total Life Changes, LLC, No. 0:20-cv-02463 (D. Minn. Dec. 3, 2020); Santiago v. Total Life Changes LLC, No. 2:20-cv-18581 (D.N.J. Dec. 9, 2020).
Complaint at ¶¶ 54-59, Williams v. Total Life Changes, LLC, No. 0:20-cv-02463 (D. Minn. Dec. 3, 2020); Complaint at ¶¶ 21-25, Santiago v. Total Life Changes LLC, No. 2:20-cv-18581 (D.N.J. Dec. 9, 2020).
See Centeno v. Dreamfields Brands Inc., No. 22STCV33980 (Cal. Superior Ct. L.A. Cnty. Oct. 20, 2022); Shanti Gallard v. Ironworks Collective Inc., No. 22STCV38021 (Cal. Superior Ct. L.A. Cnty. Dec. 6, 2022).
Downton v. Organigram Holdings Inc., Hfx No. 460984 (Sup. Ct. Nova Scotia Mar. 3, 2017).
AK Futures LLC v. Boyd St. Distro, LLC, 35 F.4th 682 (9th Cir. 2022).
Dines v. Kelly, No. 2:22-cv-02248, 2022 WL 16762903 (D. Kan. Nov. 8, 2022).
Hometown Hero v. Tex. Dep’t of State Health Services, No. D-1-GN-21-006174 (Travis Cnty., Tex. Oct. 20, 2021).
Hometown Hero v. Tex. Dep’t of State Health Services, No. D-1-GN-21-006174 (Travis Cnty., Tex. Nov. 8, 2021).
In New Jersey’s legal cannabis market and other states with newly legalized cannabis, a new market for security agencies has emerged. The increased demand, much like other aspects of the industry, has created a gold rush mentality with plenty of new and old security agencies looking to earn the industry’s business.
Kelly Conklin, founder and president of Superior Protection Professionals (SPP), wants to show people in the industry the difference between quality security agencies and those that simply hire guards and adjust their marketing for a new industry. Along with his son, Kelly Jr. vice president of SPP, they have developed a team of professionals that pride themselves in quality, integrity and trust.
Here, we sit down with Kelly Conklin for a brief chat to get his thoughts on New Jersey’s legalization and the need for heightened security in cannabis facilities.
Cannabis Industry Journal: How did you get into this business and how are you helping cannabis businesses stay safe?
Kelly Conklin (left) and Kelly Jr. (right)
Kelly Conklin: Thanks for speaking with us. We started SPP primarily because of the horrible uptick in mass shootings happening in all sorts of public spaces, like churches, synagogues, schools, and we wanted to do something that would make a positive and meaningful impact on people’s lives, to help people. We had a clear objective when we started. We wanted to build a premium brand and deliver a quality product.
CIJ: From licensing and planning to running a cannabis business, security is a big part of being in this market. What’s required and what do you suggest cannabis companies do to get ahead of the curve?
Kelly: The state requires security for all cannabis facilities. Theft at every step of the way, from the cultivation to manufacturing, to transportation and the dispensary, is a big potential problem. The presence of our agents helps to prevent these crimes. We also help to provide electronic security such as cameras, alarms, key FOB entry doors, monitoring and much more. Things like these are also mandatory for the facilities. You should take a good, hard look at the state’s requirements for security when developing your standard operating procedures and make sure you have every area of security covered.
CIJ:We’ve seen reports of armed robberies at dispensaries in various parts of the country. How do you staff a dispensary to help prevent those?
Kelly: Each dispensary has different needs based on their locations and foot traffic. We tailor our services to each and every client and give them exactly what they need specific to their facility. For example, at one of our dispensaries we have 2 armed guards inside and one unarmed guard at the door scanning IDs. Whatever’s needed, we provide. We like to provide an assessment done at each facility so the client knows exactly what to do to be compliant with all local and state regulations. We insist that if we work with someone, we want them to know us, and feel comfortable with us, knowing they are in good hands. We’re a quality security agency and we want our clients to understand exactly how to operate safely.
CIJ: You mentioned “quality security agency,” what do you mean by that?
