On Friday, December 4, 2020, the US House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement Act of 2019 (the MORE Act), which would effectively legalize cannabis by removing it from the Controlled Substances Act. The bill (H.R. 3884) has several key components:
Most importantly, the bill would remove cannabis from the list of controlled substances in the Controlled Substances Act, as well as other federal legislation such as the National Forest System Drug Control Act of 1986. This would effectively end many of the obstacles created by the federal illegality of cannabis such as the lack of access to banking, tax consequences such as 280E, adverse immigration impacts and threats of federal criminal enforcement.
Rep. Earl Blumenauer (D-OR) donning his cannabis mask as he presides over the Congress
Second, not only does the bill preclude future prosecution for cannabis-related crimes, the bill is designed to be retroactive and would provide for the expungement of past non-violent cannabis offenses.
The bill creates a prescribed excise tax on cannabis and cannabis products. The funds collected from the taxes would be channeled into opportunity and reinvestment programs.
A Community Reinvestment Grant Program would be established aimed at the provision of services for “individuals most adversely impacted by the War on Drugs,” such as job training, education, literacy programs, mentoring, and substance use treatment programs;
A Cannabis Opportunity Program would be established providing state funds for small business loans in the cannabis industry targeted at social equity candidates; and
An Equitable Licensing Grant Program providing funds for states to implement equitable cannabis licensing programs aimed at minimizing “barriers to cannabis licensing and employment for individuals most adversely impacted by the War on Drugs.”
The bill would require all cannabis producers to obtain a federal permit. Cannabis businesses would need to be licensed at the state, local, and federal levels to operate.
This MORE Act is a substantial step in cannabis legislation. Reactions to the proposed legislation have been mixed. While the bill does include some measures aimed at social equity, critics of the bill claim it does not go far enough. Similarly, while the bill includes a federal permitting provision, this would be the beginning of a nascent federal regulatory scheme.
What does this mean for your business?
While this bill passed in the US House of Representatives, it would still need to pass in the U.S. Senate this term, which by most accounts does not seem likely. However, the passage of this bill signifies the progress that has been made and provides insight on what further legislation may look like.
The drug war has harmed communities of color since its inception. For decades and decades, BIPOC (Black, Indigenous, and other People of Color) have been nearly six times more likely to be arrested for drug use than White Americans, despite similar rates of use.
Over the years that legalized cannabis has proliferated across the country, the same trends of market consolidation have emerged in every state that has legalized the plant. BIPOC communities already impacted by the drug war have less access to capital and therefore less access to the cannabis industry. Cannabis market consolidation has always led to white people taking a greater market share while BIPOC communities are left behind.
The legal cannabis industry currently lacks representation of BIPOC executives, business owners, and professionals. Ernest Toney, former global marketing and partnerships manager at Marijuana Business Daily, wants to change that. He founded the BIPOC Cannabis Business Network – a membership community that is working to make the cannabis industry more accessible and profitable for BIPOC professionals and business owners.
BIPOCANN is a place to meet cannabis industry leaders, a place to exchange goods, services and ideas that promote BIPOC economic growth in cannabis, an innovation hub for unique voices and perspectives, and it’s all BIPOC-owned and managed.
In this interview, we sit down with Ernest Toney to hear about BIPOCANN and ask him some questions about what the future of the cannabis industry could look like.
Cannabis Industry Journal: Tell me about your background- how did you get involved in the cannabis industry?
Ernest Toney: I grew up in Virginia and went to James Madison University where I studied kinesiology, and sports management in graduate school. That led me to pursue a career in sports administration, beginning as a sales and marketing director for a large YMCA in the southwest, followed by a stint as a sales consultant for the Arizona Diamondbacks in Major League Baseball. Immediately prior to joining the cannabis industry, I worked at USA Ultimate – the national governing body for the niche sport of ultimate (frisbee) in the United States. During that time, I managed and scaled adult programs and events across the country. A big part of my job required collaborating with national stakeholders and creating and enforcing policies to grow the sport by making it more accessible to diverse demographics. We also worked hard to increase the commercial visibility of the sport through mainstream media, including ESPN, with gender equity being a major focus area. It was cool because looking back, I learned a lot of things during that five-year period that is directly applicable to the work I’m doing to support the cannabis industry.
Ernest Toney, founder of BIPOCANN
But my interest in the cannabis industry became strong when I moved to Denver in 2011, a year before Amendment 64 passed. When Colorado became the first adult use cannabis market in the USA, it was an exciting time. I have always been curious about economics and how policies can impact people’s lives. I was interested in what was going to happen when the new market opened.
Early on, I followed the industry trends very closely. Living in downtown Denver, I saw firsthand the effects the cannabis industry was having on day-to-day life, like increased tourism, a housing market boom, a lot of new start-ups, dispensaries opening everywhere. It was just something I knew I wanted to learn more about.
Around 2016, I started making industry connections, but didn’t pursue opportunities until a few years later. Eventually, I was hired in 2018 by MJBizDaily to focus on new business initiatives. Some of my past successes with scaling programs, national and international event management, and community-building aligned with what they were looking for.
I started as the company’s first international marketing manager. In that role, I was responsible for driving marketing campaigns to increase the company’s global readership, event registrations, and business conference presence in foreign markets. After the first year, I transitioned to identify and manage marketing partnerships for the company – which included international and domestic media, event, and affiliate partnerships within and outside of cannabis.
I felt compelled to make a change amidst the social unrest this summer. I was doing my own protesting and volunteer advocacy in Denver, but started to see more broadly, in the cannabis industry, that cannabis executives and companies were bringing attention to the fact that the War On Drugs has been problematic for minorities and communities of color. There was greater talk about social equity programs and how they are not as effective as they should be. There was greater attention to the fact that over 40,000 people are still incarcerated for the plant that others are profiting from – and that the people behind bars are predominantly coming from communities of color. I was in a position that afforded me the opportunity to see what the composition of the global cannabis industry looked like, and I could see minority representation was lacking in business ownership, leadership positions, and more.
I thought – what is the best way for me to use my talents, insights, and knowledge to affect and change this narrative? Ultimately, I decided to start my own business. Not only was this an opportunity for me to “walk the walk,” being a black man starting a business in this industry where there is a lack of black ownership, but more importantly I was uniquely positioned to be able to educate and let people know about the opportunities to be a part of the booming industry. So, I did some brainstorming and came up with a company, which is called BIPOCANN and it stands for connecting BIPOC communities to the cannabis industry.
The work I have been doing for the last quarter includes directly recruiting people into the industry. If you are curious and want to learn more about the industry, then BIPOCANN can be the entry point. We figure out what your goals are and use the network and our resources to get you connected and figure out where you want to go. Likewise, if you are a service provider, like a graphic designer, accountant, marketer or business owner for example, that sees opportunities for your business to play a role and support it from an ancillary standpoint, BIPOCANN can be an entry point for you too.
The other component to it is working with existing businesses who are trying to make the industry more accessible. I work with existing companies and brands to create platforms that amplify voices and make BIPOC folks more visible, seen and heard within the cannabis industry. We are also helping businesses increase their profitability through diversification tactics and marketing tactics that contribute to their bottom line.
CIJ: Tell me about BIPOCANN- what is it, what are your goals with this project and how has it been received so far?
Ernest: The prohibition of cannabis has disproportionately impacted communities of color in the Americas. I alluded to this earlier, but there are more than 40,000 people behind bars in the U.S. for cannabis possession and use. There’s evidence suggesting that Black Americans are up to six times more likely to get arrested for cannabis use than White Americans despite use rates being the same. And when you look at the makeup of the professional industry, there is poor representation of business ownership by people of color. The Cannabis Impact Fund references that only 4.3% of dispensaries are Black or Latinx-owned. These problems intersect in a lot of ways.
