Tag Archives: retail

2023 Cannabis Supply Chain Virtual Conference

By Cannabis Industry Journal Staff
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2023 Cannabis Supply Chain Virtual Conference

Click here to watch the recording

Agenda

Cannabis Packaging Solutions: Navigating Regulations, Quality & Environmental Impact
Jack Grover, Founder & CEO, Grove Bags

In the cannabis industry, packaging regulations and quality standards play a pivotal role in ensuring consumer safety, product integrity, and environmental sustainability. Join Jack Grover, CEO of Grove Bags, as he delves into the multifaceted landscape of cannabis packaging. The presentation will explore the diverse aspects of packaging regulations, highlighting childproofing requirements and the varying standards across different states. With a focus on transparency, Jack will discuss the merits of a variety of packaging options and their impact on product quality, shelf life, and health. Additionally, he will provide valuable insights into maintaining regulatory compliance, and how all of the above impacts a cultivator’s and end-user’s experience throughout the supply chain. Through this thought-provoking presentation, attendees will gain a comprehensive understanding of the intricate relationship between packaging, regulations, product quality, and environmental impact throughout the global cannabis supply chain.

TechTalk Sponsored by BIPOCann
Ernest Toney, Founder, BIPOCann

Automation Unleashed: Revolutionizing the Cannabis Industry Value Chain
Nohtal Partansky, CEO, Sorting Robotics

Join Nohtal Partansky, CEO of Sorting Robotics, as he explores the transformative potential of automation throughout the cannabis industry value chain. In this thought-provoking session, Nohtal will delve into various use cases of automation, highlighting its significant impact on efficiency, productivity, quality, and safety. This presentation makes a compelling argument for embracing automation as a strategic advantage. Nohtal will unveil the financial benefits, demonstrating how automation reduces overhead costs and drives higher profitability for businesses. He will also address the remote argument, emphasizing how automation minimizes the risk of human error and enhances operational safety. Nohtal will go on to debunk common misconceptions surrounding automation, assuring attendees that it can augment human capabilities rather than replace jobs. The performance argument will shine a light on how automation guarantees consistent product quality, providing consumers with reliable experiences every time. In addition, Nohtal will delve into the contamination argument, showcasing how automation significantly reduces the risk of human error and contamination, thereby improving product safety. Attendees will gain insights into how automation eliminates tedious and overhead-heavy tasks, freeing up resources for more strategic initiatives.

Optimizing Your Cash Handling through Automation, Analytics & Reporting
Shawn Kruger, SVP, Product & Strategy, Avivatech

Shawn Kruger will share how developing a cash automation strategy saves time and costs, ensuring the security and visibility of cash inventory in/across dispensaries, delivery operations and/or cultivation centers. As an industry with limited access to traditional banking accounts, a cash automation strategy supports the business’ goals in ensuring all cash is secure and accounted for, provides the insights needed for all back-office operations to reduce risk and losses due to human error or theft, and verifies procedural compliance at every location. Kruger will explain how you can acquire banking relationships, prepare for taxes and audits with data exports, and maintain compliance with state regulations through automation.

Click here to watch the recording

Five Ingredients for a Successful Cannabis License Application

By Sara Gullickson
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In the rapidly evolving cannabis industry, in both new and emerging markets, securing a cannabis license is an essential step to establishing a successful business. However, navigating the application process can be complex, challenging and highly competitive.

To help aspiring entrepreneurs and investors in this burgeoning field, The Cannabis Business Advisors founder and CEO, Sara Gullickson, shares her top five ingredients for a successful cannabis license application. According to Gullickson, who has secured more than 75 licenses in over 30 states and five countries, these ingredients, when combined strategically, can significantly increase your chances of obtaining a coveted license and positioning your cannabis business for long-term success. 

1. Real Estate

The author, Sara Gullickson (left) with Maxime Kot (right), president of The Cannabis Business Advisors

Real estate is the foundation of success. One of the key elements in a successful cannabis license application is securing suitable real estate. Many markets require applicants to have a designated location or property before even applying for a license. Finding the right property that complies with local zoning regulations and satisfies the specific requirements of cannabis operations is crucial. Partnering with experienced real estate professionals who understand the intricacies of the industry can be invaluable. By securing a well-suited location, you demonstrate to regulators your commitment to compliance and responsible business practices.

2. Finance

The cannabis industry brings its own set of unique challenges to navigate. The federal illegality of cannabis creates significant obstacles when accessing traditional banking and loans. Therefore, having a smart financial advisor and a comprehensive financial plan is essential for a successful license application. A well-prepared financial strategy, including accurate budgeting, projections and contingency plans, showcases your ability to manage financial resources effectively. It also demonstrates to regulators and investors that you have a sustainable and profitable business model, even amid industry uncertainties.

