MJBiz Magazine April 2022

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APRIL 2022

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How to Deal With Online Reviews MAGAZINE VOLUME 9 • ISSUE 4 • $12.95

Retail Executive Reflects on Pandemic Impact Beverage Lid Provides CBD on Demand

Calibrating

Quality

From standards development to precision dosing, good manufacturing practices are gaining importance in the cannabis industry



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April Table of Contents

FEATURES

8

From the Editor COVER STORY

CALIBRATING QUALITY

From standards development to precision dosing, good manufacturing practices are gaining importance in the cannabis industry.

12

Five Questions With Ryan Sinclair

14

Hemp Notebook

16

Company News

20

46

Industry Developments

FIVE-STAR SERVICE

Retail and SEO veterans say it’s important to respond to online reviews—and learn from them.

52

Industry Players

56

Unboxed

57

Our Advertisers

APRIL 2022

58

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How to Deal With Online Reviews M AGA Z I N E VOLUME 9 • ISSUE 4 • $12.95

Seed to CEO

Retail Executive Reflects on Pandemic Impact Beverage Lid Provides CBD on Demand

On Our Cover Calibrating

Quality

From standards development to precision dosing, good manufacturing practices are gaining importance in the cannabis industry

Gardener Nick Swartz checks the water level on a tray of clones in Cresco Labs’ cultivation facility in Kankakee, Illinois. Courtesy Photo

4 April 2022 | MJBizMagazine

DEPARTMENTS

32

MJBizMagazine April 2022 Volume 9 • Issue 4


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CONTACT US Who’s Behind This Magazine?

Magazine feedback We are here to help the multibillion-dollar cannabis industry prosper. Let us know how we can serve you. Email us at magazine@mjbizdaily.com with your thoughts, suggestions and any other feedback about the magazine and the stories we cover.

MAG AZI NE

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FROM THE EDITOR Kate Lavin

Real-Life Case Study The deadly vape crisis of 2019-20 underscores the importance of quality control

N

othing drives home the need for quality assurance in consumer products like a public-health crisis. Two-and-a-half years ago, Americans began reporting to emergency rooms with a mysterious lung ailment. With patients of all ages, races and genders popping up around the country, it took weeks to identify the common thread: vape pens and vape cartridges. The public waited even longer to learn the culprit that was making patients sick. In the past, some vape manufacturers used vitamin E acetate as a thickening agent without negative effects. But some producers of tobacco, THC and CBD vapes increased the quantity of synthetic vitamin E they used to cut costs, and the results were disastrous. By the time the regulators identified vitamin E acetate as the cause of the vape crisis, dozens had died and hospitalizations shot past 2,700.

Write Down Your Recipe

Speaking about the importance of good manufacturing practices for this month’s cover story, David Vaillencourt, CEO of the GMP Collective in Colorado, said the vape crisis could have been avoided if manufacturers—most of them, but not all, working in the illicit market—had kept a list of the raw materials used in their disposable vapes and vape cartridges. The prospect of selling an inhalable product without detailed

8 April 2022 | MJBizMagazine

records of raw materials used should be alarming to anyone selling consumer packaged goods. After all, even hobby bakers can tell you where they buy chocolate chips. “No state was saying, ‘Test for vitamin E acetate.’ That wasn’t a risk factor that anybody identified,” Vaillencourt told MJBizMagazine reporter Omar Sacirbey. “We just didn’t think to test for it.” I can’t imagine a worse way to find out.

A Call to Action

With the vape crisis largely eclipsed in our collective memory by another deadly pulmonary illness, COVID-19, it’s imperative we remember the consequences of poor product sourcing, bad quality control and fudging test results. Fortunately, Vaillencourt and others interviewed for this issue have outlined how cannabis companies can, among other things: • Vet suppliers. • Implement new standard operating procedures. • Independently test raw materials. • Calculate inputs for dosing. In the cover package starting on page 32, we also hear from qualitycontrol specialists at multistate operators about how they standardize manufacturing and testing procedures when regulations vary widely between markets. In addition to the steps above, “We monitor everything that is happening at the state level on a granular basis,” Ellen Deutsch, senior vice president at Acreage

Holdings, told MJBizMagazine's Bart Schaneman. She added that the company is in constant contact with regulators in every state where Acreage does business, so regional managers are aware of upcoming hearings and plans to execute changes. Also in the cover package, laboratory specialists discuss testing challenges that are unique to cannabis, and we hear from representatives of standardsdevelopment organizations about how they are working together to create cannabis-specific testing methods.

Managing Online Reviews

Elsewhere in this issue, reporter Kate Robertson speaks with executives from retail stores and web-based cannabis platforms about best practices for handling online reviews. More than one-third of Weedmaps users said reviews from “verified purchasers” were important when making buying decisions. And while negative feedback is inevitable, it could be an opportunity to right a wrong—and polish your company’s reputation.

Kate Lavin is the editor of MJBizMagazine. Reach her at kate.lavin@ mjbizdaily.com.





FIVE QUESTIONS with Ryan Sinclair

Post-Pandemic Retail Your CBD Store’s chief marketing officer discusses retailing trends in the cannabis sector By Kristen Nichols

C

ustomization and no-contact delivery are two big retail trends that appear to contradict one another: Consumers are looking for personalized formulations, but they don’t necessarily want to spend a lot of time in a store. The twin trends present a special challenge for cannabis retailers—both those selling high-THC marijuana in regulated markets and those selling low-THC hemp extracts nationwide. That’s because cannabis retailers must also navigate a thicket of confusing legal requirements as they fend off challengers from the illicit market. To find out how a large, multistate cannabis operator captures the wellness-minded consumer while juggling complex regulations, MJBizMagazine caught up with Ryan Sinclair, chief marketing officer for Your CBD Store, a Florida-based chain of franchised cannabinoid retailers with more than 500 locations in the United States and United Kingdom.

How has the pandemic changed cannabis retail? There’s greater consumer desire for convenience. They’re willing to spend more to get that convenience. For some of the other CBD brands, they didn’t have the brickand-mortar locations that we had with a community we’d already created. I think that’s one thing

12 April 2022 | MJBizMagazine

health claims about your products? We have an extensive training program that all our store owners go through to learn how to communicate everything around CBD and the endocannabinoid system. We’re not going to put a product out there and make claims that it can prevent COVID or cure COVID. But there’s an opportunity to dig deeper into those cannabinoids and the potential that those cannabinoids have. Ryan Sinclair

that’s helped us not just maintain our business levels through the pandemic but continue to grow. Going forward, there’s a tremendous opportunity for us to grow our online presence. The key there is focusing on it in the right way. We deliver an amazing experience in our stores, providing that touchpoint, that interaction with someone who can help walk you through a journey or help explain a new product. We want to be able to translate that to our online experience. And that’s something that we’re in the middle of working on right now.

Consumers have seen a flurry of headlines about CBD’s potential to treat COVID-19. How do you capitalize on that news without making illegal

One retail trend that accelerated during the pandemic is no-contact shopping and curbside delivery. Do you think no-contact shopping is coming to cannabis? It’s a huge point of differentiation for our brands, having that expert in the store and having that interaction in the store. Especially as we continue to bring new products to market, it’s important for that interaction to happen. But I will say a key focus for us going forward is to improve our online experience that we offer our customers, whether that’s helping them order products online that they can pick up in-store or providing them additional information on new products that are coming out and an easy way they can go pick them up. Still, that connection to the wellness expert in our stores


FIVE QUESTIONS is critical. And that’s going to be a part of what we are going forward.

Some of your stores sell delta-8 THC, an intoxicant made from hemp extracts. Why carry D-8 when there are so many legal questions across the states where you do business? Our focus is on health and wellness. We looked at the opportunity to add products based on consumer demand. And we have product lines that we’re very confident … meet all of the legal requirements. We want to put products out there that there’s consumer demand for. That’s where our business is today and why the

product lines were developed. They were developed using stringent testing. So, we’re confident. as we put these products out in the 500 locations across the country where we can have these products on the shelves, that they meet the standards across the country.

What retailing trends are on your radar for the next 12 months? We’ve had some exciting product launches in the past six months really focused on minor cannabinoids. We launched our first weight-loss product in October 2021 … and it’s been received extremely well by our store owners and by their customers. We’re excited about the growth specifically connected to minor cannabinoids.

We’re also trying to identify opportunities in what consumers are looking for, to develop products that they want. Beverages are a huge category that is growing. We’re excited to be really digging into research around beverages and trying to develop some products that make sense for us to put out on our store shelves. This interview was edited for length and clarity.

Kristen Nichols covers hemp for MJBizMagazine. She can be reached at kristen.nichols@ hempindustrydaily.com.


