Member Blog: The Cannabis Crisis Plan – Business Insurance for the Future
Is Your Cannabis Business Prepared for the Unexpected?
In an industry as scrutinized as cannabis, a crisis can escalate quickly—having a solid plan in place can make all the difference.
Given its unusual balance between federal illegality and regional legality, the cannabis industry sometimes feels like it’s under a microscope. Indeed, because of this microscope, a cannabis crisis can blow up fast. From product recalls to regulatory and legal issues, the Avaans Media team has worked with cannabis companies – and non-cannabis companies – can face in moments of crisis. No crisis is ever “planned.” Because the very nature of a crisis is that it creeps up when you least expect it. Think it can’t happen to you? Seventy-nine percent of companies will experience a crisis with service disruption and media implications.
A moment of crisis doesn’t even have to be the brand’s fault. Many companies have gotten caught up in social media rumors, it could have to do with police, government officials or product recalls and yet in those cases, it is the company’s crisis to handle.
A crisis plan can be the unsung hero of an emergency. Putting a crisis plan in place may seem tedious, but a cannabis crisis is high stakes, and understanding when, who and how your company will handle a moment could save you millions in legal and PR fees, while also preserving the valuation of the brand, and the reputation in the eyes of customers, regulators, and the media. Crisis PR professionals can assess a situation quickly and guide you through this process. And a crisis plan will help you in those early critical moments. Tabletop exercises and media training are the muscle behind a crisis response.
Yet, if you find yourself in a crisis without a plan in place, there are three strategies to employ in a crisis.
Follow the traditional process of response.
We see this played out repeatedly, the traditional response to a crisis is to address the facts publicly, acknowledge the concern and the problem, apologize, and rectify. This is a well-worn process, and the media are all very familiar with this process. It’s important with this strategy to consider the methods of response and that the urgency matches the level of the crisis. Spokesperson, media format, and timing are essential elements in this strategy.
What level of response does this moment demand? If the problem hasn’t hit the media, but your customers are upset, how will you deal with that differently than if the media is calling?
The truth is always your north star. That’s particularly true during tumult. Tell the truth, stick to the facts. If you don’t know the answer, it’s perfectly OK to say you don’t know and will return with an answer when you have one. Don’t make promises you aren’t sure you can keep.
Where and how you issue a statement is a message. Who issues the statement? Will you issue a statement on YouTube or on Instagram. Both? Will you talk to the media at a press conference, or will you issue a written statement to the media?
Use the Crisis to Effect Change
Sometimes, a crisis can be used as an opportunity. No doubt, this is a risky choice and should be taken with sincere consideration and expertise about when and how to share the story.
High Seas Dispensary in Costa Mesa, California did this recently when they ran into a sudden brick wall with city leaders who were withholding their city business permit. This came a surprise to the founders of High Seas Dispensary who had always been reputable players in California cannabis.
News coverage of the situation soon started bubbling up and the withholding was rescinded, allowing the dispensary to finally open its doors, albeit months later than planned.
This may be the riskiest choice of all. Because response is critical if a crisis has or will reach the media level. The first step in a crisis is to decide if it is an actual crisis and if so, what response there should be.
Indeed, some low-level crises feel stressful in the moment, but the reality is that a public response will only fan the flames. An example of this is when things heat up with a few negative social media comments. It feels alarming, and it feels urgent, but unless those comments are part of a larger issue that should be addressed, feeding the trolls is only going to make more people aware of the situation.
Yet, a fast response may allow you the opportunity to tell your side of the story. An example of this is a cannabis recall client we worked with who called us after the story hit the TV news; there’s no going back. What’s done is done. We would have put the CEO on the news to respond which would have given the story a more well-rounded presentation and put a face to the recall, and because the CEO was highly credible, empathetic and well spoken, could have actually improved the brand reputation.
But ignoring a crisis is a risky choice, too. We’ve all seen brands that wait days before responding to a crisis that continues to spiral out of control, at which point, the public statement feels inadequate. This is a strategy, again, which should only be taken with a clear view of the risks.
Think of a crisis PR plan as business insurance. A good plan can stop a crisis its tracks. Feeling prepared is the difference between panic and composure.
Access the full recording of our #IndustryEssentials webinar, “Committee Insights: Navigating Cultivation Environmental Requirements,” and gain critical knowledge on how to effectively navigate the environmental requirements for cannabis cultivation.
Environmental compliance is a significant challenge in the cannabis industry, with a wide range of regulations varying across states and local jurisdictions. This webinar dives deep into the complexities of environmental assessments, offering cannabis cultivators actionable insights and best practices to meet these stringent requirements.
Key Topics Covered:
Sediment and erosion control techniques
Innovative water conservation strategies
Energy efficiency and carbon footprint reduction
Wastewater discharge management
Air quality and odor control measures
Our panel of industry experts, including Lisa Wright, CEO of Flowra, Michael Busher of Deterra Farms, and Michael Erana, Co-Founder & Chairman of One Day Cannabis, share their experiences and strategies. Moderated by Chelsea Haskins, Director of State and Local Licensing at Perfect Union, this webinar equips cultivators with the tools needed to achieve environmental sustainability and regulatory compliance.
Why Watch? Gain the insights you need to enhance your cultivation practices, increase your chances of passing environmental reviews, and establish a more sustainable and responsible operation.
Watch Now and ensure your cultivation business stays ahead of environmental regulations!
Member Blog: Regulating the Cannabis Industry for Accuracy and Integrity
Regulating the Cannabis Industry forAccuracy and Integrity
In the fast-evolving landscape of the cannabis industry, ensuring accurate testingstandards is paramount to safeguarding consumer safety, maintaining regulatorycompliance, and fostering fair market competition. However, a pervasive challengeknown as cannabinoid inflation threatens to undermine these essential principles,posing a significant obstacle to the industry’s growth and legitimacy.
Understanding Cannabinoid Inflation
Cannabinoid inflationrefers to the practice of cannabis testing laboratories providinginaccurately high cannabinoid concentrations in their reports, often in an attempt toattract business. This phenomenon distorts market dynamics, leading to unfaircompetition and jeopardizing the credibility of legitimate labs that adhere to rigoroustesting standards. Contaminant deflationis a significant concern, too, as labs willing toinflate cannabinoids are also more likely to underreport the presence and/or amount ofhazardous substances.