Kelly: We work hard to deliver quality. To us, that means trained professionals, be it veterans of the military or federal, state and local law enforcement. Our staff are highly trained, skilled and capable, but most importantly, they care. We’re fully insured, licensed and bonded. Quality also means good customer service. Again, we tailor services to each individual client, we want people to feel comfortable, safe and happy around us. The state conducts audits with us as required by law and we pride ourselves in our ‘above and beyond’ approach. We’re looking forward to the industry’s growth and feel that we can lend a helping hand where it’s needed. Security isn’t just a state requirement that you have to comply with, it’s unfortunately necessary in the cannabis market to keep employees, customers and products safe. We welcome folks in the industry to reach out to us, by phone (908-783-1939) or email as well and we can answer any questions whatsoever.
Based in Rochester along the I-5 corridor in western Washington is 5th House Farms, a black-owned cultivation and processing company. Founded in 2016 by a BIPOC family with a tier three producer license, the company has quietly built an impressive brand success story in the state.
Coming from an economically-disadvantaged background, Carlondo Mitchell, owner of 5th House Farms, persevered through adversity to build a successful cannabis business in Washington state. By influencing consumer behavior at the retail level with branding, they are trying to turn the concept of social equity on its head.
As a family owned and operated business since its launch, they have embodied the idea of economic empowerment in the cannabis industry. As of this writing, 5th House Farms has sold over one million vape carts, reaching the top 10 in sales for that product category in Washington and their products are sold in about 35% of dispensaries in the state.
From Section 8 to Venture Capital
Carlondo Mitchell, Owner of 5th House Farms,
After cutting his teeth in the state’s medical cannabis market back in 2012, Carlondo Mitchell later grew in the cannabis space as a farm worker and sales representative. He ultimately took over operations of 5th House Farms in 2019, building on the same entrepreneurial and family-focused legacy that the company started with. “I learned a lot as a trimmer and sales rep,” says Mitchell. “I was the guy who would work 18-hour shifts for you, whatever you needed.”
This month marks five years in the Washington adult use cannabis market for him. “I come from a single parent, low-income household so it was important to have an entrepreneurial mindset,” says Mitchell. Coming from humble beginnings in Section 8 housing, he has grown 5th House Farms into a multimillion-dollar business. “Now I own the company, I own the land, my family is there and we have twenty employees,” says Mitchell.
The business has definitely become a success story, to the point that the state of Washington is working with 5th House Farms as a case study for economic empowerment and social equity. “For some people in this industry with a lot of opportunities, the path to success is pretty short and wide,” says Mitchell. “For me, and a lot of others, it’s been a lot more narrow, long and thorny. Through 5th House Farms, we want to show people what’s possible. We’re trying to show people that it is possible.”
Innovating & Differentiating
Back in 2018, it was tough to compete in a marketplace dominated by flower, so Mitchell went in a different direction and started pouring vape carts by hand. “There wasn’t room for me at the table, so I thought I’d try and do carts and chase that. It was a day-by-day effort. He says you need to know you must work twice as hard to get noticed. “You have to prepare to be disregarded. Getting in the first store was the hardest step; you had to go through ten stores who said no to get one who said yes.” Their success came through partnering with retailers, building strong relationships, understanding consumer trends, identifying their needs and working closely with budtenders.
Some of the product offerings from 5th House Farms
He says they treat people how they want to be treated. They sell products that they themselves would want to buy, by offering good, consistent products that are high quality and for a reasonable price. “Before you knew it, we had a prototype on the market and it took off. I do believe fundamentally that on the ground, consumers make choices with their morality. Some of our biggest retailers didn’t even know we’re a black owned business just a few months ago.”
Economic Empowerment from the Bottom Up
Typically, when people in this industry think of social equity, they think of this top-down policy approach that tends to rely on lawmakers and regulators to develop things like social equity funds, a minimum number of licenses reserved for minority owners, license fees for equity programs and other policy approaches. Through 5th House Farms, Mitchell and his team are working on a different approach starting with the consumer. “We’re not only fighting for social equity, but also fighting to use cannabis to create equity,” says Mitchell. “Now that people are identifying us as a black farm, it’s a cool opportunity to show people what is possible. The equity is starting to come from people caring about how they spend their money.”
Social equity, while a relatively new concept to the cannabis industry, has garnered attention in state legislatures, legalization initiatives, conferences and talking points, proving to people that they’re an ally of BIPOC stakeholders and those harmed by the War on Drugs. “To me, social equity is really about giving everyone a seat at the table. Not just trying to make things fair, but reversing this cycle of extracting from communities and instead, uplifting them.” He wants to eliminate the idea that social equity is about taking from one side of the fence and giving to the other side, rather it is about removing that fence altogether.
