Cresco Labs, one of the largest multistate operators (MSOs) in the country, announced the acquisition of Bluma Wellness Inc., a vertically integrated cannabis company based in Florida.
Cresco Labs, with roots in Chicago, Illinois, operate 29 licenses in 6 states across the United States. With this new acquisition, Cresco Labs solidifies their ubiquitous brand presence in the most populous markets and cements their position in Florida, a new market for them.
According to the press release, the two companies entered an agreement where Cresco will buy all of Bluma’s issued and outstanding shares for an equity value of $213 million. They expect the transaction to be completed by the second quarter of this year.
Charles Bachtell, CEO of Cresco Labs, says their expansion strategy is based largely on population. “Our strategy at Cresco Labs is to build the most strategic geographic footprint possible and achieve material market positions in each of our states,” says Bachtell. “With Florida, we will have a meaningful presence in all 7 of the 10 most populated states in the country with cannabis programs – an incredibly strategic and valuable footprint by any definition. We recognize the importance of the Florida market and the importance of entering Florida in a thoughtful way – we identified Bluma as having the right tools and key advantages for growth.”
Bluma Wellness operates through its subsidiary, One Plant Florida, which has 7 dispensaries across the state and ranks second in sales in the state. They also have an impressive delivery arm of their retail business, deriving 15% of their revenue from it.
On December 16, 2020, Aphria Inc. (TSX: APHA and Nasdaq: APHA) announced a merger with Tilray, Inc. (Nasdaq: TLRY), creating the world’s largest cannabis company. The two Canadian companies combined have an equity value of $3.9 billion.
Following the news of the merger, Tilray’s stock rose more than 21% the same day. Once the reverse-merger is finalized, Aphria shareholders will own 62% of the outstanding Tilray shares. That is a premium of 23% based on share price at market close on the 15th. Based on the past twelve months of reports, the two companies’ revenue totals more than $685 million.
Both of the companies have had international expansion strategies in place well beyond the Canadian market, with an eye focused on the European and United States markets. In Germany, Aphria already has a well-established footprint for distribution and Tilray owns a production facility in Portugal.
About two weeks ago, Aphria closed on their $300 million acquisition of Sweetwater Brewing Company, one of the largest independent craft brewers in the United States. Sweetwater is well known for their 420 Extra Pale Ale, their cannabis-curious lifestyle brands and their music festivals.
Once the Aphria/Tilray merger is finalized, the company will have offices in New York, Seattle, Toronto, Leamington, Vancouver Island, Portugal and in Germany. The new combined company will do business under the Tilray name with shares trading on NASDAQ under ticker symbol “TLRY”.
Aphria’s current chairman and CEO, Irwin Simon, will be the chairman and CEO of the combined company, Tilray. “We are bringing together two world-class companies that share a culture of innovation, brand development and cultivation to enhance our Canadian, U.S., and international scale as we pursue opportunities for accelerated growth with the strength and flexibility of our balance sheet and access to capital,” says Simon. “Our highly complementary businesses create a combined company with a leading branded product portfolio, including the most comprehensive Cannabis 2.0 product offerings for patients and consumers, along with significant synergies across our operations in Canada, Europe and the United States. Our business combination with Tilray aligns with our strategic focus and emphasis on our highest return priorities as we strive to generate value for all stakeholders.”
These days, there are countless choices for cannabis operators when it comes to software. There are general tools like Trello, Airtable, Hubspot and Mailchimp. And then there is industry-specific software built just for cannabis operators.
The cannabis industry is fast-paced and highly regulated. So, there are certainly additional factors to consider in the search for software.
Because no two systems are exactly alike, it’s important to set up a decision-making framework in order to do a clean side by side comparison. Consider the following factors when evaluating software. Specifically, think about each one’s importance to the team and its ultimate goals.
Functionality is the most important factor in the evaluation process. But, before the demos begin, take the time to identify the problems this new software should solve for the company.
Will it help you automate or optimize your processes or just offer basic features that won’t make a meaningful impact on the bottom line? (The whole point!)
2. Customer Support
For some, the level of customer support is an afterthought. The team that will use the software needs prompt, attentive support both during onboarding and after.
How does one evaluate the level of customer service a software company offers?
Questions like these will gather the info needed to make a decision:
How many support specialists are there vs how many total customers?
What’s the turnaround time for a support ticket?
Can I schedule one-on-one calls after the onboarding period?
Describe your onboarding process – how many sessions or hours do we get with your team?
Ideally, the software company takes support very seriously. Because if they don’t, here’s what happens: the team won’t use it or worse, costly mistakes will be made.
Another aspect seldom considered is the company’s industry expertise. Software vendors that stay up to date on changing regulations can provide much more value than those who don’t. Test their knowledge and see whether they would make a solid resource for you.
Software built for the cannabis industry is likely to provide this kind of support. Some industry-specific vendors, that provide cannabis cultivation software for instance, are able to answer their customers’ ongoing Metrc questions. They can become your right hand in solving compliance and, oftentimes, operational challenges.
