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Insights for cannabis executives, investors & entrepreneurs

VOL 7 • ISSUE 9 • October 2020

Marijuana on the Ballot

The White House and congressional seats are up for grabs as voters in several states consider legalizing new marijuana markets

Executing Branding Deals Childproofing MJ Packaging Adding Diversity in the Workplace


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October FEATURES

TABLEOFCONTENTS

Marijuana Business Magazine

October 2020 • Volume 7 • Issue 9

40

MARIJUANA ON THE BALLOT The White House and congressional seats are up for grabs as voters in several states consider legalizing new marijuana markets.

74 CHILD’S PLAY NO MORE

Product and packaging manufacturers must work together to create aesthetically pleasing childproof designs that seniors can open.

82 PROMOTING A DIVERSE WORKFORCE

Diversifying your operation starts with job descriptions and interviews, continues through onboarding and professional growth.

94 HOW GROWERS CAN EXECUTE A BRANDING DEAL California marijuana brand Cookies contracts with cultivators in other states to expand flower market.

Veritas Fine Cannabis in Denver dedicates about 15% of its production to growing flower for the Cookies marijuana brand. Photo by Bart Schaneman

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Marijuana Business Magazine | October 2020


Insights for cannabis executives, investors & entrepreneurs

VOL 7 • ISSUE 9 • October 2020

10

FIVE QUESTIONS

Marijuana on the Ballot

Washington DC lobbyist Saphira Galoob on how election could impact marijuana reform.

The White House and congressional seats are up for grabs as voters in several states consider legalizing new cannabis markets

Executing Branding Deals Childproofing MJ Packaging Adding Diversity in the Workplace

On Our Cover Voters across the country will help decide the future of marijuana reform through the Nov. 3 general election.

14

TRENDS & HOT TOPICS States’ existing licensing strategies favor MSOs, but social equity applicants should get first crack at permits.

16

IN FOCUS

Michigan retailer celebrates opening months with livestreamed event.

100

BEST PRACTICES IN EXTRACTION

How to source and select vaporizer hardware.

108

QUESTION OF THE MONTH

Has your cannabis retail business been affected by product supply interruptions?

8

From the Editor

10

Q&A With Saphira Galoob

12

Hemp Notebook

DEPARTMENTS

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14

Trends & Hot Topics

16

In Focus

18

Company News

24

Industry Developments

100

Best Practices in Extraction

104

Industry Players

108

Question of the Month

110

Market at a Glance

112

Our Advertisers

114

Notable Quotes

October 2020 | mjbizdaily.com

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

On the site To get the cannabis industry′s latest news and analysis, visit us at mjbizdaily.com and hempindustrydaily.com.

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To start/change/cancel your subscription, visit MJBizMagazine.com, call us at (720) 213-5992, ext. 1 or email us at CustomerService@MJBizDaily.com. Marijuana Business Magazine subscriptions are currently free to qualified U.S. cannabusiness professionals and investors age 21 and over only. To advertise with us, email Sales@MJBizDaily.com or call us at (720) 213-5992, ext. 2. Marijuana Business Magazine, Volume 7, lssue 9, October 2020 lSSN 2376-7375 (print); lSSN 2376-7391 (online) Marijuana Business Magazine is currently published 10 times per year by Marijuana Business Daily™, a division of Anne Holland Ventures Inc. POSTMASTER: Please send address changes to: Marijuana Business Daily, 3900 S. Wadsworth Blvd., Suite 100, Denver, CO 80235. Copyright 2011-2020 by Marijuana Business Daily, a division of Anne Holland Ventures lnc. All rights reserved. Materials may not be reproduced in whole or in part without written permission. For reprints of any article, please contact Customer Service. MJBizMagazine.com

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FromtheEditor | Kate Lavin

Hold Lawmakers Accountable

J

ohn Nance Garner, who served as vice president under U.S. President Franklin D. Roosevelt, said “no good legislation ever comes out of Washington after June.” With this in mind, the Legislative Reorganization Act of 1970 gave our elected officials a monthlong break between August and September.

When lawmakers released the 2020 congressional calendar, they were unaware of a developing virus that would cripple international trade, put millions of Americans out of work and take the lives of more than 200,000 people in this country. At that time, it made sense for legislators to head back to their home districts for several weeks starting in August to meet with constituents.

The Bar Is Low We don’t ask much of our elected officials. Senators are each allotted nearly $950,000 to hire staff and up to $553,875 for office expenses and mail, and they can claim up to $3,000 per year for travel between their homes and lodging in Washington DC. Most U.S. senators, representatives and delegates earn a flat salary of $174,000 per year—and chamber leaders earn even more. The average U.S. household, meanwhile, had a median income of $65,721 in 2019. So this summer, when Americans desperately needed the services that lawmakers are handsomely paid to negotiate on our behalf—small-business loans, payroll-protection incentives and emergency advances for companies experiencing “economic injury disaster” caused by a global pandemic, for example—it seemed like an unwise time for our elected officials to take a vacation. And yet, the sitting members of Congress did exactly that. When we needed them most, lawmakers walked off the job, even though our tax dollars pay their salaries.

Get to Work In addition to the business-relief measures lawmakers left to collect dust when they tabled a second stimulus package in August, Congress’ inaction caused enhanced unemployment benefits to expire. Given that 13.6 million Americans are currently unemployed, a drop in consumer spending will inevitably follow, plunging the nation even deeper into recession. The federal government collects millions of dollars in income taxes from cannabis workers each year. And the industry pays more than its fair share to the Internal Revenue Service, thanks to Section 280E of the U.S. tax code.

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Marijuana Business Magazine | October 2020

What are we getting in return? In recent years, important marijuana legislation has been stalled in committee before making it to the Senate floor for a vote. And just last month, House Democrats opted to delay a vote for the Marijuana Opportunity Reinvestment and Expungement (MORE) Act until after the general election in November.

A Look Ahead Starting on page 40, we look at how the coming election could affect the marijuana industry, specifically: • References to marijuana in the Republican and Democratic platforms. • Senate races that could help or hinder banking prospects, interstate commerce and decriminalization. • States that have legalization initiatives on the ballot—and how New Jersey could set off a domino effect. Empowered with this information, we should hold our elected officials accountable at the box office. Let’s agree to vote like our livelihoods depend on it—they just might. Sincerely,

Kate Lavin Marijuana Business Magazine Editor


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FiveQuestions | with Saphira Galoob

The Roads Less Traveled Washington DC lobbyist discusses how election could impact marijuana reform and legalization By John Schroyer

S

aphira Galoob is one of a handful of lobbyists in Washington DC who have been pushing federal marijuana reform efforts on behalf of businesses for several years. The client list of The Liaison Group, where Galoob is principal and CEO, includes multistate operator Acreage Holdings, the National Cannabis Roundtable and the California Cannabis Industry Association.

Marijuana Business Magazine caught up with Galoob to get her predictions on possible changes to federal cannabis law, depending on outcomes of the November election.

What do you expect to happen with federal marijuana reform if Democratic presidential nominee Joe Biden wins the White House and Democrats take control of both chambers of Congress? I don’t think we would get legalization on the first day. If you look at what the Democratic platform has been, and where Biden has been both historically and recently, I think we get a return of a climate in the Department of Justice to the Obama era. So, a climate of nonenforcement. There’s an uptick in audits by the IRS, and I think that quiets down a bit. And maybe even a reinstatement of a Cole Memo-type guidance—protections from interference for the industry. But I don’t think we get legalization right off the bat. I do think the budget rider that protects the industry (from federal interference) will get addressed. But from the larger reform picture, I think the predictability is less certain. The DNC platform very specifically rejected the idea of legalization—and even (marijuana reform advocate U.S. Rep.) Barbara Lee, for whatever reason, was in favor of that rejection. The momentum that we see … may not manifest in the way folks are hoping for in the short run. It’s about what’s practical politically. If the SAFE Banking Act doesn’t stay in the COVID package, that’s a piece of legislation that came out of the House and had the support of every Democrat, so I do think we get SAFE Banking earlier rather than later. I think that adding (Kamala Harris to the ticket as his

10 Marijuana Business Magazine | October 2020

running mate) probably positions Biden to refine his platform. The legalization of medical cannabis, that platform moves cannabis to Schedule 2. That doesn’t solve interstate commerce or 280E (tax law) or banking. The pathway is not straight. It’s very circuitous and complex. And while Sen. Harris was the Senate lead on the MORE Act, in terms of her walking into Congress, you should look at other things that would be top of mind.

If the reforms you mentioned did occur, how do you think that would transform the industry landscape? For instance, could interstate commerce become a reality? Interstate commerce means the ability to drive California cannabis to Maine. Let’s say California wants to sell its cannabis in Oklahoma: You could possibly drive through the states, but it doesn’t mean you’re going to be able to sell your California cannabis in Oklahoma unless Oklahoma wants California to be able to sell its cannabis. So I think we need to be very precise about what we mean by the concept of interstate commerce. Can we traverse states legally? Or what’s the paradigm by which California can sell its cannabis in any state? I don’t envision a scenario in which states are going to relinquish their oversight or their regulations of the sale and distribution of cannabis. Now, it may be that some states decide they prefer that California marijuana be sold in their state, but maybe they don’t want to undermine the existing state paradigm trajectory by allowing that.

What do you expect to happen if Trump wins reelection and the GOP keeps the Senate? The very worst-case scenario for cannabis is if Republicans hold the Senate and (Colorado’s Republican incumbent U.S. Sen.) Cory Gardner does not return. That would be an absolutely abysmal situation for us because he has been the champion in terms of educating, socializing and familiarizing; he really understands how to talk cannabis to conservatives. The other thing that happens is if (Kentucky Republican and Senate Majority Leader Mitch) McConnell holds the


Senate: There’s anticipated to be a big change in committee chairs. The stance of noninterference likely continues—but based on the way Attorney General (William) Barr acted earlier this year, there’s probably going to be increased scrutiny and audits by the IRS. And it’s pretty well known that companies are starting to experience that uptick already. There is one silver lining: We’re going to see several more states probably do something with cannabis (via state legalization ballot measures). All of this can add to the pressure points on reconciling federal and state laws.

not 100% sure, which is why you have Biden and the Democrats’ platform taking a more moderate approach.

What’s your prediction for when federal legalization will happen? It depends on what you mean by federal legalization. If you’re looking at whether use, possession and distribution is no longer a crime, if Biden is elected, I think it’s very early on. If you’re looking at a system in which federal agencies are engaged in oversight and have standards that maintain safe access and use, the amount of time it takes to do the rulemaking can be a multiyear process. If we’re looking at a states’ rights approach, you may be able to address some of the immediate pain points, such as 280E, quickly. It really depends on what the word “legalization” means.

What are the biggest obstacles to federal reform efforts? For the Republicans, it’s a combination of education, awareness, fear and what their constituencies demand. A perfect example is Oklahoma: (U.S. Sen. James) Lankford is a bit of an outlier, but (U.S. Rep.) Tom Cole voted for SAFE Banking. For the Democrats, it’s more a combination of priority and incremental versus comprehensive (reform). I think there’s a misnomer that all Democrats want full legalization tomorrow. There are a lot of moderate Democrats. A lot of them saw how the regulation of opioids was wrong on their watch, and they’re just

This interview has been edited for length and clarity.

John Schroyer is a senior reporter for Marijuana Business Magazine. You can reach him at john.schroyer@mjbizdaily.com.

