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By David Vaillencourt

Recently, Congress requested detailed information regarding the regulation of CBD and other cannabinoids. This comes on the heels of frustration around federal inaction with regards to cannabinoid-containing products produced from Cannabis sativa L. plant extracts that can be classified as “hemp” products amidst the clear need for safety standards that goes above and beyond state minimum compliance requirements.

A Historical Deja Vu?

The author will be joined by his colleagues leading the Seed to Sale Safety Workshop on October 16 at the Cannabis Quality Conference. Click here to learn more. Product safety standards predate the birth of our nation (and many others). From the days of the first pharmacopeias which rival the oldest documented use of the cannabis plant, to modern regulations, the quest for safety has been a constant theme. But as the saying goes “Old habits die hard,” but so do safety issues. From peanuts to thalidomide and tobacco, we’ve seen this movie before – and it is time for a new ending.

A Universal Desire for Safety

Whether you are an investor, executive, technician or anywhere in between – nobody in the cannabis industry (and all its end uses, including industrial hemp) wants to knowingly produce unsafe products. The risks of ignoring safety are real and tangible. Whether it is 20+ years in jail for being an executive of a company that knowingly sold adulterated products and was linked to seven deaths or 10,000+ deformed children, many of whom died at birth because of a drug approved for morning sickness – there is no shortage of case studies we can learn from. Even cannabis has been known to cause injury and death in consumers – not because of the d9-THC, but the impurities. As the industry continues to innovate and develop new product form factors – whether it is new delivery methods of d9-THC in soluble beverage forms, or the rise of manufactured cannabinoids in unregulated marketplaces – it’s critical to understand the risks of your entire production process and to mitigate them. No cannabis company is immune from making costly and dangerous mistakes. It’s not just about compliance – it’s about public health and safety.

Safety Can Be a Sticky Subject

Safety is indeed a complex subject, especially when it comes to cannabis products. For instance, acceptable limits for microbial contaminants for the inflorescence of a Cannabis sativa L. plant are quite literally all over the map. What about the route of administration? Take an inhaled product (like a vape pen) vs. an ingested product (e.g. an edible). Many outdoorsy people like myself may enjoy the smell of cooking s’mores over a campfire, but the particles and VOCs can irritate our lungs, especially when exposed over long periods of time. We aren’t inhaling those s’mores – so the production of the marshmallow, chocolate and graham crackers come with different risks we need to evaluate. It’s not just about the product – it’s how it’s consumed.

Safety Standards – the Fabric of Our Society

Standards are unsung heroes of our daily lives. Whether it’s to keep planes from falling out of the sky, cribs and dressers from crushing young children, preventing train derailments or ensuring the safety of our food and medical products – standards keep us protected – just like grandma’s quilt. The absence of standards can be expensive, and anyone familiar with the accusations of d9-THC lab-shopping and inflated label claims knows that the cannabis industry is the poster child for this.

Congress has long recognized the importance of standards in protecting everyday consumers, as demonstrated by numerous legislative acts. A few notable and relevant ones to cannabis are below:

1848 Drug Importation Act: First major act that combated the importation of substandard – adulterated drugs imported from overseas into the nation which was having a major impact on soldiers of the Mexican-American War. This Act included legal requirements for drugs to meet the US Pharmacopeia’s standards for strength, quality, and purity.
1906 Food and Drugs Act: After an increase in adulterated and misbranded foods and drugs – made famous by Upton Sinclair’s The Jungle, the relentless work of Dr. Harvey Wiley, a Chief Chemist with the then US Department of Agriculture and his “poison squad” – led to significant oversight of adulterated food and drugs including legal adherence to the US Pharmacopeia and paved the way for the current FDA.
1938 Food Drug, Cosmetic Act: Shortcomings in the 1906 Food and Drugs Act were catalyzed by over 100 deaths after a wonder drug that was analogous to antifreeze led to an outcry that led to the passage of the FDC&A. From factory inspections, to strict marketing and label requirements, to legally enforceable food standards and tolerances for certain poisonous substances – the FDA was given substantial more oversight to protect the growing United States. It also expressly recognized USP quality standards for medicines with USP standards also binding for any dietary supplement manufacturer that labels their products as being compliant with USP specifications.
1994 Dietary Supplement Health Education Act (DSHEA) defined and regulated dietary supplements which carved out significant exemptions for the dietary and herbal supplement industry from most FDA drug regulations. This act has been met with significant controversy as it greatly limited the FDA’s capacity to ban or restrict supplements until evidence of a major safety or adverse event is tied to the product of concern.
1995 National Technology Transfer Advancement Act (NTTAA) – A lesser known act that is focused on standards and technology that requires participation of federal agencies in voluntary consensus standards bodies. Extending beyond foods and medicines – this act covers a broad array of infrastructure and technology regulations that ensure the fabric of our society operates (largely) without issue.

Over 1,000 ASTM standards are incorporated by reference in the US Code of Federal Regulations across nearly 30 federal agencies (searchable here), a demonstration of the value and impact public voluntary standards have in our society.

At the FDA, ASTM standards are used every day to keep us safe. Whether it is to measure the absorbency of tampons (21 CFR 801.430), enforce safety specifications of synthetic and natural wax coatings that are used to coat much of our produce, gummies and more (21 CFR 178.3770), quantifying the impurities in our bottled water (21 CFR 165.110) and many more.They have long been recognized as the de facto minimum standards that balance the need to protect consumers without imposing undue burdens on innovation by industry.