3. Ease of Use
Always keep in mind who the end user will be. Is it someone who’s tech-driven or not at all?
The trick is to balance complexity with ease of use. If complexity is feared, there’s a risk for selecting software too simple. In this case, the value of automation and cost savings isn’t gained.
At the same time, it’s important to stay mindful of how complicated or difficult it will be for the team to adopt and use.
What does a typical day look like for employees and will the software be an approachable, useful tool for them?
In a new, growing industry, there are many software vendors. How long have they been in business? Some have been around for years while others only months.
The last thing you want is for the software company to disappear off the face of the earth just when your team is on-boarded and trained. Also, beware of huge corporations that have turned their attention to the Green Rush and created a separate business unit just for cannabis. A lack of industry knowledge can be felt in the software application. If it’s being repurposed for our industry, chances are it won’t seamlessly work for our workflows.
Finally, ask what companies are currently using the software. Bonus points for recognizing any of them! It shows that established companies trust this vendor. In making the decision for which software to go with, this validation holds weight for many. Before signing a contract and implementing the new software, make sure to read the fine print!
5. Cost vs Value
At the top of everyone’s mind is price. In these tumultuous times, we’re all worried about the bottom line.
That said, review a software company for the value it can bring to your cannabis business. How much labor time will the software save due to its automation and streamlining? Is it quantifiable?
Budgeting for a more expensive software might actually make sense if the value is there. Crunch the ROI, to the best of your abilities, to see the impact its set of features can make.
How quickly and how often does the software provider innovate its product? Ask the company for examples of how they’ve listened and addressed requests for changes or additions to their software.
Also ask what their road map looks like for the year. What new features and changes will they be making?
Without updates, software can quickly become outdated and irrelevant. A perfect solution today is not a perfect solution two years from now. Select a vendor who’s committed to regular improvements.
7. Exit Strategy
Before signing a contract and implementing the new software, make sure to read the fine print!
Some companies will try to lock in a multi-year contract. Beware of contracts that will charge for early termination if you change your mind down the road.
Get the fine print and ask for clear terms of the commitment. In a fast-paced industry like ours, priorities and needs change often. Contract lock-up is not optimal.
Ever since California legalized medical use of cannabis in 1996, entrepreneurial people and people with money have been looking to turn the cannabis trade into a bonafide industry. The cannabis Green Rush has been a fast and chaotic ride as growing legalization opened myriad opportunities. It seemed for a while that pot was too big to fail.
Yet the second quarter of this year saw the majority of publicly traded cannabis companies recording double-digit losses (with 10 top cannabis stocks with a combined value of $55 billion losing an estimated $21 billion in collective value). Meanwhile, some of the industry’s most recognizable brands are under pressure to cut costs in favor of demonstrable profitability. It is clear that investors have become leery of inflated and unsustainable valuations.
But pot isstill too big to fail.
Polls show an ever-growing majority of Americans believe cannabis should be legal, and the number of states with legal weed continues to grow. The state-sanctioned market will reach nearly $13 billion in sales this year, according to BDS Analytics, with about a quarter in California, the largest, most mature legal market in the world. Total U.S. sales are on track to reach $30 billion by 2024. Legal cannabis remains the biggest investment opportunity of our times, but the Green Rush may be over. And that’s a good thing.
Get over the “green rush” mentality
From the Gold Rush to the Dot Com Boom, great opportunities have tended to create irrational mobs. Have you ever watched a group of Black Friday shoppers? In a frenzy, you often do not stop to evaluate if something is a bargain or if you even need the item. In the investment world, that type of frenzy leads to bubbles. When the Dot Com bubble burst in 2000, almost half the industry’s rising tech companies shuttered their doors, and an estimated $4-6 trillion in shareholder wealth vanished.
A similar thing is happening in cannabis.
The end of the Green Rush means we can now focus on safeguarding cannabis’ future, and not pillaging it for a quick profit.Growing legalization has created an influx of capital, but much of the early institutional money and retail investors went to Canada, where the absence of a federal prohibition allowed for a robust financial market to flourish. Canopy Growth Corp. was the first large-cap cannabis company to go public in 2016, followed by other large licensed producers or LPs. Because they are not violating U.S. laws, Canadian cannabis companies were able to uplist to the NASDAQ and NYSE as well.
American cannabis companies on the other hand – unable to freely tap capital markets at home, flooded Bay Street looking to go public on the Canadian Securities Exchange, and the rush went on hyperdrive. Soon market caps became grossly inflated, and too many cannabis companies that were barely showing profit took big gambles with other people’s money. Now, those investors are paying the price.
But a burst bubble is a good thing. It is a correction that forces companies to focus on priorities and fundamentals, and cannabis is no different. The end of the Green Rush is the start of a real industry with surviving operators becoming even stronger, less reliant on speculation and more focused on performance.
There will always be companies going public to create liquidity, and there will always be venture funding at the ready for any promising new startup. But cannabis will only survive if companies focus less on raising money and more on actually running their businesses.