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HempNotebook | Kristen Nichols

Eternal Campaign Season Think hemp isn’t on the ballot this year? Think again

I

t might seem as if hemp isn’t on the ballot this election cycle.

Hemp policy is not much of a talking point in the presidential debate. And in the hard-fought battle for control of the U.S. Senate, hemp entrepreneurs can rest assured that the top-ranking members of both parties—Kentucky Republican Mitch McConnell and New York Democrat Chuck Schumer—are both staunch advocates for the industry. After decades of fighting for legality, hemp activists might feel that the toughest work is done and they can now concentrate on unlocking hemp’s potential. Wrong. The tough political work has just begun. And it’s harder and less glamorous than the work that makes national headlines.

New Laws, New Political Game It used to be illegal to grow hemp in the United States. That made life pretty simple for would-be hemp entrepreneurs: Either work in the illicit market or push to change the law and wait. Now, hemp is legal but highly regulated. That’s great news and a real credit to those who pushed to change federal law.

But in some ways, it takes more political finesse to navigate an industry with reams of regulations than it does to navigate an industry without any. And success or failure for the hemp industry isn’t going to come from the pioneers who changed federal law. Instead, political success comes from activism by the smallest hemp entrepreneurs—from the farmer looking to try a new crop on a single acre to hobbyist herbal healers looking to sell their products. So it doesn’t matter that hemp isn’t going to come up at the presidential debates or star in any ads in senatorial battlegrounds. Working in a highly regulated industry means your livelihood is always on the ballot.

All Politics is Local When I say hemp is always on the ballot, I’m not talking about the contests they talk about on the news. I’m talking about hyper-local activism. Local activism means reaching out to your city councils and county commissions. It means finding out who leads political parties in the areas where you do business. Meet the leaders from both parties, and offer your services if they have any questions about hemp or what you do.

In some ways, it takes more political finesse to navigate an industry with reams of regulations than it does to navigate an industry without any.”

12 Marijuana Business Magazine | October 2020

Next, reach out to your local chamber of commerce. Some don’t accept cannabis members, but many do. Join the chamber and go to their (usually boring) meetings. Meet your fellow entrepreneurs and hear about your community’s business landscape. There’s a reason entrepreneurs in other industries make time for networking at chamber of commercestyle coffee meetings. The reason is that face-to-face hobnobbing makes a world of difference when local officials consider things such as zoning and taxes. Local officials who know the business owners affected by their decisions act differently than those who don’t.


How it Works Consider the 2018 Farm Bill. A lot of folks rightly credit McConnell for insisting on hemp’s inclusion in it. Why would McConnell, a lawyer who has never farmed, care about hemp? It’s not because McConnell read Jack Herer’s book or had a critically ill child suffering from a condition untreated by conventional medicine. It’s because lower-level partisans in Kentucky—folks who attend those boring breakfast meetings—kept hearing about the hemp plant and passing on the desire to see it legalized. Rotary Club and chamber of commerce activists become mayors and county commissioners. Mayors and county commissioners become congressional candidates. Members of Congress are in constant contact with local officials back home.

Keep it Going Grassroots activism is more important than ever now that hemp is legal. Because, while hemp might be legal, it doesn’t necessarily have a seat at the table.

Remember how the federal government set aside billions of dollars to support small farmers hurt by the coronavirus pandemic? Right now, most of that money isn’t going to hemp operators—not because they’re immune from the pandemic but because hemp producers don’t have enough say in government budgeting. So when you fill out your ballot this year and wonder which candidates would be better for your hemp business, keep in mind that all candidates can be strong allies. But it’s up to you to stay engaged long past Election Day to make sure the folks in charge understand your business and how they can help it thrive. Kristen Nichols is editor of Hemp Industry Daily. She can be reached at kristen.nichols@hempindustrydaily.com.

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Trends & HotTopics | Jeff Smith

Existing Strategy Favors MSOs Social equity licensees should be given a first crack at competing in new recreational markets

A

template has emerged for new adult-use cannabis markets: Give the state’s existing medical cannabis operators a head start—sometimes as much as a year or more—to begin marijuana sales.

This is the quickest way for a recreational marijuana market to launch and start creating revenue, industry experts say. States are under even more pressure to generate revenues quickly, given the staggering economic cost of the coronavirus pandemic. But is this approach good for the industry? Or will it just exacerbate industry consolidation around multistate operators (MSOs)? And where does social equity fit in?

Getting a Jump Start Many states once had a preponderance of small, local marijuana businesses. But since 2018, MSOs have rapidly expanded their footprints, targeting not only potentially lucrative medical

cannabis markets but also states with the potential to legalize adult-use marijuana. Take Arizona, where adult-use marijuana will appear on the ballot in November. In the 12-month period before the coronavirus hit the United States, seven MSOs either expanded or acquired operations in Arizona. The MSOs positioned themselves to profit from Arizona’s $750 million-ayear MMJ market and likely adult-use legalization. Then, MSOs Harvest Health & Recreation, Curaleaf and Cresco Labs bankrolled an industry-backed recreational marijuana initiative that almost exclusively favored existing MMJ operators. The pro-marijuana group Smart and Safe Arizona raised nearly $3.5 million through mid-July, according to data compiled by the Arizona Secretary of State’s office. Arizona-based Harvest contributed more than $1.4 million, Massachusetts-based Curaleaf

donated $600,000 and Illinois-based Cresco Labs added $300,000. Not surprisingly, those companies have the most to gain from adult-use legalization in Arizona. Harvest is the state’s No. 1 operator with 15 dispensaries and several cultivation and processing facilities. When some cried foul over Arizona’s MSO-first approach, one concession was made: Smart and Safe amended its initiative to include 26 social equity licenses. But the licensing of those social equity applicants is likely to come well after the adult-use market is launched: The initiative calls for state regulators to develop that program.

If the marijuana industry is intent on providing more than just lip service to diversity, it will need to figure out a way to work with regulators to fast-track social equity applicants, perhaps as financially supported micro-businesses.

14 Marijuana Business Magazine | October 2020


The bottom line for Arizona: Some strong independents and social equity licensees will be in play, but MSOs could easily dominate the state’s cannabis landscape after adult-use marijuana is legalized.

A Rigged System? One can make the argument that existing MMJ operators took the initial risk, invested a lot of money and therefore should be rewarded with the inside track in adult-use markets. It also avoids the kind of litigation issues that come with licensing rounds. But the process also can make it extremely difficult for additional licensees to break in. One of the most notable examples is Florida’s medical cannabis market, where the first operator out of the

gate, Trulieve, continues to dominate with a roughly 50% market share. Illinois also gave existing MMJ operators the first crack at the adultuse market, which launched Jan. 1. The state had contemplated a relatively short head start: Regulators intended to award additional retail licenses in May and cultivation and processing licenses in July. But the coronavirus pandemic has delayed those licensing rounds and complicated the rollout of the state’s much-vaunted social equity program. If the marijuana industry is intent on providing more than just lip service to diversity, it will need to figure out a way to work with regulators to fast-track social equity applicants, perhaps as financially supported microbusinesses.

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Many of the adult-use license applicants are incurring expenses while they wait. The delays also could make it more difficult for licensees to break into what is rapidly becoming an established adult-use market. Of course, later entrants often do well, learning from the failures of others and taking advantage of underserved areas and product niches such as craft cannabis. But overall, the scheme to fasttrack MMJ operators looks as if it will benefit MSOs the most. The giants will dominate, perhaps even faster than they would otherwise. Jeff Smith covers politics and regulations for Marijuana Business Magazine. You can reach him at jeff.smith@mjbizdaily.com.


InFocus | Images From the Cannabis Industry From left: Jacob Stewart, Stephanie Cochran, Natalia Cardenas, Olivia Haynes and Scott Lowen prepare to cut a ribbon in front of the New Standard Hazel Park store. Courtesy Photos

A Larger-Than-Life Celebration Michigan retailer celebrates opening months with livestreamed event

W

hen New Standard opened its first cannabis dispensary in Hazel Park, Michigan, it was probably not the auspicious beginning co-founders Howard Luckoff and James Fisher envisioned. The storefront opened April 3, less than a month after Michigan Gov. Gretchen Whitmer issued a state of emergency triggered by the COVID-19 pandemic. On Aug. 20, New Standard held a more traditional grandopening celebration with local dignitaries in attendance and a live audience watching via Facebook and Instagram. In the time between opening its doors to medical patients and holding the ribbon-cutting event, New Standard was approved for adult-use marijuana sales. The company plans to open seven additional retail stores in the state. The Hazel Park retail outlet is the first location for New Standard, which has a farm in central Michigan and offers curbside and delivery service. – Kate Lavin

16 Marijuana Business Magazine | October 2020

From left: New Standard co-founder and CEO Howard Luckoff joins the leadership team including Chelsea Oliver, Jordan Berman, Chase Kushak, Jim Ketai, Maxim Ermakov and co-founder James Fisher.



CompanyNews | U.S., Canada & International

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

By Omar Sacirbey

Columbia Care Closes One Buy, Starts Another Multistate operator Columbia Care closed on a full-stock deal in September to acquire Denverbased vertically integrated cannabis company The Green Solution. The deal nets Columbia Care, which trades on the Canadian Securities Exchange (CCHW), 23 retail stores, six cultivation facilities and one manufacturing operation that together are expected to generate about $88.5 million in revenue this year. The deal’s value was roughly $140 million, including 33.2 million shares of Columbia Care stock priced at $3.30 (CA$4.35) per share, plus $15 million in secured debt issued to TGS at signing and a $15 million seller’s note. Columbia Care also signed a definitive agreement to buy Los Angeles-based marijuana company Project Cannabis for approximately $57 million in Columbia Care stock and $12 million in cash from the proceeds of a concurrent sale of Project Cannabis’ real estate assets. Columbia Care’s acquisition of Project Cannabis is expected to close in the fourth quarter of 2020, according to a news release. The dual transactions expand Columbia Care’s footprint to 99 facilities that are open or under development, including 76 dispensaries and 23 cultivation and manufacturing locations. Columbia Care has operations in 18 U.S. markets and the European Union.

GTI Launches Social Equity Business Accelerator Chicago-based MSO Green Thumb Industries launched the LEAP New Business Accelerator, a cannabis business incubator intended to help promote opportunity and success for new social-equity entrepreneurs. The program follows Green Thumb’s License Education Assistance Program (LEAP), a probono program in which GTI’s license-application team mentors social equity applicants seeking cannabis business licenses in Illinois.

18 Marijuana Business Magazine | October 2020

Recent deals, acquisitions and other announcements from cannabis companies

The LEAP New Business Accelerator will offer intensive mentorship to two to three dispensary licensees and one to two craft grower licensees as the program shifts its focus to position new cannabis businesses for success. Upon social equity licenses being awarded by the state’s Department of Financial and Professional Regulation, Green Thumb will open an application period, during which dispensary licensees can apply for the incubator program. Green Thumb will open a similar incubator application period after the craft grower license announcement to social equity applicants by the Illinois Department of Agriculture. Green Thumb will also earmark $1 million in loan funds for the new dispensary entrepreneurs and $200,000 for loans to be distributed among the craft grower entrepreneurs. Green Thumb will not take an ownership interest in the participating dispensaries, and all information shared with Green Thumb will remain confidential.