5th House Farms is currently working with BIPOCANN on a product badge to be displayed on product packaging, identifying it as sold by a black-owned business. “We need a tactful way to show people where their investment is going,” says Mitchell. By influencing purchasing behavior at the retail level with branding and packaging, they are essentially trying to turn the concept of social equity on its head.
Looking Back & Forward
In the chaos of chasing a dream and building a business, people tend to move quickly. “I would tell the version of me that’s ten years younger to slow down and trust the process,” says Mitchell. “As a young man, I was always looking for the cheat code.” He says his success came from losses, but they were also valuable lessons. When states began legalizing cannabis, it created real opportunity and real hope for a lot of people, but Mitchell says you need to stay vigilant and be mindful. “Try not to be so excited for the opportunity that you forget that you need to put in the work. I would tell others in this industry the same thing: to take your time in your process.”
Looking ahead, Mitchell says the plan for 5th House Farms was always sustained growth, to go national and then international. They’re in discussions with companies in other states about moving beyond Washington and they’re building a lifestyle brand. “The dream is to sell 100 million carts.” In talking about his future plans for the company, Mitchell spoke of Tyler Perry’s success story, going from sleeping in his car in the 90s to owning the largest production studio in the country today. “He didn’t have a seat at the table so he created his own table. We are intent on creating tables everywhere we can.”
Creating a healthy cannabis growing environment based on the science behind growing top-notch, medical-grade cannabis is essential for producing consistent results, assuming you start with quality genetics. Before speaking about the environment, it is necessary to highlight that quality and consistency has to first start with quality plant material. In this article, we will explore six key factors that make for a healthy cannabis growing environment and how regular testing allows growers to achieve consistency and quality. Keep in mind, optimizing these factors to the cannabis strains and environment they are grown in is a must.
Lighting
Lighting is the most important factor in creating a good cannabis growing environment. Cannabis plants require specific types, wavelength and exposure times to grow and produce high-quality flower. The two main types of light that are essential for cannabis growth are blue and red spectrum light where blue is primarily dedicated to vegetative growing and red for flowering. The exposure time is necessary for non-autoflower cannabis to maintain a vegetative or a flowering plant.
To ensure that the plants are receiving the right type and amount of light, growers can use specialized grow lights that provide both blue and red spectrum light. They can also monitor the intensity and duration of light using light meters and timers. Regular testing of the light spectrum and intensity can help growers fine-tune their lighting setup for optimal plant growth and flower development.
Temperature
Temperature always needs to be considered when creating a strong, healthy cannabis growing environment. Cannabis plants prefer a warm, humid environment, but temperatures that are too high or too low can negatively affect plant growth and flower development. The ideal temperature range for cannabis growth is between 70-85°F (21-29°C) during the day and between 58-70°F (14-21°C) at night.
To maintain a consistent temperature in the growing environment, growers can use temperature-controlled grow rooms or HVAC systems. They can also monitor the temperature using digital thermometers and adjust the temperature as needed. Regular testing of the temperature can help growers identify and address any temperature fluctuations that may affect plant growth and flower development.
Humidity
Like other factors that require precision, humidity needs to be carefully dialed in when creating an optimal cannabis growing environment. Cannabis plants prefer a humid environment, but too much humidity can promote the growth of mold and mildew. On the other hand, low humidity can cause the plants to dry out and become stressed.
A humidity sensor mounted in a weatherproof enclosure
To maintain a consistent humidity level, growers can use humidifiers and dehumidifiers in the growing environment. They can also monitor the humidity level using a hygrometer and adjust the humidity as needed. Regular testing of the humidity level can help growers identify and address any issues that may affect plant growth and flower development.
Airflow and Ventilation
Proper ventilation helps regulate temperature and humidity and prevents the buildup of carbon dioxide, which can be harmful to the plants. It also helps prevent the growth of mold and mildew. To ensure proper airflow and ventilation, growers can use fans and air ducts in the growing environment. They can also use carbon filters to remove odors and other contaminants from the air. Regular testing of the air quality can help growers identify and address any issues that may affect plant growth and flower development.
Nutrients
Nutrients are a non-negotiable for cannabis growth and flower development. Cannabis plants require a balanced supply of macronutrients such as nitrogen, phosphorus and potassium, as well as micronutrients such as calcium, magnesium and iron.