Cannabis is creating unprecedented cultural and lifestyle shifts. It’s helping shape how people assess, diagnose and treat a broad span of health and wellness issues. Cannabis is helping to break the barriers of opioid addiction, and it’s even beginning to rival the alcohol industry. One out of every five beer drinkers in a Nielsen Market Insights report said they will spend less on store-bought beer due to consuming cannabis. Among the 65 percent of people who purchased over-the-counter drugs for pain relief, 35 percent said they will consider cannabis as a substitute.
The end of the Green Rush means we can now focus on safeguarding cannabis’ future, and not pillaging it for a quick profit.
I had dinner last night with a friend who is a senior executive at one of the largest automobile companies in the world. When I explained the industry-accepted rate of 25-30% shrinkage in horticulture he said, “Are you kidding me? Can you imagine the story in the Wall Street Journal if I gave a press conference and said that we were quite content to throw away three out of every ten cars we manufactured?”
Yet, for all growers, operators and investors who complain about shrinkage, it’s an accepted part of the business. What if it wasn’t; what if you could shrink your shrinkage by 60% and get it down to 10% or less? How much more profitable would your business be and how much easier would your life be?
Let’s take the floriculture industry as our first example. You propagate chrysanthemums in February, they get repotted at the end of April and by the end of June, you might start to see some buds. In a very short time span your job changes from being a grower who manages 10,000 square feet of chrysanthemums to being an order taker. Over a period of eight weeks, you have to unload as many of those mums as possible. The sales team at Macy’s has more time to move their holiday merchandise than you do.
If you’re like most operations, your inventory tracking system consists of Excel spreadsheets and notebooks that tell you what happened in previous years so you can accurately predict what will happen this year. The notebooks give you a pretty accurate idea of where in the greenhouses your six cultivars are, how many you planted and which of the five stages they are in. You already have 30 different sets of data to manage before you add on how many you sell of each cultivar and what stage they were in.
The future of the industry is making data-driven decisions that free up a grower to focus on solving problems, not looking for problems.Then your first order comes in and out the window goes any firm control of where the mums are, what stage they’re in and how many of each cultivar you have left. A couple of hours after your first order, a second comes in and by the time you get back in touch, check your inventory, call back the buyer and she’s able to connect with you, those 2837 stage 3 orange mums are moving into stage 4. Only she doesn’t want stage 4 mums she only wants stage 3 so now you frantically call around to see who wants stage 4 orange mums very soon to be stage 5 mums.
And, the answer is often no one. What if you didn’t have your inventory count exact and now you have 242 yellow mums that you just found in a different location in your greenhouse and had you known they were there, you could have sold them along with 2463 other mums that you just located in various parts of your greenhouse.
It doesn’t have to be like that. We had a client in a similar situation, and they are on track to reduce their shrinkage to just a shade over 10%. The future of the industry is making data-driven decisions that free up a grower to focus on solving problems, not looking for problems.
And don’t think that shrinkage is an issue only in the purview of floriculture. It’s an even bigger problem for cannabis because of the high value of each crop. The numbers don’t sound as bad because unlike floriculture, you don’t have to throw out cannabis that’s not Grade A. You can always sell it for extract. But extract prices are significantly less per pound than flower in the bag.
Here’s how one grower explained it. “Because of the high value of the crop, and the only other crop I’ve worked with that high is truffles, you’re playing a much higher stakes game with shrinkage. Even if you try and salvage a bad crop by using all of the parts of the cannabis plant. Listen, the difference between Grade A and Grade C could be $1,000 for A while a pound of B/C is less than $400. If you produce a standard 180 to 200 pounds in your grow rooms, you’ve really screwed up. No operator is going to keep you if you just cost them $120,000.”
People talk a lot about consistency when it comes to branding; after all, it’s a feature of the world’s most lucrative consumer brands (just ask Apple, Nike and Starbucks). As a result, companies will spend buckets of money on ensuring that their look and sensibility are uniform when marketing materials are out in the wild.
This consistency makes it easier for customers to recognize your brand. But the most important effect of consistent branding isn’t just that customers will recognize you– it’s that they’ll trust you.
Trust is the product of familiarity and consistency, and it’s far easier to be consistent across platforms when you have a strong sense of who you are as a brand. Strong branding helps you stick out in a crowd, and repeated viewing reinforces who you are to consumers. By extension, a consumer’s ability to quickly recognize you means that when they see your brand in public, they’re more focused on your message than picking you out of the crowd. And one way for consumers to recognize you is through archetypes.
What a Character!
Archetypes are typical examples of a person or concept that appear across different fields of literature, art and behavior; in other words, archetypes are familiar concepts that appear in storytelling. An outlaw is an example of an archetype. If an outlaw appears in a story, you may find yourself immediately drawing conclusions about that character’s motivations and sensibility and imagining how the outlaw fits into the story.
This demonstrates how archetypes can serve as a kind of shorthand when you’re telling your own brand story. We’ve created 16 archetypes–brand characters, if you will–for the cannabis industry, such as the Activist, the Doctor and the Stoner, among others. These archetypes all have a specific look and tone that you can use in your communications to keep your messaging consistent and effective so that people are focusing on your message rather than sussing out who you are and what you stand for.