3. Community Support

Building strong relationships with the local community is crucial for a successful cannabis license application. Engaging with community leaders, neighborhood organizations and residents is a way to demonstrate your commitment to being a responsible and contributing member of the community. Actively seeking input, addressing concerns and incorporating feedback can help alleviate potential opposition and increase your chances of receiving support from local authorities during the licensing process. Community support is a powerful asset that showcases your dedication to fostering positive change and creating economic opportunities within the region.

4. Industry Experience

Value the expertise of the pioneers. While the cannabis industry is still nascent, there are seasoned industry pros who have been navigating its intricacies for over a decade. Leveraging their expertise and industry knowledge can be instrumental in crafting a successful application. Collaborating with experienced consultants and advisors who understand the unique challenges and nuances of the cannabis industry can provide invaluable guidance throughout the licensing process. Their insights into compliance, operational best practices and regulatory requirements can help you develop a robust application that stands out among competitors.

5. Team

The composition of your team is the cornerstone of your success and plays a vital role in the success of your cannabis license application. Assembling a knowledgeable and diverse team with expertise in various aspects of the industry is essential. From cultivation and manufacturing to retail and compliance, each team member should bring specialized skills and experience that align with your business objectives. Demonstrating a well-rounded team with a track record of success increases your credibility and instills confidence in regulators and investors alike. Your team represents your brand and serves as the backbone of your operations, making it crucial to prioritize hiring and cultivating talent.

Securing a cannabis license is critical to establishing a successful business in the rapidly growing cannabis industry. By focusing on real estate, finance, community support, industry experience and a strong team—you can significantly enhance your chances of success in the licensing process. Partnering with experienced consultants, leveraging the knowledge of industry veterans and demonstrating a commitment to compliance and responsible business practices will position you for long-term success in this dynamic and evolving industry.

FDA, FTC Issue Warnings to Delta 8 Copycat Cannabis Companies

By Cannabis Industry Journal Staff
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Last week, the U.S. Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) sent out warning letters to six different companies for selling copycat food products that contain Delta-8 THC. In a press release published on July 5, the FDA and FTC said they sent out letters to the following companies:

  • Delta Munchies
  • Smoke LLC (also known as Dr. S LLC)
  • Exclusive Hemp Farms/Oshipt
  • Nikte’s Wholesale LLC
  • North Carolina Hemp Exchange LLC
  • The Haunted Vapor Room
The Haunted Vapor Room, Dope Rope Bites

The products in question look exactly like common name brand foods like chips, candy and other snack foods. The FDA says they are concerned they might be mistaken for traditional foods, accidentally ingested by children or taken in higher doses than intended. “The products we are warning against intentionally mimic well-known snack food brands by using similar brand names, logos, or pictures on packaging, that consumers, especially children, may confuse with traditional snack foods,” says Janet Woodcock, M.D., principal deputy commissioner at the FDA. “The FDA remains committed to taking action against any company illegally selling regulated products that could pose a risk to public health.”

The FDA has sent out dozens of other warning letters to cannabis companies over the years for illegal marketing, mostly involving misbranding/mislabeling issues. A more common reason for a warning letter is making unsubstantiated health claims. In 2022, the FDA sent out 33 warning letters to CBD companies, including some that were marketing CBD as a cure for Covid-19. In 2021, they sent out a number of warning letters to companies marketing OTC drugs with CBD in them.

FDAlogoBack in May of last year, the FDA sent out their first warning letters to companies selling Delta-8 THC products, then issued a consumer update and warning about the compound a month later. The FDA and some industry stakeholders are concerned not only about the psychoactive substance itself, but also the way it is produced that could use potentially harmful chemicals.

This is the first time since 2019 that the FTC has gotten involved, when they issued similar joint letters to companies making unsubstantiated health claims. “Marketing edible THC products that can be easily mistaken by children for regular foods is reckless and illegal,” says Samuel Levine, director of the Bureau of Consumer Protection at the FTC. “Companies must ensure that their products are marketed safely and responsibly, especially when it comes to protecting the well-being of children.”

The Distressed Cannabis Business: An Alternative to Bankruptcy

By Paula Durham, Scott E. Evans
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Bankruptcy is Not an Option

Bankruptcy courts do not provide protection to cannabis and cannabis-related businesses.Bankruptcy can be a very helpful tool for a distressed business. Bankruptcy allows a business to stop collection actions, discharge certain debts, cancel unfavorable contracts and provides breathing room to restructure the business.

What if your cannabis operation is struggling or failing – file for bankruptcy, right? Not so fast. Despite cannabis being legalized or decriminalized for certain activities at the state level, it remains illegal at the federal level. Therefore, the bankruptcy court will not provide protection to cannabis and cannabis-related businesses (CRB).

