According to a press release published earlier this week, ACS Laboratory announced the Florida Department of Health Office of Medical Marijuana Use (OMMU) has certified ACS to test products for medical dispensaries in the state.
This certification comes after the Florida Department of Health adopted an emergency rule, requiring dispensaries to only use a certified lab for product testing. Dispensaries (or medical marijuana treatment centers as the state calls them) in Florida have until December 24, 2020 to sell products tested before June 24, 2020.
ACS Laboratory was founded in 2008. They are DEA- and AHCA-licensed, ISO 17025-accredited and CLIA-accredited with the largest testing facility in the eastern United States, according to their press release. They are USDA-compliant and certified by Florida to test hemp in the state and are now also certified to test medical cannabis products.
As a certified cannabis testing lab in Florida, ACS has to meet a list of requirements, similar to rules one might find in other legal states. The Florida rules mandate that labs are ISO-accredited and qualified to accurately test for contaminants, moisture content and cannabinoid potency.
Earlier this year, ACS acquired Botanica Testing, Inc., which added about 500 new hemp and CBD clients to their portfolio. ACS Laboratory now has customers in 44 states.
Dr. Linda Klumpers has a Ph.D. in clinical pharmacology of cannabinoids. Originally from the Netherlands, she began much of her career in studying cannabis there. She now lives and works in the United States, where she has worked on a number of projects, started her own company and is continuing her research on cannabis as an effective medicine.
After studying neuroscience at the University of Amsterdam, she went on to train at the Centre for Human Drug Research and Leiden University Medical Center, where Dr. Klumpers obtained a clinical pharmacology degree and a Ph.D. in clinical pharmacology of cannabinoids. She has been researching cannabinoids in humans since 2006. Dr. Klumpers co-authored a number of peer-reviewed cannabinoid publications and she has received five honors and awards for her work, including the BJCP Prize from the British Journal of Clinical Pharmacology.
In 2016, she moved to the United States and founded Cannify, an online tool that helps patients and clinicians with product matching and providing legitimate cannabis education based in sound science. In 2018, Dr. Klumpers joined forces with Dr. Michael Tagen, another clinical pharmacologist, to launch Verdient Science, a consulting partnership. Their work at Verdient Science includes helping clients set up human studies, advise on FDA submissions, creating course materials, adjusting product pipelines and product development strategies, among other areas of focus.
Right now, Dr. Klumpers is waiting to hear back from a grant application they submitted to study THC and CBD ratios for medical efficacy in chronic pain patients. We sat down with Dr. Klumpers to hear her story, what she is working on now and how she hopes to continue researching cannabis as an effective medicine.
Cannabis Industry Journal: Tell us about your background as a research scientist. How did you get involved in cannabis?
Dr. Linda Klumpers: During my Ph.D. work, we studied the effects of so-called cannabinoid receptor antagonists that block the effects of THC – I prefer to say “we”, as research is always done by multiple people. The problem with studying these compounds in healthy volunteers is that you can’t observe acute effects, which means that you won’t measure any effect after a single dose. To circumvent this issue, we applied a trick and developed a ‘challenge test’: after you give the ‘invisible’ blocking compound, you stimulate the cannabinoid system by giving people THC. If the subjects don’t feel the effects of THC, you know that the blocker worked. One thing lead to another and we ended up studying various administration methods, such as intrapulmonal (via the lungs) with vaporization, oral and sublingual. We studied the behavior of cannabinoids in the body and how the body responded to them.
CIJ: Can you share some information on the projects you are working on? What is Cannify and what is Verdient Science?
Dr. Klumpers:Cannify was founded in 2016 after I saw that too many people had opinions about cannabis that were more based on emotion than fact. Besides, I noticed that a majority of the scientific literature on cannabis pharmacology was left unnoticed and unapplied to the people getting exposed to cannabis, such as patients, the cannabis industry – that was in a very different stage at that time – healthcare providers and regulators. With my Ph.D. in cannabis pharmacology, I wanted to add a level of objectivity to cannabis education and research. Cannify’s goals are to understand the science of cannabis, and share this with others.
The way we do this is multi-fold:
Cannify Quiz: Patients with an interest in cannabis often want to know the science about cannabis and their condition. Our quiz helps these people by asking in-depth questions and showing them relevant scientific literature in a personalized report. After that, an overview is given with products and product matching scores. Our account system allows users to track their progress over time. Product manufacturers, dispensaries and other companies can use the quiz for their websites and their stores to help out retail employees and save them time, and to receive insight with our analytics on customer desires and behavior. Needless to say, an educated customer is a better customer. It is important that customers come and leave stores well-informed.
Education: Speaking of education, our website contains educational articles about everything cannabis: from plant to patient and from product to mechanism of action. We regularly publish educational quizzes for people to test their knowledge level. With a free Cannify account, you can find all of our educational quizzes and save your results. We also provide customized courses, and have educated a wide audience varying from industry professionals to CME-accredited courses for healthcare providers. On top of that, our educational videos in dispensaries (in collaboration with our partner, Enlighten) reach customers and retail employees.
Research: To expand the knowledge on cannabis, performing and especially sharing research is essential. We have already performed and published some of Cannify’s results on descriptive statistics and effect prediction during conferences, as well as a review paper on cannabis therapeutics in a peer-reviewed journal and a book chapter. This year, we expect to co-publish the results of a survey in different sleep patient groups. We collaborated with the Centre of Excellence for Epilepsy and Sleep Medicine in the Netherlands on a peer-reviewed paper from which we expect new research to follow to benefit these patients. We have also co-submitted a grant to study THC and CBD ratios in chronic pain patients: fingers crossed! Another important next step is to test a healthcare provider-specific version of Cannify’s quiz in the clinic once COVID dies down. I want to add that after working in a clinical lab for many years, it is important to combine the results of clinical trials to what people do in real life, which is what we do with Cannify.