HEMP NOTEBOOK Kristen Nichols

Is the FDA … Right? Why U.S. drug regulators don’t deserve so much criticism from the cannabis industry

A

re you sitting down? Because I have nice things to say about Enemy No. 1 in the hemp industry: the U.S. Food and Drug Administration. I know, I know! I write this while ducking metaphorical shoes being hurled at my head from anyone in the CBD industry. As everyone in the hemp industry knows, the FDA says that the cannabinoid has great medicinal value. But the FDA also says that CBD can’t be sold without a prescription because GW Pharmaceuticals, now part of Jazz Pharmaceuticals, has sole clearance to market the cannabinoid they researched for 20 years before getting approval to sell it. Here’s where many in the cannabis industry roll their eyes: How can any one company be awarded an entire market for a molecule that exists in nature and has been used therapeutically for thousands of years? I understand the frustration. It makes sense that hemp operators by the thousands ignore the “exclusionary rule” that gives pharmaceutical companies the ability to profit without any competition. The rule is downright un-American. But as we focus this month on safety and quality in a cannabis industry that has grown so big you can buy cannabinoid treatments at countless convenience stores and bodegas, it’s worth considering

14 April 2022 | MJBizMagazine

the value of pharmaceutical-grade cannabis products. Do they have a place in the industry?

MEDDLING FOR GOOD Let’s back up and consider why the “exclusionary rule” even exists: In 1994, Congress needed a way to regulate dietary supplements and keep quack cure-alls off store shelves. At the same time, Congress needed to preserve a profit motive for companies to spend decades (and hundreds of millions of dollars) researching new drugs for rare medical conditions. Otherwise, there would be no incentive for pharmaceutical firms to develop anything but blockbuster drugs for wealthy people. So, when the FDA gave a pharmaceutical company the sole right to market CBD medicine more than two decades ago, it had good reason. At the time, there weren’t a lot of companies lining up to drop nine figures researching a drug to treat rare types of epilepsy in patients too young to hold jobs.

NOT JUST GW We all know GW Pharmaceuticals wasn’t working alone. Basement and backyard breeders also toiled for years to unlock the healing power of the cannabis plant, work that too often won them nothing but felony convictions and jail time. But that’s not the FDA’s fault.

Rather than bash the FDA for not giving CBD operators the green light to sell products over the counter, let’s acknowledge that the agency has largely resisted a national CBD crackdown. (I duck again to avoid the arrows of those who have gotten FDA warning letters—but let’s be honest, it could be much, much worse.) I also believe the industry owes a begrudging nod to GW Pharmaceuticals for jumping through hoops for more than two decades to prove that cannabis contains powerful medicine, then ignoring over-the-counter CBD competitors (despite having every legal right to want them shut down). There are sick kids out there whose parents would never give them a drug that didn’t have FDA approval. Those kids now have access to cannabis medicine because of the pharmaceutical industry and the annoying “exclusionary rule.” Everyone reading this knows that cannabinoid epilepsy treatments are just the tip of the iceberg. Let’s not disincentivize pharmaceutical cannabis research in a scramble to profit off the plant.

Kristen Nichols covers hemp for MJBizMagazine. She can be reached at kristen.nichols@ hempindustrydaily.com.



COMPANY NEWS U.S., Canada & International by MJBizDaily & Hemp Industry Daily Staff U.S. DEVELOPMENTS Moxie Sues Green Growth Backers Over Failed Merger

California marijuana operator Moxie is suing the billionaire Schottenstein family backing insolvent Green Growth Brands, claiming fraud in connection with a $310 million merger deal that was scrapped in 2019. Moxie filed the suit as MXY Holdings against the Ohio-based marijuana and CBD company’s founder, Joseph Schottenstein, his family members and others. The suit claims the defendants fraudulently misrepresented their intentions, persuaded Moxie to loan $5 million to Green Growth Brands, then canceled the merger deal without repaying the loan or a $10 million stock-termination fee.

Safe Harbor to Trade on Nasdaq Via $185M Deal

Safe Harbor Financial, a cannabis financial institution led by Sundie Seefried, announced a definitive agreement to be taken public by Northern Lights Acquisition, a blank-check business also known as a special purpose acquisition company (SPAC). Under the $185 million merger, New York-based Northern Lights, an affiliate of Luminous Capital, will pay $70 million in cash and $115 million in common stock to acquire Safe Harbor, a subsidiary of Colorado-based Partner Colorado Credit Union.

Ancillary Cannabis Firm Raises $135 Million

Agrify, a Massachusetts-based developer of indoor agriculture technology, signed a definitive agreement to raise as much as $135 million from a debt financing to strengthen its balance sheet and support continued growth.

16 April 2022 | MJBizMagazine

Under the senior secured debt facility, $65 million will be immediately available at closing. The remaining $70 million can be drawn at $35 million increments depending on certain conditions.

Native Roots Founders Win $140M in Arbitration

A nearly fiveyear legal battle over ownership of Colorado marijuana retail chain Native Roots is nearly over, with two of the owners winning a $140 million judgment against their partner for breach of contract. According to arbitration records, the ownership dispute began in 2017, with founders Josh Ginsberg and Rhett Jordan on one side and owner/investor Peter Knobel and his company, Brightstar, on the other. Knobel attempted to take over Ginsberg and Jordan’s ownership portions of the company to complete a sale. However, Ginsberg and Jordan refused to sell and forced Knobel into arbitration.

MedMen Sells License and Assets in Florida

California-based MedMen Enterprises is exiting the Florida medical cannabis market with the sale of its business license and all its assets in the state for $83 million. According to a news release, MedMen sold its Florida assets to Fort Lauderdale-based Green Sentry Holdings in an all-cash deal that included seven dispensaries, cultivation operations and inventory. MedMen will also license its trademarks to Green Sentry for two years.

Flora Growth Closes $30M Acquisition of JustCBD

Toronto-based cannabis company Flora Growth Corp. says it has the United States, Germany and Mexico in mind as it closes a $30 million cash-and-stock acquisition of Miamibased JustCBD. The deal includes $16 million in cash and an additional 9.5 million Flora common shares issued to the companies that own and operate JustCBD, Just Brands and High Roller Private Label.

Court Dismisses Patent Suit Against GW Pharma

A Texas court dismissed a lawsuit accusing pharmaceutical CBD maker GW Pharmaceuticals of violating another company’s patented extraction method for its epilepsy drug Epidiolex. The 2020 lawsuit from Canadian cannabis producer Canopy Growth Corp. alleged that GW, now part of Jazz Pharmaceuticals, knowingly used a Canopy-patented cannabis extraction method.

Cann Raises $27 Million, Launches in Canada

Los Angeles-based cannabis beverage maker Cann raised $27 million in a Series A funding round. Investors included unspecified “fresh institutional capital,” existing backer Imaginary Ventures and a list of celebrity investors. Cann said it also launched its drinks in Ontario, Canada’s largest provincial market, “with British Columbia and additional provinces launching in the coming months.” The beverages are being produced in Canada by Truss Beverage, a joint venture between Canadian cannabis producer Hexo Corp. and brewer Molson Coors Canada.


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COMPANY NEWS U.S., Canada & International INTERNATIONAL DEVELOPMENTS Tilray Throws Lifeline to Hexo Via Debt Purchase

New York-based Tilray Brands plans to acquire up to $211 million (CA$267.5 million) in outstanding senior secured notes issued by Hexo Corp., effectively throwing its troubled rival a lifeline and striking an alliance with the Quebec cannabis producer.

Under terms of the proposed deal, the notes would be amended to permit Tilray to exercise conversion rights at a price of 71 cents per Hexo share and acquire approximately 40% of the troubled company. Tilray CEO Irwin Simon said the proposed deal would be good for both companies, as it would effectively initiate a strategic alliance between two of the top marijuana producers in Canada “with complementary brand portfolios.”

Canopy Growth Dropped From S&P/TSX 60 Index

Smiths Falls, Ontario-based cannabis producer Canopy Growth Corp. was deleted from the S&P/ TSX 60 Index effective March 21. Companies need to maintain a minimum capitalization weight of at least 0.04% of the index. Canopy stock had fallen almost 90% since it was added to the index in April 2019.

Jones Soda Buys Canadian Firm, Raises $11M

Seattle craft beverage maker Jones Soda acquired a Canadian shell company and raised $11 million in concurrent financing

18 April 2022 | MJBizMagazine

as part of a move to develop cannabis-infused products. The shell company, Pinestar Gold, was previously a mineral exploration firm. Jones said it plans to list on the Canadian Securities Exchange, subject to approvals.

CannTrust Secures Overseas Financing

Canadian cannabis producer CannTrust secured a new investment from a Netherlands-based private equity investment company and said it will soon outline plans to exit creditor protection and change its name. The multimillion-dollar investment is led by Marshall Fields International B.V., a subsidiary of Kenzoll B.V., a private equity investment company based in the Netherlands. The transaction involves: • A debtor-in-possession loan of $3.9 million (CA$5.5 million) to CannTrust Equity. • A $7.9 million investment to acquire an approximately 90% interest in CannTrust Equity, with CannTrust Holdings retaining the balance.

Israeli Cannabis Producer InterCure Buys Better

Herzliya, Israel-based cannabis producer InterCure is buying rival medical marijuana company Cann Pharmaceutical, also known as Better, for $35 million (CA$44.4 million) in stock. The acquisition is expected to close in mid-2022. InterCure described Better as an Israeli medical cannabis operator. The deal includes Better’s unique cultivars, cultivation site,

intellectual property and multinational commercial operations.

British American Tobacco Ups Stake in Organigram British American Tobacco is investing another $5.1 million (CA$6.4 million) in Organigram, increasing its stake in the Atlantic Canadabased cannabis producer to 19.5%, the companies announced. BAT increased its investment by purchasing nearly 2.7 million Organigram common shares.