The process of developing an ASTM standard, which was developed and used to keep our trains from derailing 125 years ago, is now the home of 510+ cannabis industry specific standards. Whether it’s acceptable water activity levels in cannabis flower, a truly universal symbol to alert consumers of intoxicating cannabinoids, medical cannabis flower specifications developed in close guidance of the US Pharmacopeia, or how to apply the principles of HACCP to cannabis products, a lot of the hard work has already been done for the industry. It’s simply a matter of knowing where to look and how to use them!

The path to safe and sustainable cannabis products is clear, and the tools are available. It’s time that we learn from the past, apply the standards of the present and mitigate the risks of the future. Now more than ever before, it’s easy to make safe cannabis products and a credible marketplace not just a goal, but a reality.

July 25, 2023

Safety & Compliance in the Absence of Regulatory Clarity & Consistency

By Joel Chappelle

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As the legal landscape surrounding cannabis continues to evolve, the creation of robust, sensible and consistent safety regulations remains stalled. A patchwork of broadly inconsistent state rules and regulations, along with years of federal inaction and policy stagnation have the potential to create significant risks for consumers. Given the industry’s explosive, multi-billion-dollar growth, consumers have access to an ever-increasing number of products produced by an increasing number of actors, pursuant to widely divergent standards and rules. Given this, the industry would be well-served to take on the responsibility of promulgating a coherent regulatory framework with robust (but sensible) safety regulations. The importance of collaboration among cannabis industry stakeholders cannot be overstated if we are to develop and adopt consistent standards that guarantee product safety at every step of the supply chain.

Joel Chappelle, along with several renowned experts, will lead the Seed to Sale Safety Workshop at the Cannabis Quality Conference this October 16 in New Jersey. Click here to learn more. Inconsistencies in safety standards and regulations open the door to a range of potential hazards, including contaminant risk, labeling accuracy, potency quantification and many others. Absent a clear understanding of seed-to-sale risks, many of which are not even mentioned in state regulations, cannabis companies face significant exposure, often without even knowing it.

To mitigate these risks, it is vitally important for the cannabis industry to collaborate in the ongoing development of safety standards. This means understanding and implementing safety measures starting with the cultivation process. Careful consideration should be given to factors such as the use of pesticides and herbicides, soil quality and irrigation methods. Standardized safety testing to ensure uniformity between products for potency, contaminants, heavy metals and microbial organisms is crucial to consumer safety. Accurate and comprehensive labeling is likewise necessary for consumers to be adequately informed.

For as long as consistent state and federal guidelines governing cannabis safety remain elusive, the need for industry self-regulation will be paramount. Cannabis companies must work together to share best practices, establish standard operating procedures and adopt stringent safety measures. By promoting transparency and collaboration, stakeholders can build credibility and consumer trust while fostering a safer and more reputable industry.

As the industry continues to grow, it is incumbent upon all stakeholders to continue prioritizing consumer safety through, among other things, a focus on education and inter-industry collaboration, if we are to continue cultivating a trustworthy and sustainable cannabis market for the future. The path forward will require stakeholders to pursue continuous education, improvement, and collaboration in the development of a holistic safety framework capable of ensuring consumer safety.

December 9, 2022

First Pharma vs Cannabis Clinical Trial Moves Forward

By Christina DiArcangelo

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

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

Difficulties of Enrolling Subjects in a Cannabinoid-Based Clinical Study

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

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

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

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

August 3, 2022

The B2B Marketplace Trend Comes to Cannabis (Finally)

By Adam Benko, Brian Mayfield

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Ancillary services are a hot topic in the cannabis industry, as they are in many niche industries turning to B2B marketplaces to connect with specialized expertise and products.

Platforms such as Amazon Business, Flexport, SupplyHog and others have emerged to connect mainstream business sectors with the vendors and services they need, but things look a lot different in the cannabis space. The many disparate aspects of launching, running and scaling a cannabis business—and vetting dozens of service providers clamoring for your business—can feel like playing whack-a-mole blindfolded.

While a business consultancy can do some of the heavy lifting, there are reasons why this traditional “one-size-fits-all” approach is problematic. However, the rise of legalization is creating new avenues for founders in both established and emerging markets to take charge of their destiny and secure the services that truly meet their needs.

Understanding what’s available can help founders avoid pitfalls, from inadequate insurance coverage and predatory lenders to inexperienced service providers seeking to cash in on the “green gold rush.”

The Importance of Regulatory Knowledge

One reason B2B services look so different in the cannabis industry is because the industry itself is still rapidly evolving, as new state markets for medical cannabis and recreational adult use come online and states constantly amend their regulations. There’s also the sprawling scope of compliance requirements facing a cannabis operator, from securing tightly zoned real estate to building a facility with adequate security, to integrating into the state’s seed-to-sale tracking system.

It’s critical to engage with experts who are knowledgeable on the regulatory variances of the state (or states) where the business will operate. Someone who has experience interpreting cannabis regulations will know, for example, if you should have a real estate lease locked in prior to applying or if a particular state would prefer you move through the pre-opening process in a different order.

Another reason ancillary services are so important is that cannabis regulations aren’t standardized on the federal level or even state to state, which requires an especially deep, granular level of understanding of market trends and compliance demands. That can make the difference not only between a successful business launch and a swift nose dive, but also between a business surviving a major disaster or setback and becoming past tense.