And here’s some information on Verdient Science:
Verdient Science is a consulting partnership I have with clinical pharmacologist Dr. Michael Tagen. We provide clinical and translational pharmacology expertise to improve the quality of product development & clinical testing. While both working as independent consultants, we decided from 2018 to start working together to offer better services. Since then, our work has been very variable and includes helping clients set up human studies, advise on FDA submissions, creating course materials, adjusting product pipelines and product development strategies to make them more efficient and cheaper, performed scientific due diligence and much more. When clients want additional services that are beyond our expertise, we are typically able to introduce them to various people per expertise area, or refer them to our partner companies, Complex Biotech Discovery Ventures (CBDV) with Dr. Markus Roggen, and Via Innovations with Dr. Monica Vialpando. A benefit of working with the same partners includes smooth handovers and the feeling of a one stop shop.
CIJ: How does Cannify match available products to consumer needs? Is there an algorithm you developed that matches moods or feelings to cannabinoids or chemical profiles?
Dr. Klumpers: That is a great question and the core of what we do! So back to the Cannify quiz: there are three steps:
Users fill in questions;
A personalized report is generated with the relevant science;
The user gets a product overview with product matching scores.
The report and the matching scores are generated using algorithms that are regularly updated. These algorithms are based on various data sources:
Literature: There is a lot of available literature, and we make sure to select the most relevant and reliable studies;
Raw data: There is only so much one can find in the literature, and lots is hidden in the raw data. Therefore, we piled up data from studies done at various research institutions, including the University of Kentucky and Johns Hopkins University, and used them in our algorithms;
Internal studies: From the thousands of users filling in their results, there is a lot of information that we should learn from. This feedback loop helps us to better understand how the lab relates to real life situations.
CIJ: The world of cannabis research has been historically stymied by red tape, DEA interference and a host of federal regulations. How have you managed to work through all that? Do you have a DEA license? What did it take to get it?
Dr. Klumpers: Luckily, a majority of our research was and is done outside of the US. You still need to obtain the appropriate licenses, but I was perhaps lucky to have filled in every form very thoroughly and we got the licenses within months. The process is quite meticulous, as you need separate licenses for almost every step from manufacturing to administration. An additional complication is that our cannabis is not stored in our own building, but in the hospital pharmacy across the street, involving transport via the public road. Despite the roadblocks, including a legal procedure about this matter that was going on in parallel, I had no major issues getting our work done. For our research in the US, we were lucky to have been working with partners that already have the required license.
Also with publishing, I have never had an issue with the cannabis stigma. Generally, in my field of science, good quality science is very much welcomed and appreciated, and this was even before the time that there were four different cannabis-related journals, as is the case nowadays.
CIJ: Looking to the future, where do you hope to focus your research efforts? Where do you think the cannabis community should be focusing their efforts in the next 5-10 years?
Dr. Klumpers: Besides continuing to analyze the data generated from Cannify, I keep my fingers crossed for the grant application I mentioned earlier on THC and CBD ratios in chronic pain patients. Although we know that CBD is able to influence THC-induced effects, it is not known at what dosages, which ratios and how the effects are related to each other. For example: is CBD able to decrease certain side-effects of THC without decreasing pain-relieving effects?
Whatever is done, wherever in the community: good quality data are keyNext to that, I am also interested in other neurological and psychiatric disorders, and, of course, my Ph.D. love: the cannabinoid antagonists. Sadly, all the research efforts on this compound group were halted more than a decade ago. However, there is a renewed interest. I would love to help turn these compounds into effective and safe medicines.
Regarding the cannabis community: 5-10 years sounds really far away for an industry that is relatively new to many, but a lot has already changed since I started cannabis research more than 14 years ago and time has flown by. Some changes have been positive and others less so. Whatever is done, wherever in the community: good quality data are key. Many companies gather data and even publish them in peer-reviewed journals, but that does not always mean that the data are useful or that the studies were done well. Only a few minor changes to how and which data are gathered, and so much more can be done. What can help with achieving this is to let the right people do the right thing: many call themselves a ‘cannabis scientist’ or ‘cannabis expert’, but that does not mean anything. What has someone truly achieved and what is their exact expertise? A Ph.D. in chemistry is not going to help you in setting up effect studies, neither will I be able to improve your product’s shelf life or extraction yield. Getting the right people in the right place is key. Lastly: the cannabis community should stay critical. The length of one article in Cannabis Industry Journal wouldn’t be enough to lay out all the misconceptions that people have about cannabis. Make sure that those misconceptions do not live on and do not be afraid to admit you don’t know something, irrespective of the branch you work in: only then, can the cannabis community progress to the benefit of all.
The South African government has taken a leap into the future (ahead also of the expected World Health Organization (WHO) decision on cannabis this December). Namely, it has begun to regulate hemp (more in line with Europe intriguingly, than the U.S.) and attempted to remove the THC part of the equation from a domestic list of plants and drugs with no medical use.
The notice was signed by South African Minister of Health Zweli Mkhize and published a week after a domestic moratorium on CBD expired. The moratorium permitted the sale of some kinds of CBD products.
This is an intriguing new development, although it will also undoubtedly cause headaches for the burgeoning industry in the region.