To ensure that the plants receive the right amount of nutrients, growers can use nutrient-rich soils or hydroponic systems. They can also supplement with fertilizers and other nutrients. Regular testing of the nutrient levels in the soil or growing medium can help growers adjust their nutrient regimen for optimal plant growth and flower development.
Pest and Disease Management
Cannabis plants are susceptible to over 90+ pests and diseases, including insects, mold, mildew, viruses and viroids commonly infected through the environment by touch, air, water and nutrients. The most common are spider mites, aphids, powdery mildew, botrytis, fusarium and hop latent viroid. It is estimated by the United Nations that 20% to 40% of total global crop loss is due to improper pest and disease management. The cannabis growing environment is no different.
Damage from whiteflies, thrips and powdery mildew could be prevented with an appropriate IPM
While lighting, humidity, air flow and nutrients are key aspects for a cannabis growth environment, the most common overlooked aspect of growing is proper pest and disease management. Cannabis plants are susceptible to a variety of pests and diseases, which can have a significant impact on plant health and crop yields. To take optimizing a cannabis growing environment one step further, here are five essentials for developing an effective pest and disease management setup.
Prevention
Prevention is the first and most important step in pest and disease management. Growers should always take steps to prevent pests and diseases from entering or infesting the growing environment in the first place. This can be done by quarantining new plants or clones, using clean equipment, sterilizing the growing area, and monitoring plants for signs of pests and diseases through both visual inspection as well as testing.
Some diseases such as those caused by viruses and viroids, require molecular based testing to identify. Growers should quarantine and test any new plants or clones before introducing them to the growing area. This can help prevent the spread of pests and diseases from infected plants to healthy ones. Growers can also use biological controls, such as beneficial insects, to help prevent pests from infesting the plants. These insects can help control pest populations by preying on them or interfering with their reproduction.
Early Detection
Early detection is key to preventing an entire crop from being infected and scrapped. Growers need to regularly inspect their plants for signs of pests and diseases, including yellowing leaves, discoloration, spots and unusual growth patterns. Early detection can help prevent the spread of pests and diseases and limit the damage they cause, not to mention saving a business’s bottom line!
Integrated Pest Management
Integrated Pest Management (IPM) is an approach to pest and disease management that involves a combination of preventative measures, biological controls and chemical treatments. IPM aims to reduce the use of chemical pesticides, which can be harmful to the environment and human health.
IPM involves regular monitoring of plants for signs of pests and diseases, using biological controls to prevent and control infestations, and only using chemical treatments as a last resort. Chemical treatments should be used sparingly and only when necessary, and growers should follow all safety precautions when using them.
Sanitation
Taking the necessary precautions to ensure all equipment used throughout a cultivation is properly sterilized will save growers from countless headaches. Growers should keep the growing area clean and free of debris, which can provide a breeding ground for pests and diseases. They should also regularly sterilize equipment and growing containers to prevent the spread of pathogens.
Record Keeping
Record keeping is essential for effective pest and disease management in the growing environment. Keep detailed records of all pest and disease issues, including the type of pest or disease, the severity of the infestation, and the treatments used. Cultivators, you will thank yourselves later! This will help identify recurring issues and develop effective pest and disease management strategies.
While there are key aspects of creating a healthy cannabis growing environment, the most common overlooked aspect of growing is on proper pest and disease management, which involves prevention, early detection, integrated pest management, sanitation, quarantine, and record keeping. By taking these steps, growers can help ensure the health and vitality of their plants, produce high-quality cannabis that consumers want and preserve their business’s bottom lines.
Like other states now embracing adult use, Connecticut has enacted a strong social equity program, with mixed results so far. Also, perhaps more than any other state, Connecticut has committed to protecting its existing medical cannabis patients and has put in place various mechanisms to guard their access to cannabis.
Slow Roll-Out of Retail Cannabis Licenses
Like other recently-legal states, Connecticut’s rollout of its retail licenses has not been rapid. The state’s initial goal has been to issue twelve retail licenses by lottery, with six reserved for social equity applicants. Also, the eighteen already-operating medical licensees were given the option to upgrade to a hybrid medical-adult use license, a process separate from the lottery.
Governor Lamont at a press conference on January 9, discussing the social equity focus
As of the end of February 2023, there appear to be only twelve current (approved to do business) retail licenses, with eleven of those twelve belonging to medical-adult use hybrids. The majority of the 39 retail licenses listed on the state website are still in the provisional phase, which allows them to “work toward securing a final license.”