For one thing, this makes your marketing efforts easier on you because you’ll be able to tell what makes sense in the context of your archetype. For example, the Doctor Archetype wouldn’t be sharing a 4/20 playlist, and an Activist Archetype wouldn’t be arguing the merits of different CBD bath bombs. You don’t want consumers scratching their heads, and having an archetype helps to determine what kind of behavior is appropriate for your brand.
Moreover, it helps to establish consistent behavior that your consumers see. Consistency helps to build trust because it helps customers build expectations. When you build expectations and you act in a way that immediately feels familiar to them, they’ll feel more comfortable with you. Imagine your closest friends; you have a strong sense of who they are. You know that your friend will refuse to order their own fries and then pick at your own. But there’s some comfort in this because when a person acts exactly as you expect, it makes you feel as though you know them deeply. And when there aren’t any mysteries, you can focus on what lies ahead in your friendship.
Brands operate the same way. When you see an Apple ad, you don’t have to rack your brains for context before you absorb their message. You know that Apple stands for sleek design and innovation, so when you see an Apple ad, Apple doesn’t have to keep reintroducing those values. Instead, you can focus on the new product or idea being featured, knowing that the sleek design and innovation are already baked in– and it’s because Apple has done decades of legwork making sure that that’s the case.
Archetypes make that legwork even more efficient by giving you those values as part of a character. If you think of your brand as a character, it immediately makes your communication more human. For instance, like Apple, the Scientist Archetype also values innovation. But when you write social posts as a Scientist Archetype rather than a brand, it makes it easier to connect with folks because you’re writing from a particular person’s perspective rather than a bulleted list of company values.
It also grants you more structure in your brand strategy because it allows you to envision a whole person. When you’re writing a post, for example, you can ask yourself, “Would the Scientist say this?” You can envision this Archetype’s mannerisms and sensibility, and being able to do that makes it far easier to know what will feel real to consumers– and by extension, trustworthy.
That ability to build trust is what will ultimately decide how successful your brand is in this burgeoning industry. You’ll be facing more competition than ever and you may eventually find yourself facing companies selling near-identical products. The brands that will win out will be the ones that know how to build trust with consumers with a cohesive brand strategy. With the right strategy, that could be you.
Think back: do you remember the very first Nike ad you saw? Probably not.
But when you see the swoosh, you immediately think of Nike. When you see the swoosh, you probably even think “Just do it.” A whole sensibility, one that signifies perseverance and athletic excellence, gets conjured up by that swoosh. A lot of people think that’s the power of advertising, but they’re only partially correct.
The fact that you don’t just know the swoosh but have thoughts and feelings that bubble up when you see it is due to branding. Companies like Nike don’t spend millions on branding reflexively. They do it because brand recognition and the feelings that come with it turn potential consumers into buyers. Branding success is necessary, measurable and valuable – especially for brands looking to establish themselves.Strong branding is what will increase the chances that your marketing and advertising will be effective, and it’s why branding must be one of your top priorities.
Branding: The Precursor to Advertising
You might not know specifically what ads work on you. But the ones that do work are driven by a strong brand.
For example, check out this ad campaign run by McDonald’s: Essentially, the fast food giant used fractions of its logo to make a wayfinding system on highway billboards. It’s clever and memorable, but it only works thanks to McDonald’s strong branding. McDonald’s has spent years building that shorthand because they understand that immediate recognition pays off in the literal and figurative sense.
Similarly, you know an Apple or an Under Armour ad when you see one. And you know this because there’s a consistent look and sensibility that these companies have worked to codify – that’s the branding piece. If you immediately recognize who these messages are coming from even before you engage with the ad, you’re more focused on the message rather than trying to suss out which company it’s coming from or what they’re selling.
This is why branding has to be a precursor to advertising. If you create ads before you build your brand, you may get a message out about what you’re offering. But if you do this, you’re talking at your customer rather than building a relationship with them. Strong branding is what will increase the chances that your marketing and advertising will be effective, and it’s why branding must be one of your top priorities.
The Benefits of Branding
Branding is about building a lasting, positive relationship with your customer. When you present a consistent brand personality and identity to your audience, you build trust. Consider how you form any long-term relationship; it’s through repeated positive, consistent encounters that allow you to see the other party for who they are. You trust them because you feel that you understand them and that they understand you.
Strange as it seems, it’s also true of brands. Building that bond with your customers will give you an advantage against brands that aren’t very distinct. With proper branding, a company can build and solidify consumer trust, trust that pays off in the form of increased sales, loyalty and good reviews. These brands aren’t constantly introducing themselves to consumers because over time, the branding itself does the selling and makes it easier to introduce new products down the line. Companies that don’t build that trust will have to fight for recognition, and things only get worse with more competition.