On The CBD Front…
South Africa’s new hemp guidelines – namely for the amount of THC allowed in legit hemp crops that are also regulated – are that plants contain no more than 0.2% THC. This makes the guidelines absolutely in line with what is generally developing across the EU. And even more intriguingly, below federal guidelines for most U.S. domestic hemp crops (which are 0.3% at a federal level and only differ in a few state cases where the amount is lower by state law).
However, there is also a unique twist to all of this: The South African government has now created a two-pronged regulatory schemata just for CBD. The default approach to the cannabinoid is that it is in fact medication, scheduled under South African internal and global drug guidelines as a “Schedule 4” drug.
The other designation is reserved for CBD packaged in sizes of 600mg or less (and limited by instructions to no more than 20mg a day). This kind of CBD (despite the dubious understanding of cannabinoid science) will henceforth be labelled a “supplement” and on “Schedule 0”.
However, do not be fooled: This is not “descheduling.” This actually means that all CBD has been classified as a medical substance except in packets that are under a certain size, with portion suggestions on the outside of the wrapper or package.
That is hardly scientific. However, what is more burdensome is that any CBD cultivator in South Africa must also be GMP- (or internationally medically) certified (even if bound for the supplement market). By definition, in other words, it will make the cost of production for the supplement (commercial, food and cosmetic) part of the equation as expensive as pharmaceutical production. While from a purist’s point of view, having ultra clean cannabis in any product (at the level of pharmaceutical standards) is a wonderful idea, but this gets ridiculous when it comes to reality, and will ultimately never stand.
This development is also undeniably inconvenient (at minimum) for any who had envisioned outdoor hempires, which most of the cannabis grown in South Africa is. The only people who have the money to build indoor grows, starting with GMP certified greenhouses, are, for the most part, white people, foreigners or those who own property and have access to external, international equity.
The sins of Apartheid, in other words, are being writ large on the entire cannabis industry at present in South Africa. And CBD is contained right in the middle of the mix.
On The THC Front…
There are several interesting aspects to this.
The first is that THC has been removed from the South African “Schedule 7” which is roughly equivalent to the international “Schedule I” that cannabis also resides in until the WHO re- or deschedules the same.
However, this also means that all CBD as well as THC must be produced by those with pharmaceutical-grade facilities – and this of course includes more than just indoor, temperature-controlled greenhouses. It also includes a complex supply chain that is European and Western centric, starting with the requirement to access a rather large amount of capital to construct the same.
Global Re-Alignment Or Stopgap Measure?
This new regulation, in other words, specifically leaves the vast majority of what has already been seeded, or what is most likely to be, in the hands of a few Canadian and other companies who have been moving in this direction for the last several years.
It also implies, intriguingly, that the intra-African cannabis market is low priority at present for those writing the (health) rules. And that also means that eyes are being set more on creating an export market than for treating South African citizens.
It is not an unusual move, rather tragically so far. And almost certainly one that will be challenged, and in several directions, both by events, but also by firms caught up in the mix.
Why? For starters, the South African cannabis market also effectively controls the Lesotho cannabis regulatory scheme (namely all exports from Lesotho, which has seen quite a lot of cannabis investment over the last several years). All such crops must be labelled per South African guidelines if they, literally, can hit a port to be exported.
The vast majority of those grows, even with relatively decent foreign backing, are also outside – and of course as a result ineligible for GMP certification.
Of course given the fact that the UN is likely to clarify both the status of THC and CBD by the end of the year, this current situation in South Africa is also fairly clearly intended to be a stop-gap regulatory measure to last up until at least this time.
Where it may go after that is anyone’s guess. This measure, however, is also clearly being made to protect those who have invested in GMP-grade facilities as opposed to those who have been clearly angling for reform on the CBD front, starting with the beer market. Stay tuned. Interesting developments clearly ahead.
Public relations has a role to play in every industry, providing value for companies looking to promote their services, announce a recent fund raise or want to plant a flag in their domain as a leader or subject matter expert. Some industries, however, are writing a new playbook for the way PR is done. The cannabis space is a prime example of how PR can – and has – evolved in such a short amount of time. This industry has been a part of N6A’s DNA since 2017 when we created a cannabis-specific client service group. Since then we’ve seen the ups and downs, rapid changes and overall growth in an industry that, at the time, very few took seriously. We knew the potential was there, but we couldn’t be prepared for how foreign this would be compared to our other specialties like tech, cybersecurity and professional services.
We had to forget what we knew as media professionals and develop new plays and strategies for an industry in its infancy – all while bearing in mind the plant’s polarizing past and ambiguous future. With so many lessons learned about the way the cannabis and communications industries operate together, here are just a few key takeaways that have shaped our approach and operations in the marketplace.
Build Relationships Across the Board
It’s often said “it’s not what you know, but who you know,” and in cannabis this couldn’t be more true. While the industry is growing rapidly, it’s still considered a tight-knit community where everyone talks to each other, and leaders lean on one another for expertise and guidance. A competitive nature is inherent in any business environment, but what I’ve noticed about those working in cannabis is that everyone is striving for the same goal: to further legitimize an industry plagued with stigma. Whether it’s developing media contacts or a new business prospect, the foundation lies in building relationships with the key players in the space.
From a PR perspective, this includes working closely with the reporters dedicated to the cannabis beat, whether they write for a trade or mainstream publication. Journalists are shifting between jobs faster than ever before, and this beat favors industry veterans. One day your “friendly” at an obscure cannabis outlet will suddenly be spearheading coverage at The New York Times, Rolling Stone or other iconic publications. For the sake of clients and their desired business outcomes, communications professionals should foster ongoing conversations with any reporter interested in covering cannabis; you never know where it could lead.