At the heart of this issue lies a fundamental discrepancy between reported and actualcannabinoid content in cannabis products. As cannabis producers and distributors seekout labs offering higher THC values, a troubling trend is to use only labs that will inflatethe value of desirable cannabinoids, such as THC. This practice, known as laboratory shopping, perpetuates the cycle of inflated results, undermining integrity and forcingaccurate reporting labs out of business.
Proposing Regulatory Solutions
To address this pressing cannabinoid inflation challenge, Digamma Consulting,renowned experts in cannabis chemistry, presents a comprehensive set of regulatorysolutions in their latest white paper, Solutions to Cannabinoid Inflation.
Solution A: Data Analysis Reports Advocating the adoption of data analysis reports,Digamma proposes a systematic approach to analyzing testing data, providingregulators with a solid foundation for action. By leveraging data analytics, authoritiescan identify trends, anomalies, and potential instances of cannabinoid inflation. Suchidentification enables regulators to make targeted and legally justified interventions thatcan help to improve testing integrity.
Solution B: Suspect Product Checks Digamma recommends implementing suspectproduct checks, also known as “secret shopper” programs, to detect inflatedcannabinoid values. This cost-effective mechanism allows states to conduct productsampling and testing of suspected lab results by independent accredited referencelaboratories that will validate reported cannabinoid content and mitigate inflated results.
Solution C: Chemical Analysis Laboratory Audits Digamma proposes implementingin-person audits of chemical analysis laboratories to ensure testing integrity and thusdirectly address cannabinoid inflation. Subjecting testing facilities to rigorous scrutiny byexpert auditors enables regulators to assess compliance with standards and uphold theintegrity of the testing process.
Digamma’s White Paper: Solutions to Cannabinoid Inflation
Digamma’s white paper on regulating the cannabis industry for accuracy and integrityrepresents a significant step toward addressing the pervasive challenge of cannabinoidinflation. By advocating for practical, low-cost regulatory solutions, Digamma Consultingaims to empower government regulators to uphold transparency, impartiality, and legaldefensibility in cannabis testing reporting and labeling.
As the industry continues to evolve, it is imperative to prioritize consumer safety,regulatory compliance, and market fairness. Through collaborative efforts and ongoingdialogue, we can navigate the complexities of the cannabis industry and propel it towarda future characterized by integrity, transparency, and accountability. Join Digammainthe quest to build a safe, fair, and thriving cannabis industry for all.
Navigating Missouri’s Stringent Cannabis Testing Requirements: A Deep Dive
When it comes to cannabis testing requirements, Missouri absolutely lives up to its nickname as the Show Me State, requiring its licensed cannabis businesses to run a wide series of tests to prove the cannabis they are sending to store shelves is safe.
As a relatively new state to join the cannabis industry, with voters approving medical marijuana in 2018 and recreational cannabis in 2022, Missouri has had the benefit of watching several other states develop programs ahead of it and its testing regulations reflect that.
In Missouri, both flower and pre-rolls, for example, must be tested by one of 10 state certified labs for:
Moisture Content and water activity;
Residual solvents and processing chemicals;
Residual pesticides;
Microbial impurities;
Mycotoxins;
Foreign materials;
The “big four” heavy metals (arsenic, cadmium, lead and mercury) + Chromium;
Cannabinoids; and
Terpenes (if requested).
The majority of these tests are designed to protect consumers from potential dangers hidden in their cannabis products, so it is important that any rolling paper or pre rolled cones you buy – even for personal use – should pass these tests.
For example, moisture content and water activity can point to the potential for mold growth. Any water activity above 0.70 Aw creates the conditions for mold to grow, which can be harmful if consumed, which is why Missouri, like many states, caps water activity at 0.65 Aw in flower and pre-rolls.
Missouri, however, is one of a handful of states that also include chromium in their testing regiment, another dangerous heavy metal. Once chromium reaches the bloodstream, chromium can damage the kidneys, liver, and blood cells with the potential for renal and liver failure if untreated. So, you can see why states have begun adding it to their testing requirements.
MICROBIALS AND MYCOTOXINS
While heavy metals are dangerous, microbials and mycotoxins pose the greatest risk to human health.
Mycotoxins are a toxic compound produced by molds, such as Aspergillus, and can suppress the immune system and cause liver damage. Missouri requires testing for two classes of mycotoxins, Aflatoxins and Ochratoxin A. Both have properties that can alter DNA and potentially cause the formation of cancer cells. Testing for mycotoxins help ensure cannabis products are safe for human consumption.
Missouri regulations require a total mycotoxin concentration of less than 20 micrograms per kilogram for cannabis to receive a passing mark.
Missouri also requires testing for other microbials like Pathogenic E. Coli, Salmonella and Pathogenic Aspergillus Species including A. fumigatus, A. flabus, A. niger and A. terreus.
PESTICIDES
Missouri also requires testing for residual pesticides and other chemicals. The state allows some pesticides to be used on cannabis – tracked by the Missouri Department of Agriculture’s Pesticide Program – but cultivators are required to report in the state track and trace system all pesticides, fertilizers and other chemicals applied to the plants, as well as all the ingredients contained in each of those.
State law requires tests for 61 chemicals and 20 residual solvents, with actionable limits, and foreign matter screening.
LABELING LAWS
Missouri also has a very strict labeling law for its cannabis packaging that requires specific information in a specific order, beginning with the state’s diamond THC logo, the letter “M,” all ingredients, license number of the producer and where the products passed their testing, as well as the track-and-trace number for the samples and the THC potency, among others.
LAB LICENSING AND LAB SHOPPING
Aside from specifics for testing, the Show Me State goes even further when it comes to which labs can be used and how those labs get licensed.
Missouri law contains provisions for exactly who at the labs can conduct the tests, requiring the labs to be employ a laboratory director with a degree in a natural science and at least five years’ experience in a regulated lab environment or a degree in “another applicable field” with 10 years’ experience. It also requires the person performing the test to have a bachelor’s degree in natural science and at least two years of lab experience.