Florida REIT Raises $80 Million AFC Gamma, a West Palm Beach, Florida-based real estate investment trust (REIT), raised $80 million that, coupled with a $40 million credit line, gives the company approximately $120 million to lend to marijuana businesses. More than 20 large family offices participated in the equity raise. It was AFC Gamma’s first close of a $200 million investment vehicle. The firm has already provided debt financing for five cannabis companies, including retailers, cultivators and processors, and it has funded about $50 million in six transactions involving five marijuana borrowers. AFC Gamma also has committed approximately $30 million to its existing borrowers and to two new loans.

Ascend Raises $68 Million, Buys Illinois Stores Ascend Wellness Holdings, a multistate operator in New York, closed a $68.2 million funding round and reached agreement to acquire two more Illinois marijuana retailers. The stores Ascend plans to buy in Illinois—pending approval of state regulators—are located in Chicago and owned by Modern Cannabis (MOCA). The acquisition gives Ascend six Illinois locations and puts the company a step closer to the state limit of 10 retail storefronts per company, a cap Ascend said it plans to meet.


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CompanyNews | U.S., Canada & International Ascend said in its announcement that it plans to use $41 million of the raise to fund expansion opportunities. The company also has marijuana business holdings in Massachusetts, Michigan, New Jersey and Ohio.

A Jushi Raise Florida-based multistate marijuana and hemp operator Jushi Holdings increased a debt financing announced in late July by roughly $18 million, citing strong demand from shareholders and management. The debt financing, which was intended to fund Jushi’s $37 million purchase of grower-processor Pennsylvania Medical Solutions (PAMS) from Minneapolis-based MSO Vireo Health International, was previously worth $15.25 million. However, Jushi said the debt financing had closed on $33.3 million worth of subscription receipts, yielding $27.8 million in cash proceeds. The debt financing consists of 10% senior secured notes maturing in January 2023 and warrants to acquire subordinate voting shares.

Dutchie’s Star-studded Raise Oregon-based Dutchie, an online ordering platform for cannabis retailers, raised $35 million to fund new products and expansion. The group of investors includes rapper Snoop Dogg’s Casa Verde Capital, NBA star Kevin Durant’s Thirty Five Ventures, Starbucks CEO Howard Schultz, Thrive Capital and Gron Ventures. Dutchie said completion of the Series B raise brings its total funding to $53 million.

Etain Hits New York City New York-based Etain Health, a women-owned, vertically integrated agribusiness and medical marijuana dispensary, opened a new flagship facility in midtown Manhattan. The 5,000-squarefoot location will sell premium cannabis products to licensed New York medical marijuana patients alongside a variety of non-THC health and wellness brands. A rotating selection of limited-edition merchandise from women-owned brands will also be featured.

GTI-Cookies Vegas Partnership Chicago-based multistate operator Green Thumb Industries announced an exclusive partnership to open a Cookies retail outlet on the Las Vegas Strip. Cookies on the Strip is expected to open in the first

20 Marijuana Business Magazine | October 2020

quarter of 2021, subject to regulatory approval. Green Thumb currently owns and operates seven stores in the state, five of which are in the Las Vegas area, under the names Rise and Essence. GTI also manufactures and distributes branded products in Nevada such as Cannabiotix, Dogwalkers, Incredibles and Rythm. The company has licenses to open six more retail stores in the state.

Verano Breaks Into Massachusetts Multistate operator Verano Holdings entered the Massachusetts market with new retail storefronts in Sharon and Plymouth. Both storefronts operate under the Zen Leaf brand. The dispensaries will offer online orders with curbside and in-store pickup options.

REIT Sheet San Diego-based REIT Innovative Industrial Properties closed on the acquisition of a property in Madison Heights, Michigan. The purchase price for the property was $6.2 million (excluding transaction costs). Concurrent with closing on the transaction, IIP entered into a long-term, triplenet lease agreement with a subsidiary of Holistic Industries, which intends to operate the property as a regulated cannabis cultivation, processing and dispensary facility. In connection with the development of the 63,000-square-foot property, IIP has agreed to provide reimbursement for improvements of up to $18.8 million. Assuming full reimbursement, IIP’s total investment in the property would be $25 million. In addition to the Michigan property, IIP owns and leases three other properties to Holistic in Maryland, Massachusetts and Pennsylvania. Holistic is one of the largest private, vertically integrated multistate operators in the cannabis industry, with operations in California, Maryland, Massachusetts, Michigan, Pennsylvania and Washington DC. As of Sept. 21, IIP owned 63 properties across the United States.

MJBizDaily Still Among Fastest Growing For the fifth year running, Marijuana Business Daily has earned a spot on Inc. magazine’s 5000 “FastestGrowing Private Companies” list. MJBizDaily, a Colorado-based marijuana business news and events company, ranked 1,749 on the list of 5,000 private American firms, with revenue growth of 244% over the past three years. MJBizDaily first made the Inc. 5000 list at No. 302 in 2016 and held a spot in 2017 (528), 2018 (837) and 2019 (1,421).


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CompanyNews | U.S., Canada & International

Acquisition Creates MJ Retail Giant Canadian marijuana retailer High Tide is acquiring competitor Meta Growth Corp., creating an entity touted as Canada’s largest cannabis retailer. The combined companies will operate 63 retail stores across Alberta, Manitoba, Ontario and Saskatchewan with plans to grow to approximately 115 locations by the end of 2021. Meta Growth shareholders will receive 0.824 High Tide shares for each Meta share held. Those shares could be worth $6.1 million-$6.9 million (CA$8 million-CA$9 million) on an annual basis, the companies said. Together, the two companies will have an estimated $15.9 million in cash. High Tide CEO Raj Grover will lead the combined company. High Tide, which currently trades on the Canadian Securities Exchange as HITI, plans to relist its shares on the TSX Venture Exchange after the acquisition is complete. Meta Growth Corp. trades on the TSX Venture Exchange as META.

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Cannabis producer Hexo Corp. of Ottawa, Ontario, and brewer Molson Coors Canada in Montreal, have launched new beverage products under their

Truss Beverage Co. joint venture, marking increased competition in Canada’s much-hyped marijuana beverage market. The lineup of five drink brands includes both CBD and THC products. Most contain between 2.5 milligrams and 5 milligrams of THC. The XMG beverage brand contains 10 milligrams of THC, the maximum allowed under Canadian cannabis regulations.

Cultivation Acquisition Complete Toronto-based Trichome Financial wrapped up its acquisition of the assets of James E. Wagner Cultivation Corp. (JWC), a cannabis industry lender headquartered in Ontario. The company also said its subsidiary, Trichome JWC Acquisition Corp., received licenses from Health Canada to operate JWC’s two marijuana facilities in Ontario. The announcement capped off a monthslong process in which JWC entered creditor protection and put its assets up for sale. The creditor-protection proceedings and acquisition process extinguished approximately $14.6 million (CA$19 million) of JWC’s third-party liabilities. Trichome’s total consideration for JWC’s assets was CA$16 million. The restructured company’s full-time equivalent staff levels have been reduced by about 40%, to 107 employees, saving roughly $2.3 million per year, according to Trichome. Trichome’s new guidance for TJAC includes net revenue of $16.9 million-$18.4 million for the 2021 fiscal year, with annual flower production of 12,566 pounds (5,700 kilograms).

services to the German Federal Institute for Drugs and Medical Devices (BfArM). To do that, Cansativa will deliver to German pharmacies the cannabis flower grown by the German subsidiaries of Canadian-based Aurora Cannabis and Aphria as well as Germanyheadquartered Demecan.

Exclusive German Cannabis Distributor Announced Mörfelden-Walldorf-based Cansativa won the German distribution tender, becoming the sole distributor of all cannabis grown in Germany for medical purposes during the next four years, the company announced in a news release. The company, located in the Frankfurt Rhine-Main Region, will provide logistics, wholesale and distribution

22 Marijuana Business Magazine | October 2020

Clever Leaves Nabs Portuguese License Clever Leaves, a multinational cannabis company with its main operations in Colombia, obtained a license to cultivate, sell and export medical cannabis in Portugal. Clever Leaves said the license it received from Infarmed, the Portuguese health authority, is provisional since the facility has not been physically inspected because of the COVID-19 pandemic. However, the license “gives Clever Leaves Portugal the


same rights and qualifications as the definitive license,” which is expected soon, according to a news release. Clever Leaves said it expects to be the ninth fully licensed medical cannabis cultivator in Portugal and hopes to start trading on the Nasdaq under the ticker symbol CLVR before the end of the year.

Jamaica Gets First Resort-Based Dispensary The Hedonism II resort in Negril, Jamaica, is allowing a medical marijuana dispensary to operate on its property, although the store will be independent of the resort. HedoWeedo is the island nation’s first resort-based medicinal dispensary, but it will be independently owned and operated. HedoWeedo will be allowed to serve both resort guests and patients not staying at the resort. The dispensary will offer a wide range of products, including pre-rolls, flower and oils locally produced by licensed farmers. To access HedoWeedo, patients will need to have a medical marijuana card from their home country, or they can obtain one through an on-site doctor or registered physician in Jamaica. Patients may

possess only up to 2 ounces of marijuana at a time, and purchases will be tracked.

Khiron Goes to Hong Kong Khiron Life Sciences Corp., a vertically integrated cannabis company with core operations in Latin America and Europe, signed a distribution deal for its Kuida CBD cosmeceutical brand with DNO Group, a leading distributor for the Asia-Pacific region. Seven Kuida SKUs will be distributed in the Hong Kong market, with the first orders anticipated in the fourth quarter of 2020. Distribution is conditional on TSXV approval. Kuida is currently available at more than 350 points of sale in Colombia as well as the United Kingdom and Spain. 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 productrelated announcements.)

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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 West Coast Wildfires Threaten Hundreds of Marijuana Businesses Devastating wildfires on the West Coast of the United States reportedly destroyed a number of cannabis farms in Oregon and threatened even more in California and Washington. The situation has many marijuana farmers voicing concerns this is part of a “new normal” because of recurring wildfires on a nearly annual basis—especially in California. “We’ve already broken the record for most acres burned in history, and we haven’t even gotten to the worst part of the season,” David Najera, a marijuana cultivation consultant and farmer in Mendocino County, California, said in mid-September. “I think this is the new norm. Fires are just a way of life at this point.”

24 Marijuana Business Magazine | October 2020

Cannabis industry insiders say the true toll of the fires can’t yet be determined because most outdoor farmers don’t know whether their crops will pass state-mandated testing as a result of potential contamination from smoke, ash and fire retardant. That’s prompted a lot of farmers to harvest their crops early, which has led to additional concerns over microbial contamination stemming from quick but flawed storage techniques.

Manitoba and Nova Scotia Adding Retail Stores The next wave of cannabis stores has begun to arrive in Manitoba and Nova Scotia, giving Canada’s regulated marijuana industry a chance to increase market share. Manitoba’s government started taking new applications for licensed cannabis stores on June 1,


© 2020 Marijuana Business Daily, a division of Anne Holland Ventures. All rights reserved. Data is current as of Sept 15, 2020.

prioritizing applicants without any existing Manitoba stores. The first of the province’s new stores, The Joint Cannabis Shop, opened in Winnipeg in early August. Meanwhile, the number of stores in Nova Scotia is set to double to 26 in the coming months. Thirteen of the 14 new outlets are modular, meaning they are 200-400 square feet and located inside existing alcohol retailers. Eight of the stores will open this fall, with the rest expected early next year. The modular stores carry a smaller assortment of products—approximately 100—because of their size.