Understand the Limitations
Both public relations and advertising have proven to be instrumental in normalizing cannabis businesses within the mainstream media. However, communication in the space can be a compliance minefield due to strict state and federal regulations. While the industry’s growth is nothing short of explosive, opportunities for advertising are extremely limited as the largest digital platforms such as Facebook and Instagram have banned cannabis ads, forcing companies to look for other options.
Paid media has its time and place in every industry, but with so much red tape in cannabis advertising, it provides an opportunity for earned media to take the stage. Aside from a few key trades we all know well, journalists across business, lifestyle, finance and retail verticals are covering the space. Depending on what a business is looking to gain from PR, these initiatives are a great way to get directly in front of the audiences they want to reach without the risk of violating certain advertising guidelines. Companies that are ancillary, and therefore not selling a particular cannabis product, also have a bit more flexibility when it comes to advertising, especially on social media channels. As the industry sophisticates, the demographic of consumers does as well.
Evolve with the Industry
The cannabis marketplace as it stands today is vastly different than when we began to service clients years ago. For decades, this industry operated in the shadows and outside of the law, but as legalization spreads across the globe, the way that businesses position and talk about their brand has had to change.
Gone are the days of reefer madness as consumers begin to see cannabis as medicine or a wellness supplement. With this comes a significant reduction in the use of words such as “weed,” “stoner,” and even “marijuana,” while words like “cannabis,” “medicinal” and “patients” step into the forefront. Both communications professionals and businesses must be hyper-aware of the verbiage we use if we want to professionalize the industry and fuel worldwide adoption.
As the industry sophisticates, the demographic of consumers does as well. What was once reserved for a younger, male population has now been growing in popularity amongst women, baby boomers, and the elderly. Cannabis businesses are now forced to diversify their messaging to appeal to the masses which often includes taking a minimalistic approach to branding and packaging.
Consumers are no longer looking for the lowest prices, but a brand that they know and trust. Recognition, whether it be locally or nationally, can be gained through a strong communication plan and will become increasingly imperative for long-term success.
So, there you are, pondering your finances, there are many expenses and costs that go into running your business and when your budget is already tight, should you add or increase training to the expense list? Why frustrate yourself, looking for ways to train people, when you could be focusing on things like technology, product development or sales that help with business growth?
We all know that product development and sales are important. But what differentiates training from other expenses is that while on the surface training might appear as an expense, it’s not.
Think about this analogy: We know one achieves a greater plant quality and yield by using advanced cultivation practices. That said, the quality of the plants also greatly depends on the lighting, the nutrients and the nurturing they receive. The training and development of your people depends on the quality of effort you give them. Therefore, it is not so much a cost as it is an investment in the growth of your people, and when your people grow, you experience business growth.
Why invest in continual training?
The answer as to why continual training is important can be summed up in four points:
Well trained employees = happy and loyal employees.
Happy employees = educated and happy customers.
Happy and educated customers = customer loyalty.
Customer loyalty = increased business revenue
Any break in the chain breaks the relationship with the customer. There isn’t any business right now that can afford to lose a customer over something as intuitive as keeping people knowledgeable and happy.
This approach does, however, come with a caveat. Your training needs to be amazing and it needs to stick. You need to be willing to give your people the tools they need to succeed, and amazing training doesn’t come with a low-price tag. It requires not only a monetary investment but the investment of time and energy of the entire team.
Consider this, according to a Gallop research paper, happy and well-trained employees increase their value, and dedicated training and development fosters employee engagement, and engagement is critical to your company’s financial performance.
In short, this means your happy people will be earners for you. They will help you exceed industry standards, sell more and hang around longer. This means lower turnover costs.
Who doesn’t want that?
Educated and loyal employees lead to increased financial results
According to another Gallup study, businesses that engaged workgroups in continual development saw sales increase and profits double compared to workgroups that weren’t provided with development opportunities. The pressure to succeed among competitors of the cannabis industry is intense and rewards high. Having a good product is a start, but if your customer does not trust you or your employees…then what?
You can have the best product in the world, but if you can’t sell it, you still have it.
Can your business survive without trained people and loyal customers? The growth rate for legalized cannabis will be $73.6 billion with a CAGR of 18.1% by 2027. Plus, total sales of illicit cannabis nationwide were worth an estimated $64.3 billion in 2018, projections call for the U.S. illicit market to reduce by nearly $7 billion (11%) by 2025.
Those customers are going somewhere, will they be coming to you? Are you and your people prepared to earn potential customer trust and build critical relationships? Can you afford to miss being a part of this growth because your people were not carefully trained and your customers were uninformed about you, your product and your services?
A common adage is, “What if I train them and they leave? What if you don’t and they stay?” – where does your business stand?
Time for non-traditional approaches for high-impact training
With the rapid growth of the industry with ever changing regulations, new types of edibles, better product with exponentially more options – your customers will demand higher quality standards and expect your people to be in-the-know. This requires “just-in-time” knowledge as opposed to formalized training delivery.
Disappointingly, only 34% of businesses feel their overall training is effective. So, as the industry continues to evolve, it is important to know how to make your programs as effective as possible for your people. The traditional training that has failed corporate America is not the answer for this non-traditional cannabis industry. The need for new and non-traditional training methods will be critical for your people to be efficient, productive and adaptable to react to fluctuating business needs.
Six areas to focus your non-traditional training
1) Build a strategy
As the gap begins to widen and the competitive “cream of the crop” starts rising to the top, you will need to take the initiative in training and upskilling employees. This means planning future training efforts and reimagining current ones.