BIPOCANN is a small business working to make the cannabis industry more accessible and profitable for BIPOC professionals and business owners. Now, I know that one company cannot change 100 years of cannabis prohibition and how policy works. But if you want to make this industry more accessible, inclusive, and profitable for those who do not have the access then there are a lot of levers to pull. Policy is one. But BIPOCANN is using more direct strategies. We actively recruit people to come in and be a part of this industry, through employment, entrepreneurship, consulting, and collaborations.
We have also created the BIPOC Cannabis Business Network, a community where members can exchange services, network, and collaborate. It’s all about creating more opportunities for BIPOC professionals and business owners, and it’s a safe space to share your experiences and to ideate. Similar to your Cannabis Quality Virtual Conference, where there was a dedicated space for BIPOC folks to be seen and heard and tell their story through your virtual panels, we use our resources and network to help advocates for equity and access be seen, heard, and find opportunities to thrive as a business owner or professional.
CIJ: How do you hope BIPOCANN will be embraced by the cannabis community?
Ernest: I think it has been received well in its first quarter of business. We have had opportunities to share our story across a lot of platforms, including multiple cannabis industry conferences, podcasts, and interviews with varied media outlets. We are in startup mode, so currently we are about building a brand, being seen, and helping people understand what we are trying to achieve. We are working towards that right now. We have had some success and folks are supporting our vision and goals.
I am hoping the cannabis industry will look at BIPOCANN as another important resource within the social equity, business development, and networking landscape. I don’t want to be seen as a competitor to the organizations and individuals who have been doing similar work in this space, for much longer, but as an ally. Some of our approaches to bring new people into the industry will include strategically aligning communities and markets where we have strong ties – such as state governments, national nonprofits, and global cannabis networks.
CIJ: Where do you see the cannabis industry making progress with respect to diversity and including people of color?
Ernest: When I look at the types of conversations and coverage the industry is having, even compared to last year, it seems like more conferences, media entities, brands, and individual leaders are tuned in and trying to figure out how they can contribute to making this industry better, more equitable and more accessible. I am seeing a lot of more attention, attempts to understand where the gaps are and what to do about it.
When I take a step back to think of all the virtual conferences that have made dedicated conference tracks or even entire programs – like the National Association of Cannabis Business’ Social Equity Conference, the Emerge Canna Conference, the Cannabis Sustainability Symposium, and the Cannabis Industry Journal’s post-election social justice panel – or weekly segments from Black leaders like Dasheeda Dawson (She Blaze) and Tahir Johnson (The Cannabis Diversity Report) — those are good signs. They are creating opportunities for voices representing underserved communities in cannabis to share their perspectives and be advocates for change.
But there is still much to do and that includes greater education about the realities, histories, and challenges BIPOC and other minority communities are facing. Going back to the NACB, they recently drafted a social equity standard for state legislatures to use as a baseline for crafting policies and provisions for social equity programs. That and resources from organizations like the Minority Cannabis Business Association, Supernova Women, Cannaclusive, Minorities for Medical Marijuana, and the Massachusetts Recreational Consumer Council, for example are some useful resources for the industry.
Wana Brands is also continuing to do good work, and it was exciting to see them become the first sponsor of the inaugural Black CannaConference by the Black CannaBusiness Magazine. That was a great example of an industry leader using their dollars, marketing resources, and company values to support an event specifically dedicated to creating, developing, and enhancing Black entrepreneurs and businesses in the cannabis industry.
“It is hard to know what even a year from now will look like.”On the policy front, we just saw on election day cannabis having a ton of success at the polls, passing in every single state where there was a ballot measure.
Arizona did a good job with having social equity provisions directly included in the language on their ballot measure. I think for the states that have yet to draft a social equity program, they can look at what has worked well in some other states and also look at what has not worked well, like loopholes that invite predatory behaviors.
I’m excited to see that Governor Ralph Northam and the Virginia Marijuana Legalization Working Group are already identifying the best ways to make a recreational market a beneficial and sustainable one, and tackling how to incorporate social equity, racial equity, and economic equity into a future legalization bill. I am looking forward to learning more after an upcoming meeting with a Working Group member. Eventually, I hope to contribute towards any social equity efforts that will benefit my home state and hometown (a high poverty community that has been at the crossroads of America’s major civil rights movements, with a correctional facility that houses an inmate population equivalent to nearly 10% of the town population).
CIJ: Where do you see the industry moving in the next five years?
Ernest: Ha-ha! It is hard to know what even a year from now will look like.
Just this week the United Nations rescheduled cannabis, which is a big deal! We also saw the U.S. House of Representatives pass the MORE Act. We are inching closer towards federal legalization in the US and I think it will happen within that five-year timeframe, and it will be contentious. There will be compromises on things some folks don’t want compromises on, there will be more big money influencing the outcomes of the industry, and there will be unforeseen or unintended consequences to whatever the federal legislation looks like. I recently moderated a panel of social equity license holders, who felt that federal legalization would harm the disproportionately impacted areas (by the War on Drugs) even more! Their preference was to see cannabis de-scheduled and remain under state control.
I think federal legalization will bring another wave of major mergers and acquisitions, similar to what the Canadian market experienced in 2019, benefiting big business over small business.“We need folks who are educated and informed about these matters to be at the policymaking level to have a fighting chance.”
CIJ: Do you think we can change that?
Ernest: There are so many things at play. The legislators need to have diverse perspectives and representation from the folks in the industry, especially people of color who can speak to the impact that a century of prohibition policies have had on their communities. Those voices and stories need to be heard, but that type of representation is grossly lacking on Capitol Hill…which is all the more reason we need leaders from the aforementioned communities to have a seat at the table when decisions are made.
I say that because a lot of time there are unforeseen consequences when policies are created, so decision makers at the federal level can learn from those of us already doing the work on the local level. I recently had a conversation with a former journalist and colleague who is currently in a cannabis regulatory role. We were talking about how policy and operations intersect with social equity. He made the points that “many markets implement license caps, which are intended to prevent oversaturation of cannabis business (the idea being that density of outlets impacts use rates, and particularly youth use rates); in theory, that’s a good policy – but it comes with very real consequences for social equity applicants (because those licenses often go to the wealthiest applicants). License caps also artificially inflate the cost of those licenses (for a transfer of ownership), which also harms social equity applicants. Lotteries are also generally the result of policy and usually have disastrous results for the social equity applicant.”
So yeah – the rare opportunity to define a new industry that doesn’t just do business as usual, that can right its historical wrongs, and that will reward the communities that have been most harmed by cannabis enforcement, is now. And we need folks who are educated and informed about these matters to be at the policymaking level to have a fighting chance. The optimist in me says “we can do it!” The pessimist in me reminds me that it is 2020 and people still believe the Earth is flat. I’ll keep pushing for change, but I also won’t be surprised if this perfect opportunity to get it right goes wrong.
CIJ: How can people get involved in BIPOCANN?
Ernest: The best way to get involved is to visit www.bipocann.com and support our efforts by becoming an individual member or business member. Not only does that give you the opportunity to connect directly with other members in our business network, but it gives you the chance to be the first to be notified about the latest projects, events, and opportunities we’re working on to change the industry, how we can. By joining, you also directly support BIPOCANN’s goals, contribute to the operating budget of a black-owned business in cannabis, and support the nonprofit partners who we allocate a percentage of monthly sales towards.