But recent updates to Missouri’s regulations go even a step further than most states in an attempt to stop the process known as “lab shopping” to get desired results. Normally aimed at trying to limit THC potency inflation, the new law requires producers and labs to submit their samples to other labs so results can be compared.
For example, the new regulations say that up to 10 times per year, the state will require one lab to pick up samples from another lab and re-perform a test. The state will review all the results to make sure they have similar potency results and to see if one lab is passing samples for pesticide residue while another one is failing it.
According to Custom Cones USA Compliance Manager André Bayard, while the main focus of the new law appears to be THC potency inflation, which, of course, is a major driver of sales for cannabis companies, that too is a safety concern, especially in the medical market or for low-dose patients and consumers.
ENSURING PRE-ROLL COMPLIANCE
As noted, the Missouri law requires all products be tested in their final form, including pre-rolls. That means even if your cannabis is clean, your products can fail and be destroyed if your rolling papers are not.
Because of that, manufacturers need to protect themselves – and their customers – by carefully selecting suppliers. After all, a study from California’s SC labs found that 11% of rolling papers they tested would fail that state’s testing regiment, which doesn’t even include Chromium, and that 90% of rolling papers contained heavy metals with more than 8% containing them at a rate above the allowable limits.
Pre-roll manufacturers in particular need to pay attention to their suppliers and make sure that the company from which they buy their paper takes testing as seriously as they do. Bayard recommends making sure your pre-roll paper supplier is a partner.
“Find a supplier that is willing to work with you and do the due diligence to make sure you know ahead of time whether your paper will pass,” Bayard says.
Bayard notes that when contacted by a manufacturer in Missouri in 2022 about chromium content causing failures, Custom Cones USA sent samples ahead of time so the manufacturer could pack and test a handful of their completed pre-rolls to make sure the products were clean before committing to a full order.
If your pre-roll supplier is not willing to go through that step, it may be a red flag.
Testing failures can be expensive, so make sure you not only keep up on the latest changes to your states regulations, but also work with a Pre-Roll Expert to get the cleanest, best-tested pre rolled cones you can find. And always ask to see COAs.
Engage with Missouri’s Cannabis Community: Join Us at the Summit!
As you navigate through Missouri’s stringent cannabis testing requirements, it’s imperative to stay informed and engaged with the latest developments in the industry. To further your understanding and involvement, consider joining us at the upcoming Missouri Stakeholder Summit, hosted by the National Cannabis Industry Association (NCIA). The Missouri Stakeholder Summit serves as a crucial platform for industry leaders, policymakers, and stakeholders to convene and discuss the pressing issues shaping Missouri’s cannabis landscape. Each event will host a wide range of programming including interactive panel discussions, intimate fireside chats, and live Q&A to provide participants the opportunity to make the Voice of Main Street Cannabis heard by key decision makers.
All industry professionals are invited; NCIA members attend free and have exclusive access to Q&A sessions. From regulatory updates to market insights, this summit offers a comprehensive view of the opportunities and challenges ahead. From regulatory updates to market insights, this summit offers a comprehensive view of the opportunities and challenges ahead.
Ready to elevate your involvement in the cannabis industry? Explore the benefits of NCIA membership and gain access to exclusive resources, networking opportunities, and advocacy initiatives. Join online today or schedule a meeting with our team to learn more about membership and how NCIA can support your professional growth and business success.
Whether you’re a seasoned professional or new to the industry, the summit provides invaluable networking opportunities, expert panels, and discussions tailored to meet your needs. It’s a chance to connect with like-minded individuals, gain strategic knowledge, and contribute to the growth of Missouri’s cannabis market. Don’t miss out on this unique opportunity to be part of the conversation that drives change and innovation in Missouri’s cannabis industry. Register now to secure your spot and take an active role in shaping the future of cannabis in the Show Me State!
Member Blog: California’s Gold Standard – Navigating Cannabis Testing Regulations
While every state has its own testing requirements for the cannabis industry, few markets require more than California, which has been on the leading edge of cannabis testing and regulation since voters approved the state’s recreational market.
In the Golden State, all cannabis products must be tested by a licensed laboratory in their final form, or how the product will be sold to customers at retail, not just the flower. That means that not only does your flower have to be clean, but so does all of your other ingredients or components, since anything can trigger a failure, including the paper in your pre-rolls.
Testing Parameters: Ensuring Safety
Both flower and pre-rolls, for example, must be tested for:
Moisture Content and water activity;
Residual solvents and processing chemicals;
Residual pesticides;
Microbial impurities;
Mycotoxins;
Foreign materials;
The “big four” heavy metals (arsenic, cadmium, lead and mercury);
Cannabinoids; and
Terpenes (if requested).
Almost all of these tests get at a safety issue.
Moisture content and water activity, for example, relate to mold growth. Water activity is a measure of the percentage of water in your cannabis product. In California, a cannabis sample cannot have a water activity of more than 0.65 Aw (or 0.85 Aw for solid edible products). This is because anything above 0.70 Aw creates the conditions for mold to grow, which can be dangerous if consumed.
Addressing Safety Concerns: Mycotoxins and Pesticides
Mycotoxins are also a safety issue. Mycotoxins are a toxic compound produced by molds, such as Aspergillus, and can damage the liver and even suppress the immune system. The two classes of mycotoxins that California requires testing for, Aflatoxins and Ochratoxins, have properties that can alter our DNA and even spur the formation of cancer cells. Mycotoxin testing ensures that products are safe for human consumption and inhalation. In California, samples may not exceed 20 micrograms of either aflatoxins and ochratoxins.
Like many states California also requires testing for residual pesticides, including 21 “Category I” chemicals that are not allowed in any amount and 45 “Category II” chemicals that include “action levels” that the sample may not exceed. These chemicals can be very harmful to humans, causing damage to organs and other long-term health issues.
The state also requires testing for the heavy metals mercury, cadmium, lead and arsenic. All four of those metals are toxic to humans, even at small doses, and can damage all the body’s vital systems, including pulmonary, reproductive and even the central nervous system. For inhalable products, the state sets the pass/fail actionable level at 0.1 micrograms for mercury, 0.2 micrograms for arsenic and cadmium and 0.5 micrograms for lead.