Germany’s First Medical Cannabis Harvests Likely Delayed Until 2021 Germany’s three domestic cannabis growers said they could not promise their inaugural deliveries would

take place in accordance with the expected 2020 timeline, meaning the country will likely continue to remain fully dependent on imports longer than originally planned. The news came from a government reply to a parliamentary query. The three companies—Aurora Deutschland, Aphria Germany and Demecan—attributed potential delays to the ongoing COVID-19 pandemic. The government said it does not select which countries import medical cannabis to Germany. Instead, the decision lies in the “market decisions of the participants in the narcotics trade.” “In contrast to the cultivation and future distribution of medical cannabis from Germany, the (government) has no central coordination function when it comes to imports,” a regulator told Marijuana Business Daily.

October 2020 | 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.

© 2020 Marijuana Business Daily, a division of Anne Holland Ventures. All rights reserved. Data is current as of Sept. 15, 2020.

State News Arizona The state Supreme Court ruled that a voter initiative to legalize a commercial recreational marijuana program in Arizona will appear on the November ballot, removing the final legal challenge. In a last-ditch effort to keep the issue off the ballot, opponents had argued that the initiative summary failed to outline a host of changes that would be made into state law, including that a proposed 16% excise tax on marijuana sales could not be increased. The state Supreme Court agreed with Superior Court Judge James Smith, who wrote that the principal provisions of the Smart and Safe Arizona Act were included in the summary. For more information about the ballot initiative, see page 48.

26 Marijuana Business Magazine | October 2020


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IndustryDevelopments | International & State Arkansas Medical marijuana stores in the state have sold 22,350 pounds of MMJ worth $143 million since sales began in May 2019. According to the Arkansas Medical Marijuana Commission, the 80,000-plus registered MMJ patients in the state are collectively spending $600,000 per day. “With 29 dispensaries in operation, this is an average of $20,689 spent daily at each dispensary,” Scott Hardin, commission spokesperson, told MJBizDaily.

California On the final day they could approve bills this year, California lawmakers gave the go-ahead to a pair of marijuana measures but shelved a potentially major piece of hemp legislation. The two marijuana measures that won approval were: • Assembly Bill 1827/Senate Bill 827, which freezes the state’s ability to raise tax rates until July 2021. • Assembly Bill 1525, which guarantees financial institutions won’t face repercussions from the state for granting services to cannabis companies. A bill that would have established a host of new hemp industry rules was tabled after an outcry from both hemp farmers and marijuana industry insiders who viewed the measure as unfavorable.

Colorado A cold snap that swept through Colorado in early September drove temperatures below freezing and dumped inches of snow, potentially destroying millions of dollars worth of outdoor cannabis just as it had started to reach maturity. Some outdoor growers used shade cloth, canvas and plastic to protect plants. Meanwhile, wet and heavy snow snapped uncovered plants at the stalks and broke branches. The crop damage will likely disrupt the supply of material for THC and CBD extracts across the state for months.

Florida The state health department issued long-awaited edibles production rules 18 months after Florida allowed the sale of flower, which roughly doubled sales. According to the regulations, edibles: • Must not resemble commercially available candy. • Must be in geometric shapes (not animal shapes). • Can include baked goods, chocolates, drink powders, lozenges and gelatins.

28 Marijuana Business Magazine | October 2020



IndustryDevelopments | International & State Hawaii More than a year after launching, Hawaii’s medical marijuana reciprocity program has served only a limited number of out-of-state visitors. The out-of-state program allows registered patients from other medical marijuana states to apply for temporary cards to use during visits to Hawaii. Travel restrictions stemming from the COVID-19 pandemic decimated any traction that had been gained by the start of 2020. From February—the highest point of participation—to July, Hawaii’s out-of-state registry fell from 718 to 95. The state health department initially estimated that 5,000 out-ofstate visitors would participate in the first year of the reciprocity program.

Illinois State regulators are allowing some applicants for adult-use cannabis retail licenses an opportunity to correct their applications and refile before the state’s lottery for permits. The state announced finalists for 75 retail licenses on Sept. 3, but only 21 total applicants scored perfectly on their applications. While some applicants contend they weren’t notified of problems with their applications and allowed to correct them, others were given that opportunity. That situation has led to several lawsuits, one of which could be settled because of the state’s changes.

Iowa Regulators awarded medical marijuana dispensary licenses to operators in Iowa City and Council Bluffs to replace two outlets that closed in March. The licenses will bring the state back up to five dispensaries. Should the firms not accept the licenses, regulators have other applicants from which to choose. Regulators also announced that applications would be accepted for a second cultivator/processor after multistate marijuana operator Acreage Holdings, doing business as Iowa Relief, dropped out of the market. Iowa’s public health department issued the request for proposals with an Oct. 9 deadline for “intent to apply” letters. Applications are due Oct. 23, and the state plans to award the license on Nov. 20.

Maine Regulators began issuing business permits for the state’s long-awaited recreational marijuana industry. The state’s Office of Marijuana Policy activated licenses for five retailers, five grow facilities, a manufacturing facility and a testing lab. The retail stores have been approved to start rec sales on Oct. 9. Regulators will be issuing more licenses on a rolling basis up to and beyond the adult-use sales launch date. Voters in Maine approved recreational sales in 2016.

30 Marijuana Business Magazine | October 2020


Maryland State marijuana regulators are easing some costly and burdensome security requirements while also requiring medical cannabis businesses to keep video surveillance footage for a longer time. The revised regulations no longer require MMJ businesses to simultaneously record video surveillance at both its licensed facility and from an off-site premise. That previous rule, as interpreted by regulators, required businesses to spend an additional $20,000-$40,000 for dual computer servers, storage and other duplicate infrastructure. The revised regulations require cannabis businesses to: • Archive 90 days of video surveillance instead of 30 days. • Make video recordings available within 48 hours upon request by state cannabis regulators or law enforcement.

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IndustryDevelopments | International & State Massachusetts Employees at Sira Naturals, a marijuana cultivation and processing facility in Milford, ratified their initial collective bargaining agreement 10 months after being the first cannabis workers in the state to vote to unionize. The threeyear labor contract will cover about 120 workers, according to the United Food and Commercial Workers Local 1445. The agreement includes wage increases of 50 cents to $1 an hour, annual pay raises, health-care options, a 401(k) retirement plan and a three-step grievance procedure. Workers at several other Massachusetts cannabis facilities have voted to join the UFCW in recent months.

Missouri The counsel for the Democratic legislative caucus alleges that state medical marijuana regulators obstructed an investigation into the MMJ program. Caucus counsel said regulators withheld documents that revealed knowledge about potential conflicts of interest involving the company that scored the MMJ license applications. Missouri’s MMJ licensing process spurred more than 800 appeals, a number of lawsuits and a legislative investigation that has reached the governor’s office,

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Nebraska The state Supreme Court ruled that a measure to legalize medical marijuana via the November ballot was unconstitutional. The Nebraska Supreme Court’s ruling came one day before the legal deadline to certify the measure for the general ballot. Advocates now are targeting 2022 to place medical marijuana back on the ballot.

Nevada A judge ruled the state’s marijuana licensing process can resume, with some new retail marijuana stores allowed to open. The decision also means some applications for licenses will be reviewed again by state officials. The 30-page ruling is unlikely to be the last word on the two-year legal fight involving dozens of parties over who can open marijuana shops in the lucrative Nevada market. Judge Elizabeth Gonzalez said she expected her decision will be appealed to the state Supreme Court. But state Attorney General Aaron Ford interpreted Gonzalez’s ruling as a victory because it didn’t order a do-over of the licensing process.

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IndustryDevelopments | International & State New Jersey Garden State Dispensary opened a location in Eatontown, marking the state’s 12th medical marijuana dispensary. The company already operates dispensaries in Union and Woodbridge. Curaleaf, Harmony, MPX NJ and TerrAscend also plan to open more dispensaries in New Jersey. The expansion will only continue over time because existing licensees are currently allowed to open up to three shops apiece.

Ohio More than 60% of state residents are dissatisfied with the medical cannabis program, citing high prices as the No. 1 reason, according to a recent study conducted by Ohio State University Moritz College of Law’s Drug Enforcement and Policy Center. The report noted that Ohio’s MMJ program, which launched in January 2019, is still “not fully operational, creating concerns around persistent delays and the overall functionality of the program.”

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Oklahoma Advocates for legalizing a commercial recreational marijuana program in Oklahoma gave up their bid for November’s election because of the difficulty of collecting signatures during the coronavirus pandemic. Oklahoma has emerged as among the most business-friendly medical marijuana states. Now that the adult-use initiative has been withdrawn, it’s unlikely an adult-use referendum will be on an Oklahoma ballot until 2022 at the earliest.

Oregon Roughly 20% of the state’s licensed marijuana companies, or 408 businesses, are located in areas that are being evacuated because of wildfires, The Oregonian reported. In southwestern Oregon, East Fork Cultivars President and co-founder Nathan Howard said the fire had already consumed many neighboring farms. “A lot of farms are completely destroyed. A lot of our friends have lost everything,” Howard said, adding that he wasn’t sure yet if Takilma-based East Fork Cultivars had escaped the flames.

October 2020 | mjbizdaily.com 35


IndustryDevelopments | International & State Utah Activists plan to drop a lawsuit challenging the state Legislature’s action to replace a citizen ballot initiative to legalize medical marijuana with a more restrictive measure. Still, the plaintiffs characterized their effort as a victory because Gov. Gary Herbert and lawmakers did scrap a plan for a state-run dispensary system. The Utah Supreme Court dismissed a separate lawsuit a year ago challenging the Legislature’s enactment of a more restrictive MMJ measure. In that case, the state’s highest court ruled lawmakers were within their legal rights because the measure had garnered more than two-thirds support in both chambers.

Vermont A bill to legalize adult-use marijuana passed both chambers of the state Legislature, though it is uncertain whether Gov. Phil Scott will sign off on the measure. Medical marijuana has been legal in Vermont since 2004, but the state is home to only five dispensaries and a relatively small industry. Though Vermont lawmakers made possession and use of adult-use marijuana legal in 2018, the Legislature decided not to establish any system for regulated sales. The pending legislation would mandate a new Cannabis Control Board to issue business permits for retailers, growers, manufacturers, wholesalers and labs by Oct. 1, 2022.

Virginia The state’s limited commercial medical cannabis program could launch within weeks. For now, products are restricted to marijuana oils, edibles such as lozenges and lollipops as well as vape cartridges with single doses capped at 10 milligrams of THC. However, flower could be added as soon as next year. The Marijuana Business Factbook projects medical cannabis sales in Virginia will reach $9 million-$11 million in 2021, the state’s first full year of sales, growing to $45 million-$55 million by 2024.

Washington state Regulators are forming a Marijuana Odor Task Force and seeking an outside expert to advise on the possible impact of cannabis odors on human health. Regulators want a vendor that can detect and report on odors from licensed cannabis companies and then determine whether the emissions are potentially harmful. According to Brian Smith of the state Liquor and Cannabis Board (LCB), regulators received four bids for the job, and the lowest was more than double the state’s budget allotment. The LCB’s plan is to hold off on choosing a vendor for now.

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.