The Dollar Value of Branding
And of course, there are numbers to back this up. Every year, Forbes puts out a list of the world’s most valuable brands, and they use complex math to determine the actual value of this intangible thing called a Brand. Based on their thinking, a branded product should earn an 8% premium over a generic product. You can see some of their findings in the table below for a few categories that are traditionally very well-branded.
Brand Value (Billions)
Consumer Packaged Goods
Consumer Packaged Goods
These numbers, however, make it difficult to compare how well a company’s branding works for them because the brand’s total value is influenced by the size of the company. After doing a few simple calculations, we compared the Brand Value to the total Enterprise Value of each company to determine what we will call their Brand Contribution, which demonstrates how their branding efforts paid off.
When you compare the percentage of total company value that solely comes from the value of the brand, we can see that Nike significantly outperforms competitor Adidas, McDonald’s has a stronger brand than Starbuck’s, and Apple comes close to doubling the brand performance of Microsoft — none of which is surprising.
What might surprise you is the brand at the top of the list when it comes to contribution versus overall company value. Kellogg’s is one of the smallest companies to make the list in terms of Brand Value, and it has the lowest enterprise value in our list. Yet, Kellogg’s has the highest brand contribution. This makes sense in the high-stakes world of consumer-packaged goods; the competition is fierce, well-funded and global, which means that branding that resonates with customers is extremely important.
Consumer Packaged Goods
Consumer Packaged Goods
These companies are all massive and wealthy because they prioritize trust and consistency as part of their long-term plan to sell products. Branding promotes loyalty, but its ability to promote trust can be even more powerful by paying off in the long-term. And in this new legal cannabis market, trust is going to be just as critical as it is for traditional companies. After all, the power of branding isn’t just getting people to know who you are — it’s getting them to believe in you.
Enterprise value gathered from ycharts.com on 6/20/2019. Ycharts defines enterprise value as: Enterprise Value (EV) is a valuation metric alternative to traditional market capitalization that reflects the market value of an entire business. Like market cap, EV is a measure of what the market believes a company is worth. Enterprise value captures the cost of an entire business, including debt and equity. It is a sum of claims of all preferred shareholders, debt holders, security holders, common equity holders, and minority shareholders – unlike market cap, which only captures the total value of common equity securities.
Ladyjane’s valuation of the strength of a brand. What percentage of the company’s overall valuation can be attributed to the brand? Brand Contribution = Brand Value / Enterprise Value
In A Culture of Food Safety: A Position Paper (2018), the Global Food Safety Initiative (GFSI) defines food safety culture as the “shared values, beliefs, and norms that affect mind-set and behavior toward food safety in, across, and throughout an organization.” In other words, food safety culture in your workplace is the “this is how we do things around here.”
A food safety culture needs to be relentlessly communicated – everyone needs to know it is his or her job, not just a dusty slogan on the wall or a whisper down the halls.Building a strong food safety culture is particularly relevant to the cannabis workplace because of the unique history of the workers and the unique needs of the consumers. The cannabis industry is special in that it was an industry before it became regulated. As such, there are many workers in the industry who have a deep passion for cannabis products, but with experience rooted in working within only a few official standards. Thus, the behavior and mind-set of workers in the cannabis industry must adjust to new regulations. However, even currently, standards are ever changing and vary from state to state; this causes further confusion and inconsistency for you and your workers. On top of that, now that cannabis is legalized in certain pockets, cannabis reaches a larger, wider audience. This population includes consumers most vulnerable to foodborne illness such as people with immunocompromised systems, the elderly, the pregnant or the young. These consumers in particular need and deserve access to safe cannabis products every experience. Therefore, it is that much more important to develop a strong food safety culture in the workplace to promote safe, quality cannabis large-scale production for the larger, wider audience.
To achieve a food safety culture, GFSI emphasizes the vision and mission of the business, the role of the leaders in the organization, and the continuity of communication and training. GFSI also emphasizes that these components are interrelated and all are needed to strengthen a food safety culture. Food safety culture components can be simplified into: 1) things you believe, 2) things you say, and 3) things you do.“this is how we do things around here.”
Things You Believe
Food safety culture starts from the top, with the executive team and senior managers. It is this group that dictates the vision and mission of the business and decides to include food safety and quality as a part of this guiding star. Moreover, it is this group that commits to the support for food safety by investing the time, money and resources. The message then has to spread from the executive team and senior managers to an interdepartmental team within the workplace. That way, the values of food safety can be further shared to front-line workers during onboarding and/or continuous training. To restart a food safety culture, a town hall can be a useful tool to discuss priorities in the workplace. Overall, it is important to have every worker believe in producing safe food and that every worker is a part of and has ownership of contributing to the food safety culture at your workplace (GFSI, 2018).