These tests for heavy metals are especially important because cannabis plants are a well-known bio-accumulator that absorbs and collects heavy metals from the soil in which it grows.
Key Considerations for Manufacturers: Paper Suppliers
But one of the keys to California’s regulations is the need to test all products in their final form, which means that not only does your flower have to pass all tests, but every other part of your product as well. For pre-rolls, this includes your rolling papers and cones. And there have been instances of the papers causing batches of products to fail testing.
There are also examples of rolling papers that, when tested on their own, have actionable levels of heavy metals or pesticides, for example.
SC Labs, one of California’s licensed testing labs, found that 11% of rolling papers tested during a recent study would fail testing. The lab purchased 118 products from Amazon and several smoke shops in the Santa Cruz area. Its scientists tested 101 for heavy metals and 112 for pesticide contamination. At least one heavy metal was detected in 90% of the rolling paper products with 8% containing at least one heavy metal in concentrations above the allowable limits. Pesticides were detected in 16% of the samples with 5% coming in over the allowable action limits.
Because of this, pre-roll manufacturers need to be especially careful in their choice of paper supplier to ensure that the cones you pack your pre-rolls in don’t cause an entire batch of product to need to be destroyed, or worse.
Expert Insights and Recommendations
“Take due diligence to make sure your product is viable. Any one issue can be detrimental to your brand reputation,” says André Bayard, Compliance Manager at Custom Cones USA.
“In highly regulated markets, work with a company that focuses on those requirements and are trying to set the industry standard with their products,” Bayard says.
Conclusion: Upholding Standards
A testing failure can be cumbersome and costly, especially for smaller businesses, and can follow a company and its products even after the issue is corrected. You put a lot of care and effort into growing the best cannabis you can, so make sure your pre-roll supplier does too.
Join Us for More Exclusive Insights on California Marketplace
Striving to stay informed about California’s dynamic cannabis industry? We’re thrilled to invite you to two exciting NCIA events tailored for California’s vibrant cannabis industry. Mark your calendars for our upcoming California Stakeholder Summit being held in Sacramento, CA on Thursday, February 22nd and the California-focused edition of our Policy Matters webinar series being broadcast on Thursday, February 8th.
• California Stakeholder Summit 2024: Dive deep into the latest trends, regulations, and opportunities shaping California’s cannabis landscape. Join featured speakers United States Representative Congresswoman Barbara Lee (D-Oakland), Director of California Department of Cannabis Control, Nicole Elliot, and California Assembly Majority Leader Cecilia Aguiar-Curry (D-Winters). All industry professionals are invited; NCIA members attend free and have exclusive access to participate in the Q&A session. Register here to secure your spot.
• Policy Matters: Golden State Green – Regulating California’s Cannabis Industry: Join us for an insightful discussion on the evolving policies and regulations impacting California’s cannabis sector. Gain valuable insights from experts and thought leaders driving change in the Golden State. Register now to reserve your virtual seat.
Don’t miss out on these invaluable opportunities to stay informed, network, and shape the future of cannabis in California. Register today and be part of the conversation!
Overcoming Information Barriers: Data Silos in the Cannabis World
As the cannabis industry rides the waves of rapid globalization and acceptance, it is evolving into a multi-billion-dollar sector. And with this sudden influx of money, has also come an influx of data.
Unfortunately, the industry is evolving and growing faster than many businesses can keep up with, leading to roadblocks and obstacles that many businesses don’t have the infrastructure in place to adapt around. One such pressing issue is the compartmentalization of data within businesses, or “data silos”
When these silos occur, information is isolated from other systems, limiting accessibility and collaboration, and making it nearly impossible for data-driven decision-making.
The implications of siloed data
Data silos often appear when various departments within a cannabis enterprise, from cultivation to processing, distribution, and even retail, employ distinct information systems. Different facets of a business often utilize different tools and solutions, each with their own data infrastructure and programming. Although taking on multiple solutions can ease the initial burden for businesses trying to build their tech stack, this approach can lead to major processing hurdles later down the road.
The biggest drawback of this isolated data environment is limiting cross-departmental collaboration. Let’s paint a scenario: without a unified data system, cultivators might not be able to synchronize their production schedules with the sales trends identified by their retail and distributor outlets. This misalignment can lead to stock shortages, resulting in lost sales and disappointed customers. Conversely, it might also lead to overproduction, and in turn expired products and heavy storage expenditures over time.
Root Causes of Data Silos in Cannabis
To tackle this challenge head-on, it’s essential to first understand where it comes from. There are several major factors that contribute to the emergence of data silos:
Segmented Business Models: As cannabis businesses expand, they often segment into specialized units. Each of these units, with their unique operational needs, can inadvertently craft their own data management methods, leading to isolated data pools. Dispensaries may be employing different systems for their point-of-sale (POS), inventory management, ordering, and digital marketing. Without integrating the above systems, managers and C-suite individuals can’t properly align their supply-chain with sales strategies. Likewise, suppliers and distributors often lack transparency between the products they’re pushing out and what’s actually selling on retail shelves.
Regulatory Complexity: The cannabis industry is heavily regulated, and these regulations can vary widely from one jurisdiction to another. A lack of central federal guidelines means each state is left up to its own devices to determine how businesses remain compliant, and this problem is only compounded as we delve down into individual counties and territories. Different stages of the supply chain also have different data they must report, making it extremely difficult for vertically integrated businesses to ensure they’re covered on all fronts. With these varying regulatory demands, different departments may adopt distinct data tracking systems, further deepening the data divide.
Industry Infancy: The relative newness of the cannabis industry means there’s a continual influx of specialized technological solutions. Very little in the industry is standardized at this point, meaning each solution has its own approach to both data governance as well as data definitions. While these tools might be tailored to address specific needs, they can sometimes exacerbate data isolation if not chosen with integration in mind.
Challenges presented by data silos
Persisting with data silos introduces several operational hurdles. On a macro scale, isolated data complicates streamlining processes across the business chain. It introduces inconsistencies, creating a ripple effect that might not only compromise the quality of end products, but the efficiency in getting them into consumer hands.