Canadian Tribe Partners With Startup for Contest

FFES Environmental, an Indigenous-owned company in Alberta, Canada, is collaborating with The Hemp Blockchain in Utah to use hemp to remove carbon from the atmosphere and compete for a $100 million prize. The proposal calls for FFES Environmental to grow hemp on land owned by the Sucker Creek First Nation, with The Hemp Blockchain measuring and verifying the crop’s carbon footprint. The partners hope to win funding from the XPrize Carbon Removal fund, a $100 million purse set up by Tesla CEO Elon Musk. Have a company announcement you want us to consider? Send a news release or general information to omar.sacirbey@mjbizdaily.com. (Note: We’re looking for news about expansions, financing, deals, partnerships and similar developments, not product announcements.)


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INDUSTRY DEVELOPMENTS National & International

National & International News USDA Offers First Official Hemp Figures The United States grew $824 million worth of hemp on about 54,000 acres last year, according to the U.S. Department of Agriculture’s first-ever national accounting of cannabis production. The USDA’s National Agricultural Statistics Service surveyed more than 20,000 people who grew hemp in 2021. The results are the most complete look yet at the size and value of the young hemp industry. The agency counted acreage in all 50 states. The USDA counted 33,500 outdoor acres of hemp production worth $712 million as well as 15.6 million square feet of indoor hemp cultivation worth $112 million. Flower was the most profitable hemp product grown last year. The USDA counted $623 million in hemp flower production, followed by $41.4 million for hemp fiber,

20 April 2022 | MJBizMagazine

$41.5 million for hempseeds and $5.99 million for grain fiber. Colorado planted the most outdoor hemp last year, 10,100 acres but harvested only about a third of that, 3,100 acres. Montana harvested the most hemp last year, with 4,500 acres. California dominated indoor hemp production in 2021, with 3.9 million square feet. Colorado was a distant second with 1.9 million square feet, followed by: • Oregon (1.7 million square feet). • New York (1.1 million square feet). • Florida (990,000 square feet). The agency also tracked per-acre yields. For outdoor-grown hemp flower, farmers harvested an average of 1,235 pounds per acre. Hemp-grain producers averaged 530 pounds per acre, and fiber producers reported average yields of 2,620 pounds per acre.

Activists cheered the USDA’s first hemp report and called it an important step for hemp to take its place alongside other mainstream crops.

Lobbying Congress on MJ Issues Costs Millions At least $4.3 million was spent on cannabis lobbying in 2021, an increase of 16% from 2020, according to OpenSecrets, a nonprofit research group that tracks political spending. Amazon and Anheuser-Busch, labor unions and Native American tribes are among the 22 groups paying lobbyists tens of thousands of dollars to weigh in on—or simply monitor—marijuana reform proposals in Congress as part of their overall lobbying efforts. In 2011, the first year for which OpenSecrets has lobbying records for “marijuana,” $35,000 was spent on three lobbyists to focus on MJ issues.


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INDUSTRY DEVELOPMENTS State by State

WA MT

VT

ND

OR

NH

ME

MN ID

SD

MI

WY

UT

CA

IL

CO

AZ

MO

OK

NJ

CT

DE MD VA

KY

DC

NC

TN AR

SC MS

TX

OH

IN

WV

KS

NM

RI PA

IA

NE

NV

MA

NY

WI

AL

GA

LA FL

AK

■ Medical ■ Recreational HI

Note: This map does not include states that have legalized only CBD-based oils.

©2022 MJBizDaily, a division of Emerald X. All rights reserved. Data is current as of March 10, 2022.

State News Colorado Denver-based Standing Akimbo is asking the full 10th Circuit of Appeals to hear a case arguing to keep the Internal Revenue Service from obtaining certain company financial information from the Colorado Department of Revenue. Standing Akimbo was denied last year in its bid to have its case heard by the U.S. Supreme Court. The company’s appeals request referred to comments made by U.S. Supreme Court Justice Clarence Thomas, who said in June 2021 that federal marijuana prohibition might not be “necessary or proper,” given how many states have enacted their own legalization laws.

22 April 2022 | MJBizMagazine


INDUSTRY DEVELOPMENTS Connecticut Registered medical marijuana patients in the state are now allowed to buy up to 3.5 ounces of cannabis per month. The increase from the previous monthly limit of 3 ounces could lead to a sales bump for the state’s 18 dispensaries. The Connecticut Department of Consumer Protection said the policy change was based on an evaluation of the needs of the state’s 52,996 registered MMJ patients. Although patients are allowed to buy only up to 2.5 ounces of marijuana flower per dispensary visit, they can buy a total of 3.5 ounces per month.

Delaware A bill that would have legalized adult-use marijuana in the state and set up a cannabis business program was defeated in the House. The body voted 23-14 in favor of the bill, but the measure required a three-fifths majority, or 25 votes, because it would have imposed a new tax. The measure was sponsored by Rep. Ed Osienski, marking his third attempted legalization effort in the past three years.

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INDUSTRY DEVELOPMENTS State by State Hawaii Medical marijuana dispensaries can now offer edibles such as gummies and brownies. The new rules went into effect Feb. 24. The state health department also announced updated manufacturing practices and qualitycontrol requirements, new lab-testing rules and new prohibition on hemp sales by licensed medical marijuana businesses. However, the department said that “hemp ingredients may be used as an ingredient in a manufactured cannabis product.”

Kentucky The U.S. Department of Agriculture plans to work with the University of Kentucky to survey roughly 20,000 hemp producers to find out more about market conditions. The USDA said it would like to conduct its survey annually to “determine break-even production costs and range and implications for market structure.” If the project is approved, the university would carry out the survey and summarize raw data for the USDA’s National Agricultural Statistics Service.


INDUSTRY DEVELOPMENTS Maine Regulators scrapped a proposed change to rules for its medical cannabis program after caregivers and consumers protested. The Maine Office of Marijuana Policy said it will try again after caregivers told the agency during a public hearing that the proposed rules were too similar to what the industry fought in 2021. The rules included security requirements that caregivers last year deemed too labor-intensive and cost-prohibitive. For example, “limited inventory tracking” would have been required for smallscale caregivers who grow 12 plants or fewer, don’t operate a retail store and don’t transfer wholesale products to other providers.

Maryland The House of Delegates passed two bills that would give state voters the opportunity to decide in November whether to legalize recreational marijuana possession and use for those 21 and older. The legislation now moves to the state Senate, which is considering separate legalization legislation. According to the Washington DC-based Marijuana Policy Project, House Bill 837 offers an initial road map for legalization, including possession limits, limited expungement and funding for minority- and women-owned businesses.

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INDUSTRY DEVELOPMENTS State by State Michigan Following an executive order signed by Gov. Gretchen Whitmer, rules for both marijuana and hemp will fall under the state’s renamed Cannabis Regulatory Agency. The order takes effect April 13. The Michigan Department of Agriculture and Rural Development will continue to regulate hemp cultivation. Separately, Michigan regulators implemented new rules for the state’s marijuana program, including lower application fees and the removal of tiers, effective March 7. Under the new rules, Class A marijuana microbusinesses can buy concentrates and infused products from a processor, and liability insurance will be required of companies when they receive or renew a license. A new educational research license will be created as well.

Missouri The state Legislature is considering a measure that would preempt a potential recreational marijuana ballot initiative favoring existing medical cannabis operators and put in place a more wide-open, adult-use law. The Cannabis Freedom Act, or House Bill 2704, would allow unlimited licensing by the state. By contrast, Legal Missouri 2022, which supporters are trying to qualify for the November ballot, would enable MMJ operators to get first crack at a recreational marijuana market and would limit licenses.

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INDUSTRY DEVELOPMENTS New Jersey Although the state missed a Feb. 22 deadline set by regulators to kick-start adult-use marijuana sales in the state, the launch isn’t far off, according to Gov. Phil Murphy, who predicted sales would start in March. However, the New Jersey Cannabis Regulatory Commission, has yet to sign off on recreational sales for any of the state’s 23 operational medical marijuana dispensaries—in part because the agency is waiting for local authorities to signal their approval for adult-use businesses. City officials must provide written confirmation that they are in support of recreational sales within their borders before any licensed MMJ dispensary can begin selling adult-use products.

New Mexico The state’s highest court declined to hear an appeal regarding whether medical marijuana producers are subject to the New Mexico gross receipts tax, meaning MMJ businesses will be able to claim a significant tax break. In February 2020, New Mexico’s Court of Appeals ruled in favor of a medical cannabis provider seeking a refund of gross receipts taxes, finding that MMJ qualified as a prescription drug under the state’s tax rules. In a news release, New Mexico cannabis company Ultra Health said it expects to receive a $7.4 million refund from the state for gross receipt taxes on medical marijuana.