You can also get involved by subscribing to our monthly newsletter through the website or by following our social media accounts @bipocann. We are also available for speaking, media, or consulting projects that support social equity, diversity, and inclusion in cannabis. For those types of inquiries, please contact ernest@bipocann.com.
Rep. Earl Blumenauer (D-OR) donning his cannabis mask as he presides over the Congress
Rep. Earl Blumenauer (D-OR), a co-sponsor for the bill and co-chair of the Congressional Cannabis Caucus, donned a cannabis leaf mask as he presided over the floor debate in the House of Representatives on the morning of December 4. After the debate on the floor, the House of Representatives voted 228 to 164 to pass the MORE Act.
While this vote is historic and should certainly be celebrated, it is unfortunately a mostly symbolic win. During the Post-Election Analysis episode of the Cannabis Quality Virtual Conference, Andrew Kline, director of public policy at the National Cannabis Industry Association (NCIA), told attendees that this bill always had strong support in the House, but not enough support in the Senate. “You know I think there is pretty much a 100% chance of it passing the House,” Kline said back in early November. “I don’t think they would’ve scheduled the vote if they didn’t have the votes.”
The House voted 228 to 164 to pass the MORE Act.
Kline told attendees that Republican priorities are most likely to blame when the MORE Act fails to get enough support in the Senate. “The bigger question is what happens when it reaches the Senate and I think it is all but dead when it gets there,” says Kline. “Mitch McConnell has been reluctant to move any legislation over the past four years. He’s really ignored most legislation and particularly any legislation he doesn’t like. He doesn’t like cannabis and it appears to me he barely even likes hemp. He’s really not even fighting for the hemp industry.”
While the MORE Act likely doesn’t have a chance in the Senate, it passing the House is still a monumental moment in cannabis legalization history. This marks the first time in 50 years that Congress has revisited cannabis prohibition, according to Justin Strekal, political director of NORML. “This is a historic day for marijuana policy in the United States,” says Strekal. “By establishing this new trajectory for federal policy, we expect that more states will revisit and amend the archaic criminalization of cannabis, establish regulated consumer marketplaces, and direct law enforcement to cease the practice of arresting over half a million Americans annually for marijuana-related violations – arrests which disproportionately fall upon those on people of color and those on the lower end of the economic spectrum.”
Along with all of the success that cannabis had on Election Day, including five states legalizing it, the House passing this legislation is a symbol of shifting attitudes toward cannabis and serious progress on the federal legalization front.
The real question that should be asked is what will the 117th Congress do? If Democrats gain control in the Senate following the runoff elections in Georgia, it could reinvigorate the momentum behind this bill and offer a renewed breath of life.
Cannabis infused products manufacturing is quickly becoming a massive new market. With companies producing everything from gummies to lotions, there is a lot of room for growth as consumer data is showing a larger shift away from smokable products to ingestible or infused products.
This is the fifth and final article in a series where we interview leaders in the national infused products market. In this final piece, we talk with Lisa McClung, CEO, and Glenn Armstrong, senior advisor at Coda Signature. Lisa got started with Coda in 2019 as a board member after transitioning from an executive role at Wrigley. She now heads up the company as CEO and President. Glenn has deep experience in product development and innovation with brands such as General Mills, Whirlpool and Wrigley.
Aaron Green: Okay, great let’s get started here. So we’ll start with Lisa. How did you get involved at Coda?
Lisa McClung, CEO of Coda Signature
Lisa McClung: I was lucky. Based on my experience, I was originally asked to be on the board of Coda. I’ve served on nine company boards in addition to my career as an executive at General Electric and at the Wrigley Company where I was heavily involved with innovation. The Board then asked me to consider stepping in as CEO after I’d been working there for six months. I was just overwhelmingly complimented that they considered me and I feel incredibly lucky to be here.
Aaron:Okay, great. Glenn, how did you get involved in Coda?
Glenn Armstrong: We’ve known each other for a long time at Wrigley. I was in innovation for the confectionery side and worked very closely with Lisa. When she became a board member, she asked me to do some advising for her. I’m new to the cannabis industry so, I was really excited about doing something different. When Lisa became CEO, she asked me if I would help her.
Aaron: How do you think about differentiating in the market?
Glenn: I spent 90% of my career on the innovation side working with companies like General Mills, Quaker Oats and Amway. When I think about how to differentiate almost any company I always focus on innovation. In the cannabis industry, everybody’s got gummies and chocolates but you’ll hear people talking about “gummies are going away.” No, you’ve just got to innovate, right? It’s like the carrot peeler from 20 years ago. It used to sell for about 25 cents, and it was all steel and now they sell for $10.99. Who would have known?
Glenn Armstrong, Senior Advisor at Coda Signature
I believe anything can be innovative. When I looked at the gummies I asked, “what we learned at Wrigley, can we bring into Coda that currently is not in this industry?” Think about various gums and how they can change flavors over time like Juicy Fruit which dissipates really quickly and that’s just how the flavor is.
Or, there are other ways like spearmint. You can get an initial boost and then extend that flavor by encapsulations. I don’t see much of that in the cannabis industry. It’s just taking what’s out there from flavor companies that people like and getting them into this market.
Aaron: Awesome. Do you have any particular technologies or work or products from other industries that really interest you?
Glenn: I would say it’s going to be from the pharmaceutical industry. You think about THC and CBD being so hydrophobic. With chocolate, it’s not such a hard thing to get into. If you try to get those kinds of compounds into aqueous solutions though it can be a challenge, the drug industry has been doing it for years! So, to me, delving into some of their patents and some of their ideas, that’s one of the most powerful industries I see where we could utilize their technologies to advance the industry. I expect big pharma to get into this. We can start looking at what they’re doing that we can leverage quickly to get into Coda products.
Lisa: We’re not necessarily a pharmaceutical brand, but we are committed to helping people live and feel better. It really is about how you weave cannabis into everyday life?
Coda’s line of chocolate bars
We have a platform of very indulgent products, which is our chocolates ranging from truffles to bars. We also are building our non-chocolate portfolio to include other ways to enjoy cannabis in their daily life. And then to Glenn’s point, I think there’s ideas and technologies from the pharmaceutical area, there’s also things that have been in the food industry for years that provides sensations and experiences.
I think part of our goal is “how many of the five senses can we touch from people in creating product?” The feel of something in your mouth heating, cooling. Not just the psychoactive aspect of it, but the complete end-to-end experience.
These are all dynamics of us delivering the “live and the feel” piece of it. Then people can either use them from a lifestyle perspective for enjoyment, or a medical perspective. Our job is to provide consumers choices and options that provide those type of experiences.
Glenn: If you have a product that’s supposed to “reduce anxiety” why not start with the slight warming of the mouth? Something that feels calming long before the THC or CBD kicks in? Then have a flavor come up that just feels warm and comfortable. By combining all five senses, you have a product that really does something for your consumer.
Aaron: Thanks for that! What’s your process for creating a new product at Coda?
Lisa: Well, I think everybody talks about brainstorming sessions like innovation is something that just pops up. I think innovation has three legs to it. One is really customer-driven. So, we have to produce products that help our retailers make money, and that deliver really good experiences to consumers that we jointly serve.
The second piece of it is thinking about the discipline of innovation. So, when we make a product, what technologies do we bring to bear, can we scale them, and can we produce them at the right price point and delivery?
Coda Signature Fruit Notes
Then the last piece is the fun piece, trying to listen to what is and isn’t being said in the market to really try to be a solutions company.
We spend a lot of time listening and watching the market to figure out where we can anticipate things. We used to call it “problem detection” at Wrigley.