Additionally, the overhead of managing multiple data systems can strain resources, both in terms of manpower and finances. Within the tightly regulated framework of the cannabis industry, these inconsistencies can magnify into compliance violations. This can lead to hefty fines, reputational damage, or in extreme cases, business closures. It takes just one failed audit to incur devastating losses, especially for smaller businesses that lack the capital to cushion heavier blows.
Strategies to overcome data silos
Bridging the data divide demands a two-pronged approach—technological adaptations coupled with organizational cultural shifts.
Promoting a collaborative data culture: The first step is to build an organizational ethos that places immense value on data-driven decision-making. Staff and management alike need to prioritize the value of data and adopt the mindset that “data is key.”
Such a culture should incentivize cross-departmental collaborations, fostering an environment where data sharing becomes the norm rather than the exception.
Unified data systems: Technological investments play a pivotal role. By adopting systems like industry-specific ERPs or advanced data integration tools, businesses can usher in a centralized data management paradigm. Such platforms not only facilitate data integration but also enhance analytics capabilities.
Data governance: Instituting a robust data governance framework ensures there are clear policies regarding data access and manipulation. This promotes data integrity and accuracy, striking a balance between facilitating data accessibility as well as maintaining regulatory compliance.
The role of data analytics
In today’s digital age, analytics may just be the cannabis industry’s biggest ally. Contemporary analytics solutions, especially those leveraging cloud technology, offer robust platforms to centralize, integrate, and analyze data. This allows businesses to harness insights from seed-to-sale and empower their overarching business strategies. By breaking down data silos, the cannabis industry can ensure operational agility and enhance customer satisfaction, positioning itself for sustained growth in a rapidly evolving landscape.
Navigating the Confusing, Crowded World of Cannabis Payments
When you’re a cannabis retail operator looking for electronic cannabis payment solutions you’re faced with a baffling array of options and it’s hard to pick out the ones you can trust and the ones that you should avoid at all costs. Every potential vendor is going to tell you that their solution is the best (trust me!) so you need to understand the basic landscape of cannabis payment solutions in order to know what questions to ask. There’s a lot of solid vendors out there that only want to help the industry but there are, sadly, those out there that prey upon a lack of familiarity with the crowded, confusing payments landscape to push solutions that are at best unsustainable and at worst fraudulent.
ACH transactions are a way for a person or a business to do direct bank money transfers.
These transactions are conducted on a computer network run by NACHA, the National Clearinghouse Association. Since these don’t run over the networks run by the credit card companies like Visa or Mastercard – known as “payment rails” – these transactions don’t violate their rules. While NACHA hasn’t officially made a statement either way about cannabis, their actions suggest they don’t have an issue processing these transactions over their network.
The downside with many ACH solutions is that they aren’t necessarily convenient for the buyer. Because a customer or patient can’t just pull out a bank card they are often required to download an app and provide banking details like account and routing numbers. This isn’t necessarily an issue from the second purchase forward, but this can be a bit of a pain for a customer or patient trying to use an app for the first time if they’re not expecting to have to go through an account onboarding process that might take several minutes. The upside to this is that there are platforms that allow the buyer to upload funds via ACH to an eWallet, which, after the initial transaction, will enable them to make instant purchases. Platforms also allow the buyer to automatically replenish their eWallet via ACH, allowing them to always have funds to make purchases. These purchases can also be combined with a store’s loyalty points program.
Questions to ask about ACH solutions:
What does a customer or patient need to do to use the solution?
How long does it normally take for the funds to transfer, allowing a user to make purchases?
Are there any contactless platforms that allow a buyer to purchase the product for delivery or curbside pickup?
Do you need additional hardware to display a single-use QR code specific to the transaction?
Cashless ATMs and PIN Debit solutions are among the most common electronic payment methods that allow customers to directly use cards.
To discuss the issues that go along with any card-based solution we need to take a step back and talk about how payments are processed. As previously mentioned, every credit card company has a set of rails used by merchants to process a sale over their network. Each transaction is sent as a packet of information that broadly contains the following information: name of business, location of business, any additional merchant information, and merchant category code (MCC).
Every transaction has to be associated with a four digit MCC used by the merchants to indicate the nature of the business and the transaction. The code that’s traditionally been used by cashless ATMs and PIN Debit solutions is 5912, reserved for pharmacies and “cannabis (where legal to do so)”. This is what’s used in Canada where credit cards are an option but it’s not an acceptable option in the US because the major credit card networks have clarified that their rails cannot be used for the purchase of marijuana. They do so by prohibiting activities associated with “controlled substances, or recreational/street drugs” (VISA) or even more broadly “any Transaction that is illegal” (Mastercard) in their operating agreements.
It’s important to note that you can’t just randomly choose an alternative MCC because miscoding constitutes fraud. You may remember a few years ago that California-based delivery company Eaze was prosecuted in 2019 for using MCC codes associated with things like “carbonated drinks, green tea, face creams and other products” in an attempt to obscure the fact that the network was being used for the direct purchase of marijuana.
It should be noted however that there are a few ATM networks out there that aren’t directly owned by the big credit card companies like NYCE, Allpoint, Star, and Moneypass. These companies have been relatively quiet regarding the use of their networks for the purchase of marijuana products, so there is an argument to be made that if card transactions are sent over those rails they’re not violating any operating rules, but anecdotally we’ve heard that some of these networks aren’t necessarily cannabis friendly and, as private companies, they’re able to change their mind (for or against) whenever they wish.
Questions to ask about Cashless ATMs and PIN Debit solutions:
What MCC code is the payment processor using?
What network is being used to process the transaction?
Credit cards are notoriously off-limits to cannabis because of the very public positions taken by the major card networks but that doesn’t stop companies from popping up offering credit card processing for cannabis purchases. Let’s clarify here at the outset – there is no way to directly purchase marijuana with a credit card in the United States with a credit card from American Express, Visa, Mastercard, or Discover.