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INDUSTRY DEVELOPMENTS State by State New York The first round of 100 -200 recreational cannabis retail licenses will be focused on applicants with marijuana-related convictions, state officials said. Priority also will be provided to entrepreneurs with a parent, legal guardian, child or spouse convicted of a marijuana-related offense. Advocates said the plan illustrates the state’s commitment to achieving its social equity goals, which include providing 50% of adult-use licenses to equity applicants. Additionally, New York is giving licensed hemp cultivators an early opportunity to grow adult-use marijuana this spring to help supply the planned recreational market. Gov. Kathy Hochul signed legislation that sets up a first-of-its-kind “conditional adult-use cultivator” license aimed at speeding marijuana to market when recreational sales launch. To be eligible to grow marijuana under a conditional license, New Yorkers must: • Have a hemp license from New York’s Department of Agriculture and Markets as of Dec. 31, 2021. • Have grown and harvested hemp for at least two of the past four years. • Have at least 51% ownership stake in a business licensed to grow hemp. • Participate in an environmental sustainability program and a social equity mentorship program. The conditional licenses will expire by 2024, after which growers and processors will need regular licenses from the state’s Cannabis Control Board.

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INDUSTRY DEVELOPMENTS Oklahoma Republican House legislators pitched a 12-point plan to tighten up one of the country’s most business-friendly medical marijuana markets with a goal of curbing illicit activity. The plan comes weeks after law enforcement agencies seized roughly $500 million worth of illicit marijuana as part of a yearlong investigation. The plan includes: • Increased inspections of grow facilities. • A grant program for county sheriff’s departments to fund law enforcement efforts. • Implementation of a seed-to-sale tracking system. • Standardized laboratory testing and equipment. • Enhanced product packaging standards. • Pre-license inspections and increased document requirements. • Stringent new reporting requirements on electric and water use by growers. • Making the current regulatory agency, the Oklahoma Medical Marijuana Authority, a stand-alone entity instead of a division of the state health department.


INDUSTRY DEVELOPMENTS State by State Rhode Island Lawmakers introduced legislation to legalize recreational marijuana. The Rhode Island Cannabis Act would provide preferential treatment to existing medical marijuana operators, allowing them to begin adult-use sales on Oct. 1, provided they pay a $125,000 fee to a social equity assistance fund. MMJ cultivators also would have a hold on the market for at least two years after regulations are in place. The companion measures, House Bill 7593 and Senate Bill 2430, are separate from a legalization proposal that Gov. Dan McKee made in his omnibus budget bill in January. Rhode Island’s state Senate overwhelmingly passed its version of an adult-use bill in June 2021, but the Legislature adjourned without a House vote.

Tennessee State Reps. Jason Powell and Jason Bob Freeman, both of Nashville, introduced separate marijuana legalization bills in Tennessee’s state Legislature. Powell’s bill would create a medical cannabis program, while Freeman’s would completely legalize marijuana. Efforts to decriminalize marijuana failed in 2021. A bipartisan bill would ask Tennessee voters for their opinions about marijuana via the fall 2022 ballot.

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INDUSTRY DEVELOPMENTS Vermont At least 25 new municipalities opted into the adult-use marijuana industry and agreed to allow commercial cannabis retailers. During a widespread Town Meeting Day on March 1, roughly 40 towns held public votes on the issue. According to the Vermont League of Cities and Towns, 33 communities already had approved retail cannabis outlets before the vote. Existing medical marijuana dispensaries will be allowed to commence adult-use sales beginning May 1, while other retailers must wait until October.

Washington state Starting April 2, adult-use cannabis products must be tested for pesticides. The state already tests medical marijuana products for pesticides. The new rules also allow the Liquor and Cannabis Board to test both recreational and medical marijuana products for heavy metals on a random basis or as part of an investigation. Separately, lawmakers failed to come to an agreement on a last-minute ban on intoxicating hemp-derived products such as delta-8 THC. Elected state officials looked at several bills to address hemp-derived intoxicants but did not arrive at a compromise.

Note: Entries sourced from MJBizDaily, Hemp Industry Daily and other international, national and local news outlets. These developments occurred before this magazine’s publication deadline, so some situations might have changed.


Calibrating

Quality

From standards development to precision dosing, good manufacturing practices are gaining importance in the cannabis industry By Omar Sacirbey

32 April 2022 | MJBizMagazine


Cannabis samples are prepared at Rm3 Labs in Boulder, Colorado, for DNA extraction, which will identify the presence of biocontaminants such as yeast, mold, E.coli and salmonella. Photo By Matt Staver

mjbizdaily.com | April 2022 33


Calibrating Quality

How Do You QC? Cultivation and manufacturing experts offer strategies to maintain quality independent of lab testing

By Omar Sacirbey

As with all consumer packaged goods, sound quality-control systems are key to winning customer confidence in marijuana and hemp products. Because of the state-by-state nature of the cannabis industry, regulations vary by market. However, there are several steps companies can take to ensure consumers are getting safe and satisfactory products, regardless of their location: • Research standard operating procedures in industries such as food manufacturing and pharmaceuticals and implement similar quality-control processes at your own business. • Develop relationships with state and local regulators to keep abreast of policy changes in labeling, testing and other key matters.

Cannabis flower is weighed by packaging and processing teams at multistate operator Ayr Wellness. Courtesy Photo

F

rom writing standard operating procedures and vetting raw materials to starting in-house labs and conducting retail audits, cannabis business owners lean on best practices for quality control. Regulators in state-legal marijuana markets require that cannabis businesses have their products tested by independent and state-accredited laboratories before they’re distributed to retail outlets for sale to consumers. But there are many actions beyond third-party testing that cultivation, manufacturing and retail executives can take to improve quality control. These measures improve the final product, protect consumers and provide executives with some peace of mind.

34 April 2022 | MJBizMagazine

Following are eight tactics veteran cannabis executives use to ensure quality control:

1

Use other industries as a guide to create in-house standard operating procedures, or SOPs

“We created our own processes and systems. Because we make edibles, we created our own quality-assurance and quality-control program to ensure that our products are best in class and meet the state-required testing specifications,” said Erin Gore, co-founder and CEO of Garden Society, a cannabis company in the San Francisco Bay Area. Gore added that the company adopted several best practices from the food-manufacturing industry as

• Consider what differentiates cannabis from other products—sticky resin on flower, for example—and develop ways to work around it when conducting testing and sanitization. • Several standards-development organizations are working on publishing a set of testing standards for laboratories and cannabis companies to implement. Watch for these standards and ask whether your third-party testing lab is using them.

well as certifications from standardsdevelopment organizations such as ISO and ASTM. For Brian Kiniry, the Philadelphiabased senior vice president of operations at multistate operator Ayr Wellness, Good Manufacturing Practice, or GMP, is the “baseline.” “As we look to other industries that a lot of us have come from—food


and pharmaceutical—we take those documents and modify them to be more cannabis-related,” Kiniry said. He added that standards already exist for other consumer goods, such as coffee and lettuce. “A lot of these so-called standards are already there. We’re just doing modifications to standardize it for what’s best for the cannabis plant and what’s best for our customers,” he said.

2

Vet your suppliers with COAs

Whether you’re a grower, infused product maker or retailer, you must vet the businesses from which you source inputs and raw materials. One simple way to vet cannabis suppliers is requiring them to present a “certificate of analysis,” or COA, which certifies that raw materials are contaminant-free and contain “what they say,” Gore said. That’s especially important for product manufacturers that develop their own recipes. “Each of our raw materials has specifications for why we chose that raw material. Whether it’s a sugar level or clarity or flavor or pH, it all goes into formulating the best end product, until we get the desired effect that we want—whether it’s taste, texture, effects, etc.,” Gore said. Austin Brown, manufacturing manager at High Life Farms, a vertically integrated business in Michigan that is expanding into other states, also requires COAs from cannabis suppliers. In addition, he has a “shipping and receiving team that quality checks” shipments upon arrival to make sure boxes are not damaged, open or otherwise compromised, Brown said.

3

Independently test raw materials for safety

Another important way to ensure the quality of raw materials is to put them through third-party testing before processing.

Quality-control samples are created using live cultures to ensure testing equipment is working appropriately. Photo by Matt Staver

High Life Farms infuses most of its edibles with THC distillate, and a smaller amount includes live rosin. Before gummies, chocolates or anything else is infused with distillate or rosin, the extracts are sent to thirdparty labs that check for bacteria, microbials, metals, mold and potency. “The medication is tested, we get the test results back, then we produce edibles with those medications. Then it’s sent out to those same labs one more time for compliance testing. And they’re testing it again for potency, microbials, metals, mold, yeast, all that good stuff,” Brown explained. It typically takes three to five days to get results, and in that time, the products are put on a “quality hold,” Brown said. “Our packaging team knows not to touch it, not even put it in containers. As soon as we get those test results back and have that green light, and we can start selling it, it gets packaged and sent out.” Garden Society, which sources distillate and creates its own from flower purchased from independent farmers, tests both flower and oil at third-party labs before the materials

Erin Gore

are processed. “We check for potency and contaminants, with regards to heavy metals, pesticides and all of the contaminants that we want to avoid in the marketplace,” Gore said. The company tests in-house when it can, but there are some tests that are just too expensive for a small business to conduct on its own, Gore said. One such test is gas chromatographymass spectrometry, which looks for “analytical contaminants within a microscopic level.” Gore said such machinery usually costs “hundreds of thousands—if not millions—of dollars.”

mjbizdaily.com | April 2022 35


Calibrating Quality She said the cost of third-party testing depends on the number of individual batches and the complexity of the tests being done, but generally it’s “anywhere from a couple hundred to a couple thousand dollars, depending on what you’re trying to quantify and how many samples.”