36 Marijuana Business Magazine | October 2020


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Marijuana on the Ballot

The White House and congressional seats are up for grabs as voters in several states consider legalizing new markets By Omar Sacirbey

40 Marijuana Business Magazine | October 2020


W

ith this fall’s general election the U.S. marijuana industry could see its biggest spike in business opportunities since the 2016 election. Back then, four states—California, Maine, Massachusetts and Nevada—legalized recreational marijuana cultivation and sales through the ballot box, and three more—Arkansas, Florida and North Dakota—approved medical marijuana programs. On Nov. 3, Arizona, Montana and New Jersey, which all have established medical programs, will hold referendums to legalize recreational marijuana. And voters in Mississippi and South Dakota will vote on legalizing medical marijuana. South Dakota voters will also consider an adult-use marijuana initiative. The passage of most or all of these referendums is more than plausible—and if new markets open, they could create billions of dollars in business opportunities for marijuana entrepreneurs. Furthermore, federal marijuana policies could change depending on the outcome of the presidential election, as well as 10-15 key U.S. Senate contests. Important U.S. marijuana issues hinging on the election outcome include: • Banking reform. • Elimination of Section 280E of the federal tax code. • A prohibition on using federal funds to interfere with state recreational marijuana markets. • Legalization of medical and recreational marijuana. • Greater scientific research involving marijuana. • Decriminalization of marijuana use. Beyond the 2020 presidential and congressional races, marijuana entrepreneurs could see several state legislatures pass recreational marijuana laws, especially if New Jersey legalizes it this year. That state could trigger a domino effect along the East Coast, prompting Connecticut, New York and Pennsylvania to follow suit. All those states legalizing marijuana are unlikely to change President Donald

Steve Hawkins

The U.S. marijuana industry landscape could look very promising depending on the outcome of the the Nov. 3 general election, which features MJ ballot referendums in five states, 35 Senate races and the presidential election. Hereʼs what might change:

Trump’s attitude toward the plant, but some observers believe it could affect the thinking of Democratic nominee Joe Biden, should he become president. Moreover, state-budget shortfalls caused by the coronavirus pandemic could encourage more legislators around the country to embrace marijuana because of its revenue-generating potential. “As we see further legalization in the first half of 2021, when these states meet from January to May in their legislative processes, by the time Congress is taking up cannabis we could be looking at a very different picture than we are right now in terms of the states, and that will influence Biden’s evolution,” said Steve Hawkins, executive director of the Washington DCbased Marijuana Policy Project. While the future holds the potential for more business opportunities, marijuana entrepreneurs shouldn’t deceive themselves into thinking they will be limitless. Rather, it’s expected that current medical operators in Arizona, Montana and New Jersey would get first crack at recreational licenses if referendums pass in those states. Meanwhile, Mississippi and South Dakota would be among the smaller medical markets if referendums pass there. Also, it could be a while before these markets get up and running. Consider Maine: Adult-use sales are scheduled to begin this month, nearly four years after the state’s voters legalized recreational marijuana. Still, the importance of New Jersey potentially sparking an eastern domino

• Entrepreneurs could have five new markets in which to seek opportunity if voters in Arizona, Mississippi, Montana, New Jersey and South Dakota pass legalization referendums. • The Democratic platform is widely considered more marijuana-friendly than the Republican one, though neither presidential ticket has committed to legalizing cannabis. • Coupled with the outcome of the presidential election, the outcome of 10-15 close Senate races could determine how much or how little federal cannabis reform gets accomplished in the next four years. • Depending on who wins the White House and the Senate, marijuana entrepreneurs could see progress in banking reform, abolishing 280E, research and decriminalization. • Voter referendums that adopt recreational marijuana could put pressure on other states considering legalization—such as New York and Pennsylvania—to approve adult use via their legislatures.

effect and the accompanying opportunities shouldn’t be underestimated. Ditto for the potential passage of medical marijuana laws in Mississippi and South Dakota, where legalization seemed inconceivable less than a decade ago. In this issue, Marijuana Business Magazine takes a deep dive into the November elections to give cannabis businesspeople an eagle-eye view of the ballots, elections and issues that are at stake.

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

October 2020 | mjbizdaily.com 41


Marijuana on the Ballot

BIG CHANGES Could Be Afoot

But the outlook for federal marijuana reform will depend on who wins the White House and controls Congress By Omar Sacirbey

W

hat might the marijuana industry landscape look like after the Nov. 3 general election? Much different? Same old, same old? It depends on what the voters say. Marijuana business executives can expect federal banking reform, elimination of Section 280E of the federal tax code, a

softening of federal marijuana prohibition and possibly even federal tax-and-regulate style legalization if Democrats retake the White House and U.S. Senate and maintain their comfortable majority in the House of Representatives. Yet marijuana business executives might get those long-awaited breakthroughs even if just one of

42 Marijuana Business Magazine | October 2020

the two—the White House or the Senate—flips from red to blue. If President Donald Trump defeats Democratic challenger Joe Biden and Republicans maintain control of the Senate, most observers expect continued gridlock on marijuana policy, although some progress might be possible on cannabis banking reform.


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Marijuana on the Ballot

“The best chance of anything getting done is a Biden-Harris White House and the Democrats taking the Senate,” said Geoff Bacino, a partner at consulting firm Bacino & Associates in Alexandria, Virginia, and a former federal bank regulator, referencing Biden’s running mate, U.S. Sen. Geoff Bacino Kamala Harris. “Republicans are much less socially elastic and morally elastic on cannabis than the Democrats,” Bacino said, adding that most of the senators holding up cannabis banking reform have been Republicans. Currently, Republicans control the Senate 53-47, but 35 Senate seats are up for grabs in November. Of the 23 incumbent Republican senators, 13 are in competitive races, compared with only two of the 12 Democratic incumbents, according to The Washington Post. (See story on page 48.) Five of the senators defending seats—three Republicans from Arizona, Georgia and North Carolina, plus two Democrats from Minnesota and North Carolina—sit on the Senate banking committee, and the outcomes of those races could be the difference in whether the SAFE Banking Act passes or not. That measure—currently stalled in the GOP-controlled committee—would enable financial institutions to serve cannabis-related businesses without fear of federal punishment. Here’s a closer look at how key federal marijuana policies might change after November’s election.

Platform Pointers

CANNABIS BANKING REFORM

2020 Democratic Party Platform: Verbatim

Assuming the House stays blue, the best chance for banking reform is a Democratic White House and Senate majority. “If you have a Democratic takeover of the White House and the Senate, I think you’re going to see legislation that’s probably more favorable to cannabis banking,” Bacino said. He added that while it’s unlikely the change would happen in the first 100 days of a Biden presidency, it could happen in the first year. While the 2020 Democratic Party platform doesn’t explicitly call for cannabis banking reform, vice presidential nominee Harris sponsored the SAFE Banking Act, and support from a Biden-Harris White House for such measures is more than likely. “The issue with the Senate right now is not really a vote-counting issue as much as it is a committeecontrol issue,” said Steve Fox, a Steve Fox

44 Marijuana Business Magazine | October 2020

The Republican and Democratic platforms lack specifics about marijuana reform. But coupled with the positions of the presidential candidates, they can offer a glimpse at how the U.S. legal marijuana marketplace might change depending on whether Donald Trump or Joe Biden occupies the White House in 2021, and which party controls Congress.

2020 Republican Party Platform: Primer The Republican Party maintained the same platform it adopted in 2016, which said next to nothing about marijuana except that state programs flouted federal prohibition.

2020 Republican Party Platform: Verbatim

“The progress made over the last three decades against drug abuse is eroding, whether for cultural reasons or for lack of national leadership. In many jurisdictions, marijuana is virtually legalized despite its illegality under federal law. At the other end of the drug spectrum, heroin use nearly doubled from 2003 to 2013, while deaths from heroin have quadrupled. All this highlights the continuing conflicts and contradictions in public attitudes and public policy toward illegal substances. Congress and a new administration should consider the long-range implications of these trends for public health and safety and prepare to deal with the problematic consequences.”

2020 Democratic Party Platform: Primer

• Remove marijuana from Schedule 1 of the federal Controlled Substances Act. • “Appropriately” regulate marijuana by “providing a reasoned pathway for future legalization.” • Allow states to decide their own marijuana policies. • Pave the way for more scientific research into marijuana use. • Change laws to eliminate “uncertainty” for legal marijuana businesses.

“The ‘war on drugs’ has led to the imprisonment of millions of Americans, disproportionately people of color, without reducing drug use. Whenever possible, Democrats will prioritize prevention and treatment over incarceration when tackling addiction and substance-use disorder. We will build on effective models of drug courts, veterans’ courts and other diversionary programs that seek to give nonviolent offenders opportunities for rehabilitation as opposed to incarceration. “Because of conflicting federal and state laws concerning marijuana, we encourage the federal government to remove marijuana from the list of ‘Schedule 1’ federal controlled substances and to appropriately regulate it, providing a reasoned pathway for future legalization. We believe that the states should be laboratories of democracy on the issue of marijuana, and those states that want to decriminalize it or provide access to medical marijuana should be able to do so. We support policies that will allow more research on marijuana as well as reforming our laws to allow legal marijuana businesses to exist without uncertainty. And we recognize our current marijuana laws have had an unacceptable disparate impact in terms of arrest rates for African Americans that far outstrip arrest rates for whites, despite similar usage rates.” – Omar Sacirbey


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Marijuana on the Ballot

Cannabis lobbyists largely believe a Joe Biden-Kamala Harris White House is more likely to support the SAFE Banking Act.

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Washington DC-based attorney with the Vicente Sederberg law firm. “That’s really what held things up more than anything else. It’s not that the SAFE Banking Act is controversial.” Fox and other observers also believe the SAFE Banking Act could pass if Democrats control the White House but the GOP keeps the Senate. Bacino estimated that roughly a third of Republican senators support some kind of marijuana reform, a third are opposed to any reform and the other third could go either way depending on the specific legislation.

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A Biden-Harris administration that supports the SAFE Banking Act would allow fence-sitting Republicans to vote for the measure without much controversy, observers said. “I think if you had a Democratic administration, even if the Senate stayed Republican, you might find a few more Republicans willing to cross over if only to get things done,” Bacino said. If Trump wins and the GOP keeps the Senate, then gridlock will continue, many observers said. “It’s just


really hard to envision a Republicancontrolled Senate pushing forward on this,” said Fox, who also co-founded the National Cannabis Industry Association.

280E REFORM

Observers also are hopeful that marijuana business executives could see the elimination of 280E, which prohibits standard business deductions by companies that traffic in federally illegal drugs, including marijuana. And while it’s not the “low-hanging fruit” that banking reform is, getting rid of 280E is a very realistic goal, observers said. “When a new administration comes in, one of the first things they tend to do is reform the tax code in one way or the other. So I would expect there would be a push to do that, and therefore 280E would be on the chopping block,” Fox said. Others noted that the Democratic platform stipulates that states should be allowed to decide their own marijuana policies. And while the Republican platform is scant on marijuana policy, Trump has also said he believes states should be able to decide the matter on their own. If Congress can pass the STATES Act, which would give individual states control over whether to legalize marijuana, then it’s also possible to get a special 280E “carve-out” for legal marijuana businesses in states with legal marijuana markets. “If Biden decides to embrace a state-by-state approach, then that really puts the STATES Act back on the table as a way to create a carve-out for (legal marijuana) businesses and getting rid of 280E that way. Besides a carve-out, the only way 280E will be eliminated is if cannabis gets descheduled,” said Steven Hawkins, executive director of the Marijuana Policy Project.