So, with necessity being the mother of invention, some companies are trying out a new strategy to get credit card processing into dispensaries legally. Among them are solutions that take advantage of another MCC code: 6051. This code is associated with the purchase of “liquid and cryptocurrency assets” and some enterprising payment providers are using it to set up a structure where a customer isn’t “technically” buying marijuana. Instead they are “buying” what’s called a “stablecoin”, a form of cryptocurrency whose value is pegged 1:1 to the US dollar.
Questions to ask about cryptocurrency or stablecoin solutions:
What MCC code is the payment processor using?
What stablecoin is being leveraged?
How is the stablecoin preserving its value?
What will the offramping of funds from a crypto wallet to my DDA account look like to my bank?
Cannabis retail operators are faced with serious business and legal considerations when determining the payment processing solution provided to patients and customers. What solution will be the easiest for the customer? Is the solution compliant?
The cannabis industry’s evolving legal and regulatory landscape is challenging, especially with bad actors seeking to implement non compliant make-shift payment solutions intended to capitalize off of cannabis businesses seeking efficient and effective cannabis payment solutions. It is essential that you do your due diligence on cannabis payment solutions presented to your business to confirm that it will not cause an issue for you, the business and its patterns and customers. We hope that this article outlines considerations that will allow you to protect your business and its patients and customers.
Committee Blog: Production of Cannabis Infused Products – A Guide to Optimal Facility Design and Workflow
The burgeoning cannabis industry continues to grow and diversify. One sector that’s seen significant expansion is cannabis-infused food production. In this industry, meticulous facility design is crucial to ensure product quality, worker safety, and regulatory compliance.
This article discusses key design considerations for creating an efficient, safe, and regulation-compliant cannabis food production facility.
Begin with the End in Mind
This may seem more philosophical than operational but adopting this mindset early in your design process can help you avoid common pitfalls that seem to plague even experienced cannabis professionals. So, what does it mean to “begin with the end in mind?” It simply means that you need to define a lot of aspects of your business before you begin design. A very simple example of this is: What product(s) do you want to produce in this facility?
This might seem like a simple question, but there is tremendous complexity lurking just below the surface. While a commercial kitchen in a facility such as a restaurant might be a very flexible space allowing for the production of multiple products using the same space and equipment, food manufacturing of shelf-stable products requires a bit more specificity. Let’s pick a single product as an example: Gummies. Here are a few questions and decision points that need to be addressed before diving into design specifics:
Do you have a recipe for your gummies?
Does your recipe require specific equipment for production? Does that equipment require ventilation (i.e., a hood)?
Have you set throughput and volume targets for production (i.e., how many gummies do you want to produce per hour/day/month, etc.?)
How will your product be packaged?
Will more than one type of product be produced in this same room/area?
If so, how do you plan to mitigate cross-contamination risks?
Have you defined a facility workflow that maps a product’s process from component parts (ingredients) to processing to packaging to storage and delivery?
This is a very incomplete list but demonstrates the fact that a simple product decision comes with a multitude of related decisions that must be made to successfully implement the production process. For example, your decision on your facilities throughput goals directly impacts your equipment choices. Are you doing artisanal, hand-crafted gummies in small batches or are you producing gummies at scale for maximum throughput?
Do you plan to start with one product and eventually expand to other products? Knowing this in advance allows you to strategically plan for those potential line-extensions. The design of an area in your facility to produce one kind of product does not necessarily effectively translate to the production of a different product. The equipment, space-planning, and process-planning for the production of gummy products is very different from the production of baked edibles or chocolate edibles for example. Knowing what you ultimately want to do can help you strategically design for the future and avoid potentially costly retrofits. There is no “one-size-fits-all” cannabis kitchen design.
Another important consideration is the development of Standard Operating Procedures (SOPs). SOPs are a key component of developing Good Manufacturing Processes (GMP) which is becoming increasingly critical to manufacturing in the cannabis industry. Understanding and documenting how things should be done will give you key insights into what is needed in your overall facility design.
This mindset of working backwards from your goal can be applied to almost every aspect of your operation. This includes things such as labor schedules, purchasing guides, order scheduling, storage, packaging, delivery and more. Define your goals and outputs and then work backward from there.
Space Planning
The first crucial consideration is space planning. It is imperative to account for all operational aspects of the facility, from storage and production to packing and shipping. Ensuring there is adequate space for these activities contributes to the workflow efficiency and helps maintain a safe work environment.
Storage areas should be designed to accommodate raw materials, finished products, and waste materials separately. Temperature-controlled areas may be necessary for perishable ingredients or to maintain product stability.
Production areas need sufficient space to house specialized equipment for cannabis food production. These can include extraction machines, distillation other laboratory equipment, infusion systems, and commercial kitchen appliances for food preparation. The areas should also facilitate the movement of employees and materials.
Packing and shipping areas need to accommodate packing materials, finished product cases, and space for shipping operations. Depending on your scale, this may include room for pallets, forklifts, or other necessary equipment.
Workflow Design
An optimized workflow is critical for efficiency and safety. The design of the facility should facilitate a streamlined flow of materials from receiving to shipping. This ‘one-way’ flow can help prevent cross-contamination and reduce movement of personnel and materials.
Special consideration should be given to the workflow around extraction and infusion processes. These are complex and sensitive steps that involve precise control over temperature and pressure. The facilities should be designed to allow for these activities to be conducted safely and efficiently.
Equipment Planning
When planning for equipment, several considerations come into play. Firstly, understanding the power requirements for the extraction, infusion, and food production equipment is paramount. Adequate electrical infrastructure needs to be installed to meet these demands.
Drainage is another critical consideration. Extraction processes can produce significant waste that needs to be safely disposed of. Furthermore, commercial kitchen operations require a professional-grade drainage system.
Lastly, space must be set aside for regular equipment maintenance and potential upgrades. The rapid pace of innovation in the cannabis industry means equipment can quickly become outdated and need replacement.
Food Safety Best Practices
As a food production facility, following best practices for food safety is a must. This includes implementing Hazard Analysis and Critical Control Points (HACCP) plans to identify potential hazards and establish procedures to mitigate them.
Facilities must ensure appropriate hygiene measures, including handwashing stations and employee changing areas. Special attention should be given to allergen management, considering the diversity of ingredients that could be used in cannabis-infused foods.