4

Don’t forget the human touch (with gloves)

While many cultivation companies turn to automated sorters and trimmers to handle harvested cannabis, Sonoma Hills Farm in Petaluma, California, prefers humans. It’s not just because of better trimming but also because they can provide a quality-control element that machines can’t. “They can spot problems like mold or certain particulate matter,” Joyce Cenali, chief operations officer at Sonoma Hills Farm, said of hand-trimmers. “So, hand-trimming and having a good team with experience in this area—and making sure that we’re utilizing a clean and sterile environment and not combining our products with other people’s—is important.” “There’s a lot of co-packing facilities where you’ll get 10 different grows at one time in the facility,” she noted. This can increase the chances of clean cannabis being contaminated by another company’s tainted product.

5

A staff member trims fan leaves at a cultivation facility owned by Tilt Holdings.

Courtesy Photo

Create formulas to calculate precision dosing by batch

Potency results are especially important to High Life Farms’ quality control when it comes to calculating dosage. If the potency of a batch is, say, 85% THC, High Life can plug that into a “batch calculator that tells us exactly how much of that medication we need to infuse,” Brown said. “It’s not supercomplicated math formulas, but it definitely helps having an actual calculator and build that stuff out.” Brown clarified that the

36 April 2022 | MJBizMagazine

Cannabis extracts are transferred from one nonporous container to another at High Life Farms in Michigan. Courtesy Photo

“calculator” in question is a Microsoft Excel spreadsheet in which employees enter potency, desired dosage and other variables to calculate how much of each raw ingredient should go into the mix. “For example, our chocolate is melted about 200 pounds at a time.

Then we add in our flavoring or oil-based flavorings and let that mix overnight. When we infuse the distillate to medicate it, we say, ‘OK, we have 200 pounds of chocolate, the potency of the distillate is 85%, so we need X amount of distillate to be mixed


into that whole batch of chocolate.’ Then the chocolate is dosed, so we can pour it into molds,” Brown explained.

6

In-house testing

Another way to improve quality control is with in-house testing, and industry veterans say setting up an in-house lab is not as difficult or expensive as you might think. Garden Society does some testing inhouse and has dedicated team members who carry out testing using SOPs. “It’s more establishing the right equipment, the right training, the right SOP and then the right documentation for controlling that lot. So, you have the documentation to say, ‘We tested this lot. It passed within specification.’ You document appropriately, so if there’s ever quality concern, you have the information to properly troubleshoot,” Gore said. If a business wanted to start an in-house testing program, Gore said a good place to begin would be with pH testing. “A lot of times, variability in pH leads to instability in products downstream. So we measure the pH of all our input materials. It’s a very simple test inhouse but very important to ensure long-term stability,” Gore said. Equipment for testing pH can range from handheld to desktop size, but it is generally affordable—even for small businesses. “You can spend anywhere from a few hundred dollars to tens of thousands of dollars, depending on what you want to test. You can buy a refractometer and a pH meter for under $500 to get started. It’s very affordable,” Gore said. “Creating the system while you’re still small and early stage is incredibly imperative, because when you scale, it’s easier to replicate and standardize across markets.” In all, Garden Society spends “hundreds of thousands of dollars per year” on both in-house and outside testing, Gore said.

California-based Garden Society tests raw ingredients for pH before manufacturing products such as gummies. Courtesy Photo

7

Dedicate staff to quality control

“One of the biggest improvements” High Life Farms has made, according to Brown, is establishing a dedicated quality-control team about 18 months ago. The team currently has seven members. “Their sole role is … to double-check everyone else’s work. Make sure we’re not missing any warning statements that have to be on products and make sure everyone’s following SOPs for both production and packaging. That’s eliminated 95% of the issues that we were seeing,” Brown said. “That quality team is our last line of defense. The packaging team has team leads who are also doing walk-arounds while people work on things, just to be sure the correct labels are going on and that people are doing their counts correctly,” Brown said. Before products get to High Life’s “inventory cage,” where trucks pick up product, they go through the quality team’s station, where boxes are inspected one last time. “They’re doing random audits on every single box that goes out. They grab a few things out of each box, making sure the right stickers are on and they’re in the right place, that the

right information is on and just overall checking for anything,” Brown said.

8

Professional QC development

Another way to help ensure quality is to enroll employees in classes that educate them about qualitycontrol methods. One such course is the ServSafe Food Handler training program. The online course is required in Michigan’s cannabis industry, but Brown “strongly” recommends it for industry employees in every state. “It’s basic training for all of our employees on how to properly handle food,” Brown said, adding that ServSafe is an accredited certification company. The program covers basic foodhandling hygiene practices, proper clothing and controlling cooking temperatures so end products aren’t compromised. “All of our employees, even if they’re not working with food, still have to go through it just in case they need to help in other departments.”

Omar Sacirbey is a reporter for MJBizMagazine. You can reach him at omar. sacirbey@mjbizdaily.com.

mjbizdaily.com | April 2022 37


Calibrating Quality

Plants at Cresco Labs' cultivation facility in Kankakee, Illinois, are trained to grow vertically and reach for the overhead lights. Courtesy Photo

Creating

Uniformity By Bart Schaneman

Multistate cannabis producers share secrets for streamlining operations across differing state regulations

E

very state with a legal marijuana program has a unique regulatory framework. Navigating those different rules while still maintaining quality standards can be a compliance high-wire act for multistate cannabis operators. To ensure products don’t run afoul of state regulators while simultaneously adhering to internal quality goals, executives at several MSOs advise other marijuana companies to:

38 April 2022 | MJBizMagazine

• Dedicate an entire team to quality control and compliance. • Maintain an in-house testing lab and test often. • Develop a library of detailed standard operating procedures that serve as a playbook for working in different markets. “We have a compliance team that’s dedicated to all things around the legal side of the language that’s embedded in each state,” said Todd West, executive vice president of operations at Cresco

Labs, a vertically integrated multistate cannabis company based in Chicago.

FINGER ON THE PULSE

Knowing the ins and outs of each state’s regulations and following them as they change is a full-time job. At New York-based marijuana MSO Acreage Holdings, Senior Vice President Ellen Deutsch employs local regulatory experts in each state to maintain quality control and quality assurance. “We monitor everything


Welcome to the FUTURE…


Calibrating Quality that is happening at the state level on a granular basis,” she said. Deutsch added that her team is “completely connected with every state and regulatory agency.” “We monitor all of their communications, know when the hearings are and plan to execute on any changes,” Deutsch said, adding that staying on top of compliance is “a daily initiative.” Changes in labeling rules are a particularly common headache. Acreage employs state-level general managers and regional managers to handle those issues. “We try really hard not to be surprised,” Deutsch said. Gary Santo, chief executive officer of marijuana MSO Tilt Holdings, based in Massachusetts, takes a similar approach. “It’s hard to run a centralized program when you have so many states and each state almost needs its own company,” Santo said. Establishing a centralized quality-control team has helped Tilt to ensure consistent products across different states. Tilt works with third-party manufacturers for products in some markets, and the company’s goal is to make sure that consumers have the same experience with their products, no matter which state they’re in. To help with that, his quality-assurance team makes sure the products are manufactured with the same equipment and the same process in each state. “Our kitchen in Ohio is going to be virtually identical to our kitchen in Massachusetts,” Santo said. That takes a lot of the guesswork out of it, he added.

TESTING, TESTING

Each of Cresco’s locations has a laboratory with high-performance liquid chromatography equipment to test products in-house for qualities such as potency and impurities. West said the company is constantly testing all product types, including flower, edibles and vape products.

40 April 2022 | MJBizMagazine

Staff members arrange infused chocolates before packaging at a Tilt Holdings manufacturing facility. Courtesy Photo

Batches of products also go through a signoff process as they make their way through facility checkpoints. A plant manager and a quality-control team will stop the production line, and senior management will evaluate a product if something is not quite right. For example, if the color of the oil in a vape product seems off, it will get flagged, and the team will decide if releasing it would impact the brand perception or customer satisfaction. Deutsch said her team at Acreage also watches test results very carefully. “That goes for every batch we produce,” she said. At Tilt, Santo said every harvest is analyzed, and plants are tested as they are growing, drying and curing.

BY THE BOOK

Written standard operating procedures (SOPs) are crucial for maintaining quality as a company navigates the different regulatory requirements in each state, cannabis executives told MJBizMagazine. Deutsch said Acreage compiles SOPs for each state and that quality control is imbedded in those documents. “We keep our own bible of all of this,” she added. “SOPs are part of the tools to succeed.”

West said Cresco has an entire department tied to working with SOPs, including developing the documents and using them to train employees. Having all the company’s quality standards spelled out in this way helps Cresco expand into more states and secure new licenses, he said. West said Cresco sends its SOPs to state regulators when applying for business licenses in new markets “to show we’re serious” about quality and safety. At Tilt, Santo said the company’s SOPs will have target numbers such as THC potency, which the quality-control team will compare against test results. For example, the SOP for a flower strain might indicate THC levels should be at least 20%. That guideline helps the company work with other providers and product companies, so everyone knows what to expect. “We wouldn’t bring it to market unless it met our quality standards,” Santo said.

Bart Schaneman covers cultivation and extraction at MJBizDaily. Reach him at bart.schaneman@ mjbizdaily.com.