FEDERAL LEGALIZATION AND/OR PROHIBITION

When it comes to federal prohibition of marijuana, there could be major changes, but it’s highly unlikely they would entail something as sweeping as

U.S. President Donald Trump has said states should be able to decide whether to regulate marijuana.

outright legalization with Uncle Sam taxing and regulating MJ. Under the current political balance, expect the status quo to continue. But the Democratic Party platform calls for both descheduling marijuana and legalizing medical cannabis, both of which would bring about new business opportunities. (See story on page 44.) It’s likely that most Democratic senators would support medical marijuana legalization, and their numbers along with a handful of MMJ-sympathetic Republicans would be enough to pass medical marijuana legalization. What the federal regulations might look like and how state markets would continue in the interim is unclear. Descheduling marijuana, meanwhile, would make it much easier and less expensive for universities and research

institutions to conduct clinical trials and other studies into MJ. While Biden has so far opposed federal adult-use legalization, Harris has been outspoken in her support of legalizing recreational marijuana. This includes her sponsorship of the MORE Act, which would deschedule marijuana and thereby legalize it federally. And as more states legalize medical or adult-use marijuana through the ballot box, Biden could feel compelled to take a more serious look at a tax-andregulate approach—and would have Harris to back him. “As long as momentum continues to build at the state level, then I think there would just be a stronger argument for, ‘Why don’t we just treat this like alcohol and tax it and regulate it?’” Hawkins said.

October 2020 | mjbizdaily.com 47


Marijuana on the Ballot

State Snapshots Five states will offer residents the opportunity to decide on marijuana initiatives next month By Jeff Smith

MT

SD

NJ

AZ MS

V

oters in five states will decide whether to legalize medical and recreational marijuana in November, with billions of dollars in new business opportunities hanging in the balance. The ballot measures also promise to have regional ripple effects from the East Coast and Deep South to the heartland and Mountain West. Not a bad turnout for a year in which even more initiatives were expected to qualify for the November ballot, but some were derailed by the coronavirus pandemic and other factors. In the following pages, you’ll find detailed snapshots for each of the five states, including what’s on the ballot as well as the outlook for passage.

ARIZONA BALLOT MEASURE: Proposition 207 POPULATION: 7.3 million PROJECTED FIRST-YEAR SALES: $375 million-$400 million

PROJECTED 2024 SALES: $700 million-$760 million

If approved by voters in November, Arizona’s commercial adult-use marijuana program is expected to generate up to $760 million in sales in 2024.

48 Marijuana Business Magazine | October 2020

It’s no wonder Arizona’s medical marijuana market has attracted enormous investor interest. Between February 2019 and February 2020 alone, seven multistate operators either acquired or expanded operations in the state’s medical cannabis market. Arizona cannabis attorney Janet Jackim recently said in-state and out-ofstate marijuana companies and investors “are trying to gobble up any (MMJ) licenses they can.” Those acquisitions would pay off if the ballot measure is successful, because Arizona’s industry-backed recreational


marijuana initiative overwhelmingly favors existing MMJ operators. The initiative also calls on the state to issue 26 social equity licenses targeting minority entrepreneurs. State marijuana regulators would decide the final rules governing the program. Arizona-based Harvest Health & Recreation and Massachusetts-based Curaleaf bankrolled the Smart and Safe ballot initiative and are poised to be big winners if it passes. Harvest already has the largest retail presence in the state with 15 dispensaries supported by four cultivation sites and two processing facilities. Harvest CEO Steve White told analysts during an earnings call in August that the company is expanding its cultivation and processing capacity in preparation for adult-use marijuana legalization. “You’re not going to see what you saw in Illinois, where people are running out of product,” White said. Voters narrowly defeated an adultuse measure in 2016, but support for legalizing recreational marijuana keeps increasing, so the industry is optimistic the initiative will pass this time around.

Initiative: Legalize a regulated,

commercial adult-use marijuana market.

Sponsor: Smart and Safe Arizona License opportunities:

• Arizona has issued roughly 130 vertical medical marijuana licenses to companies that would be eligible to receive recreational MJ licenses as long as their operations are in good standing. • Additional licenses would be available in counties that don’t have at least two MMJ dispensaries. • Twenty-six social equity licenses would be available to entrepreneurs living in communities disproportionately affected by the war on drugs through a program to be developed by the state health department.

• Additional recreational marijuana licenses could be granted based on a 1:10 ratio with pharmacies in the state. For example, if the number of pharmacies statewide grows by 100, then the state could issue an additional 10 retail adult-use licenses.

Tax rate: 16% tax on the retail sale of adult-use marijuana products. Other important business factors:

• The initiative would set up a recreational program quickly by allowing existing medical marijuana operators to apply for dual licenses between Jan. 19, 2021, and March 9, 2021. The state would then have 60 days to issue a license from the time an application was filed. • Not-for-profit MMJ businesses would have the option of converting to for-profit status. • Potency of infused edibles would be limited to 10 milligrams of THC per serving, 100 milligrams per package. • The state would be required to adopt rules for delivery no later than Jan. 1, 2025, though it could happen as soon as Jan. 1, 2023.

Likelihood of passage: 51% of

registered voters said they would vote for the initiative while 41% would vote against it, according to a poll conducted in September by Monmouth University. This margin shrinks among likely voters in a “high-turnout scenario” to 49% for and 43% against. And it disappears in a “low-turnout scenario” of 47% for and 47% against.

MISSISSIPPI BALLOT MEASURE: Initiative 65, Initiative 65A

POPULATION: 2.9 million PROJECTED FIRST-YEAR SALES: $240 million-$265 million*

PROJECTED 2024 SALES: $750 million-$800 million* * Figures are for Initiative 65 only.

Mississippi medical marijuana industry advocates hope their state will be the second in the Deep South to legalize MMJ. A strong vote of support, industry experts say, also could influence neighboring states such as Alabama, which has yet to legalize MMJ. But legalization advocates in Mississippi face a battle because of a restrictive competing initiative that triggers a tougher voting threshold for passage. Citizen advocates put forth a businessfriendly measure (Initiative 65) in this conservative state, but then lawmakers countered with a measure that is largely undefined but would limit licenses and allow just terminally ill patients to smoke medical marijuana (Initiative 65A). “It’s just another attempt (by the Legislature) to kill medical marijuana,” said Jamie Grantham, communications director for the citizen-led Medical Marijuana 2020 Campaign. With competing measures on the ballot, voters will be asked two questions: Whether MMJ should be legalized and, if so, which initiative the voter favors. An initiative must receive at least 40% of all votes to pass, according to the state’s election rules. In other words, a strong majority will need to answer yes to the first question about legalizing medical marijuana and then clearly support one initiative over another. Details of the citizen initiative: Initiative: Legalize a commercial medical marijuana market through a constitutional amendment.

Sponsor: Mississippians for

Compassionate Care

October 2020 | mjbizdaily.com 49


Marijuana on the Ballot License opportunities:

• State regulators would be prohibited from limiting the number of MMJ licenses or setting product prices. • The initiative calls for the Mississippi Department of Health to adopt final program rules by July 1, 2021, and start issuing MMJ licenses no later than Aug. 15, 2021.

Tax rate: A state sales tax (currently 7%)

would apply. Otherwise, self-funded by user fees.

Other important business factors:

• Dispensaries would be able to sell no more than 2.5 ounces of marijuana in 14 days per qualified patient. • More than 20 medical conditions would qualify patients for medical marijuana; physicians also would be allowed some discretion in recommending MMJ. • Medical marijuana operations would have to be at least 500 feet away from churches, schools and child-care centers.

Likelihood of passage: It could be

close. A recent survey by Californiabased political polling firm FM3 Research found that the citizen measure could have just enough support to pass. The poll, funded by the group behind the citizen initiative, showed that 81% of Mississippians favor doctors being able to recommend medical marijuana and 52% favor the citizen initiative. If those figures hold, the citizen initiative would pass with about 42% of the overall vote (52% of 81% equals 42.6%).

MONTANA BALLOT MEASURE: Initiative 190 POPULATION: 1.1 million ESTIMATED 2019 MMJ SALES: $55 million-$70 million

PROJECTED 2020 MMJ SALES: $60 million-$75 million

Montana would join Colorado and Nevada in legalizing recreational marijuana in the Mountain West if residents vote to pass a commercial adult-use initiative in November. The initiative would allow existing medical marijuana operators first entry for a year. Local jurisdictions could vote to opt out of recreational marijuana, so it’s unclear how robust of a market the state would have—at least initially. The state’s MMJ market is expected to reach $60 million-$75 million in revenues this year, according to the Marijuana Business Factbook. New Approach Montana started collecting signatures for the initiative May 9, while observing strict public health protocols, after being denied permission to gather digital signatures. A recent poll showed a slim majority of residents favor adult-use marijuana legalization, with about 10% of survey respondents still undecided.

Initiative: Legalize a commercial

recreational marijuana program.

Sponsor: New Approach Montana License opportunities:

• The state Department of Revenue would license and regulate the industry, with the business license application process beginning by Oct. 1, 2021. • Existing MMJ operators would get first entry into the adult-use market for a 12-month period. • Montana doesn’t have a medical marijuana license cap and has issued roughly 300 MMJ cultivation licenses, 200 processing licenses and 360 dispensary licenses. • Local jurisdictions could hold elections for voters to decide whether to prohibit adult-use stores. • The adult-use initiative calls for 10 cultivation tiers of up to 30,000 square feet, plus a micro-tier of up to 250 square feet.

50 Marijuana Business Magazine | October 2020

Tax rate: 20% retail sales tax. Other important business factors:

• Smokable flower would be permitted. • A seed-to-sale tracking system would be implemented. • Montana residency would be required for licensees. • Marijuana operations would have to be at least 500 feet from churches and schools.

Likelihood of passage: In this moderately conservative state, residents supported recreational marijuana legalization by a margin of 54% to 37%, with 10% undecided, according to a University of Montana Big Sky poll published in February 2020.

NEW JERSEY BALLOT MEASURE: Public Question 1 POPULATION: 8.9 million PROJECTED FIRST-YEAR SALES: $375 million-$400 million

PROJECTED 2024 SALES: $850 million-$950 million

New Jersey residents are being asked to legalize a commercial recreational marijuana program in November that promises eventually to become a multibillion-dollar business—one that could spur neighboring states to follow suit. The sparsely worded initiative lacks details such as how many business licenses would be made available. Those laws and regulations would be hammered out later by state lawmakers and cannabis regulators if the measure is successful with voters. Scott Rudder, president of the New Jersey CannaBusiness Association, is among those who believe current medical marijuana operators would get first crack at the adult-use market in order to accelerate a market launch that could occur by late 2021.


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Marijuana on the Ballot

Rudder predicts a “level of urgency” for lawmakers to pass the ensuing legislation and for regulators to establish the rules because of pressure to generate economic opportunities and tax revenues in wake of the coronavirus pandemic. Bridget Hill-Zayat, a cannabis attorney with Hoban Law Group who is licensed to practice in New Jersey, agreed. “If the motivation is a drive for tax revenues, they are going to want to move as quickly as possible,” she said. With racial justice even more of an issue in recent months, Hill-Zayat said New Jersey might issue micro-licenses and loan programs to encourage applicants from diverse backgrounds to apply. Municipalities, which could levy up to a 2% retail tax on adult-use marijuana products, also might be more motivated to opt-in to recreational marijuana, given their own budget pressures, Rudder said. Experts expect the ballot initiative to pass, noting that the latest polls show roughly two-thirds of New Jersey residents in favor of the initiative. If New Jersey Public Question 1 is successful at the ballot box, Rob DiPisa, partner and co-chair of cannabis law group Cole Schotz in Hackensack, New Jersey, predicts a market launch in the second half of 2021, given the likelihood of existing MMJ operators to be fasttracked for adult use.