One project that Glen and I worked on was a mint that was designed really around adult usage in more professional situations. So, meaning the shape of the mint needs to be tucked in your cheeks so you couldn’t see it. And the packaging of it was something you could surreptitiously pop underneath the desk because we were designing it for people to use as really a business tool. You don’t think of mints as a business tool, but they really are, they give you more confidence with breath-freshening and you don’t necessarily want to hold that out with everybody else.
Some problems are about how to make a product more fun with our fruit. I can put pineapple jalapeño in my mouth and have a literal popping experience, which adds to my enjoyment of that experience.
The last piece is not to do too many products. One of the things that I think of in cannabis is that everybody’s still learning. It’s such a wide-open space, in some cases, that you also have to kind of pick what you do well. So, sticking close to our brand and what we stand for is also something that we’re trying to do. We’ve actually pulled in our SKUs recently and are trying to focus on a platform of indulgent experiences and of lifestyle products. We try not to do everything that we see out in the market and focus only on the things that we do well that solve problems for our consumers.
Glenn: From my perspective — I am not a big process person — I think the best way to do it is to say, “okay, we’ve got these products. We could look at technology, we could look at something else, but let’s just go scour what’s out there. And let’s get outside of our industry.” Look outside your own game, and see what you can use.
Discovering how to use these technologies in a gummy or chocolate as opposed to just drugs isn’t rocket science. My biggest avenue is looking outside and finding what you can apply as opposed to trying to reinvent everything.
Aaron: We’ve focused on the front end of innovation. Can you articulate on the back-end how that moves into product development, manufacturing and commercial launch?
Lisa: We have a new product pipeline with a Stage-Gate process where we will have a number of ideas and whittle them down on certain criteria.
Sometimes the ideas start with the technology and not the market. Glenn will find something and say, “Hey, this is going on, should we be thinking about this in cannabis?” It allows our each of our teams to come up with how they can make it work.
Then, as that product passes through the next stage-gate, we’re looking at the actual economics of the product, and how it fits relative to our other products all while we’re getting consumer input.
We get to that point in the process when we start trialing with consumers to help decide. And sometimes you get the best idea in the world, and then it’s not going to work so in some cases so you put it back in the pantry.
I never like to say that we don’t take an idea forward, even products that we may have taken off the market, we say “we freeze products, we don’t cut products!” because our goal is to have options. Our discipline is around a Stage-Gate process tied to our business goals and objectives. It’s also about playing around with concepts and seeing what materializes.
Glenn: There is this whole notion of a process, there’s a Stage-Gate, but before that, it’s a lot of playing around. What Lisa and I’ve recently worked on was making innovation a way of life so that every time you see something, you say something.
“We don’t think of innovation solely as the next flavor that’s going to be on the shelf.”We always gave people permission to play in the web.The reason brainstorming sessions don’t tend to work, is we expect people to become innovative in these next five hours.
So, if you think of innovation as a way of life, then it becomes what you do daily, and you look at things differently. I like to say when you’re driving home, go a different route, because you never know what you’re going to see. When you get out of that habitual mindset, you’ll think about your business differently, almost naturally. Innovation — this way of life — is one of our buzzwords.
Lisa: I think building that innovative culture is a responsibility, but also a challenge for a company like Coda. I mean, we’re not new. We’ve been around five, six years and we have some of the leading chocolate bars out there. We’re known for flavor systems.
Where our goal is to create a culture of innovation, you get these little pockets of creativity and innovation, and then it starts snowballing. You build on it, get people excited about it, and move it forward. That’s how everybody gets involved in innovation.
One of the goals of that pipeline process is to combine inspiration and discipline. But you don’t just want to be innovative in the next flavor. That isn’t doing enough for our consumers. We’ve educated them on the potential flavors could bring. But now we really want to be much more innovative across the board and see what kind of culture of innovation Coda can do.
We’re looking at the packaging, how we interact with retailers, how we use digital messaging to support our retailers and support our products. We don’t think of innovation solely as the next flavor that’s going to be on the shelf.
Aaron: From a supply chain perspective, how do you go about sourcing ingredients?
Lisa: We have some wonderful partners that have been with us at Coda. People that bring us chocolate from other parts of the earth.
We continue to keep building our ecosystem of partners. We look at different flavor houses and different food type researchers to be partners with us to broaden our ecosystem. It’s something that’s very much top of mind, even more so during COVID, because we’re feeling very fragile about our supply chains.
Glenn: Yeah, I think Lisa, that’s one thing you and I bring, not only to Coda, but I think to the cannabis industry, is the whole CPG discipline of how we look at suppliers and procurement. We need to go out there find some smaller flavor labs with incredibly creative folks.
I think the whole notion of expanding the supplier and vendor base, is pretty unique in this industry and that’s one of the strengths we bring to Coda.
Lisa: Our goal is to really create an ecosystem of different suppliers. I just think that that’s something other industries — you talked about pharmaceuticals earlier — have done. Cannabis is just starting to get there, but that’s where you get exponential opportunities.
We’re really looking at cross-functional and interdisciplinary teams with outside partners. Cannabis is at the stage now where I think it’s looking for more sophisticated technologies and new ways of deploying. We’re also really interested, as Glenn said, in some of the younger, more entrepreneurial firms that want to possibly expand their reach into cannabis as well.
Aaron: Okay, great. So my next question is can you give me an example of a challenge that you run into frequently? And this can be either a cannabis challenge or a business challenge?
Lisa: I think one of the challenges that cannabis faces in general is educating consumers about our market. One of the opportunities we have is to bring people into the market. We’re at the same time developing products for people who are in the cannabis space and are active users and have varying degrees of understanding of how they’re using the category in their daily lives.
We’re also trying to create products and education to invite people into the cannabis market. That’s a different challenge than if you’ve had an Oreo cookie, and people kind of understand cookies. They understand Oreos, and then they understand organic Oreos and all the other permutations of two chocolate cookies with a vanilla thing in between. Our goal is to expand the ability for people to access cannabis in their lives.
That is a very unique business problem. And it does represent a bit of a screen, are you going to do some of your products for more sophisticated users and others for less sophisticated users? Cannabis has consumers that have been taught essentially to think about milligrams; there’s one of the key components of choice. People will look at the product and flavor, and then they look at the milligrams and the price point.
That’s very unique to what we would find on CPG. You don’t necessarily look at dollars per milligram when you buy a cookie. So, if you’re trying to make a premium product with premium flavors, how do you say, “Well, yeah, there’s dollars per milligram, but this product has all these other technologies to create the warming or whatever.” “Innovation in products and new categories is critical to get the industry beyond common confections.”
So you kind of have a dual issue. You’re trying to get people educated on a new category and how they use it. But the education of the consumer in terms of the potential and the possibilities that they can access is going to be very important.
Aaron: What trends are you following in the industry?
Lisa: Beyond paying close attention to legalization progress across the country and monitoring how states are setting up their regulatory standards, we’re focused on which consumer demographics are incorporating cannabis into their wellness and self-care practices—and how Coda Signature products fit into their daily routines.
Glenn: For edibles, “fast acting” is probably beyond a trend and it will be interesting to see where this nets out. Consumers appear to be balking at the slightly higher price point for fast-acting gummies, but there may be a market for after-dinner dessert items. In other trends, use of minor cannabinoids and terpenes for specific benefits appears to be a solid consumer need, but this is going to require solid science to see if these products truly work. Innovation in products and new categories is critical to get the industry beyond common confections.
Aaron: Okay great! Lastly, what would you like to learn more about?