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Calibrating Quality

Sticky resin can make cannabis flower more difficult to work with than other inputs. Courtesy Photo

Sticky

Situation

C

annabis testing and quality control is no simple feat. Consider the plant itself: Cannabis contains a super sticky, resin lipid that is harder to work with than coffee, tobacco and most other natural products, said David Vaillencourt, CEO of the GMP Collective consulting firm in Colorado. “Separating out the cannabinoids to just look at pesticides is so much more complicated because we have to get rid of (the sticky resin) to separate that out and not lose the pesticides that

42 April 2022 | MJBizMagazine

By Omar Sacirbey

Cannabis products present unique testing hurdles such as non-uniform plant material, a variety of inputs and multiple product types

we want to look for,” he it up and grabbing explained. a representative Then there is the fact sample, not cherrythat flower at the top of picking. You have a plant has higher THC to have a method, a levels than flower closer protocol to get the to the roots. average and make sure But there are ways it’s representative,” to distinguish samples Vaillencourt for better accuracy, explained. He noted David Vaillencourt Vaillencourt said. that the ASTM International “You can separate batches into top, Committee D37 on Cannabis published middle and bottom thirds of the plant. a standard method for this procedure, And then you make sure you’re mixing ASTM DD334.


MEASURED VARIETY

Even under the best circumstances, it is impossible that all batches of flower, edibles, etc., test the same at different labs or that the milligrams of THC on a label will match what’s inside to the nearest thousandth. And that’s OK. Other industries also allot for measurement variations, provided they’re reasonable, Vaillencourt noted. He said in pharmaceuticals, range tolerances of 2% and 5% are common. For example, an ibuprofen tablet labeled as having 400 milligrams might actually have 397 milligrams. “We’ve identified what that reasonableness is,” Vaillencourt said. “Ranges are your best friend.”

MANY PRODUCTS, MANY LOCATIONS

Cannabis Batch Testing (Certificates of Analysis as of Oct. 22, 2021) Certificates of Analysis

Tested Batches

Failed Batches

244,948

244,948

9,171

Tested Batches By Category

Tested Batches

Failed Batches By Category

Flower

112,963

4,076

Inhalable (cartridges, waxes, etc.)

97,190

3,333

Other (edibles, tinctures, topicals, etc.)

34,795

1,762

Total

244,948

9,171

Reasons For Failure*

Failed Batches By Category

Pesticides

2,907

Label Claims

2,379

Microbial Impurities

1,876

Heavy Metals

1,187

Residual Solvents 463 The sheer number of cannabis Water Activity 176 products and inputs makes Cannabinoids 161 implementing standards difficult. In the product realm, there is not Moisture 71 only flower but also a large variety of Foreign Material 45 concentrates, edibles and beverages containing inputs that interact Homogeneity 36 differently with cannabinoids, as well Mycotoxins 12 as a wide variety of topicals, tinctures, suppositories and other products. Total 9,313 “For every different product type, *Batches can fail for multiple categories you need different (testing) methods,” Source: California Department of Cannabis Control Vaillencourt said. “For as many new and creative products that the industry is trying of the regulations that Vaillencourt said. “Then we test for it.” to come up with, we will we can,” Rimmer said. For that approach to effectively likely need a unique function, Vaillencourt said, regulators method to some degree for CHANGE would need to require that cannabis each one.” businesses maintain a list of all APPROACH Kate Rimmer, a While harmonizing ingredients and raw materials—as well research chemist at the standards will as their origins. Maryland-based National advance quality Vaillencourt said such a tracking Kate Rimmer Institute of Standards and control, it will also system might have prevented the 2019 Technology (NIST), noted be important for the vape crisis. that it is common for industry to rethink “No state was saying, ‘Test for states to have different standards for how it approaches testing more vitamin E acetate.’ That wasn’t a risk different products. generally, Vaillencourt said. factor that anybody identified. So it “For example, different states “Part of the issue is that we take this wasn’t that people were hiding things. have different regulations about the ass-backwards approach. … In the food We just didn’t think to test for it,” pesticides that can be in foods. We try or pharmaceutical industry, we say: Vaillencourt explained. “That’s how we to provide the tools that encompass all What are you putting in your product?” ended up with a big crisis.”

mjbizdaily.com | April 2022 43


Calibrating Quality

Standard

Deviation

By Omar Sacirbey

Streamlining cannabis testing methodology could improve consumer information—but industry must adhere to honest lab results

W

hile cannabis has enjoyed greater social acceptance in recent years, quality control will be critical to sustaining that growth and winning over the institutions that have yet to embrace a regulated marijuana industry. “The challenge is, the way that the cannabis industry has evolved, we’re doing this in real time,” said David Vaillencourt, the CEO of GMP Collective, a Colorado-based consulting firm, and vice chair of the ASTM International Committee D37 on Cannabis. ASTM is one of a handful of accredited organizations developing testing standards for the cannabis industry. Having consistent testing methods is an important step for marijuana executives, because it will help harmonize standards that, so far, vary greatly from state to state. Those inconsistencies and the lack of defined testing methods raise the risk of errors and product recalls for businesses. Standardized testing methods can reduce those risks and give new and existing labs proven and certified procedures to refer to, sparing them the time and cost of developing their own methods. “The big benefit of standard methods is: If you’re a new laboratory opening up, and you need to make measurements, there are methods that have been fully evaluated that you can

44 April 2022 | MJBizMagazine

Samples are labeled and prepared to be opened in a biosafety cabinet at a third-party cannabis testing lab. Photo by Matt Staver

have confidence in,” said Walter Brent Wilson, head of the Cannabis Quality Assurance Program at the National Institute of Standards and Technology (NIST), a federal laboratory operating under the Susan auspices of the U.S. Audino Department of Commerce. “We have to be a part of anything that is involved with sales, commerce and transactions.”

HOW STANDARDS ARE SET

The good news is that the effort to harmonize standards is well underway, and some of the world’s most respected standards groups are involved.

Several so-called standards-development organizations (SDOs) that create and accredit test methods for various industries have been lending their expertise to cannabis. The different groups meet at conferences, discuss their findings and even have memorandums of understanding that they will work together to achieve a common goal rather than compete against one another, Vaillencourt said. These organizations include ASTM International, which was the first to publish a cannabis test standard. That standard was for water activity, said


Susan Audino, a chemist, consultant and chair of the Cannabis Working Group at AOAC International, a Maryland-based standards body. AOAC International is a standards organization for agricultural commodities. It has published a handful of standards since developing a cannabis program and has more in the pipeline, Audino told MJBizMagazine via email. She added that several states now require laboratories to either use a published AOAC method or develop methods that meet the organization’s performance requirements. Other groups involved in cannabis standard test methods development include the U.S. Pharmacopeia in Maryland and the International Standards Organization, or ISO, a nongovernmental group headquartered in Geneva. “These are the main groups that are working on standards for the cannabis industry … that have credibility and transparent process that get some global recognition,” Vaillencourt said. “Although organizations are answering the call to develop testing standards, good science takes time, and only a handful of methods have gone through the respective ‘vetting’ processes and are available as ‘standards,’” Audino said.

RIGOROUS VETTING

Under this rubric, multiple testing methods can be approved for standardization. In other words, there is rarely just one correct testing method. That means that if a homogenized sample of cannabis is sent to multiple laboratories that use different testing methods, their results should “in theory be able to get the same value,” barring human error or other unforeseen circumstances, Wilson said. Standard test methods go through a very rigorous process to get approval, he added. Different labs or practice groups try testing methods, and if they work, they

are submitted to groups such as ASTM or the AOAC for more testing, according to Wilson. If the groups’ testing confirms successful results, then the methods will be voted on for approval. The Cannabis Regulators Association is a new, nonpartisan educational organization composed of government officials. As of February, at least 40 states and U.S. territories were engaged with the Cannabis Regulators Association. “I am hopeful this organization, which is limited to government regulators, will gather data and chart a direction toward a more unified approach to cannabis regulations,” Audino said.

FRAUD, ENFORCEMENT AND STANDARDS LIMITS

Standardizing test methods would go a long way to advancing quality control, but it can’t eliminate fraudulent testing results if cannabis companies submit misleading samples or labs inflate THC levels or pass contaminated products. “When the labs are competing with other labs for a relatively small, defined market of tests, behaviors tend to emerge. Some labs start reporting generally higher cannabinoid, core cannabinoid numbers,” said James MacRae, founder of Straight Line Analytics in Seattle, a cannabis-focused data-analytics firm. “These labs often start demonstrating lower failure rates on the safety assessments within the product and microbials and things like that.” MacRae, who has written about fraudulent lab practices in Washington state, argued that labs are more than capable of delivering accurate results, but many don’t. “The issue is what they actually do in the market,” he said.

And while MacRae agrees with harmonizing test method standards, he said “they are irrelevant if, downstream, the enforcement environment is such that this fraudulent lab behavior is allowed to go on.” However, cheating can be monitored and enforced by regulators. “You put consequences on the labs, and you start assessing,” he said. “This is something that can be done fairly inexpensively and involves random offthe-shelf testing.” Vaillencourt agreed. “It’s an imperfect process … but you do what the FDA (U.S. Food and Drug Administration) would do—audits and random inspections.”