The steps involved in creating a training plan begins with establishing business goals. Ask yourself what business factors and objectives you hope to impact through training? You will also need to decide what critical skills are needed to move the business forward. Start your training focus with high-impact skills. These are the skills, if mastered, that will lead to customer loyalty and education. Ultimately impacting your bottom-line.
2) Target skills that build relationships
Building relationships is often placed in the category of, “soft skills.” However, this is a misnomer; “soft-skills” are core strengths you will need for your business to stand apart from your competition. This goes beyond smiling at the customer. Your business requires adaptable, critical thinkers who can problem solve and communicate effectively. Soft skill training is never “finished.” Therefore, consider how reinforcement is going to be delivered and how coaching will evolve.
3) Personalize training to individuals
Many traditional training programs approach people with a “one size fits all” mentality. Just put all the people in all the classes. This is a common failed approach. Each person on your team has individual skills and needs that require attention. This means creating and planning the delivery of training programs to address specific strengths and skills challenges. Not everyone will be at the same level of knowledge. If you are hiring for culture (which you should) rather than specific skills this means providing ongoing support at different times. This requires developing a training plan that allows people to choose their training path.
4) Create digital learning spaces
Ensuring employees make time for learning was the number one challenge talent development teams faced in 2018. One way to combat this challenge is putting training in the hands of people through platforms they are already using. Most notably, their cell phones and mobile applications.
Training should be created and delivered through multiple platforms (mobile and on-demand), where the training can be personalized, and offer ongoing job support. For example: Consider training to be delivered through mobile apps, text messaging or instant messenger. This type of training is targeted, direct, can be tracked and supports “just-in-time” delivery of help. Help when the people need it and when the business needs them to have it.
5) Make training interesting through gamification
There is a general misunderstanding about how gamification and training programs work. Many business owners discard the idea of gamification because they believe it means turning training programs into video games. Understandably, owners do not want critical and regulatory compliance training to be like a game of Candy Crush. What is important to realize is that gamification is a process of building a reward system into training that imitateschallenge games. Allowing people to “level-up” based on skill or knowledge acquisition. The use of badges, points and leaderboards encourage participation in online experiences. Thus, making training interesting and more successful.
6) Plan to educate your customers
As stated, providing customer training around your products or services is a fantastic way to differentiate yourself from competitors. It also boosts customer engagement, loyalty and enables them to gain more value from you.
Customer training is now considered a strategic necessity for businesses in every industry and within the cannabis industry, education programs will play a critical role in attracting new customers. Although, keep in mind your new customers do not need “training.” They need educational awareness. Consider the education you are providing customers as an onboarding process. Thoughtfully designed educational content can help customers make the right decisions for them, and you are there every step of the way.
Choose a different path for your training efforts
Your business needs a non-traditional training plan to help your people to be better, smarter, faster than your competitors and to gain customer trust and loyalty. Cannabis is a non-traditional industry, why box your business into traditional corporate training models proven to be unsuccessful? Your business and your people deserve better.
Contact Learning Rebels to learn more about what we can do for you to help you develop training tools and resources that will make your people stand above the rest.
The news is intriguing in a world overwhelmed with pandemic news. THC Global, a Canadian-Aussie company now raising money and signing global deals, has just bought a “clinic network” of 30 prescribing physicians that will be able to supply up to 6,000 Australian patients this year.
In doing so, this entity is clearly beginning to establish a pattern of expansion in a new medical market not seen so far outside of Canada. Namely being able to obtain the all-important prescription for one’s brand at the doctor or prescriber’s office which is affiliated with a certain producer. Pharmacies and dispensaries downstream have no discretion for any other product to sell if the brand is written right on the prescription itself.
And this marks a new step in an industry frustrated with the high prices and high levels of red tape in other international environments where more widespread medical cannabis reform has come.
The Situation in Germany Germany represents, so far at least, the destination market of choice for Canadian cannabis firms (for the last several years at least). This is for several very sound business reasons (at least in theory).
The German medical market is the largest in Europe. Health reforms which swept the country at the time of reunification also created a system that is in its own way a hybrid of the more European (and British) NHS and American healthcare. Namely, 90% of the German population is on the system, but it is tied to employment and income. Freelancers, even of the German kind, must use private healthcare as must all non-passport foreigners. If you make over a certain amount of money (about $65,000), you must also pay for private healthcare. As the cannabis revolution rolls forward, many cannabis patients are caught in changing rules and a great reluctance by public health insurers to allow fast entry of any new drug, including this one. This is based on “science” but also cost.
Bottom line? Yes, the market is lucrative and growing, and yes, cannabis is covered under public health insurance, but the ability of any producers to be able to maintain a reliable, steady market of “prescribers” is highly limited. Furthermore, unlike anywhere else in the world, pharmacists play an outsized role in the process – namely because there are no chains (more than four brick and mortar outlets are verboten). Prices and availability vary widely across the country.
There are also no “online” drug stores where patients can send prescriptions in the sense that this vertical has developed in other countries.
Hospital dispensation is, for all the obvious reasons, highly expensive and generally prohibitive for the long term, if not serving much larger numbers of patients.
The Problem in the UK Like Germany, the UK decided to launch medical “cannabis” – or at least cannabinoid-related drugs under the purview of the NHS, but there are several issues with this.
The problems start with the fact that the system remains a monopoly for one British company, GW Pharmaceuticals. The medication produced by them, including Sativex and Epidiolex is expensive and does not work for many patients that it is produced “on label” for (such as MS or childhood epilepsy).
And then of course, the largest group of cannabis patients anywhere (chronic pain) have been explicitly excluded from the list of conditions cannabis can be prescribed for under public health guidelines in the UK. This, like Germany, has created a highly expensive system where those patients who obtain the drug on a regular (and legal basis) have to have both private healthcare and obtain help through private clinics. While there are several chain clinics now forming in the UK, this is not the same thing as “buying” patients in the thousands – the model seen in Canada from the beginning of 2014.
