MJBiz Magazine May-June 2021

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Insights for cannabis executives, investors & entrepreneurs

VOL 8 • ISSUE 5 • May-June 2021

WELLNESS

k o o l t Ou Cannabis firms dial in facilities, product lines and communication to treat a host of symptoms

Stocking the Shelves MJBizFactbook Preview Retail in Tough Times

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May-June 40 WELLNESS OUTLOOK

Cannabis firms dial in facilities, product lines and communication to treat consumers’ symptoms.

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Marijuana Business Magazine

May-June 2021 • Volume 8 • Issue 5

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From the Editor

10

Five Questions With Vince Sanders

12

AGAINST THE ODDS

Cannabis retailers who opened during the coronavirus pandemic share ways they set stores up for success.

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Hemp Notebook

14

Trends & Hot Topics

18

Company News

MARIJUANA INDUSTRY SHOWS RESILIENCE

Preview the latest edition of the annual Marijuana Business Factbook for details about investments, publicly traded cannabis companies and new medical and adult-use markets.

24

Industry Developments

74

Best Practices in Retail

78

Industry Players

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Insights for cannabis executives, investors & entrepreneurs

VOL 8 • ISSUE 5 • May-June 2021

WELLNESS

Outlook Cannabis firms dial in facilities, product lines and communication to treat a host of symptoms

Stocking the Shelves MJBizFactbook Preview Retail in Tough Times

82

On Our Cover

Our Advertisers

MedPharm Holdings CEO Albert Gutierrez one day plans to manufacture FDA-approved, cannabis-based medicines at his GMP-certified facility in Denver.

Photo by Matthew Staver

A V Blender mixes products at MedPharm Holdings.

Photo by Matthew Staver

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Marijuana Business Magazine | May-June 2021

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Marijuana Business Magazine | May-June 2021

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FromtheEditor | Kate Lavin

Renewed Focus on the Body The coronavirus pandemic heightened consumers’ interest in managing their own health

T

hey say those who have their health have everything. This notion really hit home during the past 15 months.

In reporting this month’s cover story, our reporters were told by multiple sources that consumer interest in cannabis to combat anxiety and help with sleep was higher than ever before—among medical patients, recreational users and first-time consumers alike.

Trendy Delta-8 THC To help understand how consumer attitudes toward using cannabis for wellness are changing, my colleague Kristen Nichols spoke with Vince Sanders. (See page 10.) The founder and CEO of CBD American Shaman has grown his retail concept to 365 stores. When delta-8 THC started taking off, Sanders believed the novel cannabinoid might steal market share away from CBD. However, he said that has not been the case.

“If you’re using a CBD product and it’s working for you, there’s absolutely no reason for us to move you or even suggest another product,” Sanders said. “Now, if you say, ‘This works great, but I still have a little bit of pain. I wish I could get rid of it.’ Then we might start talking to you about a product like D-8.”

In fact, delta-8 THC is just one of several minor cannabinoids that cannabis breeders and product manufacturers are looking to coax out of the plant and include in items for the health-conscious consumer.

Not-so Minor Leagues Laura Drotleff, a Marijuana Business Magazine contributor and reporter for our sister publication, Hemp Industry Daily, did a deep dive into minor cannabinoids for this issue. She found pharmacists, researchers and cannabis industry professionals hard at work uncovering which of about 130 known cannabinoids could provide relief for anxiety, insomnia and myriad other conditions.

Already, several popular brands are offering products with CBN and THC-V, known for their efficacy against sleep disorders and post-traumatic stress disorder, respectively.

And extraction for CBG—a popular cannabinoid when treating Crohn’s disease, glaucoma and nausea—was up 126% in 2020 compared to 2019.

Proceed With Caution But before extractors and product manufacturers start counting the money that could come from cannabis-based

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Marijuana Business Magazine | May-June 2021

supplements, they should read the advice of Dr. Priyanka Sharma on page 14. The owner of Colorado-based cannabinoid manufacturer Kazmira penned a column in this issue about the importance of research for cannabis-based supplements.

As the industry becomes more sophisticated, consumers will increasingly demand clinical testing and scientific data about the products they are buying. Of equal importance: Does pairing cannabinoids with beneficial supplements guarantee a positive outcome? Having clear data ahead of product launch can save money on recalls, legal fees and a ruined reputation.

As more Americans take charge of their health, it’s important to learn how to meet your consumers where they are.

Turn to page 40 to pick up tips from some of our industry’s brightest minds and learn where the future of plant-based wellness is headed.

Kate Lavin Marijuana Business Magazine Editor

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FiveQuestions | with Vince Sanders

Cracking the Delta-8 THC Code Multistate CBD retailer says cannabinoid provides genuine health benefits

By Kristen Nichols

I

t seems everyone in cannabis has an opinion on delta-8 THC, a minor cannabinoid that exists rarely in nature but can be synthesized easily from CBD isolate. It’s an isomer of the better-known delta-9 THC, and it creates milder psychoactive effects in many consumers because it doesn’t bind as readily to the body’s endocannabinoid receptors.

Some consider delta-8 THC to be a cheap knockoff of “real” THC and scoff at its medicinal potential. One of the hemp industry’s best-known self-regulatory agencies, the U.S. Hemp Authority, recently announced it would not certify “potentially unsafe, intoxicating products” containing delta-8 THC. Others warn that unregulated delta-8 THC is going to spark a federal crackdown and potentially threaten the decades of hard work that cannabis advocates have done to persuade policymakers that the plant has medical value.

These naysayers don’t bother Vince Sanders, founder and CEO of CBD American Shaman, the nation’s largest multistate cannabis retailer by store count. Founded in Kansas City, Missouri, in 2015, the chain of 365 stores has locations in markets where hemp-derived products are the only legal cannabis options and states where adult-use marijuana is widely available.

The stores sell delta-8 THC products except in states that expressly prohibit the cannabinoid, such as Arizona.

Marijuana Business Magazine caught up with Sanders to find out which customers are asking for delta-8 THC and why he believes the cannabinoid belongs in the wellness conversation.

Why do you sell delta-8 THC? It’s a great cannabinoid, therapeutically. We honestly see more pain management than even with (delta-9 THC).

When you have somebody with pain issues, it’s amazing.

The other thing is, because it is not as psychoactive as (delta-9 THC), it’s really more therapeutic when it comes to pain management. You can kind of microdose and manage pain without so much psychoactivity. And really, if you start taking less than 10 milligrams, there’s very little—if any—psychoactivity there.

How do you describe delta-8 THC to customers?

We start out at the basic level. We explain that this is an isomer of CBD. Then, you get into a little bit of chemistry. We say, look, there’s a group of carbon atoms. And in one place, there’s a double-carbon atom. We take that double-carbon, and we move that to a different place on the molecule.

To a novice or someone who doesn’t have a chemical experience, it looks exactly the same. There are just minor changes. It fits the (cannabinoid) receptor differently and produces a different effect.

Have you seen delta-8 THC cannibalize your CBD sales?

So far, there’s been no cannibalization. And I think that’s because we’re constantly teaching everyone in the store how things work, why they work and for what person. And if you’re using a CBD product and it’s working for you, there’s absolutely no reason for us to move you or even suggest another product.

Now, if you say, “This works great, but I still have a little bit of pain. I wish I could get rid of it.” Then we might start talking to you about a product like D-8.

This is such a hot item that a lot of people are walking in based on their own research and asking about it. And

Could it be as big as CBD? Nobody has a crystal ball, but sure. ” —Vince Sanders Founder and CEO, CBD American Shaman

10 Marijuana Business Magazine | May-June 2021

that’s why we explain how it works, why it works and how to properly use it. We give all the required warnings of, “Hey, unlike CBD, this is psychoactive. It does have these things that you may not be looking for or want.”

There is a perception that delta-8 products are a way in for consumers who cannot legally access delta-9 THC products. Does it sell better in places with limited access?

We aren’t seeing that yet, and I would have expected that.

You’ll pick a state where there is nothing—like Kansas, where you don’t even have medical—and it’s selling really well.

But we’re seeing all the fields are very brisk. We’re seeing brisk sales in California and Oregon, in lots of states where (delta-9 THC) is legal.

Two things: I think it is being used more as a supplement than (delta-9 THC). I also believe that its availability and its price point and the effects of not being as psychoactive appeal to a larger audience.

Where do you think delta-8 THC fits in the cannabis wellness landscape? Will it ever compete with CBD? As long as the government doesn’t take it away ... long term, I see this being a very important cannabinoid.

There’s a lot of minor cannabinoids out there, and if we’re allowed to continue to do different isomers, who knows what we may come up with? But as of right now, I definitely see (delta-8 THC) as a very large market.

CBD has had a number of years to get up and going.

D-8 is relatively new. You do certainly have therapeutic properties to (delta-8 THC). Long term, could it be as big as CBD? Nobody has a crystal ball, but sure.

Kristen Nichols is the editor of Hemp Industry Daily. You can reach her at kristen.nichols@hempindustrydaily.com.

HempNotebook | Kristen Nichols

A Healthier High?

Delta-8 THC, the latest trend in hemp cannabinoids, is another tool empowering patients

I

was the last person to appreciate the hype around delta-8 THC.

I kept seeing news reports about this “loophole” allowing intoxicating THC candies and smokable products to be sold in states where the real stuff (delta-9 THC, or the marijuana compound that gets users high) isn’t legal for most consumers.

It all looked to me like a lame knockoff: cheap bulk candies sprayed with synthetic who-knows-what to get ahead of regulators and give local investigative news teams a fresh topic for alarm.

Surely, I thought, folks will stop using this stuff when they can buy traditional THC products legally.

Then I started talking with people who use delta-8 THC. And I realized I had fallen into the same trap that has kept the entire cannabis industry from reaching its full potential: not listening to the people who use cannabis to find relief.

Another person I interviewed said he can’t stand delta-9 THC but loves its milder cousin. He said he just doesn’t like getting very high these days.

The stories made me pause and reflect. I realized these people sounded like the earliest CBD users. That’s because they’re finding real value in products that were scoffed at by law enforcement and even some old-timers in the cannabis industry.

Just like most CBD, delta-8 generally comes from an extraction lab rather than a drying room or trimming table.

But does that make it crap?

I realized I was guilty of the same narrow thinking that annoys me in critics who insist cannabis can’t have real therapeutic value.

I assumed that because some consumers might use delta-8 THC as a loophole to get high, that it was junk that no health-minded person would touch.

Delta-8 and Wellness What Users Say One woman I talked with said she feels relaxed and euphoric using delta-8 THC, but she doesn’t get anxious like she does with traditional marijuana.

As this source put it, delta-8 products never make her want to sit on the couch, pull a hoodie over her head and yank the strings shut, the way she does when she feels too high.

I had to laugh. We’ve all been there.

As we take a deeper look this month at the health and wellness aspects of cannabis, I’m happy to say my opinion on delta-8 THC has changed. The minor cannabinoid certainly has a place in the spectrum of cannabis wellness products.

Even better, my opinion doesn’t matter. Cannabis patients are empowered like never before. Folks have long been told by those who

Patients are increasingly empowered to take control of their own health and wellness—sometimes ignoring conventional thinking in the process.”

12 Marijuana Business Magazine | May-June 2021

supposedly knew better that the plant is poison and they need to look to traditional medicine instead.

Cannabis users just shrug in response.

That’s what makes this industry so exciting. Patients are increasingly empowered to take control of their own health and wellness—sometimes ignoring conventional thinking in the process.

Let’s keep that in mind the next time a novel, new cannabinoid starts making headlines. Before we write off a newfangled cannabis compound, process or delivery method, let’s listen to the folks doing it to find out why. We all just might learn something.

Kristen Nichols is the editor of Hemp Industry Daily. You can reach her at kristen.nichols@hempindustrydaily.com.

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Trends & HotTopics | Dr. Priyanka Sharma

CBD Pairings Require Transparency Companies that provide data about product effectiveness will outlast competitors

S

ince the onset of COVID-19, considerable attention has been directed toward bolstering the immune system. Many consumers are turning to wellness and self-care products that incorporate adaptogenic botanicals to alleviate stress and nootropics to improve brain function.

CBD is among the botanical products drawing interest, and major brands in the CBD industry have jumped at the opportunity to offer products that claim to support immune system health or cognitive function.

Lack of Scientific Data Currently, brands are launching CBD products that contain other popular dietary supplements such as turmeric, melatonin, elderberry and others.

Mixing such compounds is a common trend in the dietary supplement industry, and many supplement manufacturers produce products with similar hybrids. Although there is nothing inherently wrong with offering CBD products paired with popular supplements, scientific data is lacking on such products’ safety and the efficacy of their proposed effects.

For example, existing studies show the potential effectiveness of turmeric as an anti-inflammatory. There are also studies that explore the effectiveness of CBD as an anti-inflammatory.

However, there is a gap in the research when it comes to how turmeric and CBD function together as an antiinflammatory, and manufacturers are disregarding this gap, assuming that adding them together will provide added effectiveness. We all know what happens when we assume things: Consumers lose trust.

In terms of safety, it is also important to think about how different

supplement combinations could interact with each other in negative ways. Consider this: Fish oil and ginkgo biloba are both used to reduce cognitive impairment, but when combined, they can cause blood thinning. Haphazardly combining supplements—even natural ones—without testing is ill advised and possibly even dangerous.

Confounding Consumers As a consumer, it is extremely difficult to decide among products that contain supplements in addition to CBD. Is the brand that adds the greatest number of different supplements going to come out on top? Is the brand that adds the most popular supplements to their CBD going to find success?

Another question regarding this new class of products has to do with the dosage of each compound. Although natural compounds such as reishi mushrooms or echinacea may be beneficial, there seems to be a glaring lack of evidence to support whether these compounds are effective at the dosage levels being delivered per serving.

Combining supplements because it is assumed that their effectiveness will be additive is simply not going to cut it for consumers who are serious about wellness and looking for solutions to their health concerns. For brands, it is important to begin providing proof that these products are effective.

Consumers are going to begin losing trust in CBD and other hemp-derived cannabinoids if there is not sufficient evidence to support their efficacy.