THE FUTURE

Despite the challenges, experts are hopeful that the cannabis industry will eventually have a standardized testing regime of its own. “It’s definitely not going to be overnight,” Vaillencourt said. “But it will be a framework that’s similar enough to show that we’re more standardized and harmonized and can reliably confirm 21% THC is 21% THC, no matter in what market it’s tested.” Standards development is ongoing in other industries, too, including chemicals, metals, food and alcohol. As for federal James MacRae legalization, it will have little impact on standardization, according to Audino. “I think federal legalization will not necessarily affect testing requirements,” she said. “The industry will continue its development of standard test methods. We hope the specification levels will be associated with appropriate rules and, more importantly, be based upon sound scientific principles.”

mjbizdaily.com | April 2022 45


Five-Star Service Retail and SEO veterans say it’s important to respond to online reviews—and learn from them By Kate Robertson

O

nline reviews are so important to Cookies, the San Francisco-based cannabis cultivator and retail chain, that the company relies on a two-tier system to manage them. In addition to a customer-focused team monitoring overall online feedback, each one of Cookies’ 40-plus stores appoints an employee to respond to reviews on Yelp, Google, Weedmaps and other sites.

46 April 2022 | MJBizMagazine

“We always find the Crystal Millican most passionate and compassionate person at our store—who’s also tech savvy—to respond at a store level to customer feedback on review platforms,” explained Crystal Millican, head of retail at Cookies. The approach began with Cookies’ founder, Berner, who would respond to

every customer review if he could, Millican said. “He wants Cookies to be a cannabis experience that brings people from all walks of life together,” Millican said. “That’s an ambitious goal that we’re working toward every day. But we can’t do that if we’re ignoring what our customers have to say about us.”



Five-Star Service Each Cookies store has an employee dedicated to monitoring online reviews. Courtesy Photo

Varied Customers and Comments

In addition to dealing directly with customer concerns or compliments, the feedback serves to help improve training, products and quality control, she said. The reviews are also public-facing and can be important to marketing, helping other shoppers choose dispensaries and products—particularly in a crowded and competitive market such as California. According to the “2021 Cannabis in America” report published by Weedmaps, 34% of respondents said product reviews from verified purchasers “are extremely important features when making a purchase decision on an online menu or e-commerce solution.” But online reviews aren’t equally important across all markets, said Weedmaps Chief Operating Officer and Chief Marketing Officer Juanjo Feijoo, who added that there are a few different ways customers use the site. Generally, he said, about 50% of Weedmaps shoppers are what they call “valuers,” who shop primarily by price.

48 April 2022 | MJBizMagazine

Juanjo Feijoo Online reviews can prompt cannabis customers to give a company business or take their money elsewhere. Monitoring and thoughtfully responding to reviews can also make a big difference to consumers who take the time to give feedback. When dealing with online reviews, executives should consider: • More than one-third of cannabis consumers rely on reviews from “verified purchasers” when making buying decisions, according to a study by Weedmaps.

Thirty-three percent are looking for a particular product or store, and 17% are “conveniencers” looking for the fastest delivery time or closest location.

MVP: Most Verified Patrons

Verified reviews—published on the site by customers who have made an online purchase directly through the portal—add another layer of authenticity for products and dispensaries. They are considered the most valuable because they’re the most legitimate.

• Customer reviews can help companies make educated decisions about what products to make and sell. • Review platforms often remove posts they believe are fake, and it is unwise to create reviews for your own company. • Experts say it is important to check reviews daily and respond to negative comments.

But Weedmaps also invites feedback from nonverified users—those who say they have visited a store or bought a product but not through the site.


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Five-Star Service When retailers or cultivators suspect a review is fake—a common enough occurrence in competitive markets—they can file a dispute. If the company can prove the review is likely illegitimate, Weedmaps will take it down to protect the integrity of the platform. “Being a source of valuable and trustworthy reviews is very important to consumers,” Feijoo said. “And we believe that that adds value to the platform. Consumers will continue to come back if they see that there are reviews that can help them make better decisions when they’re purchasing cannabis.” While retailers such as Cookies will respond to nearly every piece of negative feedback with an apology and some ideas about how to have a better experience in the future, retailers in less-competitive markets with fewer licenses don’t tend to allocate nearly as many resources to monitoring reviews, said Andrew DeAngelo, a cannabis business consultant and co-founder of Oakland, California-based cannabis retailer Harborside. “We took it really seriously,” DeAngelo said, referring to his time at Harborside, which he left in 2018. “But some people don’t (pay attention to reviews). … And that’s the prevailing attitude. You go to Massachusetts (and) they don’t care. They do not care about the reviews at all.” In more competitive markets, however, Google, Yelp and Weedmaps reviews are an important piece of the search engine algorithm, said Chris Rodgers, the CEO and co-founder of Colorado SEO Pros.

Soliciting Positive Feedback Authenticity is still key to the equation, Rodgers cautioned, so don’t try to game the system or generate fake reviews. “This is going to be what your potential customers see when they are considering your brand or store, and most consumers can sniff out fake reviews,” he said. “Google has also implemented algorithm updates

50 April 2022 | MJBizMagazine

Online reviews carry more weight in some markets, according to Andrew DeAngelo, co-founder of California-based Harborside. Courtesy Photo

to address fake reviews, so they aren’t worth pursuing versus working at getting authentic positive reviews.” There are ways to try to incentivize customers to leave positive reviews, however. Depending on local regulations, some stores will give away a free gram of cannabis in exchange for a positive review, DeAngelo said, or offer a discount on the next purchase. New retailers should prioritize online reviews and ensure they have the tech skills and resources to address them. That’s something Shane Munz, co-founder and brand manager of Philadelphia’s Moka Hemp, wishes he had done when he started his CBD shop. “I would definitely put more of a focus on online reviews from the start if I had to change anything,” he said. “It’s an easy way to build that trust with new and existing customers.”

Handling Negative Reviews

It’s also important to have a clear strategy on how best to respond to negative feedback, which is going to happen to everyone at some point. Diane Mulligan, the president and CEO of Colorado-based M&C Communications, suggested ensuring at least one person on the customerservice team is looking at new reviews daily. If that person goes on vacation or needs to take a sick day, the role must be covered, because it’s important to respond to feedback within 24 hours. She recommended responding to both positive and negative reviews and making sure there’s a method to send feedback to the relevant teams so problems don’t recur.

Get Active

More than anything, engagement is key. “Let people know that you are reading them, appreciate the feedback and, if possible, list any action taken,” she said. “Your reviewers took the time to post, so they appreciate it when you take the time to respond and tell them how much you appreciate their input.” In the early days at Cookies, Millican said that negative reviews informed quality control and helped the company refine the strains it carried and overall product lineup. Now, the company’s engagement with reviews is more tailored toward specific customer experiences and their concerns, rather than repeating scripted engagement or falling into predictable messaging patterns. “We have our local budtenders respond because often they’ll be able to figure out who that customer was or who helped that customer,” she said. “And the big thing is responding to the customer in an authentic way and being able to take action upon a response.” Taking action increases the likelihood that the customer will return. Action could come in the form of replacing a product or facilitating a return, although returns might not be allowed in some locations. More than anything, it’s important to use reviews as a learning opportunity to improve product quality and customer experiences. Don’t take it personally when the inevitable negative reviews come in.



INDUSTRY PLAYERS New Hires & Promotions by Omar Sacirbey

Wana Brands Recruits Former Monster Executive Colorado-based multistate cannabis edibles maker Wana Brands appointed food and beverage specialist Kelly Flores as its new chief operating officer. Flores was most recently chief operating officer at Dosist, a Los Angeles-based vape pen and edibles company that she joined in 2018 as vice president of supply chain. Before breaking into cannabis with Dosist, Flores spent six years with Monster Energy, eventually rising to vice president of strategic planning. She also spent 11 years with Nestlé Waters, the bottled-water division of Switzerland-based Nestlé. “Kelly’s cannabis industry expertise—combined with her consumer packaged goods background—is exactly what is needed at this stage of Wana’s growth and development,” Wana CEO Nancy Whiteman said. “As we continue to innovate new products and expand our presence in other markets, Kelly’s ability to manage the logistical challenges of a multistate and international brand presence will be invaluable.” Flores will manage Wana’s business functions across all markets, identifying and implementing day-to-day operational improvements and working with other senior leaders to set and meet company objectives.

Turnaround Specialist Joins Harborside Harborside, the vertically integrated California cannabis brand founded by Steve and Andrew DeAngelo, appointed longtime retail executive Ed Schmults as its CEO and director. Schmults’ appointment was concurrent with Harborside’s acquisition of UL Holdings, which does business as Urbn Leaf, a leading Southern California cannabis retailer where Schmults had been CEO. Schmults is a turnaround specialist who broke into cannabis in 2018 as the CEO of Calyx Peak Cos., an MSO based in Massachusetts. He stepped down as Calyx’s CEO in February 2021 but stayed on as a board member and became CEO of Urbn Leaf that month. Schmults began his professional career as a financial analyst with Goldman Sachs in the 1980s before leaving for outdoor apparel and gear giant Patagonia, where his roles included chief information officer and chief operations officer and

52 April 2022 | MJBizMagazine

Ed Schmults

where he helped the company climb out of bankruptcy in the early 1990s. After executive stints at Moonstone Mountain Equipment, Freeborders and Red Envelope, Schmults was hired as CEO by the board of directors of FAO Schwartz to help the iconic toy store climb out of bankruptcy. After four years at FAO, Schmults was hired by a private equity company to lead Wild Things, a military and consumer brand in Rhode Island. Harborside also announced that Will Senn, who founded Urbn Leaf in 2017, was appointed chief corporate development officer.