Alternatives to Bankruptcy

A State Court receiver may be the best alternative when bankruptcy is not an option.Enter the state court receivership. Receivership is an equitable remedy that is often employed as an alternative to a bankruptcy proceeding. A receivership can address business insolvency or can be a temporary remedy during legal proceedings between disputing business partners, with control of the enterprise hanging in the balance.

In either scenario, the court appointed receiver takes control of the business and must assess the posture of the business and determine the best path forward. The receiver’s options run the gamut from operating the company as is, restructuring operations to maximize profit or closing shop and liquidating the business as a whole or in pieces. The receiver has a fiduciary responsibility to determine the option that best satisfies creditors, similar to duties required of a trustee in a bankruptcy.

The importance of having a receiver well-versed in the cannabis industry cannot be overstated.Distressed cannabis companies are often prime candidates for receivership. Cannabis is a burgeoning industry with huge growth and profit potential. However, worlds have collided in the Green Rush, where business-minded individuals, often with little knowledge of cannabis, have partnered with individuals well-versed in cannabis culture, cultivation and consumption, but with little experience operating a business. Add a dash of complex state laws and regulatory drama in the form of the federal/state divide on legality, a dollop of fraud potential due to the largely all-cash nature of the business and you’ve created the perfect recipe for insolvency, litigation or both. In these often-chaotic conditions it is easy for a cannabis company to become unprofitable. A receiver can add significant value by stabilizing the business while the litigation proceeds or while developing a restructuring plan. In either case the goal of a receivership is to maximize the value of a business for the benefit of its stakeholders.

If you are considering restructuring options for your cannabis operation, a receivership can be an excellent choice. However, a cannabis receivership is not for the faint of heart. There are two significant areas that distinguish cannabis receiverships from receiverships involving non-cannabis businesses: First, the complex regulatory environment and second, banking. The importance of having a receiver well-versed in the cannabis industry cannot be overstated. Making a mistake in these areas can cause more harm than good. 

Complex Regulatory Environment

Cannabis operations are subject to a complicated regulatory framework that varies by state as well as by type of legalization (medical versus adult use cannabis). Receivers unfamiliar with the cannabis industry and the associated regulatory framework will be behind the curve on day one.

Upon appointment over a cannabis entity a receiver becomes responsible for the regulatory posture of that entity.Regulatory hurdles begin at the outset of a receivership. Although receivership is an excellent restructuring option for cannabis operators in distress, regulations surrounding the authorization requirements for those operating the business on a day-to-day basis (including receivers) vary by state. Some states, but not all, even have specific regulations for receiverships.

For example, the rules and regulations for cannabis operators in Colorado administered by the Colorado Marijuana Enforcement Division (MED) include provisions for receiverships. Specifically, the MED requires court appointees, including receivers, to register with the State Licensing Authority as Temporary Appointee[s] of the Court within seven days of appointment.

Similarly, Washington State cannabis regulations directly address receiverships. Specifically, Title 314 allows receivers or trustees to operate a licensed cannabis business, but the receiver must be qualified by the Washington State Liquor Control Board (LCB). Qualification requirements include  active status on the LCB preapproved receiver list or submission of an application to serve as a receiver for a licensee within two days of appointment. Furthermore, to serve as a receiver of a Washington state cannabis licensee the receiver must meet residency requirements.

Conversely, the Arizona cannabis laws and rules do not specifically address cannabis receiverships. Nevertheless, Arizona does require anyone volunteering or working at a medical or recreational cannabis dispensary to be registered with the Arizona Department of Health Services as either a Dispensary Agent (DA) or a Facility Agent (FA). Therefore, a receiver appointed over a licensed cannabis business in Arizona must obtain the applicable registration upon appointment in order to take control of the licensed entity in a compliant manner.

The fun doesn’t stop after the initial appointment hurdles are cleared. The regulatory environment across the country is a patchwork of complex laws. States that have legalized or decriminalized cannabis on some level have instituted often complex rules surrounding the cultivation, manufacture, wholesale and retail sale of cannabis. Even seemingly simple concepts such as the definition of cannabis are not so simple in some states. For example, Massachusetts includes cannabidiol (CBD) in its definition of cannabis while Arizona does not.

Some states, like California, do not allow the sale of cannabis licenses. Other states, like Colorado, allow for the transfer of commercial cannabis licenses. In a turnaround situation it is particularly important to understand the options available to liquidate a licensee’s assets.

Similarly, many, but not all states have rules requiring cannabis product testing by accredited laboratories prior to retail sale. Most states require THC potency testing, while others (like California and Colorado) also require testing for pesticides and toxins. Conversely, testing for toxins and contaminates is voluntary in Florida. Product testing is expensive and time-consuming, and operators must have a comprehensive system in place to ensure compliant product is available for sale to retail and wholesale customers.