The solution to this issue lies in research and clinical testing. If brands can present actual scientific data on the increased efficacy of combination supplement products,

14 Marijuana Business Magazine | May-June 2021

consumers will have a much more compelling reason to trust that these products will actually work for them.

It Should Be About Self-Care Consumers are more educated about wellness and self-care products than ever before. If brands are not providing evidence for these emerging self-care CBD categories, consumers will spend their money elsewhere.

It is time to invest heavily in the research and science behind these products, and brands that have the ability to provide this data are going to be ahead of the game. As an industry, if we want consumers to trust CBD products, then we need to give them a reason to do so.

Dr. Priyanka Sharma is the co-CEO and co-founder of Kazmira, a science-based cannabinoid manufacturer in Colorado.

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CompanyNews | U.S., Canada & International

U . S . D E V E LO PM E N T S

By Omar Sacirbey

Recent deals, acquisitions and other announcements from cannabis companies

The underwriters have a 30-day option to purchase 937,500 more shares at the IPO price.

Ayr Acquires New Jersey MMJ Company

Marijuana Giants to Merge in All-Stock Deal Two of the marijuana industry’s biggest ancillary companies, Greenlane Holdings and KushCo Holdings, entered into an all-stock merger agreement.

Under terms of the deal, Garden Grove, Californiabased KushCo will become a wholly owned subsidiary of Boca Raton, Florida-headquartered Greenlane. The transaction is expected to close in the late second quarter or early third quarter of 2021.

KushCo stockholders will receive approximately 0.25 shares of Greenlane Class A common stock for each share of KushCo common stock. That arrangement is expected to result in Greenlane stockholders owning roughly 50.1% of the combined company’s common stock and KushCo stockholders owning approximately 49.9%.

Parallel Moves Into Illinois With $100M Acquisition Atlanta-based Parallel, one of the largest privately held U.S. marijuana operators, entered into a definitive agreement to acquire six stores belonging to an Illinois retail chain for $100 million.

The acquisition of Windy City Cannabis, expected to close in the second half of this year, is comprised of $60 million in cash and $40 million in Parallel stock.

The deal could be worth $155 million if certain performance-based, earnout payments payable through 2023 are attained, according to Parallel.

Ceres Acquisition Corp., a special purpose acquisition company, plans to take Parallel public through a transaction that values the MSO at $1.9 billion.

Cannabis Real Estate Financier Prices Nasdaq IPO at $119 Million AFC Gamma, which offers real estate loans to legal marijuana companies, priced its initial public offering on the Nasdaq exchange to raise net proceeds of roughly $118.8 million before underwriting discounts, commissions and other expenses.

According to a news release, the Florida-based company priced the offering of 6.25 million common shares at $19 per share, the high end of the $17-$19 range presented when it announced the IPO in February.

18 Marijuana Business Magazine | May-June 2021

Ayr Wellness, a multistate marijuana operator with offices in New York and Toronto, agreed to a $101 million acquisition of GSD NJ, a vertically integrated medical cannabis company doing business as Garden State Dispensary.

Ayr will pay $41 million in cash, $30 million in stock and $30 million in the form of promissory notes. Earnout payments pursuant to the acquisition agreement will be capped at a maximum of $96.75 million.

Cannabis MSO Cresco Expands in Massachusetts Via $90M Acquisition Chicago-based cannabis multistate operator Cresco Labs is spending $90 million to acquire all the outstanding equity interests of vertically integrated Massachusetts operator Cultivate.

According to a news release, Cresco is paying $15 million in cash and $75 million in stock for Cultivate—plus up to $68 million in earnouts if certain financial targets are met. The deal is expected to close in the fourth quarter of 2021.

SPAC Plans to Acquire Glass House Group in $567M Deal A two-year-old special purpose acquisition company announced its intent to acquire Glass House Group in a $567 million deal aimed at creating California’s largest vertically integrated marijuana business.

Toronto-based Mercer Park Brand Acquisition Corp., a SPAC founded in 2019, plans to list Long Beach, California-based Glass House Group on the Canadian NEO Exchange after the deal closes. The transaction, which has a $1 billion equity valuation, is expected to close in the first half of this year.

Cannabis MSO Vireo Health Closes $23.5 Million Loan Multistate cannabis company Vireo Health International closed the first tranche of a senior secured loan worth $23.5 million.

Minneapolis-based Vireo said the loan will be used “to support the company’s ongoing growth initiatives and working capital requirements.” The nonconvertible loan, originally announced in November, carries a

three-year term with an aggregate principal amount of up to $46 million.

Trulieve to Buy Pennsylvania Retailer for $60 Million Florida-based medical cannabis company Trulieve is spending $60 million to buy more dispensaries in Pennsylvania.

The multistate operator will be purchasing Keystone Shops, a medical cannabis company with retail locations in Philadelphia, Devon and King of Prussia. The deal is comprised of $40 million in Trulieve subordinate voting shares and $20 million in cash.

Cannabis REIT Injects $30M Into Pennsylvania Grow A unit of multistate cannabis operator Jushi Holdings received an additional $30 million from Innovative Industrial Properties, a marijuana-focused real estate investment trust (REIT), for the first phase of expanding an MJ cultivation facility in Scranton, Pennsylvania.

Assuming full payment of the additional funding and completion of the expansion, the San Diego-based

REIT said in a news release that its total investment in the approximately 129,000-square-foot facility will be $45.8 million.

The facility is expected to total about 190,000 square feet once both phases of the build-out are finished. The project, which is expected to create more than 100 jobs, is subject to certain milestones, approvals and permits.

Connected Cannabis Completes $30 Million Raise Connected International Co., which does business as Connected Cannabis, said it closed on a $30 million capital raise that will bankroll national expansion plans. The California-based, vertically integrated company expanded into the Arizona market in late 2020 and plans to “focus on states with robust cannabis cultures and promising potential for sustained growth” such as Michigan and Nevada.

Existing investors Navy Capital and One Tower Group led the debt and equity funding along with participation from new investors Emerald Park Capital, an affiliate of Bryant Park Capital, and Presidio View Capital.

May-June 2021 | mjbizdaily.com 19

CA N A DA D E V E LO PM E N T S

CompanyNews | U.S., Canada & International Canopy to Buy Supreme Cannabis

Hexo Eyes U.S. Entry With $960M Shelf Prospectus Canadian cannabis producer Hexo Corp. filed a preliminary short form base shelf prospectus that could enable it to raise up to $960 million (CA$1.2 billion) in capital over a 25-month period. Once the prospectus is finalized, Ottawa-headquartered Hexo will be able to issue securities such as common shares, warrants, subscription receipts and units.

According to the preliminary prospectus, Hexo might use the proceeds from the sale of securities for general corporate purposes, to repay debt, expand into the United States and for potential acquisitions, including international expansion.

Canopy Growth of Smiths Falls, Ontario, announced plans to acquire competing Canadian marijuana producer The Supreme Cannabis Co. in a stock-and-cash deal valued at roughly $345 million (CA$435 million).

Under terms of the acquisition, Supreme shareholders will receive approximately 11.66 Canopy shares and 8 cents for every 1,000 Supreme shares held, a premium of about 66% based on Supreme and Canopy’s share prices before the deal was announced.

Canopy said potential cost synergies from the acquisition could total roughly $23.8 million within two years.

Organigram Acquires Edibles Manufacturer Canadian cannabis producer Organigram Holdings of Moncton, New Brunswick, acquired The Edibles & Infusions Corp. (EIC), a cannabis edibles manufacturer in Winnipeg, Manitoba, from AgraFlora Organics International and other shareholders.

Organigram paid $17.5 million (CA$22 million) worth of shares for the acquisition, with further share payments worth up to $10.3 million if EIC hits certain milestones.

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I N T E R N AT I O N A L D E V E LO PM E N T S

unidentified “strategic institutional investor” in exchange for a 31.5% equity stake in its new venture, Curaleaf International Holdings.

Curaleaf International was created to hold Londonbased medical cannabis company Emmac Life Sciences after a now-completed $286 million cash-and-shares acquisition announced in March.

Elixinol Global Buys Germany’s CannaCare

PepsiCo Launches Hemp Beverage in Germany

CBD maker Elixinol Global acquired German CBD brand CannaCare Health GmbH for $3.6 million (3 million euros) plus $7.2 million in Elixinol shares. The deal calls for Elixinol to pay up to $29 million if certain goals are met.

Elixinol maintains headquarters in both Westminster, Colorado, and Sydney, Australia. CannaCare is based in Hamburg, Germany, and makes CBD oils, sprays and skin-care products. The products are sold in 4,500 brickand-mortar retail distribution points in Germany.

Rockstar Energy, a drink brand owned by PepsiCo, has launched a line of hemp-infused drinks in Germany.

Rockstar Energy + Hemp was released April 3 in three flavors. The drinks contain hempseed extract, caffeine and taurine. PepsiCo announced no sales projections or plans to expand the hemp drinks to additional markets.

Curaleaf gets $130M Funding for Stake in Global MJ Firm Multistate cannabis operator Curaleaf Holdings of Massachusetts secured $130 million in funding from an

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-related announcements.

Koray

May-June 2021 | mjbizdaily.com 21

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IndustryDevelopments | International & State MAP LEGEND High level of medical development/implementation Medium level of medical development/implementation Low level of medical development/implementation Other - federally illegal but unique circumstances Recreational

Countries included have passed legislation at the federal level and must fulfill at least one of the following criteria: • Cultivation, manufacture or sale of medical and/or recreational cannabis allowed.

• Doctors can prescribe medical cannabis.

• Import and/or export of medical cannabis allowed.

High: Countries at the forefront of the global industry.

Frameworks are established, and adoption is well underway.

Medium: Implementation has begun but is still limited or restricted; lots of room for the market to develop.

Low: Legislation has been passed, but implementation is very limited or nonexistent. Decriminalization is not included.

National & International News Biden Selects Ex-State Attorney General to Lead DEA; Marijuana Stance Unclear President Joe Biden tapped Anne Milgram, a former state attorney general and longtime criminal justice advocate, to head the U.S. Drug Enforcement Administration.

In 2009, as the state attorney general of New Jersey, Milgram was quoted as saying that a plan there to legalize medical marijuana was “workable.” But those comments came more than a decade ago, and it is unclear what her current stance is on marijuana policy and reform.

Milgram’s appointment comes at a time when states increasingly are legalizing adult-use marijuana. The

24 Marijuana Business Magazine | May-June 2021

marijuana industry has criticized the DEA in recent years for being slow to approve marijuana studies.

Milgram most recently has been working as an attorney for New Jersey-based Lowenstein Sandler and has been teaching at the New York University School of Law. Her professional career has included assistant district attorney in Manhattan and civil rights prosecutor in the U.S. Department of Justice.

Australian MJ Sales May Pass $150M in 2021 Australia’s medical marijuana sales could surpass $152 million this year, a twofold increase over 2020,

© 2021 Marijuana Business Daily, a division of Anne Holland Ventures. All rights reserved.

Data is current as of April 15, 2021.

fueled by growing patient numbers and better product selection, according to a new forecast by data firm FreshLeaf Analytics.

The North Sydney-based company said Australia is still “heavily dependent” on Canada and Europe for flower. The number of registered patients in Australia has grown from 3,000 patients in 2019 to 45,000 in March 2021.

Canada’s Biggest CitiesSold Nearly Half of All Marijuana in 2020 Nine cities accounted for 47% of Canada’s $2.08 billion (CA$2.6 billion) in legal recreational cannabis sales last year.

Data from Canada’s federal statisticians found the cannabis sales and per-capita spending in the largest census metropolitan areas during 2020 were: • Edmonton: CA$189.3 million (CA$128.85 per person) • Calgary: CA$153.7 million (CA$99.61 per person) • Winnipeg: CA$76.7 million (CA$90.26per person) • Quebec City: CA$67.9 million (CA$81.60 per person) • Ottawa: CA$74.8 million (CA$67.28 per person) • Toronto: CA$334 million (CA$50.95 per person) • Montreal: CA$216.2 million (CA$49.53 per person) • Gatineau: CA$13.9 million (CA$39.86 per person) • Vancouver: CA$105.6 million (CA$38.57 per person)

May-June 2021 | mjbizdaily.com 25

IndustryDevelopments | International & State WA MT

VT

ND

OR

NH

ME

MN ID

SD

MI

WY

UT

CA

IL

CO

AZ

IN

MO

OK

NJ

CT

DE MD VA

KY

DC

NC

TN AR

SC MS

TX

OH 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.

State News

© 2021 Marijuana Business Daily, a division of Anne Holland Ventures. All rights reserved.

Data is current as of Mar. 15, 2021.

Arkansas Several entities are suing state medical marijuana regulators and an MMJ company in connection with the sale and transfer of a business license. The suit alleges fraud, conspiracy and breach of contract related to the sale of Natural State Wellness Enterprises Cultivation to Good Day Farm as well as a relocation of the growing facility from Newport to Pine Bluff. The plaintiffs allege that the Arkansas Medical Marijuana Commission didn’t provide proper notice that the license transfer would be considered and that Good Day Farm wasn’t a properly registered entity at the time the transaction was approved.

California The state is backing off a plan to shorten the window for THC testing in hemp crops after farmers cried foul on changes that made hemp-production rules more restrictive.

California announced emergency changes to extend the hemp harvest window from within 15 days after sampling to within 30 days. The longer time frame matches new national guidelines from the U.S. Department of Agriculture. The California Department of Food and Agriculture also said samples cannot be completed more than 11 calendar days before the anticipated harvest date and growers must submit a pre-harvest report to their county agriculture commissioner 30 days before harvest.

26 Marijuana Business Magazine | May-June 2021

IndustryDevelopments | International & State Colorado Gov. Jared Polis signed a measure with initial funding of $4 million that will provide loans, grants and technical assistance to social equity marijuana licensees. The so-called marijuana entrepreneur program will be funded initially with $4 million from the state’s marijuana tax cash fund and will offer loans and grants to social equity licensees as well as technical assistance such as business-plan development, consulting services and funding to augment existing technical assistance programs.