Senn’s other cannabis endeavors include founder of The Holistic Café, a San Diego dispensary that he ran from 2009 to 2012, founder of the Patient Care Association of California from 2011 to 2013 and co-founder/vice president of cannabis-focused Floris Funds and Floris Capital Management. Senn also founded the United Medicinal Marijuana Coalition in 2016 and is a founding board member of the U.S. Cannabis Council and Global Alliance for Cannabis Commerce.

Finance Pro Joins Acreage Board Vertically integrated MSO Acreage Holdings in New York appointed Steve Strom to its board of directors. Strom is the ninth member of Acreage’s board and will serve as chair of the audit committee. Strom is currently CEO and founder of Odinbrook Global Advisors, an independent advisory firm focused on restructuring distressed companies.


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INDUSTRY PLAYERS Before he founded Odinbrook, Strom was CEO of Blackhill Partners, an independent investment bank specializing in special situations and bankruptcy. He was previously managing director at Chanin Capital Partners, a restructuring advisory boutique acquired by global management consulting firm Kroll, CIBC World Markets and was global head of restructuring at Jefferies. He began his career in finance with Chemical Bank, now known as JPMorgan Chase. He also served as an independent director for the board of Nasdaq-listed Schmitt Industries.

Deep Roots Harvest Chooses Gaming Vet to Lead Marketing Deep Roots Harvest, a vertically integrated operator in Nevada, appointed gaming and hospitality

James Mao

veteran James Mao as its new marketing director. Before Deep Roots, Mao spent nearly 14 years with Boyd Gaming, first as director of e-commerce and more recently as digital marketing director. He also led the digital marketing department at American Casino and Entertainment Properties and worked in the marketing departments of Sprint and Interactive Video Technologies.

Testing Labs Tap IT Expert Agricor Laboratories, a marijuana testing lab, and Botanacor Laboratories, a hemp-testing lab, both founded in Colorado in 2014, jointly announced that Richard Strong joined the businesses as digital officer and senior vice president of information technology. Strong was formerly chief information officer for HarleyDavidson Financial Services/ Eaglemark Savings Bank and senior global IT leader for HarleyDavidson Motor Co. “We are in the business of producing, managing and delivering incredible amounts of complex data,” Carl Craig, CEO of Agricor and Botanacor, said in a statement. “Given the regulatory environment that we work in across multiple


INDUSTRY PLAYERS states—and on the international level, too—a secure, modernized IT ecosystem is crucial.”

Stormy Simon

Canna-focused Media Co. Taps E-commerce Pioneer Boca Raton, Florida-based Kaya Now, a media and technology holdings company focused on the cannabis industry, appointed e-commerce pioneer Stormy Simon to its board of directors. Simon is best known for her roles at Overstock.com, having started there in 2001 as a temporary employee and working her way up to president and board member. She is credited with building Overstock into an online retail powerhouse before stepping down in 2016. She joined the board of High Times in 2017 and served as CEO for four months in 2020.

Simon also spent two years as executive director of the board of Mission Green, a nonprofit organization that works to free nonviolent cannabis offenders from federal prison.

Michigan MSO Bolsters Marketing Team C3 Industries, a multistate, vertically integrated cannabis

company based in Ann Arbor, Michigan, appointed John Moyers to vice president of marketing. Moyers previously served as director of brand marketing and senior director of marketing at Harvest Health & Recreation, the Arizona-based MSO acquired by Trulieve Cannabis. Before C3 and Harvest, Moyers was a managing director at TBWA\ Chiat\Day, where he led integrated advertising for Buffalo Wild Wings and Miller Lite. Since 2018, Moyers has been an independent consultant through his agency, 81818 Consulting. Hired or promoted someone for a senior-level position? Send a news release or general information to Omar Sacirbey at omar.sacirbey@ mjbizdaily.com.

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UNBOXED Cannabis Packaging and Design Insights

Cool Quencher A do-it-yourself beverage cap ensures full CBD potency for Karma Culture’s new wellness beverage By Kate Bertrand Connolly

T

he packaging highlight for Karma CBD Water is an interactive dispensing cap that protects active ingredients until the consumer pushes a button to mix them into the water. “It’s all about the cap,” said C.J. Rapp, CEO of Pittsford, New Yorkbased Karma Culture. Consumers create the beverage when they’re ready to drink it, pushing down on the patented Karma Push Cap to release powdered CBD distillate, adaptogens and vitamins into the bottled water. The cap “better preserves the CBD ingredient. We deliver on the promise of 25 milligrams of CBD,” Rapp said. “There’s no question the active ingredients—including CBD—deteriorate when they’re in a premixed beverage,” he said. “We separate the active ingredients by keeping them in the cap until seconds before the consumer infuses the contents and then drinks the product. And that is what ensures optimal CBD nutrition.” Karma CBD Water, which launched in early 2022, comes in five color-coded flavors. The front label notes the product’s CBD content and directs consumers to push the cap to infuse the water. High Wide & Handsome, a Culver City, California-based ad agency, designed the package graphics, and West Henrietta, New York-based

56 April 2022 | MJBizMagazine

Hammer Packaging prints the labels. Karma Culture manufactures the caps collaboratively with Rochester, New York-based EG Industries.

Canopy and Constellation Two partnerships—one with Smiths Falls, Ontario-based Canopy Growth Corp. and another with Victor, New York-based Constellation Brands—augment the product’s packaging benefits. Canopy Growth provides the broad-spectrum CBD distillate used to craft Karma CBD Water, and Constellation distributes the product through its expansive beer-distribution network. Initially, distribution will be only in states that allow sales of hemp-derived CBD edibles. In addition to leveraging Constellation’s distributor relationships, Karma Culture is in communication with retailers that already sell its non-CBD products, namely Karma Probiotic Water and Wellness Water. Those outlets include national chains Kroger, Rite Aid, Sam’s Club and Walmart as well as regional chains and Amazon.

‘Early Adopters’ The list of retailers that will sell the CBD product is not yet available,

SUPPLIERS Dispensing caps: EG Industries, egindustries.com Labels: Hammer Packaging, fortdearborn.com/ hammerpackaging Graphic design: High Wide & Handsome, highwidehandsome.com Bottler: Adirondack Beverages, adirondackbottling.com but “we are expecting that the smaller and independent retailers will be early adopters, for sure,” Rapp said. Those could include cannabis outlets in states where CBD products can be sold alongside marijuana. Going forward, a Karma-branded THC beverage is not in the cards, as the company remains strictly focused on mainstream health and wellness. But Rapp said Karma Culture is open to licensing the dispensing-cap technology to a THC brand. To suggest a product for this department, email magazine@ mjbizdaily.com.


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SEED TO CEO

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mjbizdaily.com | April 2022 57


SEED TO CEO Sound Bites from the MJBiz Podcast

E

veryone wants to get in on the cannabis market. The podcast “Seed to CEO” gives marijuana entrepreneurs an edge. Each week, MJBiz interviews a cannabis executive to learn the stories behind their successes and failures. To hear from those who have been there and done that, visit mjbizdaily.com/podcast or listen to “Seed to CEO” wherever you get your podcasts.

SEED TO CEO

Tune In Today!

These “Seed to CEO” podcast guests answered:

Photo by Sam Gehrke

What experience from your pre-cannabis life has proved most helpful to your work in cannabis?

AMBER LITTLEJOHN

RICKY WILLIAMS

JESCE HORTON

Executive director, Minority Cannabis Business Association Washington DC

Founder, Highsman Austin, Texas

CEO, Lowd Portland, Oregon

The value of a team (Williams is a former NFL running back). Being like one, having one heartbeat and everyone being on the same page. Because with any team, it really comes together about specialization of talents and abilities and being able to come together and get the most out of this. I really have valued that. Putting this team together and the way we work together—where we move fast, we care about each other … that’s been the main thing: the importance of team.

I was a business developer at the Energy and Environmental Services unit of Siemens. And those skills have been instrumental in everything that I do. First and foremost is: How do you differentiate from the competition? How do you develop a message that hits home with people and does things the right way? A piece of business development is process development—developing processes that are sustainable, that are repeatable and that you can improve upon. Last is execution: We all have great ideas about what could be in this industry. But if you’re not able to execute a sound strategy that really differentiates your business, then a lot of those opportunities are going to fall through your fingers.

My focus prior to the cannabis world was primarily on regulatory policy, and that is really helpful. I come from a very emerging, embattled industry, primarily dietary supplements. It’s a little bit like having a crystal ball and being able to see a bit in our future as to what challenges exist with a regulated herbal product that the government doesn’t like. So that’s been exciting, because the process that I got to go through in the supplement industry—and seeing that industry become normalized and stabilized—is something that I look forward to … with the cannabis industry as well.

Comments have been edited for length and clarity.

58 April 2022 | MJBizMagazine


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