Things You Say
A food safety culture needs to be relentlessly communicated – everyone needs to know it is his or her job, not just a dusty slogan on the wall or a whisper down the halls. The Food and Drug Administration (FDA) has a saying that “if it’s not written down, it didn’t happen.” Thus, the guidelines for a food safety culture need to be embedded in the policies, programs and procedures; and these guidelines need to be a part of training from day one and supplemented with periodic reminders. For effectiveness, make the communication engaging, relevant and simple – use your workers to pose for posters, use digital tools such as memes. In his presentation at the 2015 Food Safety Consortium, Frank Yiannas, vice president of food safety at Walmart, says “How many of you created training videos that you show the desired behavior once? You should probably show the behavior more than once and by a few different employees so that when they see it, they see multiple people in the video doing it and that’s the social norm.” By sending a consistent message, a food safety culture can flourish in your workplace.A food safety culture does not happen once; a food safety culture is a long-term commitment with continuous improvement.
Things You Do
A food safety culture does not happen once; a food safety culture is a long-term commitment with continuous improvement. Periodic evaluation of food safety metrics and alignment with business goals contribute to maintaining a food safety culture – it is useful to learn from successes as well as mistakes. In the same presentation mentioned above, Yiannas discusses “Learning from the wrong way [mistakes] lessens the likelihood that we will become complacent” where he defines complacency as “a feeling of quiet security, often while unaware of some potential danger or defect that lurks ahead.” Without the constant commitment, businesses can falter in their food safety and cause costly mistakes – whether that be recalls or illnesses or worse. By not becoming complacent and emphasizing constant accountability, a food safety culture can thrive at your workplace and make your workplace thrive.
With the regulated cannabis industry still in its infancy, the time is now for every cannabis workplace to instill a food safety culture. Before being mandated, the cannabis industry can rally for food safety because it is the right thing to do. With participation from each workplace, the industry as a whole can be united in producing safe product and be better positioned to change stigmas.
By Dr. Zacariah Hildenbrand, Dr. Kevin A. Schug No Comments
Much has been made about the plummeting market value of cannabis grown outdoors in Oregon. This certainly isn’t a reflection of the product quality within the marketplace, but more closely attributable to the oversaturation of producers in this space. This phenomenon has similarities to that of ‘Tulip Mania’ within the Dutch Golden Age, whereby tulip bulbs were highly coveted assets one day, and almost worthless the next. During times like these, it is very easy for industry professionals to become disheartened; however, from a scientific perspective, this current era in Oregon represents a tremendous opportunity for discovery and fundamental research.
As we have mentioned in previous presentations and commentaries, our research group is interested in exploring the breadth of chemical constituents expressed in cannabis to discover novel molecules, to ultimately develop targeted therapies for a wide range of illnesses. Intrinsically, this research has significant societal implications, in addition to the potential financial benefits that can result from scientific discovery and the development of intellectual property. While conducting our experiments out of Arlington, Texas, where the study of cannabis is highly restricted, we have resorted to the closet genetic relative of cannabis, hops (Humulus lupulus), as a surrogate model of many of our experiments (Leghissa et al., 2018a). In doing so, we have developed a number of unique methods for the characterization of various cannabinoids and their metabolites (Leghissa et al., 2018b; Leghissa et al., 2018c). These experiments have been interesting and insightful; however, they pale in comparison to the research that could be done if we had unimpeded access to diverse strains of cannabis, as are present in Oregon. For example, gas chromatography-vacuum ultraviolet spectroscopy (GC-VUV) is a relatively new tool that has recently been proven to be an analytical powerhouse for the differentiation of various classes of terpene molecules (Qiu et al., 2017). In Arlington, TX, we have three such GC-VUV instruments at our disposal, more than any other research institution in the world, but we do not have access to appropriate samples for application of this technology. Similarly, on-line supercritical fluid extraction – supercritical fluid chromatography – mass spectrometry (SFE-SFC-MS) is another capability currently almost unique to our research group. Such an instrument exhibits extreme sensitivity, supports in situ extraction and analysis, and has a wide application range for potential determination of terpenes, cannabinoids, pesticides and other chemical compounds of interest on a single analytical platform. Efforts are needed to explore the power and use of this technology, but they are impeded based on current regulations.
Circling back, let’s consider the opportunities that lie within the abundance of available outdoor-grown cannabis in Oregon. Cannabis is extremely responsive to environmental conditions (i.e., lighting, water quality, nutrients, exposure to pest, etc.) with respect to cannabinoid and terpene expression. As such, outdoor-grown cannabis, despite the reduced market value, is incredibly unique from indoor-grown cannabis in terms of the spectrum of light to which it is exposed. Indoor lighting technologies have come a long way; full-spectrum LED systems can closely emulate the spectral distribution of photon usage in plants, also known as the McCree curve. Nonetheless, this is emulation and nothing is ever quite like the real thing (i.e., the Sun). This is to say that indoor lighting can certainly produce highly potent cannabis, which exhibits an incredibly robust cannabinoid/terpene profile; however, one also has to imagine that such lighting technologies are still missing numerous spectral wavelengths that, in a nascent field of study, could be triggering the expression of unknown molecules with unknown physiological functions in the human body. Herein lies the opportunity. If we can tap into the inherently collaborative nature of the cannabis industry, we can start analyzing unique plants, having been grown in unique environments, using unique instruments in a facilitative setting, to ultimately discover the medicine of the future. Who is with us?