The market has a lot of potential, in other words, but like Germany, via very different paths to market than seen in Canada, in particular.
Why Is Canada Different? The development of the medical market came through federal change in the law around the turn of the century. Namely, after patients won the right to grow for themselves, via Supreme Court legal challenge, patient collectives gradually formed to grow and sell cannabis that was more “professionally” cultivated. This, in turn, became the right of private companies and indeed household names in the Canadian market saw buying patient pools as their path to financing on the equity markets as of 2014.
This is not widely popular within the industry. Indeed, the last legal challenge mounted by the industry to ban non-profit patient collectives fell apart in 2016 – the year that the larger Canadian companies began to look abroad to Europe.
It is also undoubtedly why, beyond the red tape they face in Germany and the UK if not across Europe, Canadian firms are looking to hybridize a model which worked well for them at least in the early days of capitalization of the private industry. And maybe Australia will be “it.” Stay tuned.
The cannabis industry is fraught with hypocrisy. Cannabis is good medicine as has been established by the numerous patients we have seen who are now off of their opioids, benzos and sleep agents due to the addition of medical cannabis products to their regimen. We see patients using cannabis when nothing else has worked and they tell us about their decreased suffering on a daily basis and thank us profusely for staying open during the COVID-19 shutdown, due to our designation as an essential business in Maryland.
The fact that this essential business has seen an increase in business due to the anxiety surrounding Covid-19 is an indication that our society will be dealing with the ramifications of anxiety, PTSD and depression for a long time to come as we deal with the fallout from the pandemic. Our forced shutdown of the workforce has resulted in the opportunity to look deeply at our basic assumptions and policies. Policing and incarceration for what is now a medically-necessary component to society is the crime. We believe that we have the opportunity to rectify the errors of our past and release those still imprisoned for cannabis possession, use, etc.
Further, as evidenced by our country’s recovery from the great depression, the legalization of alcohol certainly helped to bolster the economy. The US has the same opportunity with the cannabis industry. Tax revenue from the legalization of cannabis nationwide is sure to add a much-needed economic boost to help us recover from the disaster of this pandemic.
Our country has had an unfortunate historical relationship with a plant that has the potential to ease suffering safely and bring about some much-needed economic stimulation. It’s high time we fix the mistakes of our past and create a kinder and more inclusive future.
It is almost impossible to turn on the tv and not find a show or news conference or even live footage of an ongoing protest over “Black Lives Matter” or “Economic Equality.” The same situation exists with social media platforms, radio broadcast, etc. All sharing the common theme of social equity. While we all seek a solution, the state of Illinois is doing their part by awarding the coveted adult use cannabis business licenses for craft growing, infusion, transportation and dispensaries to social equity applicants by using a scoring system that favors the social equity applicant. We believe in this vision at TGC Group and our dream is to pay it forward.
We see the world, especially for minorities living in poverty, quite differently because of where we come from. “Black Lives Matter” is a movement to save the lives of all people and have human life viewed equally no matter the race of an individual. Economic equality is a totally different fight. Our communities that are impoverished need cash infusions. There needs to be financial infrastructure that recirculates the dollars from the poor communities and that comes from having business owners in the affected community to put their profits back into their community. There needs to be a system of lending that is not based on credit scores and criminal background checks because most people at the bottom will never qualify. An example would be my husband, Christopher Lacy: he went to prison for 3.5 years for growing cannabis back in 2009. He is not a violent man; he never even had a fight in prison. He spent much of his time in prison teaching inmates how to read, write and most importantly, he tried to teach them economics. He is educated about cannabis because he has been intimately involved with this plant and has been growing it for just about 20 years. Yet when he tried to apply for jobs in Illinois for growing cannabis, his invisible barrier starts with the resume. Just think about it, my husband, knows more about cannabis than most people in the industry today and could manage a facility with ease. No one could see his worth because of his background and work experience? This is the same situation with so many others in our poor communities. We know for a fact that there is hidden talent in the impoverished communities and prison system, and we intend to find it and empower these individuals to rebuild what was destroyed by the war on drugs. I speak for all the ghettos when I say this: give us access to the capital and we will get the rest done on our own. Conventional banks have their hands tied with this approach because they are regulated, but private funds have more flexibility. The excess capital needed to rebuild will not come from jobs, it only comes from ownership. Luckily, J.B. Pritzker and Toi Hutchinson are aware of this and hence created the social equity fund to help the social equity applicants fund their projects if and when they are awarded a license. We must find a way to give to the bottom so that the dollars can trickle up. Trickledown economics is kind of like that movie “Platform” on Netflix. There are never enough resources to get to the bottom because the people sending the resources down have no idea how to get them to the bottom floors of society. Trickle up economics can start at the very bottom rungs of society and still will reach to this highest level of the economic system because its built in such a way that it will inevitably get there.
These new licenses, literally pathways to financial freedom if operated correctly and efficiently, are revenue machines capable of changing our community. This change does not come from providing jobs (although jobs do help and will be available), but by providing capital to rebuild. These funds can provide scholarships, business loans, even small infrastructure projects can get accomplished via the tax revenue generated by the local governments. We have already made a written commitment to give a portion of net margins to the village. Capital in the right hands can make dreams come true. In theory, poverty can be solved. Poverty is not a prerequisite to the American way of life. That is why we were so proud to get zoning approval by our village. They see what we see. We can change neighborhoods like Beacon Hill. The dollars must recirculate in the community. Wherever you see high poverty rates you see high crime rates. This is not a coincidence. If you can lower the poverty rate you can lower the crime rates. This raises the quality of life for everyone. We see the state is on board, the county is on board, the Village of Park Forest is on board and the citizens of the community are on board. Now all we need is the license and capital to get the resurrection started.