Florida The state Supreme Court voted 5-2 against an effort to put adult-use marijuana legalization on the ballot in 2022, killing any chance it would appear in that election.

The justices called the initiative “misleading” and said the the amendment didn’t properly advise residents that marijuana still would be illegal at the federal level.

Additionally, Gov. Ron DeSantis said he does not support capping THC in Florida’s medical cannabis market. However, DeSantis did express concerns about the strength of marijuana products. Florida’s House Bill 1455 would cap THC at 10% for flower and 60% for concentrates.

28 Marijuana Business Magazine | May-June 2021

Georgia State legislators passed a bill that could pave the way for up to 30 medical marijuana oil dispensaries to open in the state, although at press time, the law was awaiting a signature from Gov. Brian Kemp. Under the program, six producers would be allowed to produce cannabis oil with a THC cap of 5%. If approved by the governor, Senate Bill 195 would allow five dispensing licenses to be issued to each of those six producers, totaling 30 dispensaries. Nearly 70 applicants have sought the opportunity to produce medical marijuana oil.

Idaho Idaho Gov. Brad Little signed legislation to legalize the production, transportation and sale of industrial hemp in the state, allowing hemp production to begin in 2022. Under the new law, the Idaho Department of Agriculture can move forward to develop rules and fees for the production, sale and processing of industrial hemp and submit a hemp production plan to the U.S. Department of Agriculture “no later than Sept. 1.” Idaho’s hemp plan will be created in consultation with the governor, the director of the Idaho state police and Idaho’s agriculture industry.

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IndustryDevelopments | International & State Maryland Adult-use marijuana legalization in Maryland must wait at least a year after bills failed to meet the deadline for passing one legislative chamber and being sent to the other. Experts polled shortly after the November election had considered Maryland as one of the states most likely to approve a recreational marijuana market in 2021. But the adult-use bills, which included a focus on social equity and industry diversity, got stuck in committee.

Michigan A federal judge temporarily halted Detroit regulators from processing adult-use cannabis license applications in response to a suit challenging the constitutionality of a city ordinance giving preference to longtime residents. The city, which started taking applications earlier this year, intends to issue as many as 75 retail licenses, 35 consumption lounge permits and 35 microbusiness licenses. At least 50% of the licenses must be issued to so-called “Detroit Legacy” residents. The Detroit City Council unanimously approved the ordinance in November 2020 with the goal of providing economic opportunities for residents.

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Mississippi The state Supreme Court heard oral arguments on a constitutional challenge that seeks to nullify a medical marijuana legalization initiative, even after voters overwhelmingly approved the measure in November. At stake is a business-friendly MMJ market the 2021 Marijuana Business Factbook projects would generate $265 million in sales the first full year and $800 million annually by the fourth year.

Mississippi Supreme Court Chief Justice Michael Randolph appeared to strongly lean toward striking down MMJ legalization. More than 70% of Mississippians voted in favor of the measure; the city of Madison filed the legal challenge.

Missouri The state’s marijuana regulator is asking a court to throw out a February decision that granted medical marijuana cultivation licenses to related businesses Heya Kirksville and Heya Excello. The Missouri Department of Health and Senior Services called the Administrative Hearing Commission’s decision to grant the licenses after they were denied “arbitrary, capricious or unreasonable and “a violation of constitutional provisions.”

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IndustryDevelopments | International & State Montana Montana Gov. Greg Gianforte signed a bill that clears the way for farmers to use hemp in animal feed for pets and horses—and for other livestock once approved by the U.S. Food and Drug Administration’s Center for Veterinary Medicine. The bill, which passed unanimously in the Montana Legislature, earned support from the state’s Farm Bureau, farmers’ union and associations representing livestock and grain growers.

New Jersey Gov. Phil Murphy appointed Charles Barker to the state’s Cannabis Regulatory Commission. The appointment was made after the NAACP raised concerns about the five-member panel not including a Black man despite Black men being targeted by the war on drugs. Barker is a staffer for U.S. Sen. Cory Booker and member of the Rev. Al Sharpton’s National Action Network. A lawyer by training, Barker has been a constituent advocate working for Booker since 2017. Barker managed several policy areas, including criminal justice reform. He replaces William Wallace, who will shift to a staff role for the panel.

New Mexico Gov. Michelle Lujan Grisham signed a bill legalizing a potential $425 million adultuse marijuana market in the state. Lujan Grisham called for a special session after legislation had stalled during the regular session. Retail sales are to begin no later than April 1, 2022. The bill includes an excise tax of 12%, which would increase over time to 18%. A provision of the bill allows municipalities to limit adult-use operations but not opt out altogether.

New York State lawmakers legalized a recreational marijuana market that is expected to become one of the largest in the country. Sales could start as soon as next year.

The bill creates automatic expungement of previous marijuana convictions that would now be legal and provides licensing opportunities and support to social equity applicants and microbusinesses. The measure offers a path for the state’s 10 existing MMJ operators: Existing medical marijuana companies would be permitted to operate three adult-use stores apiece, co-locating them with dispensaries.

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IndustryDevelopments | International & State North Dakota The state Senate overwhelmingly defeated a bill to legalize recreational marijuana, ending reform efforts in that state for the year. State Rep. Jason Dockter of Bismarck sponsored the adult-use legalization bill in an effort to preempt a more liberal measure on the ballot in 2022. North Dakota voters rejected a recreational marijuana initiative in 2018, but residents in neighboring Montana and South Dakota approved adult-use legalization during the 2020 election.

Oklahoma State law enforcement officials are conducting a wide-ranging investigation into legal medical marijuana businesses they say might also be involved in illicit sales.

One such company in the town of Guthrie was raided recently, and the Oklahoma Bureau of Narcotics (OBN) seized “dump trucks full of marijuana plants,” according to local news outlets. An OBN spokesman said the agency received tips that the operation was selling cannabis on the illicit market. The agency said the company’s records were fraudulent and that they were not properly reporting sales. The OBN took 11 people into custody, though no arrests were made in connection with the raid.

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Oregon Oregon is considering new limits on delta-8 THC amid concerns that state regulations don’t adequately address the newly popular cannabinoid. Members of the Oregon Liquor Control Commission, which regulates the marijuana industry, recently discussed testing requirements and other safety regulations for delta-8 THC sold in dispensaries. The OLCC’s limits would apply only to Oregon’s marijuana program. Most delta-8 THC products are coming from hemp-derived CBD distillate, and the OLCC does not regulate hemp manufacturing. Statewide limits could include a requirement that all intoxicating THC products are sold within the OLCC regulated system and a ban on delta-8 THC sales to people under 21.

South Carolina A state vape shop owner is challenging police over $5,000 worth of delta-8 THC products confiscated from his store. Robert Oggenfuss, owner of TSR Vape Shop in Clinton, said the products were derived from legal hemp. South Carolina law does not specifically address delta-8 THC, an isomer of delta-9 THC that can cause mild intoxication. Authorities have not charged him with a crime pending lab analysis.

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IndustryDevelopments | International & State South Dakota The state Supreme Court heard arguments and is mulling a challenge to South Dakota’s voter-approved constitutional amendment to legalize recreational cannabis. This comes after attorneys representing the organization South Dakotans for Better Marijuana Laws appealed a lower-court ruling striking down the amendment because it contained more than a single topic. Gov. Kristi Noem opposes the voter-approved effort to legalize marijuana and directed the state attorney general to try to kill the measure. In addition, the governor is trying to add restrictions to the state’s medical cannabis program, which voters also approved.

Vermont Advancing efforts to launch a state recreational marijuana industry, Gov. Phil Scott announced his three appointees for the state’s Cannabis Control Board 12 weeks after they were due. The Cannabis Control Board is supposed to make recommendations to the Legislature about its annual budget, environmental and land-use requirements for marijuana businesses as well as proposed cannabis industry fees. If the Legislature doesn’t receive and approve those recommendations by May, when lawmakers are scheduled to adjourn for the year, the adult-use program launch could be pushed back.

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Virginia State legislators approved measures that will allow the personal possession, cultivation and use of small amounts of marijuana beginning July 1, but a commercial market still isn’t permitted to begin until 2024. Gov. Ralph Northam proposed the amendments to accelerate the timeline of a bill lawmakers passed in February to legalize adult-use marijuana. Northam wanted the changes made before he signed the legislative package. The measure emphasizes social equity licenses and would limit vertical integration to small businesses.

West Virginia State regulators awarded a business license to Crab Orchard-based Analabs, an MMJ testing facility. The licensing of Analabs clears up a potential bottleneck in the supply chain for West Virginia’s licensed medical marijuana program. Growers, retailers and processors have all been licensed, with many of the permits going to multistate marijuana companies. Regulators are expected to begin issuing medical cannabis patient cards this spring.

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

May-June 2021 | mjbizdaily.com 37

WELLNESS

OUTLOOK Cannabis firms dial in facilities, product lines and communication to treat a host of symptoms

40 Marijuana Business Magazine | May-June 2021

Vape cartridges are filled with cannabis oil at MedPharm Holdings in Denver.

Photo by Matthew Staver

May-June 2021 | mjbizdaily.com 41

WELLNESS OUTLOOK

Marijuana’s medical and wellness benefits propelled state legalization and formed the foundation of the modern cannabis industry. While recreational cannabis is grabbing today’s headlines, the industry’s future will be heavily shaped by health and wellness goals that executives would be wise to consider.

These include:

A greenhouse team grows medical marijuana at Vireo Health. Courtesy Photo

THE BUSINESS

OF HEALTH

Recreational and medical marijuana customers use cannabis to address concerns

R

ecreational marijuana makes the most headlines, but a large number of cannabis consumers buy and use the plant for medical and wellness reasons. These include acute medical conditions such as cancer, chronic pain and epilepsy, as well as wellness reasons including anxiety, muscle strains and sleep problems.

To understand their consumers’ needs, marijuana product manufacturers and retailers must know which cannabis products can help and how to make them in a way that wins consumer confidence.

There’s a lot to consider: • Federal legalization could usher in new regulations and standards governing how cannabis facilities operate.

• Researchers are learning about minor cannabinoids, which could play a role in future cannabis-based product development.

• Scientists brought over from the pharmaceutical industry are helping revolutionize cannabis products in a way that will make them more palatable—literally and figuratively.

“It’s important to understand where this industry is going to go long term,” said Albert Gutierrez, CEO of MedPharm Holdings, a Denver company that cultivates and manufactures cannabis products at a Good Manufacturing Practice-certified facility. “We want to make sure we’re following standards that will meet federal guidelines to serve customers or even serve researchers.”

42 Marijuana Business Magazine | May-June 2021

• Good Manufacturing Practice (GMP) improves quality and safety, facilitates scalability and will be the norm if cannabis is legalized federally. It behooves cannabis manufacturers to familiarize themselves with GMP now rather than scramble later.

• The benefits of minor cannabinoids are becoming better understood, and product manufacturers and formulators looking to gain an edge over their competition would do well to examine how they fit into existing business strategies.

• Chronic pain remains the leading condition cited by patients applying for medical marijuana cards, but the COVID-19 pandemic has prompted many consumers to use cannabis to better handle sleep and anxiety issues.

• Connecting with patients and understanding their needs remains a fundamental component of medical marijuana programs. As the industry matures, there are more ways to collect helpful data about patient needs and product effects.

• A dearth of doctors who support medical marijuana and are willing to recommend it to patients remains acute, but some physicians say attitudes among their peers are evolving.

While state-of-the-art facilities and science will play a large role in shaping the industry, so will established tactics such as building patient relationships and keeping records about the effects cannabis products are having.

In the following pages, readers will get firsthand insights from executives who are paving the way for marijuana’s future.

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WELLNESS OUTLOOK

COMPASSIONATE

BY OMAR SACIRBEY

CONNECTIONS

How marijuana businesses meet the medical and wellness needs of patients and consumers

M

edical marijuana isn’t exclusive to MMJ dispensaries.

It’s true that consumers with serious health problems are more likely to shop at dispensaries than adult-use retailers in order to access more potent products, higher purchasing limits and low to no taxes on medical marijuana.

But many cannabis consumers with less acute medical or wellness needs avoid the MMJ route and embrace recreational marijuana to address issues such as insomnia, stress and muscle pain.

“The way that you win as a business is to bring a differentiated experience to the consumer or to the patient,” said Dr. Kyle Kingsley, a former emergency room physician and current CEO of Vireo Health International, a multistate operator based in Minneapolis.

GETTING FEEDBACK

But how can cannabis executives get enough patient feedback to provide the right experience?

Chris Diorio, who in 2017 left pharmaceutical giant Pfizer after 20-plus years as a senior scientist to join PharmaCann, a Chicago-based multistate operator where he is now director of research and development, said his company uses several channels to gather feedback from patients and consumers.

These include PharmaCann’s social media pages, a call center, patient surveys and dispensary workers who serve customers.

PharmaCann has many employees who are also patients, and the comp

Cannabis clones are propogated in Texas. Photo courtesy of Texas Original Compassionate Cultivation

any often relies on them to better tailor new products.

For example, if PharmaCann wanted to launch a new product in a certain market, it wouldn’t do it on a massive scale right off the bat. Instead, a number of employee-patients would test the product and provide feedback on things such as onset, duration and taste.

“It would be a softer launch,” Diorio explained. “We get the feedback, make adjustments if necessary to make it more palatable—or, if the onset was delayed, investigate what was going on.”

QR CODES, EXPLORATIONS Vancouver, Washington-based Fairwinds, which sells THC-infused products within the state and hempbased CBD products nationwide, uses many traditional customer feedback channels. It also has started incorporating quick response (QR)

44 Marijuana Business Magazine | May-June 2021

codes on packaging that customers are encouraged to scan with their cell phones, activating a form where they can answer specific questions about the product.

“That helps us a lot. Sometimes, it’s things we would never think of. Smell is a really huge thing for people,” said Wendy Hull, Fairwinds’ CEO. Fairwinds also recently started an “Exploration Series,” where consumers are encouraged to provide feedback about their product experience through an online survey.