• Currently, New Jersey has 12 vertical medical marijuana licensees. The state plans to issue 24 additional MMJ licenses—four of them vertical and the remainder stand-alone cultivation, processing and dispensary licenses. • Presuming the ballot measure is successful, state lawmakers would pass enabling legislation and regulations would be developed by the New Jersey Cannabis Regulatory Commission, which was created last year but has yet to get up and running.

Tax rate: 6.625% sales tax on adult-use products. Municipalities could pass ordinances to charge local taxes of up to 2%. Likelihood of passage: Residents favor the legalization proposal by a margin of 68% in favor and 26% against with 6% unsure, according to a July poll commissioned by the cannabis law practice of Brach Eichler and conducted by DKC Analytics. An April poll conducted by Monmouth University found 61% of respondents in favor of adult-use legalization.

SOUTH DAKOTA

Initiative: Legalize a commercial recreational marijuana program by constitutional amendment. Sponsor: A supermajority of New Jersey lawmakers passed a measure that put the referendum to legalize an adult-use marijuana program before voters in November.

BALLOT MEASURES: Amendment A

License opportunities:

South Dakota could become the first state in the nation to simultaneously legalize medical (Measure 26) and adult-use marijuana (Amendment A) in November. That would be a milestone for the politically conservative state, especially

• Lawmakers and regulators would decide on the number and type of marijuana business licenses available, but existing MMJ operators are expected to get first crack at the adult-use market.

and Measure 26

POPULATION: 884,659 PROJECTED FIRST-YEAR SALES: $1.5 million-$2 million*

PROJECTED 2024 SALES: $10 million-$12 million*

* Figures are for medical marijuana only

52 Marijuana Business Magazine | October 2020

considering that MMJ supporters weren’t able to collect enough signatures to get a legalization initiative on the ballot in 2018.

Initiative: Legalize a recreational marijuana market through a constitutional amendment. Sponsor: South Dakotans for Better Marijuana Laws

License opportunities:

• The initiative calls for the state Department of Revenue to issue “enough licenses to substantially reduce the illicit production and sale of marijuana throughout the state.” • But state regulators also are directed in the initiative to limit licenses “to prevent an undue concentration” in any municipality. • Four license types would be available: cultivation, wholesale/processing, retail and lab testing.

Other important business factors:

• Local jurisdictions could ban marijuana operations in their areas or limit the locations of such operations. But a local government could not prohibit the transportation of marijuana products on public roads by those who are licensed elsewhere. • The state Department of Health would have to establish program rules within 120 days of the passage of the act, including scoring criteria should a local jurisdiction receive more applicants than the number of licenses allowed. • Individuals who have a debilitating medical condition as defined by the state would be eligible for MMJ as long as a physician certifies the condition. Such conditions include “severe” or “debilitating” pain. • A dispensary could not sell more than 3 ounces of cannabis to a qualified patient during a 14-day period.



Marijuana on the Ballot

The

DOMINO

New Jersey could be key to legalizing adult-use marijuana on the East Coast By Jeff Smith

I

f New Jersey voters approve a commercial adult-user marijuana program in November (see page 50), insiders predict legalization dominos will fall along the East Coast. “It’s happening now,” noted Scott Rudder, president of the New Jersey CannaBusiness Association. Massachusetts already has a recreational marijuana market in full swing, and Maine’s is scheduled to launch Oct. 9. If New Jersey passes the initiative,

Effect

“that will be the final hurdle for New York, Pennsylvania and surrounding states,” Rudder predicted. “Once it’s done, it’s done.” Others agreed. “It’s going to motivate the surrounding states for sure,” said Bridget Hill-Zayat, a cannabis attorney with Hoban Law Group who is licensed to practice in Maryland, New Jersey and Pennsylvania. For example, she said, if Trenton, New Jersey, has an adult-use marijuana store,

54 Marijuana Business Magazine | October 2020

that’s going to put a lot of pressure on nearby Philadelphia to follow suit and not miss out on potential tax dollars. “A lot of medical marijuana customers will go over to New Jersey, and that’s a significant amount of revenue Pennsylvania is going to lose,” Hill-Zayat said.

WORKING TOGETHER

In the fall of 2019, New York Gov. Andrew Cuomo hosted a meeting of Northeast governors to discuss ways


their states could coordinate an adult-use framework and approach. Those interested in legalization and working on a regional approach included governors from Connecticut, New Jersey, New York and Pennsylvania; Rhode Island also was represented at the meeting. Cuomo wanted to legalize a commercial adult-use cannabis program in New York via his spring 2020 budget bill, but the coronavirus crisis forced him to shelve those plans. As of August, adult-use legalization bills were in New York legislative committees, but insiders said it was unlikely that the bills would pass before year-end. Jeremy Unruh, senior vice president of public and regulatory affairs for Illinois-based PharmaCann, which has a vertically integrated MMJ license in New York, said New York would be in a better position to evaluate a meaningful adultuse strategy after all federal coronavirus stimulus legislation had passed. Federal lawmakers were still deadlocked over an additional stimulus package as this magazine went to press. Unruh also said he didn’t expect New York to quickly resolve the issue of how to encourage greater participation by minority entrepreneurs in any new recreational marijuana program. “In my view, New York’s next-best opportunity to pick up where it left off (in 2019) will be after the new year, when the General Assembly convenes to address the governor’s budget bill,” Unruh said. Rob DiPisa, co-chair of the cannabis law practice at Cole Schotz in New Jersey, concurred, noting experts have long said it would be too difficult to legalize adult use in New York via a stand-alone bill. The coronavirus pandemic, meanwhile, strengthens the case for legalizing adult-use marijuana through the state’s budget bill, DiPisa said. Any new program would generate additional tax revenue for the state’s coronavirusdepleted coffers.

Garden State Dispensary is one of New Jersey's medical marijuana dispensaries expanding cultivation capacity to prepare for an adult-use market. Courtesy Photo

RACE TO THE FINISH

But by legalizing recreational cannabis through the budget next spring, “it’s highly unlikely that New York is going to beat New Jersey,” DiPisa said. “The funny thing is, no one is talking about that (competition) much anymore.” Stories were rampant in 2019 about the heated race between New York and New Jersey to be the first to legalize a recreational marijuana program—or risk losing out on cross-border and tourism revenue. It’s possible the two states still could be close in terms of a market launch—perhaps in late 2021. “But New York’s Achilles’ heel is that it doesn’t have the resources to meet the demand,” DiPisa said, even if the state’s medical marijuana operators are allowed first entry. New York’s highly restrictive medical marijuana program, which is limited to 10 MMJ licenses and bans flower, serves only about 120,000 patients, a fraction of the state’s population of approximately 20 million. New Jersey had long been a restrictive

medical marijuana market as well, but the state is poised to expand its program from 12 vertically integrated licenses to 36 MMJ permits once certain legal challenges are resolved. The new licenses to be awarded include four additional vertically integrated permits, five stand-alone cultivation facilities and 15 dispensary licenses. Meanwhile, the state’s current MMJ operators—including Garden State Dispensary, New York-based multistate operator Acreage Holdings and Massachusetts-based MSO Curaleaf—are expanding cultivation capacity to prepare for an adult-use market. For its part, Curaleaf also is formulating plans to increase its cultivation capacity in New York, Executive Chair Boris Jordan said during an earnings call in mid-August. “We believe the potential legalization of adult use in New Jersey could kick off a wave of legalization in the Northeast, with New York, Connecticut and Pennsylvania likely to seriously consider adult-use legalization,” Jordan said. Let the dominos fall.

October 2020 | mjbizdaily.com 55


Marijuana on the Ballot KY

IA NC

GA

AL

TX MN CO

AZ ME

GIANTS of the Senate? SC

Of the 35 seats up for grabs in the U.S. Senate, several would be key wins for those in the marijuana industry By Omar Sacirbey

T

he business outlook for cannabis companies could be significantly different this time next year, depending in large part on which party controls the Senate and which senators are elected. Observers say a critical component to getting cannabis banking reform, eliminating Section 280E of the federal tax code, and rolling back federal prohibition of marijuana, among other things, is a Democrat-controlled Senate. It’s not just important to have a majority that favors reform, observers say, but to have reform-friendly senators

as committee heads who can help advance marijuana-friendly bills to the floor for final votes. This was made painfully clear last year, when cannabis banking reform passed the U.S. House of Representatives with bipartisan support but stalled in the Senate banking committee under the command of Idaho Republican Jim Crapo. Going into November, Republicans have a 53-47 advantage in the Senate. There are 35 Senate races this year, including 15 that are considered competitive and could result in flips. A new Senate could potentially pass

56 Marijuana Business Magazine | October 2020

legislation that would save marijuana businesses millions of dollars, depending on the size of the operations. Here are snapshots of the most important Senate matchups, beginning with five key races that could change the makeup of the all-important banking committee. Incumbents are listed first.

ALABAMA

U.S. Sen. Doug Jones (Democrat) versus Tommy Tuberville (Republican)


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Marijuana on the Ballot

Despite being a banking committee member, Doug Jones is not one of the 34 senators co-sponsoring the Senate version of the SAFE Banking Act, which would enable financial institutions to serve cannabis-related businesses without fear of federal punishment. He supports medical marijuana legalization, decriminalization and last year told reporters that cannabis “is really a states’ right issue these days.” Many observers consider Jones to be the most vulnerable Democrat up for reelection. Jones’ challenger is former Auburn University football coach Tommy Tuberville, who opposes both medical and adult-use marijuana but is open to hearing more about MMJ. “They’re going to have to prove to me that medical marijuana is good. As long as it’s medical marijuana, as long as you have to have a prescription,” Tuberville told The Birmingham News. “If we ever put marijuana on our streets legally, it’s over.” Upshot: There are more outspoken marijuana allies than Jones, but his loss—as is now forecast—would be a pro-cannabis vote lost.

ARIZONA

U.S. Sen. Martha McSally (R) versus Mark Kelly (D)

Martha McSally is reliably anti-marijuana. She opposes medical marijuana legalization and has voted against legislation such as the McClintock-Polis amendment, which prohibits federal funds from being used to enforce MJ prohibition. A former fighter pilot, McSally in 2019 reversed course and voted for the Veterans Equal Access Amendment, which would allow veterans to legally access medical marijuana. Her challenger is Mark Kelly, an astronaut, former Navy captain and husband of former U.S. Rep. Gabby Giffords, also an Arizona Democrat. Kelly’s position regarding cannabis is unknown, but if he does win—and polls

show him ahead in the race—it will stem partly from Arizona’s adult-use referendum getting people out to vote. (See story on page 48.) Roughly 70% of Kelly’s supporters favor recreational legalization, while 23% oppose it. By contrast, 33% of McSally supporters back recreational legalization and 59% oppose it, according to OH Predictive Insights, an Arizona polling firm. Upshot: A Kelly win would be an important flip for marijuana reform. This is a special election to see who serves out the remainder of the late U.S. Sen. John McCain’s term.