Leghissa A, Hildenbrand ZL, Foss FW, Schug KA. Determination of cannabinoids from a surrogate hops matrix using multiple reaction monitoring gas chromatography with triple quadrupole mass spectrometry. J Sep Sci 2018a; 41: 459-468.
Leghissa A, Hildenbrand ZL, Schug KA. Determination of the metabolites of Δ9-Tetrahydrocannabinol using multiple reaction monitoring gas chromatography – triple quadrapole – mass spectrometry. Separation Science Plus 2018b; 1: 43-47.
Leghissa A, Smuts J, Changling Q, Hildenbrand ZL, Schug KA. Detection of cannabinoids and cannabinoid metabolites using gas chromatography-vacuum ultraviolet spectroscopy. Separation Science Plus 2018c; 1: 37-42.
Qiu C, Smuts J, Schug KA. Analysis of terpenes and turpentines using gas chromatography with vacuum ultraviolet detection. J Sep Sci 2017; 40: 869-877.
Disclaimer: Marguerite Arnold has just raised the first funds for her blockchain-based company, MedPayRx in Germany (and via traditional investment funding, not an ICO). She will also be speaking about the impact of blockchain on the cannabis industry in Berlin in April at the International Cannabis Business Conference.
You have probably heard of cryptocurrencies, tokens and smart contracts. You might have also heard, even if you did not understand the significance, that IBM recently suggested that the Canadian government use their form of blockchain, called Hyperledger, to track the recreational cannabusiness. Or that a large LP called Aurora is also looking at this space (as are other licensed producers large and small). Or maybe you have seen an item in the mainstream news about an ICO for a cannabis company that is now also going terribly wrong.
What on earth is going on?
These are all related issues, even if highly confusing and disjointed. Blockchain technology and cryptocurrency are hot right now and getting hotter – both in the mainstream world and in the cannabis industry globally. But for all its fans, the drumbeat for caution is also growing louder the more mainstream this technology (and the legitimate cannabis industry) becomes.
The many problems the entire cannabis vertical has with banking has make this current development almost inevitableOn the technology and finance side, that is why so many big names right now are urging caution. Nouriel Roubini, professor at NYU’s Stern School of Business, is just the latest to do so – and for reasons that everything to do with history. Including recent history ten years ago, when the world stood on the brink of a financial disaster thanks to unchained derivatives. The biggest worry in fact, right now, is about the financial implications of widespread adoption of the technology, beyond the tech itself and how it may (and may not) be legitimately used. Which itself is a huge question.
So why all the fuss?
This is revolutionary technology which is also being introduced into the market at a time when decentralized processing for automation is on the horizon. But also because blockchain can be used to create tokens or digital coins that act like financial instruments. And once created, such tokens can be issued much like money or even stock, to raise additional funds – for both start-ups and ongoing enterprises. The best thing though? This technology was invented to create a decentralized form of value exchange and trust-less, anonymized auditing and verification. No traditional financial institutions or even governments needed, wanted or should apply (at least in theory).
The many problems the entire cannabis vertical has with banking has make this current development almost inevitable. Not to mention accessing investment cash (although this is certainly changing outside the United States). Compliance issues in every direction are another wrinkle this tech will help solve. Starting with tracking product but also rapidly expanding to uses including protecting users’ privacy and facilitating access to high-quality, inspected product for qualified users and buyers. Not to mention other areas that are literally space-age but coming fast. Look for cool stuff coming soon involving both AI (artificial intelligence) and IoT (internet of things).
It is a fascinating, complex space. However, one aspect of this world, in particular, Initial Coin Offerings – or ICOs are getting attention right now. Why? They can be an incredibly efficient way to raise money for companies – both ones currently in business and start-ups with little more than a whitepaper or business plan and perhaps a working prototype. More and more of the successful ICOs are, however, for an existing company or are even attached to an asset, including a license, a prototype or a fund of money (or other combinations). They also rely on blockchain and alternative currency or tokens (sometimes also referred to as smart contracts) to work.
From a technology perspective, you can “mint” new coins relatively easily these days, sourced from a variety of different kinds of blockchain. Or even combinations thereof. You also can issue tokens or altcoins without an ICO.
In a world where there is vastly expanding cannabis opportunity, and many of these hopeful entrepreneurs are both digitally astute but without access to traditional capital, what could be better?
From a financial and investor perspective, ICOs are a hybrid form of an IPO meets social media. “Coins,” “tokens” and “smart contracts” –or cyber currency collectively– are digital forms of cash, contracts, membership cards, discounts or even authorizations for identity. There are many ways tokens can be used, in other words. This by way of saying there are also important differences too. Not all tokens are the same. Not all are used as “money.” Some are but have assets assigned to them (like real estate). Others, particularly smart contract tokens, are strictly functional (pay funds when product is delivered and verified). The one caveat here is that the exchange of any token or altcoin will also cost money. Why? It is the electricity cost of computer processing the request for transfer. Plus access and service fees. There is no such thing as a “free” token. How tokens are priced, sold, bought, maintain value and for what purposes, is a debate if not process function that will not be solved anytime soon. Starting with the fact that some blockchains are more energy efficient (and sourced from green energy) than others.