The first product in the series is a Pax Era vape cartridge blending the strain OG Kush with CBN, a minor cannabinoid that many observers say promotes sleep and stress relief.

For companies that can’t or don’t have the time to put their products through formal studies, such channels can provide invaluable feedback.

“That’ll help us home in on anything that can be improved,” Hull said. “That’s one way we can try and make sure our products are as effective as possible.”

FINGER ON THE PULSE

In Texas, one of the most restrictive medical markets in the nation and one where relatively few doctors have signed on to the program, Texas Original Compassionate Cultivation (TOCC) relies heavily on a medical advisory board comprised of eight physicians from around the state who have different specialties. They are led by Dr. Karen Keogh, a pediatrician and child neurologist whose practice of roughly 2,000 patients includes many who use cannabis to treat epilepsy.

“They provide us feedback on what they’re seeing, what they’d like to see change, how we might improve our products, what type of ratios are working for what type of symptoms,” said Morris Denton, CEO of TOCC, noting that he and other executives have telephone conferences with the medical board at least once per month. “We stay incredibly engaged with the patient and medical community in order to continue to develop and refine our products based upon what we know is working—and, often more importantly, when we think we can make improvements.”

Feedback has resulted in some changes for TOCC. For example, some patients who have tree nut allergies said they are unable to consume coconut oil, prompting TOCC to start making some products with safflower oil, which is nut-free.

Texas has a provision that infused products can contain only up to 5 milligrams of THC per serving, but those 5 milligrams can account for just 10% of the product’s total weight. That means patients who require more THC to treat their symptoms must consume large amounts of coconut or safflower oil. Many consumers wrote to TOCC seeking an alternative, so the company created a lozenge that contains 5 milligrams, allowing patients to get their daily doses through a reasonable number of lozeng-

Chanda Macias trains staff to recommend certain marijuana strains based on patient symptoms. Courtesy Photo

es rather than an unpalatable amount of cannabis oil.

Denton said TOCC has developed a large enough clientele and network of physicians that it can assemble focus groups of 15-20 patients to test new formulations and products.

TOCC provides the products for free in exchange for physicians and patients filling out questionnaires about their experiences. The company also gets information in traditional ways, such as surveys and conversations between patients and budtenders.

“It was really challenging at first, but it’s getting easier as we continue to evolve and grow. And were getting better at how we do it, too,” Denton said. “There’s not a single product we develop that doesn’t go through an initial patient scrutiny ... and then a focus group testing process to ensure that the product is ready for prime time.”

AILMENT-STRAIN ALIGNMENT

Chanda Macias, CEO of Ilera Holistic Healthcare in Louisiana and the National Holistic Healing Center in Washington DC, counts on her wellness consultants to serve patients using a method she calls “ailment-strain alignment” and a mantra of “listen, guide, treat and heal.”

“We look at their ailment, we match them with the proper strains and then the proper form of medicine—whether it’s in a tincture, flower, vaporizer. We

work with them to get the best medicine aligned with their ailment,” Macias said.

She emphasized that her team members can’t make health claims about cannabis strains, but they can share anecdotal evidence and let customers make their own decisions.

Her companies also built a database with six years’ worth of anecdotal evidence provided by patients. “We allow people to treat themselves and then give them the options that we think align properly with their ailment and condition.”

Many people assume cancer requires a high-THC product but forget that there are different types of cancer. Brain cancer, for example, might be better treated with high-CBD products, she said.

If a patient has multiple sclerosis, in which pain is known to rise suddenly before dipping down, Macias suggests indica strains consumed through combustion or vaporization, so the delivery and onset are fast. But for chronic pain, she recommends delivery through edibles or tinctures because the effects last longer.

“We rely on the patient to say how they feel,” Macias said.

ANECDOTAL EVIDENCE

Short of sophisticated research studies that take years to complete, industry observers say such anecdotal evidence can be valuable.

“The safety profile of cannabis is fairly well established. We do post-market surveillance looking for adverse events. And there’s been very few adverse events and consequences over the five to six years that we’ve been studying that,” Vireo Health’s Kingsley said.

“It’s just a matter of time until we have adequate evidence … to demonstrate that, for some segments of the population, cannabis is a real alternative,” he said. “In children with severe epilepsy disorders, there’s really solid evidence.

But the only way you’re going to convince mainstream medicine generally is to go through formal clinical processes and trials and really develop the real data. But you can’t always wait for that.”

May-June 2021 | mjbizdaily.com 45

WELLNESS OUTLOOK

THC, M.D.

BY OMAR SACIRBEY

While many physicians see patients benefiting from cannabis, national medical associations remain unconvinced

A

growing number of physicians see medical cannabis as legitimate medicine, but many remain skeptical if not reluctant to recommend it. That’s left some state medical marijuana programs with a dearth of MMJ-recommending physicians, undermining patient numbers and slowing industry growth.

For example, through the end of March, only 286 physicians were certified to recommend medical cannabis in Texas, a state with roughly 30 million people.

“Texas is 1,000 miles from east to west and north to south. You get out into West Texas, and there can be hundreds of miles between you and the nearest doctor. And who knows if that doctor is registered” in the Compassionate Use Program, said Morris Denton, CEO of Texas Original Compassionate Cultivation, which opened its doors in 2018.

Over the years, numerous other state medical marijuana programs have gotten off to slow starts, in part because not enough doctors were registering to become MMJ recommenders.

That reluctance is a product of multiple factors, including a lack of serious study into the benefits of medical marijuana, a lack of education about MMJ, fear of losing one’s license to practice medicine and stigma surrounding the plant.

GUILT BY ASSOCIATION

Many national medical groups maintain hardline anti-marijuana stances. The

nation’s biggest physicians group, the American Medical Association, remains opposed to both adult-use and medical marijuana legalization.

“AMA does not support legalization of cannabis for adult use until additional scientific research has been completed to fully document the public health, medical and economic consequences of its use,” AMA President Dr. Susan Bailey wrote in an April 9 letter outlining the group’s cannabis positions.

She added that the AMA does not yet believe medical marijuana’s benefits have been scientifically proven. “Approval and use of any drug must be based on sound, evidence-based scientific research. Our AMA believes that in the case of cannabis, that burden has not yet been met.”

Despite institutional opposition, many doctors who support medical cannabis legalization assert that more physicians support MMJ than the numbers suggest.

“The physicians that I know who treat a lot of these chronic conditions (listed under Mississippi’s new MMJ law) are ready to get into this and prescribe it, as needed, for the people who need it,” said Dr. Matt Wesson, an ophthalmologist from Tupelo, Mississippi, who sparred with the AMA’s Mississippi chapter over the state’s recently passed medical marijuana statute. “I think that there’s a good percentage (of physicians in Mississippi ready to recommend MMJ) because they realize that there’s a need for it.”

46 Marijuana Business Magazine | May-June 2021

Dr. Michelle Weiner

Some physicians come around to supporting medical cannabis after watching MMJ programs thrive in their states without the negative consequences that legalization opponents predicted, observers said.

“Physicians are more understanding because they understand a little more about the science,” said Dr. Michelle Weiner, a pain and rehabilitation physician in Hollywood, Florida.

Weiner said when patients tell doctors that their symptoms are improving with medical marijuana, it helps improve the medical community’s impression of the plant. “Physicians are seeing firsthand from patients how well they’re doing with the addition of cannabis into their regimen—and how many pharmaceuticals they’re no longer taking. There’s a substitution effect that speaks for itself.”

Very few recent studies have surveyed physician attitudes toward cannabis, but there are some that suggest majority physician support for medical marijuana.

WELLNESS OUTLOOK

Medical Marijuana Patients by Condition HIV/AIDS 0.4%

Nausea 3%

PTSD 11%

Glacoma 0.7% Chronic or severe pain 61%

Muscle spasms 6% Cachexia 0.4%

Cancer 3%

Note: Similar conditions have been grouped together.

Some patients may fall into more than one category.

All other conditions 13% Epilepsy or seizures 1%

Source: Arizona, Arkansas, Colorado, Delaware, Illinois, Michigan, Minnesota, Missouri, Montana, Nevada, New Hampshire, New Mexico, Oregon, Rhode Island and Utah state MMJ programs. © 2021 Marijuana Business Daily, a division of Anne Holland Ventures Inc. All rights reserved.

Among states that publish the conditions patients cited when qualifying for medical marijuana cards, chronic pain was the most widely reported ailment.

Courtesy Photo

A 2018 survey by Mayo Clinic researchers of 62 health-care providers in Minnesota (76% of them physicians) found that 58% of respondents strongly or somewhat agreed medical cannabis was a legitimate therapy, while a majority “believed that medical cannabis was helpful for treating the qualifying medical conditions of cancer, terminal illness and intractable pain.”

A survey of 334 pain doctors published in the Journal of Regional Anesthesia and Pain Medicine last year found that a majority believed medical cannabis was a legitimate treatment for pain.

While many national physician groups remain steadfastly opposed, state associations have been more progressive on medical cannabis. For example, after years of opposition to medical cannabis, the

25,000-physician-strong Massachusetts Medical Society changed course in December 2020 with a new policy recognizing cannabis as a legitimate therapy option.

“I would like to see cannabis treated … as something that is part of a person’s health and well-being,” said Jay Broadhurst, chair of the society’s committee on public health and an assistant professor of family medicine and community health at the University of Massachusetts Medical School.

While the progress being made might spare future medical marijuana markets the lack of doctors that has plagued their predecessors, more can be done, physicians said.

Weiner would like to see more medical schools teach students about the endocannabinoid system and have

48 Marijuana Business Magazine | May-June 2021

the federal government expand research into cannabis to compile the kind of evidence that doctors depend on in their decision-making.

Wesson believes the best way to change physician attitudes is through education—and, to that end, the cannabis industry should pass its experience to physicians, he said.

“They can let physicians know more about it: what conditions apply, what conditions it helps and the many ways in which it can be given. Also, things like where people can get it and what the approximate cost is going to be,” Wesson said. “The more that we can educate physicians, the more accepted it is going to be. It’s only a matter of time—a few years—until it is an absolutely accepted medication.”

CREATE THE UNDERGROUND

WITH MYCORRHIZAE

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FULLY INTEGRATES WITHIN PRO-MIX® GROWING SOLUTIONS LEARN MORE AND CONNECT WITH US @PROMIX_CANNABIS VISIT PTHORTICULTURE.COM/EN/CONNECT The information in this document was up-to-date at the time of printing. Because of its continuous improvement policy, Premier Horticulture reserves the right to halt manufacturing, change products, or revise technical data and prices without further warning or liability. Product availability may vary depending on the territory. Premier Horticulture is not responsible of the use of its products in territories where cannabis is prohibited. © 2021 Premier Horticulture Ltd. All rights reserved. PRO-MIX® is a registered trademark of Premier Horticulture Ltd.

WELLNESS OUTLOOK Color Up CBD Wellness Center in Denver works with massage schools to educate students about how cannabis-based products can be used in their practice. Courtesy Photo

MINOR CANNABINOIDS,

MAJOR MARKET POTENTIAL

Lesser-known cannabis compounds are likely to play a significant role in the booming wellness industry

BY LAURA DROTLEFF

M

ove over CBD. Make way for CBN and CBG. Hemp and marijuana executives say the booming wellness market is a natural fit for cannabis-based medicine, and minor cannabinoids might play an even larger role in consumers’ health pursuits. That’s because of the effects that are possible through broador full-spectrum extracts as well as the unique benefits of each isolated molecule.

Like CBD, many minor cannabinoids are nonintoxicating and can be used in topicals, edibles, beverages and even smokable flower. They are purported to: • Relieve ailments from immune disorders (CBG) to seizures (CBD-V).

• Promote better sleep (CBN).

• Relieve pain and inflammation (CBC).

THC-V, a minor cannabinoid more common in marijuana, also is reported to be less intoxicating while offering an uplifting high and characteristics such as appetite suppression and stimulant qualities.

Minor cannabinoids offer a “huge opportunity” within the wellness category, according to Jonathan Vaught, CEO and founder of Front Range Biosciences, a cannabis genetics producer in Lafayette, Colorado.

With more than 130 unique cannabinoids, harnessing the cannabis plant’s potential to prevent and treat disease is “an incredibly exciting area of growth in the wellness sector,” Vaught said.

DIALING IN FORMULATIONS

It’s essential to have experience formulating products with minor cannabinoids to provide the sought-after

50 Marijuana Business Magazine | May-June 2021

effects, according to Dr. Jenelle Kim, a neurobiologist and co-owner of JBK Wellness Labs, which formulates beauty and wellness products in San Diego.

“Minor cannabinoids—particularly when they’re utilized in a purposeful manner for synergy—are going to be very important for the wellness industry,” Kim said. She added that broadspectrum extracts have the most potent effect, although isolates can be important for consumers who cannot be exposed even to trace THC. “For them, having a blend of isolated cannabinoids might be important versus not having anything.”

Will Parker, a co-founder of Denverbased Color Up CBD Wellness Center, said the benefits of CBD were fundamental to Color Up’s skin-care line, and now the company is starting to move more toward minor cannabinoids as well.

Minor Cannabinoid Regulation and Research

POTENTIAL

Much has been made of the U.S. Food and Drug Administration’s plans for CBD regulation, but other cannabinoids are on the agency’s radar, too. Researchers within the agency and at universities across the country are looking at the health effects of THC and minor cannabinoids as the FDA’s Cannabis Working Group investigates the safety and efficacy of all cannabisderived extracts.

Government agencies are funding numerous projects focused on cannabidiol, THC and minor cannabinoids, seeking to understand how they work when used together and with conventional drugs.

During a conference hosted by the FDA’s Office of Women’s Health in November, the agency revealed multiple research projects underway looking at the health effects of both marijuana and federally legal hemp.

The agency says there are research gaps on minor cannabinoids as well as other non-cannabinoid molecules such as terpenes.

“The focus of research for many years has been on THC, and it’s left significant gaps in understanding the properties of the well over 100 cannabinoids and 120 terpenes within the cannabis plant. Many may have important therapeutic benefits,” said David Shurtleff, deputy director of the National Institutes for Health’s National Center for Complementary and Integrative Health in Bethesda, Maryland.