Unlike other applicants, we were only capable of applying for one license for a craft grow facility. Some may see this as a disadvantage because only 40 licenses will be issued for this purpose. I wish we could have applied for more to increase our odds, but resources were scarce and applying was not cheap. We decided to stick with the efficient market theory and put all our eggs in the one basket that we know we can carry and be successful with. Without the help of Justice Grown, we would’ve never completed the application so shout out to them and anyone else that helped “true” social equity applicants apply.
The wheels are in motion so all we can do is wait to see who wins. I would hate to be on the team who must decide who wins these licenses. Everyone knows large corporations found ways to apply as social equity applicants because they only needed a certain number of “social equity” employees to qualify. But if you go ask the employees, not the owners, if they have been cured of their financial burdens and see if $15 has raised their quality of life to a middle-class level. The answer is emphatically NO. You cannot give out band-aids for heart attacks. If these large corporations are awarded the licenses, it will perpetuate the cycle of poverty. We do not personally have anything against the big companies. Like Toi Hutchinson said regarding the first round of dispensary and cultivation licenses: we needed the big company dollars to fund the next round of licenses. Well, the next round is here. Let’s do right by the communities that were truly affected by the war on drugs and on a more personal level and my reason for applying: let’s do right by my husband because he lost 3.5 years of his life and was excluded from participating with his family for doing what is now legal.
Back in late 2016, the Oregon Liquor Control Commission (OLCC) legalized delivery for cannabis products. Since then, dispensaries could offer a delivery option for their customers to purchase cannabis products without leaving the comfort of their home. Up until quite recently, that market was dominated by a handful of dispensaries who also conduct business at their physical location, offering delivery as an option while conducting most sales in-person.
Enter Pot Mates. Founded in 2018 by Hammond Potter, the company embarked on the long regulatory road towards licensing and beginning operations. On April 20, 2020, Pot Mates opened for business, starting their engines to take on the fledgling cannabis delivery market in Portland.
Pot Mates is a tech startup through and through. The founders are former Apple employees. Hakon Khajavei, the chief marketing officer at Pot Mates, founded Blackline Collective, a business and marketing consultancy, which is where he joined the Pot Mates team. The other co-founder of Pot Mates and chief technology officer, Jason Hinson, joined after serving in the US Navy as an electronics technician maintaining satellite communications networks.
With the sheer amount of regulations for cannabis businesses, coupled with the new delivery-based business model, Pot Mates had to focus on technology and automation from the get-go.
Not Just an Online Dispensary
For the cannabis companies already offering delivery in the Portland metro area, their websites seem to mimic the in-person dispensary experience. They offer dozens of products for each category, like concentrates, edibles and flower, making a customer pour through options, all at different price points, which can get confusing for the average consumer.
Pot Mates does things a little differently. “Our start up process was thinking through how do we make this the best experience possible, how do we get rid of the unnecessary junk and how do we do things that only an online dispensary can do,” says Khajavei. They have flat pricing across the board. In each category, almost every product is priced the same, moving away from the common tiered-pricing model. This, Khajavei says, removes the decision barriers customers often face. Instead of choosing the right price point, they can choose the delivery mechanism and effect they desire uninhibited by a difference in cost.
It all comes back to focusing on the simplest way for someone to buy cannabis. “Shopping online is just very different,” says Khajavei. “Our process focuses on the customer journey and limits the number of products we offer. We have a mood system, where we tag our products from reviews to typify moods that you experience with different products.” All of that requires a lot of back-end technology built into their website.
The Long Regulatory Road
Technology has been a strong suit for Pot Mates since they opened their doors, and well before that too. Making the decision to be an online-only delivery cannabis company pushed them to pursue a very unique business model, but regulations dictate a lot of the same requirements that one might see in dispensaries.
The same rules apply to them when Pot Mates submitted their license application. You need to have a signed lease, extreme security measures, detailed business plans, integrated seed-to-sale traceability software (Metrc in Oregon) and much more. “During the months leading up to getting our license, we were able to iron out a lot of the regulatory details ahead of time,” says Khajavei. A lot of that was about security and tracking their products, which is why technology plays such a huge role in their ongoing regulatory compliance efforts. “We built in a lot of automation in our system for regulatory compliance,” says Khajavei. “Because of our technology, we are a lot faster.”
In the end, their licensing process through the state of Oregon as well as the city of Portland took about nine months. Once they had the license, they could finally get down to business and begin the process of building their website, their POS system, their inventory and reaching out to partners, producers, distributors and growers.
For any cannabis company, there are a number of regulations unique to their business. “We need to report every product movement in house through Metrc,” says Khajavei. “Every time something is repackaged it needs to be reported. We focus so much on our technology and automation because these regulations force us to do so.” But delivery companies are required to report even more. Pot Mates needs to report every single movement a product makes until it reaches the customer. Before the delivery can leave the shop, it is reported to Metrc with an intended route, using turn-by-turn directions. It complicates things when you make two or more deliveries in one trip. Reporting a daisy chain of deliveries a vehicle makes with turn-by-turn directions to regulatory authorities can get very tedious.
As far as regulations go for delivery parameters, they can legally deliver anywhere inside Portland city limits. “It is our job to figure that out, not the customer’s job; so we don’t have any distance limits, as long as it is residential,” Khajavei says. “We programmed customized technology that allows us to handle really small orders.” Without a minimum order policy or a distance limit, Pot Mates can reach a much bigger group of consumers.