Insurance and Lending Issues

Every business owner knows they need insurance, for example, but not every insurance broker knows what specific coverages to lock in to ensure a payout if a dispensary is vandalized or if a wildfire burns a grow operation to the ground. While federal legislation like the Clarifying Law Around Insurance of Marijuana (CLAIM) Act could one day make it easier for national insurance companies to serve legal cannabis businesses, currently criminal conduct exclusions can be used to keep plant-touching business owners from getting their full payout.

Fires in Sonoma County devastated cannabis crops in Northern California back in 2017.

Not only does federal prohibition make it challenging for a cannabis business operator to find proper insurance coverage, access financial networks and establish employee benefits programs to keep industry jobs competitive, even seeking investment capital can leave cannabis companies exposed to unfavorable terms. Just look at the case of iAnthus, a multistate operator that claims to have been burned in a deal with Gotham Green Partners while looking for expansion funding.

So how can cannabis leadership locate and vet professional services, particularly in the critical startup stage when it feels like everything has to happen right away? That’s where the B2B marketplace trend comes in.

The Advent of Vendor-Agnostic B2B Marketplaces for Cannabis

While platforms such as Amazon Business have offerings for a variety of mainstream industries, they’re not tailored for cannabis. But there is a growing field of vendor-agnostic specialists helping cannabis founders make the right moves.

Vendor-agnostic consultancies are nimble and adaptable in a way that broad-scale platforms are not

Necessity absolutely produced this particular innovation, which upends the traditional single-funnel consultancy model to instead create a village that can raise a variety of cannabis businesses. Vendor-agnostic consultancies are nimble and adaptable in a way that broad-scale platforms are not. And rather than being tied to a particular suite of products and service providers the way traditional business consultancies often are, the vendor-agnostic approach gives both consultants and cannabis founders much-needed flexibility.

In a cannabis B2B marketplace, a pool of inventory-tracking software vendors, for example, can be sorted to allow for easy comparison shopping based on whether the operator is a single-state startup looking for basic integration with the state compliance system, or an MSO that needs a more robust platform. And the customization extends from there—vertically integrated businesses versus standalone wholesale producers, plant-touching businesses versus other professional service providers and beyond.

As more and more industries specialize, it’s no wonder ancillary services are having a renaissance and replacing the traditional one-size-fits-all model popularized decades ago. But it’s also no wonder that the cannabis industry needs an especially unique approach to professional support for niche fields. The more this industry expands, the more founders and their B2B partners need to roll with their own solutions.

May 3, 2022

Quality in the Retail Ecosystem: A Q&A with LucidaClub Founder Jack Roosevelt

By Cannabis Industry Journal Staff

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The cannabis retail market is very unique. What began as compassion clubs and wellness centers in the early days of legal cannabis, eventually morphed into dispensaries, quickly becoming the retail model that regulators around the country adopted and businesses implemented.

For most states with legal cannabis markets, the dispensary has been the only way for consumers to buy cannabis and cannabis products. Before the pandemic began, we started seeing a handful of states warm up to allowing delivery services. During the height of the pandemic, more states adopted curbside pickup, e-commerce in some shape or form and delivery services that finally expanded cannabis retail beyond the dispensary. Still though, regulations hamper commercial growth in the retail space and the dispensary remains, by far, the place where most people buy their cannabis.

When Jack Roosevelt, co-founder of LucidaClub

When Jack Roosevelt, co-founder of LucidaClub, entered a dispensary back in 2019 in Massachusetts, he shared an experience all too common in the cannabis industry: An overwhelming number of options, jargon like sativa, indica and strain names that make no sense to the uninitiated, confusing product types and an all-around unpleasant shopping experience. Jack saw all those barriers to entry for the canna-curious or novice consumer and thought that there must be a better way to shop for cannabis.

So he started LucidaClub, a membership-based platform that is designed to guide and educate consumers with the advice of experts who can help people understand cannabis products and make the right purchase decision without all of the frustration and trial and error that is so common.

The name, Lucida, comes from a Latin phrase meaning the brightest star in a constellation. Jack and his co-founder, Lucinda, want their company to be the guiding star on your cannabis journey. LucidaClub isn’t just for the cannabis newbie; their in-house curator and team of experts can help any cannabis consumer find products to better fit their needs for sleep, wellness, relaxation, stress or just to have a good time. We sat down with Jack to chat about the cannabis retail market, what his company is all about and what the future of cannabis retail might look like.Jack Roosevelt will be speaking on the cannabis retail experience at the Cannabis Quality Conference & Expo. Click here to learn more.

Cannabis Industry Journal: Tell us about your background and how you came to the cannabis space.

Jack Roosevelt: I began my career in finance, working for JP Morgan and Barclays. I left Barclays and joined a renewable energy start up before eventually joining the cannabis space.

My move into the cannabis space was due to an event in the summer of 2019. Adult use cannabis had been legal in Massachusetts since November of 2018. Now, I smoked some weed in high school and college, but hadn’t touched it in at least 20 years. However, cannabis was now legal, so I said maybe there’s an opportunity to find something that would help me unwind at the end of the day, help with sleep and manage some of my stress.

Knowing that I smoked in high school and college, I figured that buying weed was buying weed. How difficult could this be? That took me to going to a dispensary for the first time. Walking through those doors made me realize that buying cannabis today is nothing like buying weed back when I was in college. It’s a fundamentally different experience.

I stood there looking at the menu of strains, with names that meant nothing to me, jargon like terpenes, and even the idea of sativa versus indica at that time was foreign to me. Twenty years ago, we didn’t pay attention to the strain name or anything like that. We’d walk into someone’s dorm room and your option would be ‘this is twenty bucks an eighth, forty bucks an eighth and sixty bucks an eighth.’ You weren’t paying attention to the strain or the name of anything like that.