Connecticut Social Equity
Connecticut has committed to a robust social equity program and provided an early application opportunity for social equity applicants ahead of non-social equity applicants. In addition, the Nutmeg State has reduced fees for adult-use licenses by 50% for Equity Joint Venture applications, which is where investors agree to partner with a social equity applicant. Further, the state has eliminated 43,754 low-level cannabis convictions.
Connecticut’s social equity requirements are less rigorous than those of neighboring New York and New Jersey, which may provide additional entry opportunities for both in-state and out-of-state entrepreneurs. Connecticut defines a social equity applicant as requiring that at least 65% of a business be owned by an individual with less than 300% of the state median household income in the past three tax years. Since the median household income was $79,855, that individual would need to have earned less than $239,565 annually.
Subversion of the Lottery Process
The lottery for the six initial social equity licenses was held in May 2022 followed by the lottery for the initial six general licenses, which took place in September 2022. Both were administered by a professor and department head at the UConn School of Pharmacy (the state law stipulated the lottery operator must be part “of the state system of higher education”).
15,605 applications were received for both lotteries. Unfortunately, many of the winning applicants flooded the lottery system with hundreds of applications, spending hundreds of thousands of dollars to do so. One example, SLAP ASH LLC, accounted for 850 of the 8,360 applications submitted to the social equity lottery, winning 2 provisional retail licenses. Another company, Jananii LLC, spent over $200,000 to submit 807 entries, receiving one provisional retail license. “There were individuals applying for licenses who submitted 50 applications or more to enter the lottery,” said House Majority Leader Jason Rojas, D-East Hartford. “That wasn’t our intent.” Rojas and others are looking at other options for the next lottery to try and combat the problem.
Protecting Medical Cannabis Patients
Perhaps what makes Connecticut’s adult use cannabis program most unique is its outsized commitment to protecting medical patients’ continued access to cannabis. Concerned that adult use sales wouldn’t leave enough supply for patients, the state mandated a cap of ¼ ounce of cannabis for all adult use purchases. Lieutenant Governor Susan Bysiewicz commented that this action emphasized the importance of “not losing sight of a very robust medical program.”
Lt. Gov. Bysiewicz speaks to an audience on the day adult sales became legal, outside of the ZenLeaf Meriden dispensary.
With the recent strong sales of adult use cannabis, however, patients have expressed concern about access, and now the Nutmeg State is considering further action. A bill is being considered in the state legislature which would create a state cannabis ombudsman. This individual would act as a liaison between patients and the state and would, in effect, be there to put pressure on the four licensed growers. These cultivators are required to submit a medical cannabis preservation plan to “ensure against supply shortages of medical marijuana products” and are in many ways responsible for continued patient access to cannabis.
Licensing Fees
Connecticut lottery winners’ license fees will vary from $1,000 for a micro, to $25,000 for a retail, to $75,000 for a cultivator, subject to a 50% reduction if the applicant is deemed social equity. However, once the field is open to regular applicants, the fees will become sizeable.
Retail license fees will be $1 million and cultivation license fees will be $3 million, and even with a 50% reduction for an Equity Joint Venture application, the investment will be significant. The $1 million fee also applies to any existing medical dispensary that wishes to convert to a hybrid license without going through the lottery process. The four existing cultivation companies that wish to service the adult use market and avoid a lottery process will have to pay the $3 million as well.
Tax Issues
Connecticut cannabis-businesses are obligated to pay a sales tax of 6.35%, a gross receipts tax of 3% and a privilege tax of $0.00625-$0.0275 per mg of THC, depending on the item. Other than New York, Connecticut is the only state to have a tax based on the potency of the cannabis product.
Federal Tax Subject to Section 280E
On the federal level, cannabis businesses are subject to Internal Revenue Code Section 280E, which disallows deductions and credits for expenditures connected with trafficking in controlled substances under the Controlled Substances Act, schedule 1 or 2. As cannabis is a schedule 1 drug, cannabis companies are only permitted to reduce their sales by cost of goods sold when determining their taxable income. By example, a cannabis dispensary would only be allowed to deduct the cost of the product purchased and the cost to transport the product to the dispensary, while disallowing such significant expenses as rent and payroll. All cannabis businesses must forgo expense deductions related to selling, general and administrative expenses, as they are disallowed under the tax code.