Lisa: We’re fascinated by the technological advances being made in the cannabis industry, and how those achievements may enrich the consumer experience moving forward. We’re also interested in the growing body of scientific research around how cannabis products can enhance people’s health and wellness.
Glenn: U.S. legalization and the constant changes in regulations require someone to distill the information and do a weekly report on changes.
Aaron: Thank you both! That concludes the interview!
November 3 was a historic night for legalization across the country. Only a decade ago, cannabis was illegal for nonmedical use in all 50 states. Now, the tide has turned, and every presented cannabis-related initiative has passed, pushing the U.S. adult use cannabis market to 15 states with a population of over 110 million. If nothing else, this year’s election results provided clarity that American voters have become more open to the benefits of cannabis.
Here’s a list of states that passed cannabis-related measures in the 2020 election, along with an analysis of each initiative and what it means for the future:
New Jersey: Public Question 1
New Jersey’s ballot proposed and ultimately passed the measure Public Question 1, making it the first Mid-Atlantic state to legalize adult use cannabis.
Expected to take effect January 2021, this measure legalizes the adult use of cannabis for anyone over the age of 21 along with cultivation, processing, and retail sales. The Cannabis Regulatory Commission oversees the state’s medical cannabis industry and will now be responsible for the new adult use cannabis market. However, since the ballot measure didn’t outline many details, it has left a lot of discretion up to the state’s legislature, leaving residents awaiting specifics about home-grow rules, possession limits, and other retail regulations.
Public Question 1 will apply the state sales tax of 6.625 percent. However, under this measure, the local jurisdictions are permitted to implement an additional 2 percent, so the final tax rates remain undecided. With New Jersey’s nearly 8.9 million residents, it’s projected to have adult use sales of around $375 million in just the first year and estimated to reach up to $900 million by 2024.
Mississippi: Initiative 65 & Alternative 65A
Mississippi had two competing measures on the ballot to legalize cannabis for medical purposes: Initiative 65 and Alternative 65A. Initiative 65 prevailed with 74 percent of the vote.
Between 2018 and 2019, over 228,000 Mississippi residents signed a petition that led to Initiative 65 appearing on the ballot. And by mid-2021, the legalization of medical cannabis is expected to take place. This initiative is designed to allow medical cannabis treatment for people with at least one of 22 specified qualifying conditions, including ALS, post-traumatic stress disorder (PTSD), epilepsy and Parkinson’s disease. The passage of the initiative allows those patients to possess up to 2.5 ounces of cannabis at one time with a cannabis sales tax set at the state’s regular sales rate of 7 percent.
The Mississippi Legislature proposed the competing ballot item, Alternative 65A, in what supporters of Initiative 65 believed was an effort to confuse voters. This measure restricted the use of cannabis to only terminally ill patients but did not specify qualifying conditions, possession limits or a tax rate leaving the results somewhat ambiguous with many details to be set by Mississippi Legislature. Initiative 65 easily won over the alternative with nearly 74 percent of voters approving versus just over 26 percent for Alternative 65A.
Montana: I-190 & CI-118
Montana became the 14th state to legalize adult use, passing both cannabis-related initiatives on the ballot: Initiative 190 (I-190), which creates a legal adult use cannabis market, and Constitutional Initiative 118 (CI-118), which supplements I-190, allowing the state to establish the legal purchasing, consumption or possession age of 21.
These ballot issues will go into effect beginning January 2021. Initiative I-190 legalizes the adult use and possession of up to one ounce of cannabis or 8 grams of concentrate. It also allows individuals to cultivate up to four cannabis plants and four seedlings in their residence.
Depending on the circumstances, anyone serving cannabis-related sentences for reasons no longer considered crimes under I-190 may request to be resentenced or have their conviction expunged.
Cannabis and infused product retail sales will be taxed at 20 percent. Following the Montana Department of Revenue’s deduction of administrative costs to enforce the measure, remaining tax revenue is set to be allocated to the state’s general fund, veterans programs, conservation programs, drug addiction treatment programs, and local law enforcement and healthcare workers.
South Dakota: IM-26 & CA-A
South Dakota made history as the first state to legalize both medical and adult use in the same election, moving from total prohibition to legalization in just one night. First came Initiated Measure 26 (“IM-26”), South Dakota’s medical cannabis ballot item, passing with nearly 70 percent of the vote. Then came the adult use initiative, Constitutional Amendment A (CA-A), narrowly passing with almost 54 percent of votes.
Both ballot issues are set to go into effect on July 1, 2021. IM-26 establishes a medical program for individuals with a physician-certified debilitating medical condition. Patients can possess a maximum of three ounces of cannabis and, for patients registered to cultivate at home, they will be permitted to grow up to three plants at minimum unless otherwise prescribed by their physician. However, under this measure, the Department of Health can limit the number of cannabis products each person may possess and make amendments to the conditions qualified as debilitating.
CA-A legalizes the adult use of cannabis for adults age 21 and older, allowing possession or distribution up to one ounce, and for those living in a jurisdiction with no licensed retail stores, permitting the growth of up to six cannabis plants in a private residence. This measure also requires the state to adopt hemp laws.
Marijuana sales will be taxed at 15 percent under Amendment A, estimating revenue of $29.3 million by 2025. After any revenue is used for costs associated with implementing this measure, remaining revenue will be divided between public schools and the state’s general fund.
Arizona: Prop 207
On November 3, voter initiative Proposition 207 passed with 60 percent of the vote, and Arizona became the 13th state to legalize adult use cannabis – a movement that’s expected to make a great addition to the state’s already thriving medical cannabis program.
Also known as the Smart and Safe Act, this initiative legalizes the possession and use of cannabis for residents age 21 and older. It requires the Department of Health and Human Services to develop the rules regulating businesses in areas like licensing of retail stores, and production and cultivation facilities. Individuals will now be allowed to grow up to six plants in their private residences, with no more than 12 plants per household.
Prop 207 placed a 16 percent excise tax on cannabis sales in addition to the state’s 5.6 percent, totaling a 21.6 percent tax. It is estimated that legal cannabis will generate $300 million in revenue, which will be divided between community college districts, municipal police, sheriff and fire departments, fire districts, highway funds and a new Justice Reinvestment Fund. This initiative also allows anyone convicted of certain cannabis-related crimes like possession, consumption, cultivation or transportation to petition for the expungement of their record beginning July 2021.
Each of the initiatives above is expected to provide a wealth of job opportunities and economic growth for their state. This transition also allows those in the cannabis law and regulation industry the chance to develop and implement meaningful and accessible social equity licensing programs. In addition to day-to-day business needs, our firm will be working closely with clients as they transition from strictly medical cannabis licenses to dual licensing. We will also help new licensees build out and develop their adult-use licenses with long-term success in mind.
Cannabis has quickly become a mainstream health and wellness solution for people all across the globe. With the estimated annual national market for cannabis being $50-$60 billion, it’s believed to be a real solution to many local economic shortfalls caused by COVID-19, opening up the country and cannabis industry to a whole new world of opportunity.
The United Nations Commission for Narcotic Drugs, based in Vienna, Austria, voted to remove cannabis for medical use from its Schedule IV status, the strictest drug classification where dangerous drugs like heroin are listed.
The vote comes after the World Health Organization submitted a number of recommendations to the commission regarding cannabis, all of which were rejected except for the Schedule IV removal, according to Kyle Jaeger at Marijuana Moment. The WHO first issued their recommendations to change the status of cannabis last year in 2019.