Coming into the dispensary that day, I thought I’d walk out of there with an eighth of flower and something to help me unwind at the end of the day. I walked out of there with a tincture and it really wasn’t because they upsold me to a better product, it was because it was the least worst option I could see on the menu. It was something I felt that I could understand from a dosing standpoint and it was something that didn’t require knowing the strains or names that mean nothing to me. I was quite frankly looking for the easiest way to purchase something and get out of there as quickly as possible

Sitting in the car afterwards, I was mulling over that experience, the feeling of intimidation, how awkward it was, how frustrating it was. I am 6’8” and 300 pounds I am not a small guy, and I’m not a wallflower. I don’t intimidate easily, so if this was my experience, what was this going to be like for everyone else?

That made me reexamine and take a stronger look at the retail market and the potential growth. How do you engage the consumer like me, for whom there are lots of barriers to entry, most of which are perception-driven. Some of the barriers are regulatory and geographic, but most are perception based. Here in Massachusetts, a lot of the dispensaries are in inconvenient locations. Not all towns allow for rec sales, and not all of those towns that do will allow a dispensary to open on the High Street, so consumers often times have to drive out of their way to get to a dispensary.

So, for me understanding what this new consumer base would look like and how they would come into the market was key. Obviously there would be a natural growth progression for the cannabis market. However, if we could build something to help guide people, answer their questions and make them feel comfortable with what they were buying and how to consume, really hold their hand in the initial stage of a consumer coming back into the market or coming in for the first time, then we could help grow the market quicker and put that natural progression of growth on a faster track.

That experience made me start to do some market research, look at the market size, and what that potential market could look like. Our research shows that, depending on the maturity of the market in question, there are between 1.5 and 4 times the number of Cannacurious sitting on the sidelines than there are active consumers in a market. Here in MA, conservatively there are at least 1.5MM Cannacurious sitting on the sidelines, waiting to come into the market. Because our research showed such a large opportunity he in MA and the Northeast, where we live, we decided to focus our efforts here.. Because we are Cannacurious consumers ourselves, we have a natural understanding and empathy for the consumer. I was definitely not and still am not an expert on cannabis. But if we can find the right experts that can answer the questions that we have then we can do the same for the Cannacurious. For 70+ years, we’ve been told that cannabis is bad, smoking weed is bad and everything associated with it is bad. So, we want to break that negative perception, that stigma that is still lingering and open it up to a more mainstream consumer.

CIJ: What gave you the idea to start Lucida Club?

Jack: What I just told you sums it up pretty well. It was basically built out of personal frustration. I thought that if I had this problem, those feelings of intimidation, awkwardness and frustration, then undoubtedly a lot of other people would too. Therefore, we’re looking at how we can create a platform that would make the buying process as simple and convenient as possible, while educating the consumers at the same time.

CIJ: How does Lucida Club work?

Jack: It’s a concept of simplicity and convenience. There are two sides to this: The E-commerce side, when you sign up and become a member and you want to make a purchase, all you have to do is answer three questions: What experience do you want? Do you want to smoke something or not? And how much money what do you want to spend? We put together three experience packages with three key price points, around $100, around $150 and around $250.

It is based on available inventory, which products and price points match up with different packages. We have fully integrated with Flowhub and are doing the same thing with some other POS systems as well. We see the inventory for our retail partners on a live basis. When one of our members makes a purchase, if they choose the sleep, nonsmoking, $100 package and put that option in their cart, by the time it populates in their cart, our platform has already gone to the dispensary inventory, we’ve allocated their inventory by experience and by order preference. So it will put those top two or three or four items in the cart automatically. The consumer doesn’t have to worry about what brands are available.

We’ve done all the work for them. They just need to pay attention to what experience and price point they want and we take care of the rest.

The other side of our business involves our head curator who combs through all the inventories and manages the product selection. But he also works with with our members as a concierge. When you sign up for our service, you automatically get a free consultation with our head curator, which we encourage all of our members to do before they make their first purchase. That way, we can answer all your questions and make sure the package is really tailored towards you individually. You also get a follow up consultation, which helps to guide additional advice and make sure you get the experience you’re looking for. On top of that, we’re also trying to advance consumer education through a lot of content, answering common questions and help to guide consumers on their journey with cannabis and the role it can play in their lives.

CIJ: How do you think you are innovating the cannabis retail experience?

Jack: When I was sitting in the car that fateful day back in 2019, I looked at retail the same way everyone else does: you build a store, an e-commerce platform, you have a product you’re trying to sell and focus on the product itself. What opened my eyes being the consumer that day was that cannabis unique.

We’ve been told for decades about how bad cannabis is for us and for society and these negative connotations have been drilled in to us. We need to look at the retail space from the consumer’s perspective and the barriers to entry that they feel. It’s not something that a regular retailer can do easily.

By definition, a brick-and-mortar retailer, needs to be everything to everybody, for all of their customers. They have to work with the connoisseurs, the regulars that have been consuming for a long time, who really understand what they’re looking for. At the same time, they need to engage with the canna-curious, the newbie that’s walking in the door for the first time. It’s difficult to focus on one market segment for them. If they were to focus all of their efforts on just the canna-curious, they would be missing out and losing traction and not engaging properly with their other customer bases.