Tetrahydrocannabivarin

He said that phytocannabinoids “exert a wide range of pharmacologic effects” that are of therapeutic interest, and several National Institutes of Health institutes have “modest investments” in research focused on the endocannabinoid system and clinical research focused on the therapeutic effects of cannabinoids.

– Laura Drotleff

May-June 2021 | mjbizdaily.com 51

WELLNESS OUTLOOK “CBD has this balancing effect with our sebum-producing cells in our skin, and CBG and CBD-V have been shown to increase lipid production in the skin. On the other side of that, we have cannabinoids like CBC and THC-V, and they’re actually shown to decrease some of that sebum production, so we’re finding these minor cannabinoids fit really well with the skin-care products,” Parker said.

Minor cannabinoids also provide anti-inflammatory and antioxidant effects, which are hot topics in skin care, Parker said.

“Minor cannabinoids are doing multiple things at once,” he said. “If we can put one action-packed ingredient in something and have it do multiple jobs, I feel like that’s a win-win situation for everyone.”

INCORPORATING OTHER INGREDIENTS

While minor cannabinoids are likely going to play a significant role in wellness, they’re only one piece of the puzzle, which is why many brands are blending cannabinoids with other properties such as adaptogens for stress and nootropics for brain function as well as Ayurvedic herbs and ingredients found in Eastern medicine practices, Parker said.

(Read about the importance of testing combination supplements on page 14.)

Large beauty brands and other companies are formulating consumer packaged goods that combine cannabinoids with other ingredients, said Kim, who specializes in using traditional East Asian herbs and medicines in her formulations.

“We’re moving into a time when people are becoming much more aware of when to use what and why it’s important,” Kim said. She added that many cannabinoid formulations focus on incorporating supplements and topicals into consumers’ daily life habits to ensure their bodies work optimally and function as preventative care.

“Nootropics, sleep and beauty are definitely where I see this really coming to fruition,” she said.

Dr. Jenelle Kim uses East Asian herbs as well as cannabinoids in her JBK Wellness Labs formulations.

Courtesy Photo

EDUCATING CONSUMERS

Most consumers are not aware of what minor cannabinoids are and what they do, said Laura Fuentes, a pharmacist, CEO and co-founder of Florida-based Green Roads CBD. Fuentes developed a sleep aid with CBN and is developing products containing other minor cannabinoids.

“Consumers are still not 100% clear on what CBD does, so it’s just like throwing another layer on this cake, and it’s hard for consumers to understand because it seems like it does so many things—because it does do so many things,” she said.

Clients at Color Up CBD have shown an increased interest around minor cannabinoids over the past few months, especially CBN for sleep, said Shauna Blanch, Color Up co-founder and chief operating officer.

“So many of us for so long used marijuana for sleep, and it does put you to sleep. But the THC can trigger us out of our REM sleep, so we’re not actually getting that full sleep, when we do most of our healing,” she said.

Skin-care clients also have shown confusion around whether they should be using full-spectrum or isolated CBD products, Blanch said. “That’s where we start to educate them.”

Though consumers are just beginning to develop awareness of the benefits of minor cannabinoids, it’s likely these molecules will become a regular element of health and wellness in the next five years, Fuentes said. She also expects them to be marketed like other natural

52 Marijuana Business Magazine | May-June 2021

products in the wellness space, though there will likely be a pharmaceutical path for higher concentrations of isolates.

“I think it’s going to be like multivitamins: Cannabinoids are going to be part of our normal routine,” she said. “If you feel like you’re getting sick, you pop a bunch of vitamin C. If your knee is bothering you and you have a lot of inflammation, you’re going to want to take CBD.” Fuentes added that because so many consumers are using CBD and other cannabinoids, patients are beginning to force doctors and other medical professionals to read the research.

“There’s a fair amount to learn about (CBD) from a consumer education and total market perspective, but it’s the same for other cannabinoids, too,” Vaught of Front Range Biosciences said.

MARKETING MINORS

So how do cannabis entrepreneurs educate consumers about the benefits of minor cannabinoids? The U.S. Food and Drug Administration and the U.S. Federal Trade Commission have an increasingly sharp eye fixed on the cannabis industry, making the promotion of cannabinoids tricky. Numerous CBD companies have received warning letters—and even fines, in some cases— for making unsubstantiated medical claims about what the molecule can do for users.

“What we have to do is market it as the dietary supplement industry would do, which are what they call

WELLNESS OUTLOOK ‘fluffy claims.’ ‘It may support this; it may help that.’ But we can’t say, ‘It will stop your pain,’” Fuentes said.

“There’s no drug monograph for these products because they haven’t gone through that process yet.”

Color Up’s owners say it’s increasingly frustrating to see others making claims they know are unlawful.

Instead, the company uses its online education program focused on wellness practitioners such as yoga teachers, naturopaths, nutritionists and the network of spas carrying its products.

The company also educates brand ambassadors from massage, aesthetics and skin-care schools with the hope that they will teach their students about Color Up’s products.

“I teach at a massage and aesthetics school, and (the brand) is fully in their program. We’re in the Paul Mitchell schools and the Aveda schools, and we teach their students about our cannabis products and how they’re utilized in treatments—why we’re using it, why we’re recommending it,” Blanch said.

“And then, all of those people are out there educating for us.

“That’s how we have been able to get our education and marketing out to people without crossing the FDA lines or getting ourselves in trouble.”

Mainstream brands exploring the benefits of cannabinoids are careful to enlist attorneys and regulatory experts to ensure they are following the rules, Kim said.

“We always will look to the attorneys on what exactly (is) correct and how it should be said,” Kim said.

“While sometimes it can be a little limiting … regulations and the laws are so very important, and there is a lot of gray zone, so people have to educate themselves well.”

Laura Drotleff writes for Hemp Industry Daily and Marijuana Business Magazine. She can be reached at laura.drotleff@ hempindustrydaily.com.

Plant Breeders Coax Minor Cannabinoids From Genetics Until recently, manufacturers have had a tough time getting minor cannabinoids incorporated into their products. A shortage of availability and a high price tag have stood between manufacturers and these rare molecules, said Will Parker, cofounder of Denver-based Color Up CBD Wellness Center.

But in the past year or two, cannabis breeders have stepped up efforts to produce genetics dominant in minor cannabinoids, while extractors have developed techniques to more thoroughly isolate them.

“It’s really exciting now that they’re becoming a lot more accessible,” Parker said.

PUMP UP THE THC-V

Jonathan Vaught, CEO and founder of Front Range Biosciences, a producer of hemp and marijuana genetics in Lafayette, Colorado, said the genetics for minor cannabinoid-dominant varieties are coming online from a number of companies.

Front Range Biosciences is launching a new line of THC-V genetics in collaboration with marijuana partners in California and Colorado.

The company also is working on developing hemp-compliant THC-V genetics as well as genetics dominant in other minor cannabinoids.

“THC-V has been rarely observed … and it’s generally produced at fairly low levels,” Vaught said, citing a mutation in the pathway that allows cannabis plants to produce THC-V. “Most plants that do have this mutation generally don’t produce very much, and when they do … then the plants are generally fairly poor performing. They don’t produce very good weight. They don’t produce high overall cannabinoids and terpenes.

They’re just generally not very easy plants to grow and produce.”

With advances in breeding technology, the company has unlocked the plant’s genetic ability to produce varieties with more than 20% total cannabinoids and a nearly 1:1 THC-V:THC ratio, Vaught said.

54 Marijuana Business Magazine | May-June 2021

“By improving not only the total amount of THC-V that gets produced in the plant but also some of the other characteristics—high terpenes and total cannabinoids—it produces more weight and more flower and it’s more vigorous,” Vaught said. “Those are all the things that are going to make it easier for growers to produce this and introduce it in the supply chain.”

CBG AND CBN

The availability of new genetics has shown up in cultivation, too.

According to Hemp Industry Daily’s 2021 Hemp and CBD Factbook, CBD continues to be the cannabinoid most hemp growers strive to cultivate, with 80% of growers focused on CBD flower and biomass production in 2020, down from 96% in 2019.

Cannabigerol (CBG) is often called the mother of cannabinoids because it breaks down to form other cannabinoids such as CBD and THC. Of hemp grown for cannabinoid extraction in 2020, 43% was for CBG, up from 19% in 2019. The shift likely stems from increased research and public interest in novel cannabinoids.

Cannabis plant varieties rich in CBD-V also have recently hit the market.

Long considered an unwanted waste product of “stale” cannabis, CBN is created when THC-A is exposed to light or oxidized. Some cannabis product manufacturers say the degraded THC has sleep and anti-inflammation benefits worth exploring.

The percentage of hemp cultivated for CBN remained nearly the same from 2019 to 2020, at 10% and 12%, respectively. About 3% of growers were cultivating hemp for delta-8 THC, a category that has gained traction only over the past year.

Meanwhile, cannabis extractors are experimenting with better ways to use light, heat and pressure to hasten the way THC degrades into CBN, which several marijuana companies are using in sleep-aid products.

– Laura Drotleff

HOW TO

EXTRACT FOR MINOR CANNABINOIDS

BY BART SCHANEMAN

Breeding for rare compounds can save money compared to ‘needle in the haystack’ extraction, experts say

A

s minor cannabinoids gain popularity and acceptance among cannabis consumers, extraction companies looking to cash in on the trend can approach creating them in several ways.

The easiest and most common way is to find plants that have been bred to be rich in lesser-known cannabinoids such as CBG. There are multiple ways to extract for minor cannabinoids, depending on the extractor and the targeted compounds.

If the genetics already have been developed, then an extraction company can use traditional methods such as butane, CO2 or ethanol solvents to strip out the targeted compounds. The cannabinoids are then isolated into a crude mixture and can be further purified and separated by distillation or chromatography.

For cannabinoids that don’t show up in strong percentages in plant source material, companies rely on chemistry to create larger quantities.

Rarer cannabinoids such as CBC and delta 8-THC, for example, can be created using biosynthetic processes, through which a different organic material such as yeast is converted into the desired compound.

The trick to extracting minor cannabinoids is trying to separate a specific molecule from a biological source, whether it’s yeast or bacteria or a hemp plant.

“When you talk about extraction, it’s all chemistry,” said Jonathan Vaught, CEO and founder of Front Range

Biosciences, a cannabis genetics producer in Lafayette, Colorado.

THE COST OF EXTRACTION

There are many chemical processes and tools to extract THC and CBD, and they work the same with the other cannabinoids, Vaught said.

He added that depending on the purity an extractor is looking for, the costs of the extraction process can vary.

A broad-spectrum extract with multiple compounds will really drive up the cost.

For example, if a plant produces only 1% THC-V and produces 15%-20% THC or other cannabinoids, it’s going to be much more expensive and challenging to purify that THC-V and isolate it, according to Vaught.

Currently, THC-V extract is about three to five times more expensive than THC, Vaught said, primarily because of limited supply and low yields from the varieties that exist in the marketplace.

“It’s like if you have one needle in the haystack, that’s going to take a while,”

he said. “If you have a thousand needles in the haystack, you’re going to find one more easily. It’s kind of the same way with the molecules.”

Vaught sees breeding for minor cannabinoids and plant development as a solution to cut extraction costs.

His team is working with cultivators to improve the efficiency of growing for these minor cannabinoids. Once the growers start to produce more, “the economics start to change,” Vaught said.

SUPPLY AND DEMAND

Jason Pickle, co-founder of Murfreesboro, Tennessee-based Volunteer Botanicals, an intermediate manufacturer that takes extracted material and creates finished products, said the production of compounds with minor cannabinoids is increasing.

A lot of companies are using minor cannabinoids to boost a product, he said.

For example, a company might take a CBD extract and add more CBN to create a different effect for the consumer.

“What we’re beginning to see is, in the cannabis industry, people are leveraging supply and demand,” he said. “This year, there’s more and more people producing these cannabinoids.”

Bart Schaneman covers cultivation and extraction for MJBiz Magazine and MJBizDaily. You can reach him at bart.schaneman@ mjbizdaily.com.

May-June 2021 | mjbizdaily.com 55

WELLNESS OUTLOOK

GETTING AHEAD

BY OMAR SACIRBEY

WITH GMP

Companies planning for legalization and cannabis-based pharmaceuticals should implement rules followed by the food and drug industries

D

o you monitor peanuts coming into your extraction lab or mix edibles ingredients with a plastic spoon? If so, your marijuana company might be violating Good Manufacturing Practice (GMP). And according to some experts, GMP certification will be part of the federal legalization of cannabis.

GMP is a set of rules that ensure the quality, safety and efficacy of food and drugs. It covers all aspects of food and drug manufacturing. The United States, Canada and the European Union all have GMP rules that, while similar, are not interchangeable, meaning GMP certification will not carry over from one region to another.

Attaining GMP certification from independent third-party certifiers or government regulators can take many months or years to achieve—as well as plenty of money.

So, why do it?

First and foremost, if the federal government legalizes marijuana, many observers predict GMP will be a requirement for the industry.

Having a GMP certification can also give you an advantage with customers and B2B partners because it provides a verifiable level of safety and security to your cannabis products.

For newer businesses with ambitions to expand, having GMP established in one facility makes it easier to replicate in another, which makes scaling easier.

Albert Gutierrez of MedPharm Holdings said GMP certification focuses most on processes.

Photo by Matthew Staver

“It was important to me on a basic moral level. That’s the kind of standard we wanted,” said Annie Holman, CEO of The Galley, a contract manufacturer in Santa Rosa, California. The Galley, which manufactures infused chocolates, hard

56 Marijuana Business Magazine | May-June 2021

and soft candies, beverages, tinctures, creams, bath bombs, pre-rolls and other products for brands, currently is pursuing GMP certification.

“Once this thing gets federally legal, (GMP is) going to be required. It’s not

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WELLNESS OUTLOOK right now, but I didn’t see any reason to backtrack on this. It’s about people, my premises and all the processes and procedures. And to have all those things done well equals profit.”