While some states like California have not conformed to 280E and allow their cannabis businesses the same deductions as other businesses, Connecticut is not one of those states. Personal income tax starts with Federal Adjusted Gross Income while corporate income tax starts with Federal taxable income as reported on line 28. There are no provisions that say Section 280E does not apply. This will mean a significantly heavier state tax burden for cannabis businesses.
Labor and Employment Issues
Connecticut state flag
Cannabis is expected to fuel significant employment growth in Connecticut, and experts project more than 11,000 cannabis jobs will be added once the market reaches full capacity. These jobs are expected to include full time and temporary positions in all cannabis verticals: cultivation, manufacturing, distribution, retail, marketing, testing, finance, accounting, legal, compliance and C-suite.
As part of its social equity program, the state has made it clear it would like to see cannabis businesses employ individuals from those communities that have been disadvantaged by the war on cannabis. Connecticut has also made it a requirement that every approved licensee enter into a “labor peace agreement” with a labor union, and that such an agreement shall be an “ongoing material condition of licensure.”
The state is focused on maintaining quality control on all aspects of its adult use cannabis businesses, including the people involved. Licenses are needed for all cannabis employees along with a special license for key employees in managerial positions. Additionally, financiers must be licensed, with a Backer license required for individuals with direct or indirect financial interests in a cannabis establishment totaling 5% or more.
Connecticut cannabis employees must be pre-trained through the state’s Social Equity Council. The state also requires that each license recipient have a workforce development plan approved by the Council “to reinvest or provide employment and training opportunities for individuals in disproportionately impacted areas.”
In Summary
No adult cannabis state has come close to having a smooth opening for it adult use sales program, and Connecticut is no exception. With well-funded groups gaming the license lotteries and medical patients concerned about their continued access to cannabis, the Nutmeg State has its work cut out for it. But with its strong commitment to social equity and its outsized commitment to protecting its medical cannabis patients, Connecticut can serve as a role model for compassionate cannabis capitalism. 2023 will reveal how the state rises to its challenges and matures its cannabis marketplace.
Cannabis retail is becoming more and more commonplace in the United States. According to a consumer trends survey by North Hollywood-based cannabis brand Ganja Goddess Inc., 90% of respondents said they used online ordering and delivery services to purchase cannabis. Around 60% reported that online ordering and delivery would continue to be their preferred method of purchase post-pandemic. The pandemic hugely impacted the delivery market, pushing sales up 300% by the end of 2020. However, in a lot of states, brick-and-mortar stores remain illegal. Delivery services allow cannabis companies to reach customers in areas where dispensaries are not allowed. While cannabis delivery is an incredible opportunity for companies to reach new customers they would not otherwise be able to, following the law can be difficult in an environment with a patchwork of local laws and changing regulations. So, what do you need to know about regulatory adherence to stay ahead of the curve?
Delivery services allow cannabis companies to reach customers in areas where dispensaries are not allowed.
The short answer is it’s complicated. Each state has dramatically different laws regarding cannabis delivery, and laws can vary by jurisdiction. Some states allow full access to adult use cannabis, some only allow medical cannabis and some completely ban delivery, making it tricky to adhere to the law. There are currently 6 states that allow cannabis delivery: California, Colorado, Massachusetts, Michigan, Nevada and Oregon. Others like New York are taking the steps to allow delivery with careful regulation. With more states legalizing cannabis sales every year, delivery laws in existing delivery states are evolving and adapting to licensing changes. California introduced major changes to laws on January 1, 2023. These changes included allowing drivers to carry double the amount of product (up to $10,000 worth), no longer requiring vehicle inventory to be allocated or pre-purchased, and allowing curbside delivery for all licensed retailers. These changes to the largest cannabis market in the world showcase how much delivery is still changing and being regulated, and stresses the value of staying up to date on the latest laws and regulations.
Another aspect of delivery to consider is licensing specifically for delivery. Like regulations, licensing varies state to state and jurisdiction to jurisdiction. For example, in Massachusetts there are two types of licenses. Licensed providers must register as either a Marijuana Courier or as a Marijuana Delivery Operator. Couriers are allowed to earn a fee for delivering cannabis products from licensed retailers to consumers, and operators may buy and sell cannabis products wholesale, as well as deliver them. In Colorado, delivery requires two permits, however, a holder of both permits can still get in trouble if they deliver to an area or jurisdiction that has not affirmatively permitted delivery.
Although highly dependent on local, state and federal laws, the cannabis delivery space shows no signs of slowing down anytime soon.