Dirk Heitepriem, vice president at Canopy Growth, told the New York Times the vote is a huge step forward. “We hope this will empower more countries to create frameworks which allow patients in need to get access to treatment,” says Heitepriem.
The much-delayed vote was close, with 27 in favor and 25 against, and Ukraine abstaining, but support from the United States was pivotal in getting it passed. Still though, the vote is largely symbolic – it doesn’t necessarily clear the way for countries to start legalizing cannabis and governments can still classify cannabis how they see fit.
The vote does, however, provide an important foot-in-the-door moment for cannabis advocates and businesses around the world. The commission’s decision to remove cannabis from Schedule IV means that the UN recognizes cannabis as an effective medicine, opening the door to future progress on the international level and possibly opening research opportunities along the way.
Dr. Markus Roggen is a chemist, professor, cannabis researcher and founder & CEO of Complex Biotech Discovery Ventures (CBDV). Founder & CEO of Ascension Sciences (ASI), Tomas Skrinskas has been at the leading edge of transformative healthcare technologies, including computer assisted surgery, surgical robotics and genetic nanomedicines, for over 15 years.
Leading researchers from the cannabis industry – Dr. Markus Roggen (Complex Biotech Discovery Ventures) and Tomas Skrinskas (Ascension Sciences) – highlight the challenges facing the industry’s current compliance testing standards and the opportunities emerging from the latest developments in nanotechnology and advanced analytical testing. Here are the key insights from the discussion.
What are the current compliance testing requirements for cannabis products? Are they sufficient in ensuring safety and quality?
In the current landscape, Canada’s compliance testing requirements are clearly laid out in the form of guidance documents. Specifically, for pesticide testing, cannabinoid concentration content in products, heavy metals, etc. Compliance testing can be roughly divided into two categories: 1) establishing the concentrations of wanted compounds, and 2) ensuring that unwanted compounds do not exceed safety limits.
In the first category, cannabinoids and terpenes are quantified. Their presence or absence is not generally forbidden but must stay within limits. For example, for material to be classified as hemp, the THC concentration cannot exceed 0.3 %wt., or a serving of cannabis edible should contain below 5 mg of THC. The second category of compliance testing focuses on pesticides, mold and heavy metals. The regulators have provided a list of substances to test for and set limits on those.
Are those rules sufficient to ensure safety and quality? Safety can only be ensured if all dangerous compounds are known and tested for. Take for example Vitamin E acetate, the substance linked to lung damage in some THC vape consumers and the EVALI outbreak. Prior to the caseload in the Fall of 2019, there were no requirements to test for it. It’s not only additives that are of concern. THC distillates often show THC concentrations of 90% plus 5% other cannabinoids. What are the last 5% of this mixture? Currently, those substances have not been identified. Are they safe? There is no concrete way to determine that.
The aforementioned guidelines have the best intentions, but do not adequately address two key obstacles the industry is currently facing: 1) what happens in practice, and 2) what can easily be audited? Making sure people follow the requirements is the challenge, and it comes down to variability of the tests. Testing has to happen on the final form of the product as well as every “batch,” but there is little guidance on how that is defined. With so much growth happening in the industry, how are these records even tracked and scrutinized?
And finally, there’s the question of quality. How do you define quality? Before establishing quantifiable quality attributes, it can’t be tested.
If compliance testing is insufficient, then why aren’t more cannabis companies testing beyond Health Canada’s requirements?
Compliance testing has always been focused on the end product, THC and CBD levels, and consumer safety. As long as cannabis companies are testing to determine this, doing further testing means added costs to the producer. There is a rush to get cannabis products to the new market because many consumers are eager to buy adult use products such as extracts or edibles, and quality is not the biggest selling point at this very moment.
However, there are unrealized advantages to advanced analytical testing that go beyond Health Canada’s requirements and that offer greater benefits to cannabis producers and product developers. Producers often see testing as an added cost to their production that is forced upon them by the regulators and will only test once the product is near completion. For cannabinoid therapeutics and nutraceuticals, advanced analytical testing is critical for determining the chemical makeup and overall quality of the formulation. This is where contract researchers, such as Ascension Sciences, come in to offer tests for nanoparticle characterization, cannabinoid concentration, dissolution profiles and encapsulation efficiency.
A lack of budget and awareness have prevented cannabis companies from advanced analytical testing. However, testing that goes beyond lawful requirements is an opportunity to save money and resources in the long term. This is where companies, like Complex Biotech Discovery Ventures (CBDV), offer in-process testing that provides a deep characterization and analysis of cannabis samples during every stage of product development. If tests are conducted during production, inefficiencies in the process are revealed and mistakes are spotted early on. For example, testing the spent cannabis plant material after extraction can verify if the extraction actually went through to completion. In another case, testing vape oil before it goes into the vape cartridges and packaging allows producers to detect an unacceptable THC concentration before they incur additional production costs.
Which methods are the most successful for cannabis testing?
The most effective method is the one that best determines the specific data needed to meet the desired product goal. For example, NMR Spectroscopy is paramount in assessing the quality of a cannabis sample and identifying its precise chemical composition.
HPLC (liquid/gas chromatography) is the most precise method for quantifying THC, CBD and other known cannabinoids. However, if a cannabis extractor wants to quickly verify that their oil has fully decarboxylated, then an HPLC test will likely take too long and be too expensive. In this case, IR (Infrared Spectroscopy) offers a faster and more cost-effective means of obtaining the needed data. Therefore, it ultimately depends on the needs of the producer and how well the testing instruments are maintained and operated.
What’s next in analytical testing technology? What are you working on or excited about?
In terms of compliance, regulations to standardize the testing is the hot topic at the moment. For nanotechnology and nanoparticles, the big question now is what is known as the “matrix” of the sample. In other words, what are the cannabinoids, and what else is in the sample that’s changing your results? The R&D team at Ascension Sciences is in the process of developing a standardized method for this to combat the issues mentioned earlier in the interview.
The smoke analyzer in CBDV’s lab
Ascension Sciences is also excited about characterizing nanoparticles over time to determine how cannabinoids are released and how that data can be transferred or made equivalent to consumer experiences. For example, if a formulation with quicker release, faster onset and better bioavailability is found in the lab, product development would be more efficient and effective when compared to other, more anecdotal methods.
At CBDV, the team is working on in-process analytical tools, such as decarboxylation monitoring via IR Spectroscopy and NMR Spectroscopy. CBDV is also looking at quantifying cannabis product quality. The first project currently in motion is to identify and quantify cannabinoids, terpenes, and other compounds present when vaping or smoking a joint using a smoke analyzer.
A lack of budget and awareness have prevented cannabis companies from testing beyond what’s required by Health Canada. Compliance testing is designed to ensure safety, and for good reason, but it is currently insufficient at determining the quality, consistency and process improvements. As the above factors are necessary for the advancement of cannabis products, this is where further methods, such as advanced analytical testing, should be considered.
Small cannabis dispensaries face different challenges than those seen with large, multi-state operators. To this end, massive companies like MedMen and Grassroots Cannabis need to accommodate multi-state operations’ compliance challenges. Conversely, small dispensaries must learn to compete with the big box retailers of the cannabis industry.
Small cannabis dispensaries must figure out how to make their size an advantage against larger business entities to stay competitive. To this end, they must critically assess the corporate structure of large cannabis companies like Green Thumb Industries to look for operations and marketing opportunities still “left on the table” for smaller operators.
Luckily, owning and operating a small cannabis dispensary affords creativity and innovation in the workplace. Namely, because small businesses can quickly implement change and pivot to the demands of the ever-changing cannabis landscape. Conversely, due to corporate structures’ difficult navigation, their larger counterparts must go through far more effort to implement operational changes. To better understand how small dispensaries can stay competitive in today’s market, we put together some criteria to examine.