We have the ability to engage with a very specific market segment, the Cannacurious, which is a very large group of people by the numbers but still niche. Our research shows that there are at least 1.5 million Cannacurious in Massachusetts alone that are either sitting on the sidelines or engaging in the market in a very small way. We’ve spoken to a lot of people that have other people make purchases for them, their sister or brother going to a dispensary that feels comfortable picking up a single package of edibles for them. That’s a form of hand holding that we want to provide. We want to make consumers feel comfortable and educate them on how they can choose products for the experience they want.

In my mind when we look at the cannabis space, it’s about how we can help people come into the marketplace, how we can help open their eyes to a litany of other opportunities for them and also how to approach things from a consumer perspective.

CIJ: What do you think the future of retail in cannabis looks like?

Jack: That’s a tough question because so much of that is driven form a regulatory standpoint. I know where I think it would go if regulators were just there to make it easy for consumers and for everyone to do business. It changes so much state to state and market to market. In retail in general, so much is moving online and on to e-commerce. Where you have a situation where people actually understand what they want and they tend to buy the same products on a regular basis, e-commerce is great and easy for them to make a purchase. Delivery opens a lot of doors as well with that. But again, it’s really difficult to look at what is going to happen because the market is so fragmented from a regulatory standpoint.

It won’t develop in one direction easily. Delivery is an option but we don’t have it on a mass scale in Massachusetts. It’s the same with e-commerce. Technically in Massachusetts, purchasing online is not an easy thing to facilitate. It still has to be done at the point of sale in-person with pickup and it hampers e-commerce. This potentially slows down how the market could develop. I definitely know where it could go, but looking into that magic eight ball will still be very cloudy if you ask it for an answer. Sorry, I have to obfuscate things a little there because it’s just so hard to figure out what the regulators will greenlight next and where they want the market to go.

We really just don’t know. There are so many ways to look at that question. If you’re a brick-and-mortar dispensary right now and you’re looking at how the market itself is growing in the state of Massachusetts, it’s tough to say. We went from about sixty licensed retailers during the height of the pandemic to well over 200 now. There’s going to be some consolidation. Whether that means that the growth of MSOs will proliferate and everything will be homogenized going forward, I don’t know what that could mean because at the moment it’s very difficult to have that full homogenization when you’re only allowed to have a handful of retail licenses. How do any of the MSOs gain real traction with three locations? If that changes, if you go somewhere like Florida where the rules are different, you see the true growth of the MSO with dozens of retail locations. Here, we still have a lot of mom-and-pop retailers along with a lot of much smaller MSOs who might have locations in one or two other states.

E-commerce will bring a lot to the market and help brands grow significantly. How we grow depends almost entirely on what the regulatory environment looks like. There are so many different things we could do with our platform, but we are so hampered by the regulations in just this one market alone. We built our platform and business model the way we did because it allows us to be flexible and adapt. As we move into a new market, we can build relationships and new markets open up. It’s all about being flexible if you can be.

March 10, 2021

Cannabis Registry Reality Check: Privacy Must be Paramount

By Shadrach White

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The task of preserving privacy for any records platform, especially a cannabis registry, cannot simply be relegated to ones and zeros lurking in some forgotten codebase. This past year taught us many lessons, especially related to the trauma unleashed by vulnerabilities in government domains. We learned time and again that a registrant’s privacy must be the first order of business for the architects of registries.

But the first order of business isn’t the last order of business. That intention and effort to secure privacy must then be communicated and reinforced through real-world reality checks.

Lapses in data security and rising distrust for government institutions block the efficacy of well-intentioned and vital registries. Those states launching new registries in 2021 are at a precarious crossroads as public trust erodes.

As I write this, we’ve just learned illicit operators hacked a third-party service provider for the Washington State Auditor’s office. The attack compromised the personal data of 1.4 million users seeking unemployment benefits. Security hacks are a cautionary tale, whose impact is felt too often.

But many in the government sector are staring at a once-in-a-generation challenge to launch new registries – those related to cannabis – with privacy top-of-mind from the initial Request For Bid.“The question isn’t when these privacy-first registries will be implemented, it’s a question of whether they’ll be implemented proactively ahead of hacks or after the damage is done.”

Here’s how:

Table Stakes for New Cannabis Registries

These suggestions are just the beginning, and I see them as the minimum buy-in to begin the architecture of a new cannabis registry. They include:

End-to-end data encryption while in transit and within the system while the data is at rest.
A solution that is a cloud-native web application which is managed as a service for maximum uptime and strong security posture.
Registries should also leverage algorithms and machine learning to ensure accurate data entry by analyzing incorrect or duplicate data before it is saved within the system.

Beyond HIPAA

The Health Insurance Portability and Accountability Act (HIPAA) requires privacy and security measures to protect Personal Health Information (PHI). Debate exists on whether compliance is a requirement for all entities transacting in the medicinal cannabis space. While some state registries are exempt from HIPAA, others choose to provide HIPAA compliance not just for the optics, but the known benefit to users’ privacy and confidence. New cannabis registries should commit to HIPAA-compliance to set a trusted new privacy standard for medical patient credentials and legal authorization for the use of cannabis for medical purposes.

That’s just the start. Registries should also ensure SOC2 Type II certification, which safeguards security, site availability, confidentiality and privacy through independent third-party auditors.

Connect with Confidence

Registries function as a hub of information in an often-confusing cannabis space. The California Bureau of Cannabis Control displays more than 25 links wired into its top navigation bar alone. Each link sends the curious to new resources. Registries must establish themselves as credible resources, especially when directing users to third-party sites.