To add to all of this confusion, not all ICOs function the same way. Some do give investors ownership in the company or specific portfolios that even include real-world assets. Others offer to use pooled funds to buy assets (like real estate or an expensive license). Many rely on the “coin” issued as a kind of discount scheme, reward mechanism and in many cases, direct discounted payment for future goods and services, of both the digital and real world kind. Many offer banking services directly, including in the very near future, the ability to exchange cyber cash for the fiat variety at even remote ATMs. Sound futuristic? It is coming and soon.
Most ICOs in the market now, however, rely on the following supposition: Issue a token with a unique name. Put up an ICO website. Encourage investors from anyplace on the planet with an internet connection, to use either crypto or fiat currency to buy tokens in the issuing startup as an investment that will give the new company funds to operate and build out services or the application (whatever that is). Also, plan to use the tokens for an exchange of some kind in the future (either for other coins or a good or service). Watch the value of the coin increase (for whatever reason) while informing investors (or contributors) that this is not really a security but a “utility” token that is expected but not guaranteed to become more valuable. Retire early with the prospect of having brokers of expensive real estate in places like London and Dubai come calling.The public tide of opinion, even if regulations are slow to move, is on the side of reform if not outright advocacy.
That will not be the case for the vast majority of ICOs, however, no matter what returns, goods or services they offer. Even if they also have vibrant communities already using their services (whatever those are). It will not be the case for most of the cryptocurrencies upon which such ICOs are based (most at the moment are based on Ethereum, NEO, Hyperledger or combinations of the three). There will be more of those too. And not every blockchain will make it (cryptocurrencies and tokens are based on an origin protocol or blockchain much like computer operating systems are either PC or Mac or mobile phones are Android or Apple). Some speak to one another well. Most do not “exchange” easily – even between themselves – let alone back into good old cash. And while nobody wants to be the Betamax of blockchain, there will, inevitably, be quite a few of them. When that happens, any economic value of the coins and even contractual relationships created with them disappear as well. Add in extreme price volatility in the current market pricing of these tokens, and you begin to get a sense of the risk profile involved in all of this.
The real hurdle, not to mention expense, comes when transferring back from the world of crypto to the one of fiat (regular money). Being a Bitcoin billionaire (there are about 1,000 individuals who own about 40% of the entire global Bitcoin issuance) is no fun if you have no place to spend it.
A Rapidly Changing Marketplace
In the past 18 months, cryptocurrency and ICOs have gotten increasing attention because of the increasing value of all kinds of cyber currency (far beyond Bitcoin). The total market cap for all forms of cryptocurrency itself zoomed past $700 billion at the turn of the year. That is impossible to ignore. You might have heard of some of these currencies too. There is ETH, Litecoin, Bitcoin Cash, Dash, even Dogecoin (created originally as a joke on an internet dog meme). Right now, in fact, at some of the most expansive exchanges, there are literally hundreds of these coins which are constantly bought and sold if not exchanged and used.
And then there are the sums ICOs are bringing in some cases, flagrantly flaunting regulatory agencies and doing end runs on the global banking system that cannot keep up with them. The top ICO of 2017, a company called Block.one and registered in the Cayman Islands, so far holds the record at $700 million and counting. Filecoin, the second largest ICO last year, raised $262 million in one month from August to September. And then, of course, there is the cannabis industry-specific case of Paragon – now headed for class-action lawsuit litigation over their $70 million pre-and ICO sale intentions.
It would be logical to assume, given the eye-watering sums potentially involved not to mention the large role a smart digital media footprint has to do with an ICO’s success, beyond its service or technology offerings, that this would be a perfect place for cannapreneurs to turn for funding. The global market is opening for cannabis reform at the same time the crypto craze meets Fintech Upheaval is occurring – in fact, these two things are happening almost simultaneously.
Thanks to regulatory realities and an ongoing stigma, there is still no institutional investment in the industry in the United States (that is rapidly changing other places). These are two new industries and dreams are large.
In the legit cannabis space, so are the expenses.
The price of opening a dispensary in most U.S. states tops a million dollars right now. In Europe, the price of entry is even more expensive. A GMP compliant grow facility in Western Europe, plus the money for lawyer’s fees and negotiations for the license itself will set you back anywhere from $20 million and up, depending on the location. Even staying afloat in the industry once the doors are opened is a challenge. And loans, even for outstanding invoices, are still tough to come by in an industry where banking services of the simple business account kind are a challenge. Particularly in the United States.
The public tide of opinion, even if regulations are slow to move, is on the side of reform if not outright advocacy. Why shouldn’t a reform-group-rooted ICO aspire to own or provide ongoing business financing to a community-minded canna farm in California, Canada, Germany, Israel or Australia? Or even Greece?
However, right now, with some noted exceptions, the cannabis business remains at minimum, a dangerous place to consider issuing altcoins that act like financial instruments or raise money with them. Why and how?
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