Even taxes are different for cannabis businesses. A receiver must understand and be able to manage a cannabis business in order to comply with and minimize taxes under the infamous 280e regulations of the U.S. tax code.

Upon appointment over a cannabis entity a receiver becomes responsible for the regulatory posture of that entity. Accordingly, the receiver must ensure that any regulatory deficiencies are identified and corrected in order to ensure compliant operation.

We’ve highlighted just a few of the myriad of regulatory concerns facing a receiver upon appointment. It is critical to engage a receiver who has experience working under the complex cannabis regulatory structure for your distressed cannabis operation.

Banking

One of the most important things a receiver does upon appointment is to identify and secure the assets of the entity in receivership, including cash. This normally involves opening a bank account in the name of the receivership entity that is controlled solely by the receiver and moving cash assets into the controlled account.

This typically ordinary task is not so easy with a cannabis operation. Because cannabis remains illegal under federal law, processing funds derived from the sale of cannabis (even sales that are legal at the state level) can be considered by the Department of Justice (DOJ) as aiding and abetting criminal activity or money laundering.A receiver must negotiate the complex banking regulations regarding cannabis businesses and effectively manage the large amounts of cash, which may not be bankable.

The Financial Crimes Enforcement Network (FinCen) issued guidance in 2014 that cleared the way for financial institutions to service canna-businesses (2014 Guidance). The 2014 Guidance requires financial institutions who choose to provide services to CRBs to design and implement a thorough customer due diligence review that includes, in part, analyzing the licensing of the entity, developing an understanding of the business operations of the entity, and ongoing monitoring of the entity. In addition, financial institutions are required to file a Suspicious Activity Report (SAR) for every transaction they process for a CRB, should they choose to accept the business.

While this is a positive step forward, it is a heavy compliance burden that comes at a cost. Naturally, compliance costs incurred by banks to service cannabis operators are passed on to the customer; fees of $2,500 per month per account are not uncommon. The high compliance costs, coupled with the significant regulatory risk, keeps most banks out of the cannabis market; thus, making it hard, but not impossible, for a receiver appointed over a cannabis operation or CRB to obtain banking.

While banking options do exist, the reality is that most canna-businesses operate on a cash basis. Distressed cannabis operations may not have the cashflow to afford banking services, at least at the outset of a receivership. Further compounding the banking problem, some banks that are open to cannabis are not open to receiverships, further limiting banking options.

A receiver therefore must be prepared to quickly secure all cash assets of the receivership entity and ensure appropriate internal controls are in place to control cash on an ongoing basis.

Cannabis has been legalized or decriminalized in a majority of U.S. states but remains illegal at the federal level. Therefore, federal bankruptcy protection is not generally an option available for a distressed canna business. However, not all is lost because state receiverships offer an excellent restructuring option for distressed cannabis operations.

An Inside Look at the Creation and Growing Popularity of Solventless Cannabis Products

By Tim Nolan
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A top product trend this year is the rise of solventless cannabis products, according to recent statistics from cannabis market analyst firm BDSA. In fact, from June 2021 to June 2022, BDSA research also showed that the category grew an average of 132% each month.

Copperstate Farms

Nearly all cannabis products start with cannabis concentrates, which are made with a solvent that contains the desirable compounds from cannabis. Solventless concentrates however are made from the cannabis flower without the use of any chemicals and are becoming popular among businesses and consumers. This broad category of cannabis products includes everything from hash to live rosin.

Mitch Lindback, Lab Director at Copperstate Farms, has been growing and extracting cannabis for 15 years and has over a decade of experience working with cannabis derivatives. “Solventless is the truest expression of the cannabis plant,” he says.

Copperstate Farms is one of the largest greenhouse cannabis producers in North America and home to 1.7 million square feet of canopy and 40 acres under glass. Here is an inside look into the company’s solventless creation process:

The Harvest

One of the most important growth factors in cannabis is light, so cannabis grown in full-spectrum light often brings the best flower to harvest. In the weeks before harvesting, the lab conducts a test wash on cannabis plants before hand-selecting which will be used in rosin. Plants are selected based on appearance, aroma and test wash results. On harvest day, all flowers are lightly hand-trimmed and frozen within two hours of harvest.

The Wash

The wash system

Using only chilled RO water and minimal ice, our cannabis extraction experts gently break the trichome heads off the fresh-frozen cannabis using a stainless-steel wash system, by gently agitating the flower. Then they collect the 73μ-159μ trichome heads while pushing the immature trichome heads and stalks to pass through collection bags with a cold spray wash.

The Press

After carefully freeze drying, sifting and packing the hash into double-wrapped mesh rosin bags, Copperstate Farms uses rosin presses to gently express the nectar from the trichome heads using a little heat and a lot of pressure.

The Cure

All live rosin goes through a minimum 7-day cure. “We have found through extensive analytical testing that curing rosin for a minimum of seven days increased its terpene content by over 30 percent,” Lindback says.