COSTS AND HIRING

The cost of setting up and maintaining a GMP-certified facility depends on its size.

“For every square foot of manufacturing space we’ve built, you can add almost 30% more per square foot if you’re going down the GMP route. It’s a significant investment,” said Michael Elias, CEO of vertically integrated marijuana company Common Citizen, based in Marshall, Michigan.

Experts also noted “indirect costs” of adopting GMP such as maintenance and third-party consultants. Finding and hiring staff familiar with GMP will likely be more expensive as well.

But the investment is worth it, Elias believes. “The FDA is coming,” he said of the U.S. Food and Drug Administration.

“It’s really important that our facility look and feel like those facilities in Big Pharma and food when it comes to GMP standards, because they are the gold standard.”

ASSESS AND VET

When embarking on a GMP transformation for your business, it’s important to carefully choose where and how you build it. And unless your business has high-level staff that’s well-versed in GMP, hiring a GMP consultant is advisable.

When Holman found an 8,300-squarefoot, former fish-processing plant in 2018 that had been built to GMP standards, she thought she had found the ideal location for The Galley. Pressed for time and eager to launch, Holman said she gave the building less scrutiny than it deserved.

“I should have bulldozed that building and started again,” she said. Instead, Holman began renovating only to discover successive repairs—including an expensive earthquake retrofit—that totaled almost $1.7 million.

Building a GMP facility can cost 30% more.

Photo courtesy of Common Citizen

“My mistake was I should have looked at this a little more carefully in regard to what was it really going to take. You get all these bids for things, but it’s always more expensive. This literally turned out to be about three times the expense.”

Had she known about the true extent of the repairs needed, Holman said she would have done things differently.

“Instead of scrambling to find someone to help us fix this problem at the last minute, I would have planned it out better. I would have had more of a chance to really look around and say, ‘OK, what are the solutions to fixing this problem?’” Holman recalled.

Once the necessary renovations were made, she hired consultants to tell her what she had accomplished toward establishing GMP in her facility and what was still needed.

“Don’t try to do this yourself. It’s complicated, and you won’t think of everything,” Holman said.

For $2,500, she hired GMP consultants Trace Trust from San Francisco for help.

“They just came in and said, ‘Hey, you need to look at this, you need to look at that.’ They gave me a lot of food for thought, and then I decided what we were and weren’t going to do.”

Although Elias, a former healthcare executive whose resume includes running a 450-bed facility for advanced

58 Marijuana Business Magazine | May-June 2021

health care, and his co-founders were familiar with GMP, they hired Orion GMP Solutions, a third-party consultant from Rochester, Michigan, to help design their facility and processes.

Elias noted that while cannabis executives can draw from U.S. Food and Drug Administration-approved GMP guidelines for the pharmaceutical and food industries, consultants can safely navigate the vagaries that inevitably come with interpreting government regulations.

“It’s not this detailed, prescribed approach to what you do. It’s more of a guideline,” Elias said. “Those consultants are critical to shaping the interpretation of those guidelines and fitting them into a cannabis framework that will essentially pass certification.”

FOCUS ON PROCESSES

When it comes to GMP, most of what needs to be done has more to do with processes than equipment, said Albert Gutierrez, CEO of MedPharm Holdings, a cannabis cultivation and manufacturing company in Denver that produces products for both the recreational and medical markets in Colorado. MedPharm also is conducting federally approved cannabis research studies with the aim of creating FDA-approved medicines that can be used to treat Alzheimer’s, Parkinson’s and other conditions.

“What does GMP mean? Do you have SOPs in place? Have you put this washing method in place? That’s easy to say. But to do it in practice and actually have an auditor come out and review all your processes and say whether or not you are doing that, that’s a whole other ballgame,” Gutierrez said.

There are hundreds of details when it comes to setting up GMP standards for your business, but the biggest category of steps would fall under “cleanliness,” Gutierrez said.

For example, workers cannot mix ingredients using paddles with plastic on the ends because plastic is porous, making it an ideal hiding place for bacteria that can contaminate your products.

Also, MedPharm workers use white coats when mixing ingredients that don’t have allergens such as peanuts but use blue coats when mixing ingredients that have allergens. Wearing specific coats when working with allergens helps contain them and prevent crosscontamination.

Other procedures guide what chemicals, nutrients and soil are allowed, how they should be stored and how they should be mixed. Gutierrez said there are steps on how to properly irrigate your grow, how to handle runoff when it occurs, how to ensure that mold and mildew aren’t building up and how to clean a flowering room after it’s been harvested. In the food and product development labs, MedPharm staffers wipe down and sanitize counters at the end of every day but repeat the cleanings in the morning in case any airborne contaminants landed on the tables overnight.

Other important GMP steps include cleaning machinery and calibrating it daily to make sure it’s measuring correctly.

“There’s a lot of different components to it all,” Gutierrez said. “You want to make sure you’re putting standards in place and buffering yourself to make sure you’re not letting contaminants in.”

Elias from Common Citizen agreed.

“It’s not just the facility side of the equation. To maintain your GMP standards, you need to really drive it within the culture. And there’s a lot of work that the humans have to engage in to sustain it: How we touch the product, how we move the product, what materials we use in processing the product—everything from what kind of scissors you should be using to what the tables need to look like,” he said.

It is important when creating foodgrade products not to use any materials that attract contaminants, Elias said, adding that “porous materials are a big no-no.”

“A lot of these suppliers now are actually going out of their way to make sure that cannabis-specific

The Galley is pursuing GMP certification for its facility in Santa Rosa, California, where workers create cannabis-infused products such as bath bombs for client companies. Courtesy Photo

instrumentation and equipment is GMP-certified, because we are asking for it now.”

THE FINAL EXAM

Once an executive feels strongly that a company’s facility and processes have reached and even gone beyond minimum GMP requirements, they should seek certification from an independent GMP certifier to make it official.

In fact, some certifiers suggest running a mock GMP audit before a real audit to discover any shortcomings that might have been overlooked and need correcting.

“We had a third-party auditor come in after we had established everything and asked, ‘OK, now what are we missing? Where did the gap analysis show improvements need to be made?’”

Gutierrez said. “It is possible to miss things, and having an audit guide you is helpful. Now, every year we just go through renewals. And it’s another audit, but it goes pretty smoothly because we know what we’re doing.”

Audit certification renewals cost about $5,000 to $7,000, Gutierrez said.

While prepping and going through one’s first GMP audit and certification can be expensive, subsequent audits for renewal are much easier because most of the work has been done, minus updates that need to be made because of rule changes.

“The good news is, once you’ve written a couple of these, you can look at one and

base the rest of them on that. It’s not like you’re reinventing the wheel the entire time with your SOPs,” Holman said. “The way we clean things has to be consistent, reliable and the same. When you do all these things and you have all these things in place, one of the benefits is that it’s much easier to scale,” Holman said.

STAFF BUY-IN

Getting employees to abide by GMP can be another challenge.

“We can write SOPs till I’m blue in the face. We establish these operating procedures that are extremely robust and very detailed, but sometimes things get missed or they don’t get followed,” Holman said.

To make sure GMP is being maintained at its facility, Common Citizen consistently has seven to 10 people who serve on an internal qualityassurance team that makes sure GMP is being followed.

“GMP facilitates repeatability of process. For it to succeed, you need to have a culture of developing and sustaining standards. Standards are what drive repeatability, reproducibility, to deliver on the same quality outcomes over and over again,” Elias said.

Gutierrez agreed. “These are all things that are important, because as we go into this next phase of cannabis, the maturity of the industry is going to really increase times 10,” he said. “We want to be ahead of that game. That’s always been our play.”

May-June 2021 | mjbizdaily.com 59

WELLNESS OUTLOOK

RESPONDING

TO SLEEP AND ANXIETY C hronic pain continues to be the No. 1 reason patients register for medical marijuana cards. But the COVID-19 pandemic and a major recession forced many people to confront a host of new health and wellness challenges, which appears to have had an impact on cannabis use.

In particular, anecdotal evidence and a boom in cannabis sales over the past year suggest many more Americans are turning to the plant to deal with anxiety, stress and sleep issues.

“For the general population, the three main categories that you can break almost every product down to would be pain, anxiety and sleep. Those are the ones we hear all the time,” said Wendy Hull, CEO of Fairwinds, a cannabis products manufacturer based in Washington state.

“This past year has been very stressful for a lot of people. And a lot of people need these types of products,” Hull said.

For example, Fairwinds formulated Release, a CBD product that comes in tinctures and vapes, which Hull described as Fairwinds’ anti-anxiety brand.

Dr. Kyle Kingsley, CEO of Minneapolisbased Vireo Health International, agrees that a growing number of patients are using cannabis because of sleep issues and anxiety and that marijuana businesses should respond accordingly.

“There is increased anxiety, increased insomnia,” Kingsley said. “I think cannabis is an interesting potential tool for some people in the time of COVID.” To that end, Vireo developed a sleep aid and calming product last year called Moonlight, a combination of THC, CBD and CBN. “It’s really formulated to address this need for people,” Kingsley said. “That’s

Edibles might help patients stay asleep, according to Garden Remedies owner Dr. Karen Munkacy.

Courtesy Photo

Dr. Karen Munkacy

really what we’re looking to do, is bring defined outcomes to people.”

Despite the substantial increase in the number of Americans with sleep and anxiety issues, many states don’t include insomnia as a qualifying medical condition. In the past year, regulators in

60 Marijuana Business Magazine | May-June 2021

Pennsylvania and Hawaii both rejected insomnia as a qualifying condition for medical marijuana.

Qualifying conditions or not, patients are likely to bring up sleep and anxiety with budtenders, and cannabis business owners who want to serve patients and make a profit should be prepared.

For example, Dr. Karen Munkacy, an anesthesiologist and owner of medical/ recreational marijuana retailer Garden Remedies in Massachusetts, noted that when consumers ask for a sleep aid, budtenders frequently suggest indica strains. That’s a good start, Munkacy said. But consumers should also be told that the effects of smokable flower last only a fraction as long as edibles.

“That means that, if you’re someone trying to sleep through the night, edibles are going to be much more effective,” Munkacy said.

– Omar Sacirbey

WELLNESS OUTLOOK

BRINGING

BIG PHARMA

BY OMAR SACIRBEY

EXPERTISE TO CANNABIS

T

he key to developing effective medical and wellness products for cannabis consumers begins with understanding what patients want and expect—and what the ever-growing universe of plant-based medicines can deliver.

When it comes to patients who prefer flower—and, to a lesser degree, concentrates and vapes—it’s understood that different batches will have different potencies. Because of this, patients will monitor their consumption based on the effect they are feeling rather than how much THC they’ve consumed.

“Flower doesn’t require much product development. It’s more about various strains and how people respond to them,” said Chris Diorio, director of research and development at Illinoisbased PharmaCann, a multistate operator he joined in 2017 after more than 20 years developing drugs at pharmaceutical giant Pfizer.

But when it comes to products such as pills, capsules and edibles, there is no room for variability.

“The intent is to design and formulate products that look like medicine and perform like medicine. That means precision dosing, repeatability, uniformity from dose to dose, content uniformity of a capsule or tablet from the beginning of the batch to the end of the batch,” Diorio said.

Another question PharmaCann scientists ask when developing medically minded products is: What kind of products bring value to patients?

Pills and capsules offer less room for variability than cannabis flower. Courtesy Photo

Consider edibles. Most edibles products have onset times that range from 45 minutes to two hours, a variability too great for many people used to medicines such as aspirin taking effect in 30 minutes or less. Durations are also unpredictable, while bioavailability of cannabinoids delivered through edibles is far less than those delivered through combustion, Diorio said.

To deal with those shortcomings, Diorio developed capsules using a technique he imported from Pfizer: a self-emulsifying drug-delivery system, or SEDDS. According to Diorio, scientists take very fat soluble or lipophilic compounds, which are widespread in the pharmaceutical industry but no different than cannabis oil, and formulate them so that, when consumed, they are absorbed

62 Marijuana Business Magazine | May-June 2021

in the stomach, Diorio said. The process offers patients a faster onset, greater bioavailability and a longer duration, he added.

“In designing the products, it’s all about what’s really the value add,” Diorio said. “These more sophisticated forms, for all intents and purposes, are identical to the types of products I developed while I was at Pfizer. They’re very much shaped the same way.”

He added: “By using those technologies, we’re not trying to strip away the beauty of this plant but trying to incorporate all the benefits of that plant into a product that appears more medical for those folks who perhaps were afraid of cannabis.”

Among the benefits for marijuana companies: These products can be easily scaled and mass-produced with consistency.

“The patients come to know exactly what to expect when they consume it.

And those types of products you can manufacture at a very large scale, and for a lower cost, because the existing technology that is used to fill capsules and pressed tablets is well established,” Diorio said. “You can drive the cost down for the patient.”

Omar Sacirbey is a reporter for Marijuana Business Magazine.

You can reach him at omar.sacirbey@mjbizdaily.com.

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Planet 13 reopened its Medizin dispensary in November.

The company used newspaper and magazine advertisements as well as billboards to inform Las Vegas consumers about the reopening.

Courtesy Photo

64 Marijuana Business Magazine | May-June 2021

Against the Odds Cannabis retailers who opened during the coronavirus pandemic share ways they set stores up for success

By Margaret Jackson

O

pening a retail cannabis store is difficult. Throw in a pandemic, Toronto’s bitterly cold winter weather or the revival of a dormant medical marijuana dispensary, and the new venture could be headed for disaster.

Nevertheless, Forever Buds CEO Vish Joshi said his company’s new store is “killing it” on service in Toronto’s Little Italy neighborhood. The community is responding, Joshi added, even though customers have not yet been allowed in the store.

Forever Buds began sales Jan. 28, shortly after an alarming increase in COVID-19 cases prompted Ontario’s provincial government to declare an emergency and restrict cannabis retailers to serving customers through delivery and curbside pickup.

Joshi and his team persevered and strived to make the outdoor experience as comfortable as possible for curbside shoppers. They set up heaters outside the store to keep customers warm, served hot chocolate while consumers waited and worked hard to fill orders as fast as possible for curbside pickup. Forever Buds also offers a free, same-day delivery service.