Cross-Training Employee Teams
The fact that small cannabis dispensaries do not have many employees significantly reduces operating costs. However, to capitalize on the savings of a small employee team, you must cross-train your staff. Because if a small team can handle all the required tasks of a shift, you will never waste money on over-staffing your dispensary operation.
A bud tender helping customers at a dispensary
Looking at the specific jobs of a small cannabis dispensary, business owners should ensure that budtenders are trained to handle nearly every business task. To illustrate, you should train budtenders to open and close the store, conduct inventory work, recommend products and operate seed-to-sale software. Not only does this cross-training keep you from overstaffing your dispensary when it is slow, but it also insulates your business during busy market fluctuations.
Please note, once you train budtenders to handle a variety of tasks, you should also pay them more than the industry average. In doing so, you insulate yourself from the high turnover rate that plagues the cannabis space.
Lean Operating Principles
Lean operating is a practice that has exploded in popularity across the business world. To help teach lean operating principles, specialty training companies offer Six Sigma certifications. These certifications help business owners and executives save money on operational efficiencies. Methods taken from Six Sigma can be incredibly impactful for small cannabis dispensary businesses.
According to the ASQ professional training website, “Lean Six Sigma … drives customer satisfaction and bottom-line results by reducing variation, waste, and cycle time, while promoting the use of standardization and flow, thereby creating a competitive advantage.”
Lean Six Sigma principles can be beneficial with inventory control in small cannabis dispensaries. To this end, these businesses should apply analytics to track consumer behavior within their stores. After that, they can use data to create precise sales forecasts and conduct highly accurate product procurement. The end goal being to increase liquidity by reducing money tied up in a bloated inventory of unsold cannabis products.
Personalized Experience
Due to their small size, single dispensaries have the luxury of customizing the retail shopping experience. As such, without the added pressures of corporate oversight, small operators have the creative freedom to make for highly memorable shopping experiences within their stores. In going the extra mile on things like interior design, small dispensaries can help ensure customer retention and benefit from word-of-mouth marketing.
The dab bar at Barbary Coast
For example, Barbary Coast Dispensary in San Francisco, CA, has the look and feel of a high-end speakeasy, making it the perfect match for the Bay Area’s aesthetic sensibilities. The dispensary interior is decorated with a 19th-century touch and features a dab bar, where clients can enjoy the surreal atmosphere while consuming some of California’s best cannabis. A visit to a small dispensary like this will likely leave a lasting impression.
Memorable retail shopping experiences often translate directly to customer loyalty. In turn, this dynamic directly impacts your bottom-line concerning marketing expenses. Notably, a steady base of loyal customers will sustain your business, significantly reducing your marketing costs. In the end, marketing can be directed at retaining clients through loyalty programs and customer engagement – both can be mainly handled “in house” and relatively inexpensively.
Product Differentiation
Small dispensaries can utilize product differentiation to stay competitive in today’s market. To this end, small operators are blessed with the ability to pivot quickly with new product offerings. Conversely, large dispensary chains with corporate structures must go through rigorous steps before launching new products at their stores.
Offering rare or unique cannabis strains is a great way to differentiate
Small cannabis dispensaries can immediately “get out ahead” on new product trends as they arise. For example, you can offer rare cannabis strains or boutique extracts that none of the larger dispensaries carry.
By the time the larger dispensaries in your area catch up on the current trends, you can move on to the next one. We recommend making alliances with some of the top craft growers in your area to make this possible.
Every year, the cannabis industry grows more competitive. As this business evolves from an underground affair to a multi-billion-dollar enterprise, the scope and sophistication of cannabis dispensary operations grows exponentially. Within this ever-changing dynamic, many small dispensaries fear the wayside will leave them.
Yet, if you approach the market with creativity and zeal, you can make the additional market pressure work to your benefit. By focusing on critical facets like cross-training employees, lean operating principles and product differentiation, you can build a profitable and sustainable cannabis dispensary by making small size a competitive advantage.
There is an ineffable logic to the pace of reform these days. Nowhere is that clearer in both the success of voter reform measures in the United States (along with timelines for implementation baked into the language of the same) and developments internationally. No matter that New Zealand decided to take a recent punt on the issue, there are other forces moving elsewhere that have the potential to be far more consequential – and in the short term.
Israel Announced Its Intent To Create A Recreational Market in 2021
There is little news anywhere as consequential as that of the oldest medical market finally succumbing to the inevitable. Namely, Israel has announced that it will allow an adult use market to begin operations probably by the third quarter of 2021. That said, don’t hold anyone to a deadline in the days of COVID-19, which will just as surely have not passed by then.
However, this development means that the entire conversation has moved up a notch – because the Israelis have so much research on the plant at this point.
For this reason, the tiny country is likely to have an outsized impact on the entire discussion – along with conveniently timed medical exports to the world.
Luxembourg Will Initiate Its Recreational Market Shortly Thereafter
It is likely not insignificant that the Israelis announced their intent to begin an adult use market just ahead of the long-announced Luxembourg flip – now on the agenda of the Green Party domestically for several years.
The strategic location of Luxembourg in both the European market as well as the much larger financial one now interested in the vertical cannot be understated. Indeed, the country has already played an outsized role in the development of the medical market here due to the contretemps over the clearing of stock trades in the German market as of 2018.
The double whammy of good news from both markets will also create a buzz internationally that is sure to drive other conversations forward – even if it is to study how both countries approach the issue. And, more to a point, how they differ from Canada, including regulation of their equity markets.
Combined with a more regulated market in Holland and presumably continued “experimentation” in Denmark, and by the end of next year, adult use reform will have hit the continent and in no small way.
Does This Mean The Sudden Potential of Adult Use Everywhere?
As 2020 has shown, in spades, just about anything can and frequently does happen. However, do not expect many more countries to move into the recreational column for the next several years.
Whatever the UN does or does not do about cannabis at the next meeting of the WHO, cannabis the plant remains a Schedule I drug internationally. This means that, for example, import and export of the same across borders, even in Europe, is likely to be problematic and for some time to come – let alone its international travel across say, the Atlantic.
Further from the law enforcement and financial security (namely money laundering) perspective, there are big issues that have to be dealt with finally, internationally, that so far have not – and under the guise of “medical reform.”
For that reason, in other words, do not expect Germany, much less France or even the UK to suddenly switch gears. And remember that both Luxembourg and Israel are small countries.
Bottom line? Adult use reform is here to stay, and will increasingly show up on the map. But the more “blanket” reform, still driving the entire discussion, is broadly, and globally, medical.
Cannabis infused products manufacturing is quickly becoming a massive new market. With companies producing everything from gummies to lotions, there is a lot of room for growth as consumer data is showing a larger shift away from smokable products to ingestible or infused products.
This is the fourth article in a series where we interview leaders in the national infused products market. In this third piece, we talk with Stephanie Gorecki, vice president of product development at Cresco Labs. Stephanie started with Cresco in 2019 after transitioning from an award-winning career in traditional foods CPG. She now heads up product development where she manages R&D for Cresco, a multi-state operation with tremendous SKU variety.
Next week, we’ll sit down with Lisa McClung and Glenn Armstrong from Coda Signature. Stay tuned for more!
Aaron Green: Stephanie, how did you get involved at Cresco Labs?