The final product: live rosin

The extensive process to create solventless cannabis products is time and energy intensive, but leads to quality offerings, like full melt hash and live rosin. In fact, the solventless category is “primed for premiumization and growth in legal cannabis markets,” according to BDSA retail sales analytics. This is especially true in the dabbable concentrate product category and predicted in the vaping concentrate category as well.

With popular annual holidays like 7/10 (the cannabis community’s holiday for celebrating oil products, dabs and concentrates) gaining traction, solventless products are predicted to grow in market share and are worth cannabis companies looking into producing as demand rises among consumers who are always looking for innovative products that feature solventless concentrate.

To learn more about Copperstate Farms, visit www.copperstatefarms.com.

Minnesota Legalizes Adult Use Cannabis: Part 2

By Abraham Finberg, Rachel Wright, Simon Menkes
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In Part 1, we examined the current status of adult use cannabis in Minnesota, paying particular attention to the licensing framework, taxation and social equity considerations. In this article, we’ll cover some important need-to-know info if you’re considering opening an adult use business in the “Land of 10,000 Lakes.”

Starting a Cannabis Business in Minnesota: Important Considerations

As the state does not expect to begin issuing licenses before the first quarter of 2025, now is the time to plan a licensing campaign. With a population of 5,714,000, 64% of which live in the Twin Cities of Minneapolis-Saint Paul, Minnesota is close in population to Colorado, with 5,774,000 residents. Colorado currently has around $1.8 billion in yearly retail cannabis sales. This may suggest a similar possible level of sales for Minnesota once its retail cannabis market matures.

In a recent op-ed piece for Marijuana Moment, the New York cannabis consulting firm of Bridge West Consulting suggested three reasons, in addition to low cannabis excise taxes and reasonable license fees, why entrepreneurs should consider investing in a retail cannabis business in Minnesota:

  • Minnesota legislation prohibits localities from banning cannabis businesses. This avoids serious problems that have plagued cannabis businesses in other states including California and Montana in which access for cannabis companies has been denied and, in Montana’s case, even reversed. (Minnesota’s new legislation does allow local governments to limit the number of cannabis retailers to one for every 12,500 residents, however.)
  • Minnesota has allocated funds to assist social equity cannabis businesses, including $6 million to the CanStartup which will fund non-profits to make loans to budding cannabis businesses.
  • Bridge West makes the interesting observation that Minnesota is bordered by four states—Wisconsin, Iowa, South Dakota and North Dakota—none of which have legalized adult use cannabis. Moreover, an estimated 1.9 million people live outside of Minnesota within a 50-mile radius. That means that not only will Minnesotans not have to compete with out-of-state cannabis dispensaries but will benefit from the purchases of out-of-state residents that live within a comfortable distance.

How a License Application is Scored

HF100 gives some guidance as to how the Office of Cannabis Management (OCM) will score license applications, awarding points for the following 9 categories: social equity status, veteran status, security and record keeping, employee training plan, business plan and financial situation, diversity plan, labor and employment practices, knowledge and experience and environmental plan.

The OCM may award additional points if the applicant would expand service to an underrepresented market. Points may also be awarded to those applicants who can demonstrate a negative impact from cannabis prohibition such as arrest or imprisonment of the applicant or their immediate family. This is different from social equity status and the law says points may be awarded to the applicants “in the same manner as points are awarded to social equity applicants.”

Emphasis on Market Stability; Prohibition of Vertical Integration

Minnesota is taking measures to ensure “market stability,” which it doesn’t specifically define, but which it says involves:

  1. Ensuring an adequate supply of cannabis, but not a glut.
  2. Eliminating the illicit cannabis market.
  3. Promoting a craft cannabis industry.
  4. Prioritizing growth and recovery in communities that have experienced a disproportionate, negative impact from cannabis prohibition.

HF100 states, “The office shall issue the necessary number of licenses in order to ensure the sufficient supply of cannabis flower and cannabinoid products to meet demand, provide market stability, and limit the sale of unregulated cannabis flower and cannabinoid products.”

Continuing its emphasis on “smaller is better,” HF100 says, “Unless the office determines that the issuance of bulk cultivator licenses is necessary to ensure a sufficient supply of cannabis flower and cannabinoid products, the office shall not issue a bulk cultivator license before July 1, 2028.”

Vertical integration is also prohibited. “The office shall not issue licenses to a single applicant that would result in the applicant being vertically integrated.” HF100 goes on to state that microbusinesses are exempted, and that if the OCM determines that vertical integration is necessary to ensure a sufficient supply of cannabis and cannabis products during the first year of such products being sold to customers, it may authorize one or more applicants to be vertically integrated. However, such a group of licenses are very temporary and will expire at the end of that first year period.