Proper ventilation is a key factor in maintaining air quality and controlling odors, which can be a significant issue in cannabis production facilities. An effective ventilation system will also help control humidity, which can impact both the quality of the product and the longevity of the equipment.
Putting It All Together
The design of a cannabis food production facility is a complex task requiring a clear understanding of the production process, equipment requirements, safety considerations, and regulatory compliance. Through thoughtful planning and design, producers can build a facility that not only meets these demands but is also flexible enough to adapt to the ever-changing landscape of the cannabis industry.
Member Blog: Transportation Woes – The Unique Risks Cannabis Businesses Face and the Need for Specialized Insurance
In recent years, the cannabis industry has continued to grow with the legalization movement gaining momentum across the globe. As the market expands, so do the unique risks that cannabis businesses face, particularly when it comes to transportation. From theft and accidents to regulatory compliance, navigating the road to success in the cannabis industry requires adequate insurance coverage. In this blog post, I will explore the specific risks cannabis businesses encounter during transportation and the increasing importance of insurance products tailored to these challenges.
The Rising Threat of Theft
Protecting your valuable cargo from theft is a constant concern for cannabis businesses, especially during transportation. The high value of cannabis products makes them an attractive target for criminals. With high value products and cash amounts involved, the consequences can be devastating. That’s why it’s crucial for cannabis businesses to invest in insurance policies that specifically address theft risks during transportation. These policies can provide coverage for stolen goods, ensuring that businesses can recover from such losses and continue to thrive.
On the Road
Whether a retail delivery or wholesale distributor, transporting cannabis comes with its own set of challenges, particularly when it comes to employee safety, accidents and liability. Cannabis businesses must comply with strict regulations regarding transportation, including proper labeling, packaging, storing, tracking and secure transport methods. Additionally, accidents involving cannabis delivery vehicles can result in property damage, bodily injury, or even fatalities. Insurance products tailored to cannabis transportation risks can provide coverage for these eventualities, protecting businesses from costly lawsuits and providing peace of mind.
Staying Compliant
Navigating regulatory compliance with ever-changing regulations is a top priority and can be a challenge for any cannabis business. When it comes to transportation, the rules can be even more complex. Each jurisdiction has its own set of regulations governing cannabis transportation, such as licensing requirements, transport manifest requirements, and restrictions on the quantity of cannabis allowed per shipment. Failure to comply with these regulations can lead to significant penalties or even the suspension or loss of a cannabis license. Insurance products designed for the cannabis industry can help businesses stay compliant by providing coverage for regulatory fines and legal expenses.
Tailored Insurance
Meeting the unique needs of the cannabis industry and recognizing the unique risks faced by cannabis businesses, insurance providers have developed specialized products to address these challenges. Cannabis transport insurance policies offer elements of risk transfer strategies by providing comprehensive coverages, including theft, auto damage, liability and employee injury, while simultaneously meeting regulatory compliance issues. These tailored insurance solutions are essential for cannabis businesses, providing financial protection and ensuring business continuity in the face of inherent risk.
In general, the transportation of cannabis presents unique risks for businesses operating in the industry. From the constant threat of theft to accidents and regulatory compliance challenges, cannabis businesses must be prepared to face these risks head-on. Insurance products tailored to the specific needs of the cannabis industry offer crucial protection, allowing businesses to navigate the road to success with confidence. Investing in this insurance is not just a wise business decision — it is an essential step towards safeguarding the future of your cannabis business.
Service Solutions | 9.21.22 | Does Your Video Surveillance Monitoring Method Put Your Business at Risk?
NCIA’s Service Solutions series is our sponsored content webinar program which allows business owners the opportunity to learn more about premier products, services and industry solutions directly from our network of established suppliers, providers and thought leaders.
In this edition originally aired on Wednesday, September 21, 2022 we were joined by the experts from Netwatch North America and Sapphire Risk Advisory Group to discuss the stark differences between the most common methods businesses choose for video monitoring to clear up the confusion about the best method for your type of business.
Every business needs a video surveillance system to guarantee the security of its premises and improve business operations. As a high-risk industry, cannabis businesses have an even greater need for these systems. Cultivation facilities, processing labs, and dispensaries are high-value targets for potential criminals due to the large amounts of currency and cannabis products stored on-site.
In addition, these systems are necessary to remain compliant with local or state law. However, while regulations require cannabis businesses to equip their facilities with a functioning video surveillance system, regulations can be less restrictive about how these systems are monitored. Yet, the method of video monitoring chosen can determine how effective the business can be at reducing and preventing criminal activity.
You’ll leave the program with a roadmap for next steps to take to evaluate the methods currently in place, how best to conduct an assessment and implement new systems to ensure the security of your business AND the safety of your employees.
In this session, you will learn:
• What are the most common video monitoring methods for cannabis businesses?
• How does each method monitor, detect unauthorized activity, and comply with canna regulations?
• What is the best option for your type of business?
41:30 – Audience Q&A (When should I reach out to a PVM company during the cannabis business planning process?)
43:29 – Audience Q&A (What VMS systems does Netwatch currently integrate with?)
44:45 – Audience Q&A (Do insurance companies reward operators for proactive video? Is activity reporting for proactive surveillance a regulatory requirement in MA or other jurisdictions?)
46:42 – Audience Q&A (How does working with a security company like Sapphire help to save my company money?)
48:26 – Audience Q&A (How important and common are camera analytics in the industry?)
52:09 – Audience Q&A (Should I choose the security integrator/manufacturer to work with first or my video monitoring method?)
54:39 – Audience Q&A (How do you get in touch with a risk consultant?)
55:50 – Final Thoughts & Upcoming Events w/ Netwatch & Sapphire Risk Advisory Group
Service Solutions | 7.13.22 | Scarcity Shouldn’t be Scary – How to Fund Your Growth
NCIA’s Service Solutions series is our sponsored content webinar program which allows business owners the opportunity to learn more about premier products, services and industry solutions directly from our network of established suppliers, providers and thought leaders.
In this edition originally aired on Wednesday, July 13, 2022 we were joined by e2b Teknologies whose team of leading integration & technology experts discussed some easy steps to prepare your business for funding and accelerated growth. As you all know, competition was stiff for funding prior to 2022 but with the current economy and rising interest rates, capital is much harder to acquire today. You should be taking steps get noticed and get the MONEY you need to grow your business now.