Launching in the Midst of a Global Pandemic
Luckily, the Pot Mates team received their license just in time. About two weeks after they submitted their application, Oregon put a moratorium on any new dispensaries.
They went forward with their launch on April 20 this year, despite the coronavirus pandemic impacting just about every business in the world, including their marketing efforts tremendously. With cannabis deemed essential by the state, they could operate business as usual, just with some extra precautions. What’s good for PotMates is that they don’t need to worry about keeping social distancing policies for customers or curbside pickup, given the lack of storefront.
Advertising Cannabis in a Pandemic is No Easy Task
“The marketing aspect is where covid-19 really hurt us,” says Khajavei. “There are so many regulations for cannabis companies advertising already. Unlike other products, we can’t just put up advertisements anywhere. We have to follow very specific rules.” So, in addition to the normal marketing woes in the cannabis industry, the team then had to deal with a pandemic.
Pot Mates had to scrap their entire marketing strategy for 2020 and redo it. “We wanted to begin with a lot of face-to-face marketing at events, but that didn’t quite work out so well.” Without any concerts, industry events or large gatherings of any kind, Pot Mates had to pivot to digital marketing entirely. They started building their SEO, growing their following on social media, producing content in the form of blogs and education around cannabis and the local laws.
On an Upward Trajectory
Obviously, the short-term problem for a new cannabis company is reaching people, especially during the COVID-19 crisis. “We have a good trajectory though, we know we are growing our business, but we still have a ways to go,” says Khajavei. It doesn’t help that social media companies have nonsensical policies regarding cannabis. Their Facebook page was recently removed too.
But the bigger issue here is kind of surprising when you first hear it: “It’s not even a matter of customer preference, a lot of people just have no idea that delivery is even legal.”
It’s pretty evident that cannabis delivery has not really gone mainstream yet. “We’ve told people about our business in the past and a common answer we get is, ‘Oh my gosh, I didn’t even know we could get cannabis delivered.’” It’s never crossed their mind that they can get cannabis delivered to their home. It’s an awareness problem. It’s a marketing problem. But it’s a good problem to have and the solution lies in outreach. Through educational content they post on social media and in their blog, Khajavei wants to spread the word: “Hey, this is a real thing, you can get cannabis delivered.”
As the market develops and as consumers begin to key in on cannabis delivery, there’s nowhere to go but up. Especially in the age of Amazon and COVID-19 where consumers can get literally anything they can dream of delivered to their front door.
Moving forward, Pot Mates has plans to expand as soon as they can. Right now, they’re limited to Portland city limits, but there’s a massive population just outside of Portland in towns like Beaverton, Tigard and Tualatin. “We are so close to these population centers but can’t deliver to them now because of the rules. We want to work with OLCC about this and hopefully change the rules to allow us to deliver outside of the city limits,” says Khajavei. In the long term, they plan to expand out of state, with Washington on their north border being first on the docket.
To the average person, one would think launching a delivery cannabis business in the midst of a global pandemic would be a walk in the park, but Pot Mates proved it’s no easy task. As the market develops and the health crisis continues, it seems the Oregon market will react positively to the nascent delivery market, but first they need to know it is even an option.
This year, many issues have gotten put on a shelf as the world has dealt with the COVID-19 pandemic. The legalization of cannabis in many states has been one of those issues. But this time on pause has given the industry a chance to identify how it would like to move forward as an emerging market that has many benefits across medicine, from mental health to the economy.
For many of these reasons, cannabis use is coming out of the shadows and there has clearly been a shift in recent years from cannabis being an illicit item to becoming a boutique product in many circles. The transition of cannabis’ image from that of the stoner in his parent’s basement to the “it” consumable for the jet set has as much to do about science as it does sophisticated branding.
Approximately 24 million Americans in 2019 have used cannabis, about 10% say they consume it for medical purposes based upon a growing body of evidence supporting the use of medical cannabis for a number of conditions. There are also economic reasons why legalizing cannabis makes sense including increased revenue for the government, job creation and more.
As cannabis becomes legal across America—11 states have adopted laws allowing for recreational use, while 22 others permit only medical cannabis—it’s finally becoming the sprawling business its proponents have long envisioned.
And this has moved the mainstreaming of cannabis in today’s society from a taboo illicit drug to now being openly discussed at dinner tables.
First of all, our hats need to be taken off to the cannabis advocates who over the last 20 years have shaped an emerging industry, educating society and the government on the benefits cannabis can offer based on science.
The global cannabis community has collaborated with regulatory bodies to establish compliance and regulations as a starting point to help the general public understand sourcing products from legal entities is a safer way to get quality product to consume that is not compromised from unregulated producers.
In addition, technology advancements within the cannabis space have led to sophisticated track and trace solutions of raw materials and products through the supply chain. The data captured within these systems allows cannabis brands to tell a compelling authentication story to end consumers based on scientific facts.
This all leads to an emerging market that has open transparency, full traceability and establishing trust with consumers. The early master growers now work hand in hand with designer laboratories, perfecting and protecting their IP. A sophisticated supply chain has been put in place so consumers know where their cannabis was grown and by whom. Consumers understand which strains have been harvested and what hybrid models have been created. This is certainly no longer a bag of weed you purchased from a neighborhood friend, but a complex, innovative industry with established brands that have celebrities, ex-politicians and well know business executives involved now and the advocates that has been leading the charge for over 30 years are still the backbone to educate the masses on the benefits cannabis and hemp will bring to mankind over time.
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