“When we got into this business, we wanted to be a landmark,” Joshi said. “We wanted a big splash with a big party. But we couldn’t do it. It’s the worst possible time you can open.”

Vish Joshi

With Forever Buds’ opening not going according to plan, the team recognized that there were other ways to get the word out, such as holding food drives, raising money for charity and taking advantage of social media.

Joshi’s advice for cannabis retailers who are new to the market? “Don’t give up,” he said. “This is a temporary situation. We’re all trying to penetrate the same marketplace, and there’s enough business for everybody. Stick to your business plan and roll it out. Keeping your doors closed doesn’t pay.”

MAKE IT AN ATTRACTION

In November, Las Vegas-based Planet 13 reopened its 2,500-square-foot Medizin dispensary. The shop closed in October 2018 to transfer the license to the Planet 13 superstore next to the Las Vegas Strip.

Medizin did $18 million in sales the first year it was open, with profits coming mainly from local residents. To get the word out that Medizin had reopened

Establishing a marijuana retail store is challenging in the best of times, but opening shop while a global pandemic is raging presents its own set of challenges. Depending on where the business is located, a retailer might not be able to welcome customers into the store or have the option of delivery. But it is possible to succeed with advice from those who’ve done it.

Retailers who have opened their doors during the past year suggest: • Don’t give up on the hard work you’ve put in to obtaining a license, securing real estate and building a strong foundation. The current situation is temporary, and providing great service during the worst of times could win over customers for years to come.

• Give customers a reason to visit your shop by making it an attraction.

Examples include art installations and limited-time offerings.

• Make online ordering and curbside pickup easy and comfortable.

Consider using outdoor heaters and serving hot chocolate during cold weather or, in the heat, fans and lemonade.

• Build community around your shop by hosting or participating in food drives and raising money for charities.

May-June 2021 | mjbizdaily.com 65

Against the Odds

By Subscription Only There’s never a good time for a pandemic to strike, but the timing couldn’t have been better for Nugg Club to launch its cannabis subscription box.

The Santa Monica, California-based company, an offshoot of the telemedicine platform Nugg MD, launched in April 2020. Nugg Club delivers boxes of carefully curated cannabis products valued at $225 to consumers monthly for $99.

Unlike the Planet 13 superstore, Medizin caters mainly to Las Vegas residents.

Courtesy Photo

(the superstore remained open as well), Planet 13 advertised the Medizin store in local newspapers and magazines. The company also advertised on multiple, sequential billboards.

Not only did Planet 13 open a new cannabis retail store in its hometown, but it also started construction on a 55,000-square-foot superstore in Santa Ana, California. Called the Orange County Cannabis SuperStore Entertainment Complex, the shop is expected to open in mid-2021.

Construction on the California superstore started in early February, nearly a year after Gov. Gavin Newsom issued the state’s first stay-at-home order related to the coronavirus pandemic.

The Orange County retailer will have 16,500 square feet for the dispensary and additional space reserved for ancillary stores and experiences like the ones at Planet 13’s Las Vegas flagship location.

Planet 13 delivers more than just cannabis products. With attractions that include an aerial orb show, LED interactive floor and interactive laser art, visitors to the company’s 112,000-square-foot Las Vegas shop leave with an experience they’re likely to share with friends on social media, said Larry Scheffler, Planet 13’s co-CEO. The Orange County store will have a different theme but will still be an experience that visitors want to share, Scheffler said. The tentacles of a 16-foot-tall octopus sculpture in the store’s lobby reach into 500 brightly colored umbrellas that will hang from the ceiling. An interactive floor will suggest waves lapping up on a beach, where visitors’ footprints are left behind in the sand.

“Everybody wants to be entertained, and it’s our job to entertain people,” Scheffler said. “We encourage videos and photos. What’s going to help us is the people who advertise for us—take a picture and send it to their friends or post it on social media. The best advertising in the world is word of mouth.”

In talking with other California dispensary owners, Scheffler said he’s learned that as much of their business these days is coming from delivery as it is from in-store sales.

66 Marijuana Business Magazine | May-June 2021

“We don’t require a formal application process, but we have a strict vetting and curation process for all brands, regardless of whether they initially reached out to us or we reached out to them,” said Alex Milligan, co-founder and chief marketing officer for Nugg Club.

The boxes originally were designed to help consumers discover new products while giving partner brands more visibility. But with many consumers spending more time than ever at home and avoiding retail settings early in the pandemic, the subscription model served a dual purpose.

“We thought there was some opportunity to bring delight back into the business,” Milligan said. “We knew that the consumer preference would be for more affordable cannabis and include the knowledge and education components of the experience.”

The subscription model is beneficial to marijuana brands because many in-store product promotions have been put on hold, making it more difficult for them to attract customers’ attention. The Nugg Club boxes give brands the opportunity to introduce themselves to customers who otherwise might have overlooked them.

“We still see brands struggling right now,” Milligan said.

“Their biggest problem is getting distribution right.”

Nugg Club’s staff personalizes the boxes based on the preferences its customers select when they sign up.

They can indicate their preference for indica or sativa as well as whether they prefer smokable or edibles products. Among the brands in the box that went out in March were LucidMood vapes, Heavenly Sweet gummies, OG Blunt pre-rolls and Fire Cut flower.

“We go and scout brands from all over California and rigorously test their products over several weeks,” Milligan said. Nugg Club ranks and scores potential products for the box on traits such as terpene profile and how firm the buds are for packaged flower.

“We have a list of criteria we’re looking for,” Milligan said. “If a brand meets enough of those criteria and we’ve tested their product, from there it’s a matter of whether it’s right for the box model.”

– Margaret Jackson

Against the Odds

“We were planning for $50 million in sales our first year,” he said. “If we do as much as that in delivery, we’ll be up to $100 million.”

The pandemic isn’t slowing Planet 13’s expansion to other states. The company is looking at opening superstores in Arizona, Florida, Massachusetts and Michigan. While the company will consider neighborhood shops such as Medizin, its focus will be on developing the larger-format superstores.

BUILD COMMUNITY

The Farmacy Berkeley had barely opened its doors when Alameda County became one of six California counties to issue shelter-in-place orders. The Farmacy already had built a relationship with the city of Berkeley and was pushing hard to be classified as an essential business, said Kitshwa “Kiki” Genama, general manager of the Farmacy Berkeley, one of the retail brands under the Glass House Group umbrella.

“We had 20-plus employees trying to navigate something that’s new to the world. But the bigger challenge was pivoting and adjusting our operations to immediately launch delivery, which was something we weren’t going to do for three months,” Genama said.

That pivot meant buying delivery vehicles and getting them insured within two weeks of the store opening. In addition to delivery, the Farmacy also implemented a curbside model with different levels of service so that people who were new to cannabis would have extra time to explore the options.

The Farmacy started by serving customers through its modified entrance.

The store ultimately spent $50,000 to replace its existing storefront windows with sliding windows and more security for the building. Deeper into the pandemic, when it was allowed to welcome customers back into the store, the Farmacy reconfigured the sales floor layout to accommodate social distancing, with only three to five shoppers permitted inside at a time.

The Farmacy Berkeley had to pivot away from in-store shopping shortly after opening its doors.

Courtesy Photo

Kitshwa Genama

Genama said that at least half the store’s customers were new to cannabis, and most steered away from vaping or smoking because COVID-19 is a pulmonary virus. It was imperative the staff was well-trained about the products available in the store in order to alleviate concerns, Genama said.

68 Marijuana Business Magazine | May-June 2021

“If there’s a new customer or someone who’s in need of a consultation, we’re able to accommodate bringing them into the space and giving them more oneon-one attention,” Genama said. “We had to make sure we got our product knowledge up to par so that people who were coming in droves to get relief from anxiety and insomnia were comfortable that we had enough information.”

That commitment to education helped the Farmacy foster a sense of community among its customers, an outcome of the pandemic that Genama said has served the business well.

“For the people who were being responsible or living alone, this was one of their very limited social interactions in a day,” Genama said. “We built a community around people who love to come in and talk to us. Cannabis is a community of like-minded individuals who are socially conscious and health conscious.”

NEW 2021 EDITION 41 EXCLUSIVE CHARTS AND FIGURES

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Industry Shows Resilience Preview the latest edition of the annual Marijuana Business Factbook

Overview of Public Cannabis Marke

By Jenel Stelton-Holtmeier

T

he global economy faced massive uncertainty throughout 2020 as the coronavirus pandemic made its way around the globe. The question for the cannabis industry was: How would it fare in its first economic downturn? As it turns out, remarkably well.

There is still a lot of growth to occur, but to succeed going forward, companies will need to behave like more mature, mainstream businesses and carry the lessons they learned during the pandemic with them, such as how to maintain operational efficiencies as they shift into expansion mode once again.

In addition, momentum has returned for marijuana legalization, with 10 new markets approved since November 2020. Arizona took that a step further and launched its newly legal adult-use market in January, mere weeks after voters approved it. The issue is front of mind this year for several other states as well.

And while the doors might look different now as retailers adapted operations to new public safety rules, cannabis consumers keep coming through them.

Across the board, markets experienced higher sales of marijuana products, though stores recorded some shift in the Closeregistries got an Global Stock Index types of Cannabis products purchased.

And patient unexpected boost because of policies tied to the pandemic.

Dec. 28 $50 That resiliency has reopened the door to capital, and $45.47 Jan. 6 investors $41.74 are flooding back in—though they’re not abandoning what they learned in 2019. They expect to see trustworthy, founded financials and a clear path to profitability.

Global Cannabis Stock Index

Close

Dec. 28 $45.47

$50

Jan. 6 $41.74 $40

GW Pharmaceuticals

$20

$10

52-week: Low: $2.3B High: $5.7B

March 23 $19.38

Jan Feb

Mar Apr May

Tilray 52-week: Low: $390M High: $2.5B

Jun Jul 2020

Aug

Sep Oct

Nov Dec

Overview of Public Cannabis Market Performance

$40

$30

$20

First stimulus Publicly tradedchecks cannabis companies faced precipitous declines in mid-2020, but by the beginning of 2021, stock prices had rebounded—as had the market-capitalization values for some of the largest global cannabis companies.

The result of the wild swing and the declines experienced in 2019 was a resetting of expectations for the industry overall, which helps establish it as more mature and based on real data rather than March 23 wild speculation.

This will lead to a more robust industry with stronger companies going forward. $19.38

Source: Yahoo Finance, Macrotrends $10 © 2021 Marijuana Business Daily, a division of Anne Holland Ventures Inc. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec All rights reserved.

2020

Aurora Cannabis 52-week: Low: $590M High: $2.6B Canopy Growth 52-week: Low: $3.8B High: $14.9B

First stimulus checks

$30

Market of p

Source: Yahoo Finance, Macrotrends © 2021 Marijuana Business Daily, a division of Anne Holland Ventures Inc. All rights reserved.

Market capitalization for a sampling of publicly traded companies

Aurora Cannabis 52-week: Low: $590M High: $2.6B

$2.3B $1.9B

Canopy Growth 52-week: Low: $3.8B High: $14.9B

$7.9B $14.9B

GW Pharmaceuticals

$3.6B

52-week: Low: $2.3B High: $5.7B Tilray 52-week: Low: $390M High: $2.5B

Source: Yahoo Finance, Macrotrends 2021 Marijuana Business Daily, a division of Anne Holland 70 ©Marijuana Business Magazine | May-June 2021 Ventures Inc. All rights reserved.

$4.8B $1.9B $2.5B January 2020

January 2021

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MOMENTUM BUILDS

The full effect of that green wave likely won’t be seen until at least 2022.

While the coronavirus was the big headline for everyone in 2020, cannabis industry participants had reasons to cheer last year. The barriers to a national industry are starting to fall.

Since November 2020, nine states approved new marijuana markets—and one of them has already launched.

Once those markets come online, eight of the 10 most-populous states in the U.S. will have legal cannabis sectors in place—and half of those include adult use.

We still must wait for that momentum to truly reach the national level, but that eventuality appears to be nearer than ever before.

The full effect of that green wave likely won’t be seen until at least 2022, as new markets work out the details for how to support a legal cannabis industry. Even so, nationwide revenue is expected to increase roughly 32% over 2021.

The long-term outlook for the recreational side of the industry is more bullish than for medical, primarily because there are more markets that haven’t legalized adult use, but the MMJ industry got a boost in 2020 thanks to the coronavirus pandemic.

State registries experienced an uptick in patient counts—and, as a result, in medical cannabis sales—especially in Massachusetts, where recreational

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stores were ordered to close for more than a month. The benefit of that increase, however, likely will dissipate quickly as consumers return to their normal purchasing patterns.

In addition, more states are embracing adult-use markets via their legislatures.

Between November’s election and the end of March 2021, four states—New Mexico, New York, Vermont and Virginia—approved measures to launch recreational markets. Those new markets are expected to launch between 2022 and 2024.

FACTBOOK

The Factbook covers overall trends, opportunities and data specific to challenges on a cannabis cultivation, state-by-state basis and product manufacturing, retail and investing.

The 2021 edition includes 41 exclusive charts and figures state data, conservative including financial benchmarks, sales projections, economic impact number of companies. estimates, employment and

Get the facts you need to position your business for growth and understand the marijuana industry.

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U.S. Cannabis Industry Total Economic Impact: 2020-25 $134.4B$160.7B

Additional economic impact of retail sales Retail sales estimate

$77.0B$92.4B

$93.4B$112.3B

$108.2B$130.6B

$121.8B$146.3B

$59.2B$70.0B

$18.4B 2020

$24.2B

2021

$30.4B

$34.9B

$38.1B

$39.1B

2022

2023

2024

2025

Source: Marijuana Business Factbook © 2021 Marijuana Business Daily, a division of Anne Holland Ventures Inc. All rights reserved.

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BestPracticesInRetail | Solomon Israel

Taking Stock of Product Selection Paying attention to analytics and consumer feedback can help weed out inventory that won’t sell

T

he cannabis products lining your shelves might make or break the reputation of your marijuana retail store. Whether or not they sell could make or break your company’s bank account.