An entity holding a cannabis retailer license may also hold a delivery license, a medical retailer license and an event organizer license. But no retailer may hold any other license. Also, no entity may own or operate more than one retail business in one city or county.

Interestingly, Minnesota is also allowing cities or counties to own and operate a municipal cannabis store, possibly similar to the way Utah has government liquor stores which compete with private bars, breweries, wineries and distilleries.

In Summary

Minnesota is just beginning to define and establish its adult use cannabis market. Like other states before it, it is attempting to promote social equity aims at the same time as it’s working to avoid the serious problems of a competitive illegal market and an over-or-under supply of cannabis to its citizens.

With low license fees and excise taxes and a good-sized population, 420CPA believes cannabis entrepreneurs should seriously consider Minnesota for possible investment. The first cannabis retail businesses are not expected to open for another 18 months, so now is the time for businesspeople to lay the groundwork for their applications and future locations.

The Sensory Branding Opportunity for Cannabis Products

By Dr. Ed Szczygiel
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Cannabis brands are facing a proverbial fork in the road: determining whether their product evolves into a luxury consumable or affordable agricultural commodity. While it is reasonable to assume the cannabis market space will organically grow into a luxury goods industry such as wine and spirits, the luxury brands that serve as the foundation of these markets were built over years of engagement between consumers, connoisseurs and producers. If cannabis companies want to successfully market their products as luxury items, a concerted effort towards well-defined, consumer-accessible branding is required.

The first step towards evolving a cannabis brand towards luxury is overcoming the fixation on cultivar identity. Unregulated cultivar naming currently impedes creativity and craftsmanship, disrupting brands and salespersons’ abilities to clearly communicate strain aesthetics.

The good news is the alcohol, coffee and consumer packaged food (CPG) industries have done most of the heavy lifting, paving the way with robust sensory science and analytical approaches to product characterization. Cannabis stakeholders need only adapt their tools and apply them to cannabis with similar intention.

Research suggests that aroma is one of the strongest predictors of positive consumption experience. As adult use consumers become familiar with current product offerings and increasingly legal availability, they will seek products that consistently yield the best experience. The most successful brands will be those that most effectively communicate that experience and then deliver it. The status quo – describing aroma using strain names, top terpenes or THC content – is not effective at harmonizing a brand’s promise with consumer experience.

Figure 1: Illustration of both the conventional branding approach (top) and the sensory-based branding opportunity (bottom).

The conventional cannabis product branding approach leaves to be desired a tremendous opportunity to characterize cultivars (Figure 1). Sensory science, the discipline used to evoke, measure, analyze and interpret reactions to materials through human perception, has been used for decades to characterize CPGs from skin lotion to washing machines. Adapting these well-established techniques for use in cannabis can be challenging, but it is certainly worth the investment.

These shifts in the cannabis industry have already begun to occur. I recently was the principle investigator on a white paper that presented a novel cannabis aroma wheel derived from aroma descriptors and a panel of trained sensory experts. In the study, sensory scientists evaluated randomly sampled cannabis flower over a period of several months. The researchers combined qualitative focus panels, literature review and formal blinded sensory tests to develop a comprehensive lexicon that served as a tool for trained evaluators to characterize cannabis aroma. This novel and robust tool (Figure 2) was designed to be used by trained panels to characterize cannabis aroma, is freely available and is just the beginning of a collective development of a data-driven cannabis lexicon.

Much like the World Coffee Research Lexicon referenced here, the Cannabis Aroma Lexicon is a tool with a specific purpose: collecting an objective description of the product aroma. It is a living document that will grow along with the industry. In the future, we may have lexicons to describe more than just aroma. Tactile and appearance sensory attributes of cannabis will gradually be defined by sensory scientists, presenting more opportunities for deep craftsmanship in the cannabis industry.

Figure 2: Expert-derived aroma wheel tool for cannabis aroma characterization.

The role that dispensaries play in adoption of standardized quality metrics is critical. The product features that position cannabis to be a craft product warrant the presence of a third-party expert to translate and guide consumers during the purchasing process. It’s intuitive to ask a waiter to recommend a pairing (i.e., a dry red wine to pair with a seafood dish), given the trust that consumers put in the restaurant to understand the properties of the food they are serving. Dispensaries have thus far filled the service structure role for cannabis, but the vast amount of unknowns regarding the physiological and sensorial effects of cannabis have resulted in inconsistent experiences that leave something to be desired in terms of consumer trust.