One example is for cannabis registries to provide secure access to healthcare professionals who are verified by the Drug Enforcement Agency (DEA). These healthcare professionals are licensed to distribute controlled substances including cannabis. Each third-party link should offer the same high-level of scrutiny to enshrine confidence and credibility in the registry.

Next-Generation ID Cards

A cannabis registry card should not just be a document, but a toolset that attests to the identity and the authority of the carrier represented. An illicit counterfeiting market seeks to exploit registry card vulnerabilities. Next generation ID cards present the best defense against counterfeiting and illegal use with robust security measures. That starts with assuring that any credential is mobile ID compatible with iOS Wallet and GooglePay for mobile identification.

ID cards should also include:

The automated modification of the document bearer’s photograph to ICAO (International Civil Aviation Organization) standards. This critical modification makes the photograph easier to use for ID verification; it also facilitates the detection of photograph substitution.

A two-dimensional barcode compiles information contained in a one-dimensional barcode. It also delivers confirmation of other data shown on the card or in the system such as license authorization and limitations. Adding additional material to the physical document such as holograms, UV image, micro-printing or laser perforations offers another level of protection against illicit use or counterfeiting.

While cannabis registries are the beginning, they’re not the end. Driving efficacy for government registries needed for COVID19 track-and-tracing, cannabis plant track-and-tracing and vaccine distribution require the same attention to privacy, security and ultimate useability. A sea change is required – not just for the sake of those who use the registries but also for those who must implement, deploy and maintain those registries. The question isn’t when these privacy-first registries will be implemented, it’s a question of whether they’ll be implemented proactively ahead of hacks or after the damage is done. I believe the government sector leaders exploring new cannabis registries offer the wisdom and foresight to choose the proactive approach.

January 5, 2021

The Hidden Costs of Non-Compliance for Consumers

By Mark Slaugh

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Anyone owning and operating a cannabis business should know the value of proactive compliance management to operate successfully. For consumers, the view into the world “behind the budtending counter” is limited to the cool looking packaging, test results and the overall “vibe” of products they may want to try.

In our experience, as the oldest cannabis compliance firm, we’ve audited and visited hundreds of facilities and have seen the proverbial “Wizard behind the curtain”. We know “how the sausage is made.” And, as one can expect, it’s not always as glamorous in the back of the house as it appears on the shelf.

As markets expand and people buy into existing or new cannabis businesses, amid a world of thousands of competing companies and products, consumers need to ask themselves: “What do I know about the companies and products I consume?”

More and more, the question of consistent quality keeps coming up in the cannabis industry. Recalls are still ongoing in the news as products continually fail testing for potency and contamination.

Colorado, for example, is considered the shining jewel of the US industry in terms of experience, quality and integrity. However, consumers may be shocked to learn that a majority of dispensaries in the state do not operate by stringent SOPs, nor do they verify packaging and labeling for compliance, or review test results of products coming in and going out of their shops.

Starting January 1, 2021, these retailers finally have to develop and implement recall procedures in the event of contaminated products or cannabis that is causing adverse side effects. Later this year, vape pens will finally have their vapor tested instead of just the concentrate therein.

These liabilities or lack of compliance infrastructure may very well be a ticking time bomb no consumer in their right mind would want to deal with.

Bad Product/Brand Experience

Non-compliance and inconsistency on the part of operators translates directly into negative experiences for consumers. Whether its consuming a product that tastes like chlorophyll or enjoying a product the first time only to find a completely different experience the next time around, consumers experience the cost of non-compliance the most.

Beyond products, most consumers recognize their brand experience when shopping for products. Since the invention of Weedmaps, customers have always expressed their like or dislike for particular dispensaries and delivery services. Operators know these reviews from a customer’s experience can make or break their business and brand.

We always tell cannabis operators that a brand is a double-edged sword. As easily as it can strike through competitors, it can just as easily damage one’s own business.

Examples include SweetLeaf and Kushy Punch whose brands, once well-known and popular, are now synonymous with the worst of the worst given their histories of non-compliance and shut downs.

For consumers, finding consistent, quality products at a fair price is often the most important consideration to avoid the cost of a bad experience with cannabis. For visitors or first-time consumers, this could mean the difference between trying cannabis again or deciding it’s simply not for them.

Contamination & Illness

control the room environment — Preventing contamination can save a business from extremely costly recalls.

The worst-case scenario for consumers, especially patients, is the cost of consuming contaminated products or otherwise having adverse effects from the use of cannabis. While cannabis itself is one of the least harmful substances known to man, contaminated cannabis can be dangerous or deadly.

In the early days of the industry and in many emerging markets with poor to no oversight, these lessons are learned most severely. From the use of non-commercial washing machines being used for water-based extracts that tested positive for E. coli to recalled products ladened with Eagle 20 (which contains the harmful pesticide known as Myclobutanil), the industry has been reactive to safety measures and complying with best practices.

Still, some states persist with limited to no testing and simply label products with a warning to consumers that they are using cannabis at their own risk without testing for safety or efficacy.

Most consumers may be shocked to know that most cannabis companies do not adhere to good agricultural practices or good manufacturing practices (GAP/GMP) to ensure consistent quality and safety standards in similar industries such as nutraceuticals and food manufacturing.

Patients already weakened by disease states – including auto-immune disorders – are most at risk and understand all too well the costs of hospitalization, medical bills and loss of quality of life. For the average adult user, these risks are the same and there is often little to no recourse with the dispensary or product manufacturers if the product slips through contamination testing because of the non-compliance of product validation on flower or infused products.