After viewing you’ll walk away with a better understanding of:
• How to leverage a team properly
• What’s most important – It may not be what you think.
• What’s necessary in terms of reporting, compliance, and record-keeping
• Evaluating potential technology partners
Sit back and settle in for an informative and timely program outlining the challenges facing operators and how you can position yourself for success with the right tools to help succeed at scale.
Member Blog: High Five – The Top Ways an Integrated Cannabis Technology Solution Supports your Business
by Daniel Erickson, Director of Product Strategy, ProcessPro
Anyone involved in the cannabis industry is well aware of its exponential growth and the corresponding pressure for companies to increase performance, enhance quality, optimize operations, and maintain data integrity and control. In this complex environment, reliable technology and the use of disparate and manual systems not only affects profitability but also creates a competitive disadvantage in the market. Progressive cannabis companies are finding the potential that a single, comprehensive business system can bring to their operations to streamline processes. An integrated enterprise resource planning (ERP) solution’s features and functionalities support cannabis businesses in five key areas.
Cultivation Management
Cannabis ERP software with cultivation management functionality enables cultivation, manufacturing, and dispensary operations to manage, log, and report on every movement of individual plants throughout the entire supply chain in one platform, tracking growth and production to assist with regulatory compliance. Greenhouse recording and package IDs management within the solution can include recording activity costs, quality checks, audit trails, inspections, strain tracking, harvesting techniques, plant health, growing conditions, and batch yields. Evaluation of this data helps determine ideal conditions for maximum plant growth and yields to improve productivity as well as provide information to run a cost-efficient operation.
Regulatory Compliance
The highly regulated cannabis industry requires companies to maintain detailed, accurate, and real-time records to mitigate the consequences of non-compliance with state regulators, auditors, and law enforcement agencies. Constantly changing state laws and specifications require businesses to keep pace with these developments as well. It is predicted that federal legislation for the cannabis edibles market will closely align with current FDA regulations in the food and beverage market, and adopting the current manufacturing practices utilized in those industries can make the transition seamless for proactive cannabis manufacturers.
Cannabis ERP tracks, measures, documents, and reports on compliance initiatives including licensing requirements, waste disposal protocols, transportation records, compliant packaging and labeling, and tax payments – accommodating multiple locations, jurisdictions, countries, and intra-industry verticals. A solution with integrations to state government-approved software, such as METRC, Biotrack THC, and Leaf Data Systems, helps to ensure reporting is accurate and timely.
Seed to Sale Traceability
Critically important to the cannabis industry, tracking of accurate inventory and locations of valuable cannabis products mitigates theft and controls regulatory risk. A cannabis technology solution provides real-time seed-to-sale visibility of the supply chain by managing and automating transactions and lot tracking and traceability capabilities – ensuring security and accountability by utilizing user-based software permissions to validate employee transactions.
Inventory control monitoring tracks appropriate stock levels, monitors shelf life, and documents product loss due to damage, shrinkage, and accidental or purposeful destruction. To facilitate production and purchasing, the integrated functionality of material requirements planning (MRP) allocates the use of resources to ensure there are sufficient raw materials and ingredients to meet customer demand. An ERP solution helps prove the chain of custody, establish and uphold safety standards, increase accountability, and limit factors leading to compliance and health risks – reducing the possibility of unsafe products entering the marketplace.
Formula and Recipe Management
Comprehensive and tight management of formulas and recipes is essential in this consumer-driven market in which product quality and consistency in regards to taste, texture, appearance, potency are correlated to a company’s brand. Cannabis ERP maintains raw material data, production notes, versions, and revisions within each Bill of Material. The solution should also calculate nutritional information to include ingredients and allergens to produce accurate labeling, reporting, and product packaging necessary for consumers of cannabis edible products – providing traceability and a documented labeling history to identify items quickly in the event of a product recall. To support new and innovative delivery methods and products, research and development functionality within a cannabis ERP solution streamlines new product development and introduction into the market. The ability to experiment and test in a sandbox environment without affecting current production allows for easily transitioning approved products to live production.
Reporting and Analytics
By gathering data from all areas of the business in a centralized database, cannabis software makes it possible to analyze what is working within the operation and what is not. In the area of cultivation, adjustments to nutrients or other conditions can improve yield and lead to improvements in financial performance. Businesses can benefit from the ability to track consumer purchasing fluctuations in regards to holidays and seasonal trends to help navigate supply chain challenges and forecast demand. When data is collected throughout the life cycle from seed to sale, businesses are able to identify patterns, predict trends and changes in consumer taste, and help plan for the future – allowing companies to make data-driven business decisions.
Integrated features such as cultivation management, regulatory compliance, seed-to-sale traceability, formula and recipe management, and reporting and analytics offer a competitive advantage for cannabis businesses. In the dynamic cannabis marketplace, the functionality available in cannabis ERP provides the technological tools that companies need to thrive in a world with increasingly tighter profit margins and regulations.
Daniel Erickson, Director of Product Strategy, has been with ProcessPro since 1999. As the Director of Product Strategy, Daniel focuses on driving overall market success by ensuring products meet both current and future market demands. Leveraging his extensive understanding of process manufacturing, the unique business trends of this industry and information gathered from market analysis, customer feedback and regulatory compliance, he drives product decisions. Daniel has a passion for connecting the benefits of ProcessPro’s ERP solution and analytics software packages to batch process manufacturers and helping to effectively solve their key business challenges. Daniel has held a variety of positions within ProcessPro, including implementation, account management, product consulting, product management and sales, which has provided him an aptitude for manufacturing and the nuances within the food and beverage, nutraceutical, personal care, pharmaceutical, cannabis and chemical industries. His diverse experience with the customer base and within ProcessPro provides a strong foundation for his position.
Follow NCIA
Newsletter
Facebook
Twitter
LinkedIn
Instagram
News & Resource Topics
–
This Just In
Member Blog: What Consumers Really Want in a Pre-Roll
Member Blog: The Evolving Cannabis Legal & Regulatory Landscape in 2026