Application of sensory science in cannabis is an unparalleled opportunity for brands to build consumer trust and differentiate their products in a sea of strain names and high potency flower. Cultivars that can be established as measurably aromatic in a specific character can leverage that aroma profile to add significant value to the product. For example:

  • Cultivar name can be aligned with the perceived aroma (e.g., garlic is not bad, but expecting tropical and getting garlic can harm consumer trust).
  • Product catalog can be consolidated and optimized to avoid sales cannibalization by growing specific products to meet consumer group’s needs.
  • Guesswork is removed from breeding by measuring when a product is meeting sensory goals and ensuring it doesn’t drift over time.
  • Demonstrating transparency will win over ethical consumers. Utilizing controlled, blinded studies to profile aromas will add value to ethics-minded consumers.
  • Becoming a leader in connoisseurship. In the forefront of this shift in branding, one can position a brand to be ahead of the competition.
  • Elevating the dispensary experience. By utilizing aroma profiling, products can be more easily sold by budtenders and salespeople.
  • Opening doors to new application types (e.g., seasonal, occasion centered or geographically unique cultivars).

These are just some of the ways that aroma characterization will differentiate products and simultaneously contribute to cannabis brands’ ability to communicate craftsmanship and the maturity of the industry as whole. Not only will adoption of robust sensory-based branding improve the consumer experience by providing a means to compare products to one another, it will promote adoption of good manufacturing practices that simultaneously improve the quality and safety of cannabis products. Without consumer-accessible quality metrics, brands have little incentive to produce products of elevated quality and are conversely incentivized to prioritize quantity and meet minimum regulatory requirements.

Importantly, cannabis businesses will use this tool to adapt to an inevitable industry-wide shift towards connoisseurship and application of robust sensory science. While it may be challenging to shake off the “bad habits” that currently plague many brands, cannabis has significant potential as a luxury good. Consumers are eager for a better cannabis experience from purchase to consumption. How will your brand use sensory profiling to expand or evolve product offerings to succeed in a cannabis market full of luxury brands and what steps will you take now to prepare?

Digital Insurance Solutions are Ripe for Fast-Growing Cannabis Dispensaries

By Jay Virdi
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Cannabis sales in the United States are expected to hit $100 billion by 2030, and yet dispensary owners still face hurdles before getting up and running, namely obtaining the right insurance coverage. Unlike a coffee shop or clothing store, it can be difficult to secure the insurance coverage needed to satisfy the requirements prescribed by the state and/or commercial leasing agreements.

Yet a simple answer to the dilemma exists. Increasing demand for cannabis business owner policies has prompted some retail insurance brokers to provide convenient turnkey solutions via digital commercial insurance platforms. These platforms circumvent the traditional underwriting process that could trudge on for weeks, allowing cannabis businesses to ramp up operations sooner.

Currently about 30% of insurance customers interact with and purchase from their insurance provider digitally for their business needs. This can be a game changer for a fast-growing cannabis business operator.

What do you need to obtain insurance online?

Obtaining insurance online lets dispensaries secure a complete, holistic insurance policy in one quick pass to cover the industry’s unique risks.

Increasing demand for cannabis policies has prompted some insurance brokers to offer digital solutions

Like any other commercial business package policy, you’ll need to provide details about your business and its operations when harnessing a digital insurance platform.

The first piece of information needed will be proof of licensing with the applicable state or commonwealth where the business operates. This piece is critical since cannabis is still illegal at the federal level. In addition, businesses will need to have other basic data on hand before finding coverage online, including:

  • The legal name of the business
  • Tax identification number
  • Operating locations
  • Annual or monthly sales projections
  • Number of employees

A Closer Look at Cannabis Coverages

Crime, extreme wealth conditions and legal challenges count among the risks faced by cannabis dispensaries. Here are three essential coverages important for cannabis business owners and operators.

  1. Commercial property insurance. Owned cannabis dispensary properties can face perils such as fire, storms, theft and vandalism. Buildings hold value and need to be repaired or replaced if any adverse events occur. Leased properties may contain equipment and fixtures owned by the business and subject to the very same hazards. Commercial property coverage can help cover the cost of replacing business contents and inventory if damaged through a peril covered by the policy.
  2. General liability insurance. Cannabis retail outlets experience a high volume of foot traffic from customers, vendors and technicians, for example. As such, trips, slips and falls could occur and lead to lawsuits. General liability insurance helps cover legal defense costs should any of these parties seek to recover compensatory damages from accidents and mishaps on the property or occurring elsewhere in a business-related capacity.
  3. Product liability coverage. Issues such as quality control with infused products and concentrates can be a concern for cannabis purveyors. Lawsuits arising from mislabeled or improperly tested products likewise need to be defended by cannabis businesses. Comprehensive product liability coverage can meet the needs of cannabis dispensaries promoting and selling a unique variety of product offerings.

Outside the standard commercial package offering, dispensaries can opt for coverage such as business interruption insurance, which helps pay overhead costs if the operation must temporarily cease due to a covered peril.

Cannabis businesses also often need to retain workers compensation insurance that helps pay for lost time and/or medical bills incurred by employees who become ill or injured on the job. Commercial crime policies help cover losses that may occur on premises or in transit in a cash-centric business.