Available inventory and exact ordering methods vary widely from store to store. Some marijuana retailers source their products from dozens of suppliers, while others might be limited to a single wholesaler or supply their own stock.

Still, marijuana retailers can find success with an organized approach that incorporates both quantitative data and qualitative feedback, combined with some basic precautions to avoid getting stuck with unsellable inventory.

Driving Decisions With Data “My job is mostly data,” said Unity Whittaker, director of offerings at the Village Bloomery in Vancouver, British Columbia. The independent retailer values small cannabis producers and tries to fill its shelves with sustainable products.

“I’m looking at spreadsheets and analytics most of the time,” she said.

“It’s not a very sexy job, but it’s so interesting.”

Whittaker starts her day by analyzing sales statistics from the store’s point-of-sale system, Cova, as well as cannabis data platforms Headset and BDS Analytics to determine which products are selling well and merit reordering.

Whittaker said it can be disappointing when products from craft producers don’t sell, but she has to follow customer demand. “We’re a small business, we have to survive. So we always have to carry things that sell.”

Larger retail chains might be able to rely on their own analytics software for inventory management. At Fire & Flower, a major Canadian dispensary chain with around 80 locations, Vice President of Merchandising Rob Cherry and his team use the company’s Hifyre analytics platform to get the job done.

“We have a lot of insight into our customers and their buying patterns, mapped to actual point-of-sale data telling us what the top sellers are by

week in terms of gross sales, in terms of net margin contribution, in terms of inventory sell-through. We look at those data points to identify opportunities to either increase our SKU (stock-keeping unit) count or increase the depth of our inventory in those SKUs or bring in newness,” Cherry explained.

“Conversely, we’ll see the data and we’ll say, ‘OK, this category is trending

A cannabis retail store is only as good as its product selection. But choosing the best items from an ever-expanding constellation of regulated marijuana products is far from straightforward. Inventory managers from a diverse group of cannabis retailers have some recommendations in common for making smart inventory decisions: • Establish a system to analyze sales data, whether that’s a third-party analytics tool, an in-house software platform or a do-it-yourself spreadsheet.

• Create channels for customer feedback to quickly reach inventory managers and drive purchasing decisions.

• Frequent social media to see which cannabis products consumers are talking about.

March and Ash Inventory Manager Jill Regan shares curated product selections.

Courtesy Photo

• Take precautions to minimize the impact of underperforming products. For example, consider pricing new items with a higher profit margin initially so you can use markdowns if they don’t sell.

• When opening a new store, make sure to have reasonably priced flower and look at what the competition is selling.

74 Marijuana Business Magazine | May-June 2021

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BestPracticesInRetail | Solomon Israel down. We’re going to back off a little bit. We’re going to put those inventory dollars elsewhere.’”

Inventory managers don’t necessarily have to use advanced analytics software to do their job—a do-it-yourself approach can also work for those with technical and statistical skills.

At March and Ash, a marijuana retail chain with four Southern California locations, Inventory Manager Jill Regan takes information from the stores’ point-of-sale system and feeds it into her own spreadsheets to drive inventory decisions.

“We’ve taken a pretty basic sales report and then used that to create our own tools to not only manage inventory but also make sure that we’re keeping the products that sell well in stock,” Regan said.

Incorporating Anecdotal Feedback “It’s not just sales reports,” Regan added. “It’s also customer feedback that’s going to dictate what brands we carry and what brands we don’t.”

Regan collects that feedback from multiple channels such as customers who call to ask whether a product is back in stock or feedback from store managers about products that are in demand.

At the Village Bloomery in Vancouver, Whittaker takes a similar approach by keeping an open dialogue with store staff. That helps her provide what customers want, even when the product doesn’t quite fit the store’s independent ethos.

“It’s not just us making the decisions, it’s our customers,” she said. “We definitely listen to what our customers ask for. We will bring things in—even though it’s maybe not something that we like—we will bring it in because people want it.”

For example, Whittaker said the Village Bloomery consistently carries 1-gram packages of DNA Genetics Chocolate Fondue flower. The brand is produced in Canada by Canopy

Growth. It’s not exactly a mom-and-pop offering, but it’s still a top seller.

Whittaker also takes time to sample the cannabis products herself and even posts product “unboxing” videos on YouTube.

“Get on all the social media channels—get on Reddit, get on Twitter, get on Instagram, YouTube, Clubhouse, everything you can—to hear what people are saying about cannabis,” she advised.

At Fire & Flower’s much larger store network, Cherry and his team rely on documented conversations with staff, including regional managers, store managers and in-store educators to inform their inventory picks.

That information is sorted into a spreadsheet for analysis, with the purchasing team providing feedback to district managers.

“I think it’s critical to listen to all different types of feedback and data points, because that paints a holistic picture. Then, it’s that holistic picture that we execute on,” he said.

Cherry likens merchandising to a language. “You can teach it, but ultimately, you have to practice it in order to truly understand it,” he said.

Hedging Your Inventory Bets With so much data to interpret and so many products on the market, not every inventory choice will be a winner.

Simply ordering less is one obvious way to hedge your bets: At March and Ash, Regan said a new, unproven cannabis flower product might warrant an order as small as 32 units.

76 Marijuana Business Magazine | May-June 2021

Unity Whittaker is director of offerings at Village Bloomery in Vancouver, British Columbia.

Courtesy Photo

Rob Cherry

Stocking a Brand-New Store Making inventory choices for a new marijuana retail location can be daunting.

Rob Cherry, vice president of merchandising at Canadian cannabis retail chain Fire & Flower, said his team relies on local demographic data when making those choices.

“We’ll compare that to (the) demographics of other communities where we have stores, so we’ll almost try to map it as a sister store,” he said. “We’ll be a little bit risk averse in the beginning. We want to make sure that when we open a store, we’ve got a great assortment that’s going to please our customers.”

Taking the time to understand local demographics can pay off. As an example, Cherry said Fire & Flower’s location in Banff, Alberta—near a major Canadian national park that’s popular with tourists—sells a relatively high proportion of pre-rolls.

“We knew early on that that would likely happen, because of drilling into those analytics,” he said.

Jill Regan, inventory manager at March and Ash in Southern California, has approached new store openings by stocking triedand-true brands from existing locations. However, doing some research on the local competition’s reviews and online menus can also help, she said.

Regan said one category that always seems to sell well is reasonably priced flower. “That is definitely something we always make sure we carry at all locations,” she said.

– Solomon Israel

“It also depends on the price of flower. We have some really top-shelf flower that’s pretty expensive, and we’re obviously not going to carry hundreds of eighths at a time,” she said. “We also have budget flower that’s a lot less expensive for us and for the customer, so we’re going to carry quite a bit more.”

Fire & Flower’s Cherry advises considering an “exit strategy” when making inventory choices to ensure you can offload underperforming products while keeping a reasonable profit margin. Without such a strategy, a great deal of cash flow can get tied up in inventory, he said.

An exit strategy could be as simple as assigning uncertain products a higher profit margin at first to leave room for future markdowns, if needed.

“It can be the thing that sets your company apart when you’ve got great

inventory and it’s turning quickly,” he said. “It can also be the death of certain companies that are not being proactive enough in marking down and cleaning out their inventory.”

“It’s not just us making the decisions, it’s our customers.”

– Unity Whittaker Village Bloomery

Cherry is fond of reminding his buyers: “Constantly weed your garden.”

“Markdowns aren’t something you look at every three months,” he said.

“Markdowns are something you look at every week. And by constantly doing

that, you’re not letting these problems fester—you’re addressing them head-on when they happen.”

Consistently underperforming or deficient products might merit a difficult conversation with the supplier.

“If we’re consistently seeing issues from the customer side, we’re probably going to try to address it with the vendor first and see what’s going on,” March and Ash’s Regan said.

“And if they don’t have a viable explanation for it, or improvements in that product, we’re probably going to end the relationship.”

Solomon Israel is a reporter for Marijuana Business Magazine and MJBizDaily. You can reach him at solomon.israel@ mjbizdaily.com.

May-June 2021 | mjbizdaily.com

77

IndustryPlayers | New Hires & Promotions

Craig Lyon

By Omar Sacirbey

Nike Marketing Exec Makes Cannabis Connection

A

fter leaving Nike in December following a 10-year marketing career at the sports giant, Craig Lyon didn’t know what industry he wanted to explore next. Cannabis wasn’t on his radar, but he did know the type of environment where he wanted to work.

“I had an idea of the type of company, the type of brand, the position in a market that I wanted to get into,” Lyon told Marijuana Business Magazine.

When a former Nike colleague told Lyon about a marketing post he had considered with the Connected Cannabis Co. in Sacramento, California, which was followed by a query from a recruitment firm about the same role, Lyon’s interest was piqued.

“The beauty of a company the size of Nike is that there is so much space to grow. So, you’re always thinking about where’s your next move,” Lyon said.

“The most interesting thing (about Connected) was being able to talk about hospitality and luxury goods and cannabis and the intersection of all those things. … That’s what really separated this opportunity: the chance to still play around in all these new places and in something so undefined.”

Lyon, who became Connected’s first vice president-head of marketing in February, noted that while Connected is “a smaller company on the rise,” he was attracted by the “potential for it to be something really huge.”

At Nike, Lyon most recently sat on the North America Brand Leadership Team as a senior brand director, leading the Central U.S. and Canadian marketplace. His previous roles at Nike focused on global basketball marketing initiatives. During this time, he served in roles of increasing rank including senior brand director, brand manager and community specialist.

78 Marijuana Business Magazine | May-June 2021

A look at some recent hiring moves in the marijuana industry

 Willie’s Reserve Exec Jumps to Nevada Edibles Brand Hervé Edibles, maker of luxury French-inspired and cannabisinfused desserts, appointed Ryan Hunter as its chief strategy officer.

Most recently, Hunter served as chief operating officer at Willie’s Reserve, the cannabis product maker where he’d worked since 2017. Hunter also worked at Mocavo, a genealogy web service; Natural Extractions Systems, a CBD extraction company; and JJF Holdings, a Denverarea medical cannabis company. In his new post, Hunter will develop strategic corporate and business relationships in new markets and lead go-to-market strategies in addition to product licensing and distribution initiatives.

Swati Mylavarapu

 Mayor Pete’s Investment Adviser Joins GTI Financial specialist Swati Mylavarapu, who served as national investment chair for Pete Buttigieg’s 2019-20 presidential bid, joined the board of directors of Chicago-based multistate operator Green Thumb Industries. She will be on the compensation committee.

Since 2017, Mylavarapu has served as founder and managing partner of Incite.org, a hybrid incubator and investment fund that combines venture capital, philanthropy and civic advocacy. She was an investment partner at venture capital firm Kleiner Perkins from 2015 to 2017. Before that, she led early international efforts for financial services and digital payments company Square.

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IndustryPlayers | New Hires & Promotions JLL. She will guide Nabis in expanding the infrastructure of its distribution centers across California.

Suber currently serves as a board member of Yield Street and Qwil, an advisory board member to three special purpose acquisition companies as well as numerous firms in lending, real estate, banking and payments sectors.

Terra Tech Bolsters Board

Giadha DeCarcer

 Data Pioneer Changes Roles New Frontier Data, a Washington DCbased data and business intelligence company, announced that its founder and outgoing CEO, Giadha A. DeCarcer, will become executive chair. She will continue to lead the company’s strategic direction and planning, M&A activities and global expansion efforts.

DeCarcer appointed Gary Allen, previous chief operating officer at New Frontier Data, to replace her as CEO. Allen will lead the company’s data and tech-enabled product strategy.

Irvine, California-based Terra Tech appointed Tiffany Davis to its board of directors. Davis currently leads Arizona cannabis company Generation Alpha, where she has been CEO since 2019 and chief financial officer since 2018.

Before joining the cannabis industry in 2016, Davis worked in the technology and private equity industries.

Eitan Popper

Tarik Brooks

 Cannabinoid Firm Welcomes MedReleaf Investor

Nabis Nabs Three Advisers Nabis, one of California’s largest licensed cannabis distributors, announced the appointment of three new advisers: Anthony Chen, Elizabeth Cooper and Ron Suber.

Chen was the first full-time employee at Flexport, a global technology logistics giant, joining the company while it was still in Y Combinator’s accelerator program in January 2014.

Chen’s focuses will include scaling the business.

Cooper is vice chair of Jones Lang LaSalle, a global real estate brokerage firm with nearly $20 billion in annual revenues. She has more than 30 years of real estate experience, including two decades as a top sales producer at

president at RLJ Cos., a portfolio of businesses owned by investor Robert L. Johnson, where Brooks led the development of gaming/nightlife ventures in the Caribbean and the completion of RLJ Kendeja, a resort hotel in Liberia.

Cresco also announce that Dominic Sergi, an original founder of the company, retired from the board of directors as part of the planned boardrefreshment process.

 Diddy’s Financial Manager Joins Cresco Board Cresco Labs appointed Tarik Brooks, president of Combs Enterprises, to its board of directors. At Combs, Brooks oversees all business operations and investments owned by Sean “Diddy” Combs, including ventures in Ciroc Vodka, DeLeon Tequila, Revolt TV, Bad Boy Records, AquaHydrate and Capital Preparatory Schools.

Brooks previously was the chief operating officer of account management and trading at hedge fund Bridgewater Associates. He also served as executive vice

80 Marijuana Business Magazine | May-June 2021

Creo, an ingredients company in San Diego with a proprietary platform for producing natural rare cannabinoids without the cannabis plant, announced the addition of Eitan Popper, co-founder and president of MedReleaf Corp., as an investor and strategic adviser. MedReleaf was acquired for $2.5 billion in 2018, making it one of the cannabis industry’s largest acquisitions.

Popper is also chair of the advisory board of BioHarvest Sciences, a fast-growing, publicly traded biotech company in Vancouver, British Columbia, and an active private investor through River Growth Capital Corp.

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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82 Marijuana Business Magazine | May-June 2021

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