For companies, outdated and inaccurate SOPs as well as production batches are the only line of defense to protect the company from product liability lawsuits filed by consumers in the event of contamination and illness. Most cannabis companies do not manage this aspect of their business effectively and simply assume they are sufficiently compliant without proactively measuring such compliance and adjusting operations as necessary.

Long-Term Consequences

Consumers would do well to remember that the modern industry is infantile in its development compared to other heavily regulated industries. Cannabis companies are babies learning to crawl while major food and beverage, pharmaceutical and nutraceutical, and alcohol and tobacco industries are far ahead of the game. The US industry, is arguably, already behind the compliance curve comparative to other nations already placing stricter regulations and standards on licensees.

For customers, this can be a confusing experience given that no two batches of flowers will taste the same let alone give a consumer exactly the same effect.

Already, customers are learning Sativa and Indica are imaginary cultural terms to describe generalized characteristics of major and minor cannabinoids and terpenes in each strain which produces a variety of effects – despite state limitations on labeling these active ingredients.

Vape pens are under increasing scrutiny as regulators discover long-term effects of vape use from the tobacco industry causing EVALI in consumers and being deemed as dangerous. As with anything new, the data and science simply aren’t there to truly tell customers what the effects may be over the long run. It has taken decades for tobacco, as an example, to go from doctor-recommended to carcinogenic.

Consistency in quality standards requires meticulous SOPs

Similarly, Big Cannabis of the future may be facing similar concerns that aren’t being warned about currently on their products and consumers could face unknown long-term consequences. In no way is this a condemnation of cannabis and early research shows cannabis is much safer than either alcohol or tobacco.

The point is to emphasize that over the long run, compliance is key to tracking the consistency and safety of products to avoid long-term liability and costs on consumers. Consumers would be wise to gravitate towards compliant brands and companies that focus on consistent quality and safety to minimize potential long-term negative impacts and costs.

Accountability & Transparency

Customers must first understand where the buck stops and who is responsible for what as it applies to cannabis and the cannabis products they consume. This can vary between states from vertically integrated models to horizontal models which allow for independent businesses to buy and sell cannabis between each other.

In the case of cannabis, the restrictions on METRC and other state “seed to sale” tracking systems make it nearly impossible for customers to return products and unclear on how to file complaints.

METRC and other seed to sale systems dictate that dispensaries must be able to track originating sources of cannabis back to another licensed facility. As such, once the consumer buys a faulty vape pen, for example, it’s gone from the dispensary inventory. Bringing it back in physically creates non-compliance issues for the dispensary as they cannot virtually account for the physical addition back into inventory.

No one ever said making sausage was a pretty or easy process. That’s why most consumers don’t want to think about how it’s done.

This example is a simple one to showcase the importance of compliance in the cannabis business and the complexities businesses must go through to operate. What is more applicable and important for consumers to understand is how non-compliance and inconsistency can affect them negatively – beyond messy fingers from leaky vape carts.

These types of unexpected issues represent significant costs for cannabis operators in recalls, fines, lawsuits and fees which is what most people think the “costs of non-compliance” mean.

However, and in addition to the literal cost mandated by regulation, there are the costs owners don’t think about: in the time and fees charged by the professionals to solve these issues, the time and stress spent on production, the increase or decrease in supply, mitigating product liability, and brand recognition and damage due to poor quality or recalls.

All of these factors simply drive up the costs of products for consumers and decrease the reliability of finding consistent, quality products and brands that customers can count on.

As we always say at iComply:

“It is always more cost-effective to be proactive, rather than reactive, when it comes to operational cannabis compliance management.”

Consumers would be wise to recognize which companies are proactive in managing their compliance. And companies would be wise to get ahead of these customer costs by being the proactively compliant companies that consumers want and need.

October 27, 2020

Metrc Gets West Virginia Contract

By Cannabis Industry Journal Staff

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According to a press release published earlier in October, Metrc has won the seed-to-sale traceability software contract for West Virginia. The West Virginia Department of Health and Human Resources, Bureau for Public Health, Office of Medical Cannabis (OMC) made the announcement on October 21.

According to that press release, the main focus for the state’s traceability program is “helping OMC regulators ensure no illicit cannabis products are sold in the medical cannabis market, and also that no legal medical cannabis products are sold unlawfully.”

Regulators in West Virginia are still on schedule to open the medical cannabis market as soon as next year, according to Jason Frame, OMC director. “This is an important step to make certain medical cannabis is available only to West Virginians with serious medical conditions and to prevent diversion of products in West Virginia,” says Frame. “While the COVID-19 pandemic has put many industries across the country on hold, we’re proud to say that it has not stopped West Virginia from meeting its deadlines and laying the groundwork for a safe, regulated medical cannabis market.”

Regulators at the OMC are still working on scoring processing and retail license applications. The OMC says they will begin the process of issuing patient cards in the spring of 2021.

September 22, 2020

Oklahoma Announces Contract with Metrc

By Cannabis Industry Journal Staff

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In a press release published last week, the Oklahoma Medical Marijuana Authority (OMMA) announced they have awarded their seed-to-sale traceability contract to Metrc, a national company with contracts for the same service in 14 other states.

According to OMMA Interim Director Dr. Kelly Williams, working with Metrc will help them protect public health, by expediting recalls. “The seed-to-sale system will greatly expand our compliance capabilities and improve the effectiveness and speed of any future recall efforts,” says Dr. Williams. “It will also allow us to detect unusual patterns that may indicate product diversion.”