If cannabis industry owners and managers use an online platform for their insurance needs, they could secure a certificate of insurance in as little as 24-48 hours. HUB’s digital commercial insurance platform, powered by Insureon, is one such direct-to-consumer solution. The platform is ideal for licensed retail cannabis dispensaries in all legal US states.

Beyond Compliance: Leveraging Packaging to Build Brand Identity & Loyalty

By Jack Grover
1 Comment

Ten years ago, “cannabis packaging” didn’t extend very far beyond throwing buds into a plastic baggie – in fact, the term wasn’t even really a recognizable category. The lack of product packaging attention-to-detail was understandable at the time; the industry was still predominantly underground, and brands were much more focused on staying afloat amidst global prohibition and crackdowns.

Fast forward to today’s cannabis landscape, and it’s practically unrecognizable. Brands have figured out that, not only is proper cannabis packaging essential for providing consumers with a safe, reliable product, but it offers businesses an inimitable opportunity for marketing to their audience and establishing brand identity.

Because of this, the legal industry has gotten increasingly creative and playful with their packaging, using the space to connect with their audience, leave a lasting mark and obtain that covetable consumer loyalty the retail world is always hungry for.

The beginnings of cannabis packaging: Preserving integrity in a growing market

I entered the cannabis world as a home grower – exclusively for my brother, who has pretty intense cerebral palsy and gets tremendous medicinal relief from the plant. I’ve been growing for him for years, and in my earlier days I found myself losing a lot of cannabis to the elements as time passed: mold, pests, etc. I figured there had to be a better way to preserve what I was cultivating for long-term storage.

After visiting a dispensary in Colorado to get some ideas, I realized all of their packaging was overkill. It didn’t do anything to actually nurture the plant, or give it what it needs for successful lasting preservation. So, I got even more interested.

I started looking into what chemically happens to cannabis after you dry it and I discovered there was no real information on the topic yet. So, my team and I started looking into how we could contribute to this arena – sort of creating this whole new category and awareness around curating, storage, long-term plant viability, shelf life and conditions for quality cannabis.

We looked at a variety of elements for proper packaging – like UV protection, humidity and moisture control, odor control and oxygen control – and worked hard to develop some materials that would factor in all of these considerations for an end-goal that I believe should be universal.

When it comes to cannabis packaging, the most important thing you should be thinking about is integrity throughout the supply chain: delivering products to patients in the way that it was intended to be delivered from the grower for optimal medical results.

Proper packaging is critical for the industry. It contributes to operational efficiency, eliminates waste, maintains full moisture and humidity rates and helps businesses protect their bottom line.

It allows operators to deliver better, more viable and more potent medicine to patients – and that is absolutely what’s most important. Giving patients the full efficacy of the plant, unadulterated and unmolested by the supply chain.

Utilizing cannabis packaging as a powerful marketing tool

That’s how cannabis packaging was first developed – to protect products and keep them safe and effective for consumers. Since then, the sector has totally evolved to encompass even more elements. There’s a lot more education about drying and curing, and how to preserve the integrity of cannabis as it moves from seed to sale.

Brands have also started recognizing a dual opportunity alongside safe cannabis packaging: an effective means for marketing and advertising. In a space where we’re so restricted on how we market our brands, having great packaging is beautiful, convenient and reminds the patient of the brand behind the product they’re currently enjoying.

This is a critical opportunity for brands to cement their reputation and form a relationship between themselves and their clients. “Consumer loyalty” is a magic term that a lot of brands are chasing today, and the biggest way to achieve that is with consistent, high-quality packaging that allows operators to maintain integrity within a supply chain they just can’t control.

Cannabis packaging is the consumer’s first reaction to your product. It’s the plating. And the way it’s presented has a major effect on how customers view your brand. Think of your packaging as a type of billboard: every consumer carrying around a branded bag of your pre-rolls is a walking advertisement and ultimately an ambassador.

The 12-inch vinyl LP cover art of our generation is the one-eighth flower pack. Just like those records are all music, these packages are all cannabis, but these brilliant creatives all over the world are getting to attack an identical canvas with radically-different approaches and aesthetics.

It’s a ubiquitous thing – like designing a watch. From Timex to Rolex, all of these brands have been creating iterations from the same basic layout to do the same basic thing: tell time. That is constraining, but it also pushes people to get really innovative and imaginative.

In the cannabis realm this is just the beginning of utilizing packaging for brand identity and loyalty. Innovating your cannabis packaging provides an incredible framework for seeing different ideas and inspirations come to life. It’s a cannabis collaboration with artists in its most newborn infancy and there’s a lot of exciting potential there. Beyond a billboard and a brand voice, packaging is a keeper of the quality, consistency and potency your customer deserves.