A big win for delivery services came when Apple allowed cannabis delivery apps on iPhones in June 2021, with downloads restricted to states that allow adult use cannabis. Even then, a lot of individual counties or cities within adult use states still prohibit the delivery of cannabis. This patchwork of regulation makes adherence tricky, and makes certain software features like real-time driver tracking and proof-of-age verification crucial to delivery operations. With competition increasing it’s even more important for cannabis delivery operators to provide an outstanding experience for customers every time. One way they can achieve this is by improving their cannabis delivery software. According to cannabis last mile delivery management software provider Onfleet’s study, 72% of cannabis delivery operators said a delivery management tool was “critical to running delivery operations.” Delivery software also helps companies stay compliant with local regulations. Route planning allows your drivers to stay within legal zones. These platforms can also capture images of state-issued ID for age verification and record customer signatures so drivers can focus on ensuring customers are getting the best experience.
Although highly dependent on local, state and federal laws, the cannabis delivery space shows no signs of slowing down anytime soon. And if (or when) cannabis is legalized on a federal level, it would pave the way for major corporations like Uber and Amazon to enter the space – Uber is already taking steps in Canada. Whether that’s a good thing is up for debate, but delivery certainly isn’t going anywhere anytime soon. Depending on regulations and the market’s next moves, we will see a variety of delivery models and services in the coming years. Delivery services are the future of cannabis, providing customers with ease of access and personalized deliveries as well as benefiting retailers by lowering overhead costs and providing options for easy, quick customer service. Just make sure to check local laws before you confirm a delivery order, even in states where cannabis is legal.
By Abraham Finberg, Simon Menkes, Rachel Wright No Comments
On January 27 this year, Matthew Lee, General Counsel for the Department of Cannabis Control, sent a letter to Senior Assistant Attorney General Mollie Lee requesting an opinion on whether “medicinal or adult-use commercial cannabis activity … between out-of-state licensees and California licensees, will result in significant legal risk to the State of California under the federal Controlled Substances Act.”
The eight-page letter, itself a detailed legal opinion in favor of interstate cannabis commerce, states strongly that the legal risk to California of such commerce is insignificant. The DCC hopes the AG will help authorize the state to negotiate agreements with other states, allowing their cannabis companies to do business with each other. Such agreements, the letter says, “would represent an important step to expand and strengthen California’s state-licensed cannabis market.”
Prices for wholesale cannabis in California have plummeted in the last year: a pound of packaged flower is wholesaling in the $1,200 to $1,400 per pound range compared with $1,700-$1,900 a pound at the beginning of 2022, a year-over-year decrease of about 25%-30%. With many growers struggling and many others forced to enter the illicit market to get a sustainable price for their product, the DCC believes opening up interstate opportunities for California growers will provide much-needed support for their large cultivation industry.
Additionally, this request by the DCC should serve as a roadmap for other states to follow in order to move interstate cannabis commerce forward through state legislatures since it appears that federal progress in legalizing cannabis has become mired in inaction.
The DCC cited new state legislation, Senate Bill 1326, which took effect on January 1, 2023, and which allows interstate agreements for both export AND import of cannabis. This is important because other states would not be inclined to enter an agreement with California if they could only receive (import) cannabis into what may be an already glutted market.
In drafting their letter, the DCC chose to side-step some “thorny” issues, including avoiding having the Attorney General delve into any discussion regarding the federal illegality of cannabis.
While many states to the east, including New York, New Jersey and Connecticut, are opening up their states to adult-use cannabis consumption, California is paving the way forward for the future of interstate cannabis commerce. The DCC’s letter is a bold move to support and strengthen California’s cannabis industry and will likely be watched closely by other cannabis states and the nation as a whole.
This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
Strictly Necessary Cookies
Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.
We use tracking pixels that set your arrival time at our website, this is used as part of our anti-spam and security measures. Disabling this tracking pixel would disable some of our security measures, and is therefore considered necessary for the safe operation of the website. This tracking pixel is cleared from your system when you delete files in your history.
We also use cookies to store your preferences regarding the setting of 3rd Party Cookies.
If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.
According to the press release, The new labeling standard is the first of its kind, attempting to harmonize regulations throughout the cannabis industry with universally recognized labels that could be adopted by regulators anywhere in the world. ASTM member Darwin Millard has spearheaded the development of this new standard and believes it will have countless practical applications.