Metrc has begun work towards their rollout of the system, which they expect to have ready by February 2021. “We know that businesses will have many questions in the coming weeks, and we will answer them as quickly as possible,” says Dr. Williams.

Oklahoma legalized medical cannabis in 2018 and the market has expanded considerably. There are more than 300,000 patients and almost 10,000 licensees. It has the highest number of dispensaries per resident in the country.

Jeff Wells, CEO of Metrc, says Oklahoma has done a good job so far in developing one of the fastest growing markets in the country. “We’re honored Oklahoma selected Metrc to implement the state’s first cannabis tracking system,” says Wells. “With one of the fastest growing medical cannabis markets in the United States, the OMMA has done a tremendous job developing this new industry, and we’re excited to support its ongoing success. We look forward to working with state regulators and licensees to launch our system and ensure cannabis products are safe and secure for patients.”

September 15, 2020

California Employment Laws, COVID-19 & Cannabis: How New Regulations Impact Cannabis Businesses

By Conor Dale

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As employers in the cannabis industry adapt to making their businesses run and thrive in the age of COVID-19, federal, state and local jurisdictions have issued new laws and regulations providing rules and guidance on returning employees to work. Employers in the industry should be aware of, and prepare for, these rules moving forward.

Federal guidance regarding COVID testing and employees’ return to the workplace:

Since March, the Equal Employment Opportunity Commission (EEOC) has issued guidance and frequently asked questions (FAQ) concerning employment-related COVID-19 topics. In its September update, the EEOC answered practical questions relating to COVID testing, questions to employees regarding COVID, and employee medical information.

Employee testing

The EEOC has already stated that employers may administer COVID-19 tests before initially permitting employees to enter the workplace. In its September FAQs, the EEOC confirms that employers may conduct periodic tests to ensure that employees are COVID free and do not pose a threat to coworkers and customers. The EEOC also clarified that employers administering regular COVID-19 tests is consistent with current Centers for Disease Control and Prevention (CDC) guidance and that following recommendations by the CDC or other public health authorities such as the Food and Drug Administration (FDA) regarding employee testing and screening is appropriate. The EEOC acknowledges that the CDC and FDA may revise their recommendations based on new information, and reminds employers to keep apprised of these updates.

COVID questions for employees

The EEOC also confirmed that employers may ask employees returning to the workplace if they have been tested for COVID-19, which, presumably, permits employers to ask if the employee’s test was positive or negative. Please note that an employer’s right to ask employees about COVID testing is based on the potential threat that infected employees could pose to others if they physically return to work. As a result, the EEOC clarified that asking employees who exclusively work remotely and/or do not physically interact with other employees or customers about potential COVID-19 status would not be appropriate. The EEOC also stated that an employer may not directly ask whether an employee’s family members have COVID-19 or symptoms associated with COVID-19. This is because the Genetic Information Nondiscrimination Act (GINA) generally prohibits employers from asking employees medical questions about family members. However, the EEOC clarified employers may ask employees if they have had contact with anyone diagnosed with COVID-19 or who may have symptoms associated with the disease.

Sharing information about employees with COVID

The Americans with Disabilities Act (ADA) requires employers to confidentially maintain information regarding employees’ medical condition. The EEOC’s updated FAQS clarify that managers who learn that an employee has COVID may report this information to appropriate individuals within their organization in order to comply with public health guidance, such as relaying this information to government contact tracing programs. Employers should consider directing managers on how, and to whom, to make such reports, and specifically instruct employees who have a need to know about the COVID status of their coworkers to maintain the confidentiality of that information. The EEOC also clarified that workers may report to managers about the COVID status of a coworker in the same workplace.

California state guidance on employees returning to work

The state of California also recently released a “COVID-19 Employer Playbook” which provides guidance on employees to return to work. That playbook states that employees with COVID related symptoms may return to work 24 hours after their last fever, without the use of fever-reducing medications, if there had been an improvement in symptoms and at least 10 days had passed since symptoms first appeared. This was also indicated in the California Department of Public Health (CDPH) Order, issued in June, about responding to COVID-19 in the Workplace.

More recently, on August 24^th, the CDPH released similar guidance which reiterates when employees who have tested positive for COVID could return to the workplace when: (1) at least 10 days have passed since symptoms first appeared; (2) at least 24 hours have passed with no fever (without the use of fever-reducing medications), and (3) their other symptoms have improved. Conversely, individuals who test positive for COVID and who never develop symptoms may return to work or school 10 days after the date of their first positive test.

Employers should also check local public health orders for their county when determining how and when to return an employee who has recovered from COVID-19. It is important to also confer with your employment counsel when implementing new policies and procedures related to COVID-19, particularly given that the guidance issued by government authorities continues to evolve at a rapid pace.

Return to work laws on the horizon

Finally, a number of local governments in California such as the City of San Francisco, Oakland and Los Angeles have enacted return-to-work ordinances generally requiring employers to offer available positions to former employees who have been separated from employment due to coronavirus related business slowdowns or government-issued shutdown orders. The California legislature is also in the process of enacting a potential law that would similarly require employers in the state to offer vacant job positions to former employees whose employment ended due to COVID.

While the San Francisco ordinance only addresses positions in San Francisco and the Oakland and Los Angeles ordinances primarily address large employers in the hospitality and restaurant industries, cannabis industry employers should strongly consider offering vacant job positions to former employees whose employment ended due to COVID in order to comply with these ordinances and other potentially applicable future laws and in an effort to avoid potential legal claims from former employees.

Employers are strongly advised to consult with counsel to make sure they are following the requirements of these new laws and regulations.