Stephanie Gorecki:A few years ago, CBD became the most talked about ingredient in the food industry. CBD-infused food headlines appeared in most of the trade magazines. I have always been curious about working in the cannabis space, and not just with CBD, but THC and other cannabinoids. I researched technical seminars and came across the cannabis infused edibles short course put on by the Institute of Food Technologists.
Stephanie Gorecki, Vice President of Product Development at Cresco Labs
I attended the short course in April of 2019. I realized that to be hands-on with cannabis in the near future, I would need to join an organization that was already in the space. The space was highly regulated which meant that research in the mainstream food and beverage space was limited.
Immediately following that seminar, I began to look for opportunities near where I lived. That’s when I came across the Cresco Labs career opportunity. The Director of Food Science position appeared to be a good match. I applied for the position and went through the interview process. Approximately two months after attending that seminar, I joined Cresco Labs.
Aaron: Awesome! It’s a cool story. In your role, how do you think about developing products that differentiate in the market?
Stephanie: There are many opportunities for brand differentiation in cannabis right now. There is a focus on high bioavailability and water solubility and how that translates to onset times once consumed. Many of these technologies utilize ingredient technologies and systems that I have experience with from my past work in the flavor industry.
Gummies and jellies are a great infusion matrix to start with because of their shelf-life stability. There are a variety of formulation techniques that can be used to deliver on product differentiations. There is an abundance of flavor varieties, colors, processing steps and cannabinoid ratios that can be baked into a formula to make that product line unique.
Here in the cannabis space, SKU variety is essential. It’s exciting to be a part of a company where we develop products that appeal to a variety of customer wants and needs.
Aaron: In that vein, what’s your process then for creating a new product?
Stephanie: I’ll start with how we develop an edible. Most of my background is in this type of product development, but the same process is applied to how we develop and extract vape, topical, flower SKU, or ready-to-smoke type products. We follow a similar stage/gate process utilized by most CPG companies.
Marketing typically presents our product development team with a brief on a new concept based on how they’ve read the needs of the market. There are opportunities for us to come to marketing with ideas for innovation, too. The product development team regularly works in our processing facility, so we as a team are aware of the different capabilities of each state and production line. During the briefing phase, we determine what is needed to be achieved and the parameters that the team would like the new product to deliver on.
For edibles, we begin our development work at The Hatchery. The Hatchery is our non-infused product development space that we utilize outside of our processing facility. In this space, we have several pieces of pilot equipment that allow us to scale and create prototypes that are highly representative of what our finished product will look like. For vapes, flower SKUs and RTS (ready-to-smoke) products, development and processing trials happen within our cultivation center.
All infusions are conducted in our licensed processing center. We also conduct stability testing and analytical testing in-house on our products. Our analytical lab is amazing – we have talented chemists and the ability to run GCMS, HPLC, microbiological testing, and many other analytical tests that are important for ensuring consistency and product uniformity.
Aaron: Can you expand on a point about testing? How do you think about testing at the different points in your manufacturing or production process?
Stephanie: Testing comes in several forms. We focus heavily on analytical testing since that does not involve product consumption. Potency uniformity and consistency is critical for edibles. For infused products, we have one shot at hitting our potency – infusion science is extremely important for us. Our gummies and chocolates cannot be re-worked, so hitting our potency range on the first attempt is important. If we miss the target, the product has to be destroyed.
We have methods developed to conduct in-process potency testing where we can. With the processes and infusion methods that we have implemented, we are rarely outside of our targeted potency ranges.
Aaron: Okay, awesome, then, can you walk me through your experience with one of your most recent product launches?
Stephanie: We recently launched Mindy’s Dark Chocolate Peppermint Bark, a limited time offering for our Mindy’s chocolate line. There’s a series of commercialization trials that we will conduct prior to launch. We use these trials as an opportunity to train our production teams on the new manufacturing instructions and processes.
When it comes to launching products, our technical teams are very hands on with new product introductions. Since we cannot manufacture product in one state and ship it to another state, we have to build processing centers and secure the proper licenses in every state that we’d like to operate in. When we have a new product ready to launch in a new state, our team works with Operations on the tech transfer piece. We’re there on-site during launches to oversee and train on the entire process until our teams are comfortable with manufacturing and packaging the new SKUs.
We monitor launches carefully to ensure product looks as it should before and after leaving our facility for sale in licensed dispensaries across the state. When there are opportunities to optimize a process post-launch, we will do what we can to make the process work as well as possible for the teams producing our products.
Aaron: Okay, so next question is, how do you go about sourcing ingredients for your infused products?
Stephanie: We manufacture our oils and extracts in house, and then source other ingredients externally. We have a supplier quality assurance process for new supplier approval, and we have documentation needs that we need each supplier to be able to deliver on.
Several of our suppliers have invested in research and development of products that will help us to meet our deliverables in the cannabis industry. Our suppliers, at times, have provided applications support in order to help with our speed to market and early phase prototyping. These types of partnerships are essential to us being able to make quick modifications and decisions on ingredients such as flavors and colors.
Aaron: Can you give me an example of a challenge that you run into frequently? This could be a business challenge or a cannabis-related challenge.
“I’m a scientist at heart. I look forward to more spending on cannabis research to show how THC and other cannabinoids can be used to treat a variety of conditions.”Stephanie: A big challenge for us and other multi-state cannabis operators are the variations in compliance regulations state-to-state. We have compliance managers in every state who work to ensure we are meeting all of the state regulations. Our packaging reviews are in-depth because of all the language that needs to be included on our packaging.
Each state needs its own packaging with proper compliance labeling. Some states require a cannabis warning symbol of a certain type. If we sell Mindy’s Gummies in 8 flavors and THC mg SKUs in four states, that is 32 different pieces of artwork that need to be managed and cross-checked for accuracy. We have 32 separate pieces of packaging for this one line of products. We have many lines of products with multiples strains (flower and vapes) and flavors (edibles).
Aaron: You mentioned packaging, do you do all of your packaging in house?
Stephanie: We design our packaging artwork in-house. We have a creative team who works on our product artwork, and then a team of cross-functional members tasked with packaging editing and review. Packaging reviews go through multiple rounds before being released for printing. We source a variety of packaging depending on the needs of the product going into the packaging. For edibles, our packaging has to be opaque. Product cannot be seen through the packaging in most states. This is great for our products that are made with natural colors that may be light sensitive.
All of our packaging needs to be child resistant. This limits the amount of packaging variety that we have, but this is a big opportunity for packaging developers. We want and need more sustainable forms of packaging that are differentiated from other packaging forms currently on the market.
Aaron: What trends are you following in the industry personally?
Stephanie: Cannabis trends that are of interest to me personally are fast-onset and water solubility technology. There have also been many discussions surrounding minor cannabinoids and how those can be blended together to drive customer experience.
There are traditional food trends that also impact how we formulate. Our Mindy’s Edibles line is flavor forward. The flavors are sophisticated. In the Mindy’s line, you won’t find a generic orange or grape flavor. Instead, you’ll find a Lush Black Cherry or Cool Key Lime Kiwi Flavor. This flavor development work starts with Mindy Segal, who is the face and talented James Beard award-winning chef behind our Mindy’s Edibles line of products.
Aaron: Okay, so the last question I have for you is, what are you interested in learning more about?
Stephanie: I’m a scientist at heart. I look forward to more spending on cannabis research to show how THC and other cannabinoids can be used to treat a variety of conditions. People use cannabis for many reasons: to relax, to ease aches or pains, etc. It’s exciting to lead part of our technical team during a period of time where cannabis is rapidly growing and is of great interest and increasing acceptance across our country and in the world.
Aaron: Okay. So that’s it. That’s the end of the interview!
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