NORTH CAROLINA

U.S. Sen. Thom Tillis (R) versus Cal Cunningham (D)

Thom Tillis has a middling record on cannabis. He opposes recreational and medical marijuana legalization but supports increased research into MMJ. In a statement to Vice magazine in 2018, a Tillis spokesperson said the senator opposes federal recreational legalization. However, Tillis “supports efforts to remove regulatory roadblocks that place unnecessary limits on legitimate research into medical marijuana and derivatives, which includes the potential health benefits, interactions with other prescription medications and appropriate dosage.” His opponent, U.S. Army veteran Cal Cumberland, hasn’t said much about marijuana. But Cumberland’s website notes that he believes in “allowing states to develop their own regulation and taxation of cannabis, while putting resources into public health and substance-abuse treatment.” Upshot: Of the five close races involving banking committee members, this the closest. Recent polls give Cunningham a sizable lead, but the election gurus at the University of Virginia Center for Politics rate North

58 Marijuana Business Magazine | October 2020

Carolina as one of three “toss-up” states, along with Iowa and Maine.

GEORGIA

U.S. Sen. David Perdue (R) versus Jon Ossoff (D)

David Perdue has said he is open to the medical use of marijuana, while news reports suggest he favors a states’ rights approach to MJ. State Rep. Allen Peake described Perdue as an “eager supporter” of efforts to pass a medical marijuana law in Georgia. Perdue has stopped short of supporting federal legalization and did not co-sponsor the STATES Act. But he appears to support giving legal cannabis businesses access to banking. Perdue’s opponent, Jon Ossoff, is a former investigative journalist and CEO of media production company Insight TWI. Ossoff recently told CNBC that he supports not just decriminalization but nationwide legalization of marijuana. “The fact that there are people doing time for nonviolent marijuana-related offenses while others are getting rich in the cannabis industry is a grave injustice. I’ll fight for outright cannabis legalization, an end to incarceration for nonviolent drug offenses and expungement of records for nonviolent cannabis offenses,” Ossoff told the cable news channel. Upshot: In mid-September, most polls showed Perdue with a small lead. While Perdue has been softer than most Republicans on marijuana, an Ossoff victory would put an outspoken MJ supporter on the banking committee.

MINNESOTA U.S. Sen. Tina Smith (D) versus U.S. Rep. Jason Lewis (R)

A former lieutenant governor in Minnesota, Tina Smith was appointed to the Senate in 2018 to fill the seat vacated when Democrat Al Franken resigned. She


won a special election that year to serve out the remainder of Franken’s term. Smith supported medical marijuana but not recreational legalization until this July, when she surprised many political observers by introducing the Substance Regulation and Safety Act of 2020. The bill deschedules marijuana, authorizes the U.S. Food and Drug Administration to regulate MJ products, promotes the safety and quality control of MJ crops and addresses racial inequities stemming from the war on drugs. Her opponent, Jason Lewis, also has been a strong supporter of state marijuana programs. “The federal government has no business sending in the FBI and Department of Justice to prosecute people in full compliance with their own state’s law,” Lewis stressed on Twitter in 2018. As a congressman, he’s co-sponsored legislation prohibiting federal money from being used to enforce prohibition and descheduling marijuana to advance research. Upshot: While Lewis would be one of the more pro-marijuana Republicans if elected, Smith’s support of federal adult-use legalization makes her a strong industry ally.

Here are six more Senate races whose outcomes could shape the marijuana industry going forward.

COLORADO

U.S. Sen. Cory Gardner (R) versus John Hickenlooper (D)

Cory Gardner is perhaps the most progressive Senate Republican on marijuana, having co-sponsored bills such as the 2018 STATES Act and the 2019 SAFE Banking Act. “I am obligated to the people of Colorado to take all steps necessary to protect the state of Colorado and their rights,” Gardner said shortly after former Attorney General Jeff Sessions jettisoned the Obama-era Cole Memo. But Gardner trails his opponent in polls. After initially opposing

marijuana legalization as the state’s top executive, former Colorado Gov. John Hickenlooper became more supportive after the success of legalization in his state. Hickenlooper told Iowa Public Television last year, “We should decriminalize on a federal level. … Declassify it from a Schedule 1 narcotic” and allow banks to service cannabis businesses. Hickenlooper also said the federal government should not force legalization on states, but it should have a role in regulating the marijuana industry. Upshot: Each candidate is good for marijuana, but some industry analysts lean toward Hickenlooper because a Democratic majority in the Senate is more likely to advance MJ legislation than a Republican majority Senate.

MAINE

U.S. Sen. Susan Collins (R) versus Maine House Speaker Sara Gideon (D)

Susan Collins has at best a checkered record on marijuana reform, voting for amendments that would prohibit the FDA from using federal funds to interfere with state medical marijuana programs but voting against cannabis banking reform and opposing federal recreational legalization. “From a federal perspective, if there were a bill in the Senate to legalize marijuana, I would vote against it,” Collins said in 2018. Sara Gideon, Collins’ challenger, is a former speaker of the Maine House of Representatives who voted for a bill creating a regulatory structure for that state’s recreational marijuana program. Gideon’s former chief policy adviser, Erik Gunderson, heads Maine’s Office of Marijuana Policy. Upshot: Collins has long disappointed marijuana advocates, while Gideon’s support for adult use in her own state would make her an industry asset at the federal level.

SOUTH CAROLINA

U.S. Sen. Lindsey Graham (R) versus Jaime Harrison (D)

Lindsey Graham was initially a nightmare when it came to marijuana reform—opposing medical legalization and the SAFE Banking Act while supporting jail time for MJ possession. More recently, Graham’s record has improved somewhat thanks to his support for veterans’ access to medical marijuana and amendments prohibiting federal interference in state MJ programs. Jaime Harrison is an associate chair of the Democratic National Committee and former chair of the South Carolina Democratic Party. He favors the tax-andregulate approach to federal marijuana legalization. “I think we should legalize, regulate and tax marijuana like we do alcohol and tobacco,” Harrison told CNBC in July. Harrison, a former lobbyist, also helped pass a medical marijuana bill in the South Carolina House of Representatives in 2017, but the legislation never cleared the state Senate. Upshot: While Graham has become less draconian in his approach to marijuana, Harrison’s support for federal legalization makes him the industry’s clear favorite. And Harrison has a real shot. While Graham was the favorite early in the race, polls show Harrison—who has out-fundraised Graham in the past two finance cycles—in a dead heat with the incumbent.

TEXAS

U.S. Sen. John Cornyn (R) versus MJ Hegar (D)

John Cornyn is among the most anti-marijuana senators in Washington DC. He opposes medical marijuana legalization and amendments that would prohibit federal interference into state MMJ programs.

October 2020 | mjbizdaily.com 59


Marijuana on the Ballot

Thirty-five seats in the U.S. Senate are up for reelection next month.

“We have a lot of questions we need to answer before we talk about normalizing a drug like marijuana,” he told The Dallas Morning News in February. Cornyn’s opponent, MJ Hegar, a former Air Force pilot who served in Afghanistan, is unabashedly in favor of marijuana legalization. Hegar’s campaign website outlines her support for the MORE Act, and in a February debate she said: “I think most people agree that we should legalize marijuana. Being a veteran and being in a community where people suffer—whether it’s from high suicide rates or PTSD or the opioid epidemic—this is something that marijuana could help in every chapter. And the reason I think it needs to go beyond medical is that most veterans are not self-identifying and seeking treatment and doing the necessary things that it would take to actually get a prescription.” Upshot: Although Hegar trailed Cornyn in polls as of mid-September, an upset is still within reach and would be a major win for the marijuana industry.

KENTUCKY

U.S. Sen. Mitch McConnell (R) versus Amy McGrath (D)

As Senate majority leader, Mitch

McConnell has been a powerful supporter of hemp and helped its legalization with passage of the 2018 Farm Bill. But he has been one of marijuana’s staunchest opponents. In July, McConnell blocked cannabis banking reform amendments from making it into a Congressional coronavirus-aid package. He has opposed amendments to prohibit federal interference into state programs and has repeatedly stated his opposition to medical and adult-use marijuana legalization. Amy McGrath, a former fighter pilot who flew combat missions in Iraq and Afghanistan, beat a much more prolegalization Democrat, Charles Booker, to win the party’s nomination. She hasn’t spoken in support of recreational marijuana legalization, but her website suggests she supports medical use: “Many veterans suffering from chronic pain and PTSD report improved health outcomes from medical cannabis. I stand with the American Legion in calling for the removal of cannabis as a Schedule 1 drug and permit its use to treat ailments that veterans, and others, face.”

60 Marijuana Business Magazine | October 2020

Upshot: McGrath isn’t as pro-cannabis as many other Democrats, but she would be an improvement for the industry over McConnell. Of all the competitive races, this could be the hardest to flip.

IOWA

U.S. Sen. Joni Ernst (R) versus Theresa Greenfield (D)

Jodi Ernst supported the legaltization of hemp through the 2018 Farm Bill, but she has vehemently opposed medical marijuana legalization, cannabis banking reform and prohibitions on federal interference into state programs. Theresa Greenfield, a former urban planner and real estate developer, hasn’t made any public statements about cannabis. However, the political website ISideWith.org suggests that a majority of Greenfield voters support marijuana reform, and therefore she might, too. Upshot: Polls have been inconclusive, while the University of Virginia Center for Politics recently moved the race from “leans Republican” to “toss-up.”



Marijuana on the Ballot

A Regulator’s VIEW

New Jersey official says the state is already busy readying for recreational marijuana By Omar Sacirbey

V

oters in three states with medical marijuana markets might choose to pass adult-use laws. While the change might not happen for months—if at all—some regulators have already started thinking about how their states can best adapt to the shift. “We are absolutely thinking about the transition to recreational. And we didn’t start thinking about it just with the referendum getting on the ballot,” said Jeffrey Brown, an assistant commissioner with the New Jersey Department of Health, the agency responsible for overseeing the state’s Division of Medical Marijuana. “This has been on Gov. (Phil) Murphy’s policy agenda from Day One of his administration. I started in March 2018, and while my role has been to focus on the medical program, I also have been planning for what happens if adult use becomes legal.” Brown’s foremost concern is keeping the state’s medical marijuana program viable if New Jersey legalizes recreational sales, especially since some states that have gone through the same transition have seen their medical programs suffer. In Oregon, for example, nearly two-thirds of patients gave up their medical marijuana cards, triggering a decline in medical-only dispensaries, according to a 2018 Associated Press report. Oregon once had more than 400 medical dispensaries; today, only a handful remain. Three issues determine whether medical patients will stay with a medical program, Brown said: product, price and access. As for product, the concern is regulating high-potency merchandise.

Specifically, how does a program ensure high-dose products are available to medical patients who truly need them? As of now, Brown said, “There aren’t a lot of definitive answers.”

KEEPING MMJ PRICES DOWN

The price component of ensuring medical marijuana programs remain viable is easier: Keep medical prices and costs lower than recreational marijuana to prevent MMJ patients from abandoning the program in favor of adult use. To that end, New Jersey has lowered its medical cannabis tax to 2% with plans to eliminate it altogether. Regulators also lowered the cost of obtaining a medical card from $200 to $100 per year, and there are discussions to bring the cost of patient cards down even more. In terms of access, Brown noted that some patients aren’t comfortable buying their medicine from recreational outlets, which might lack the medical feel that some patients enjoy, so it’s important to maintain a healthy number of medicalonly stores to serve that demographic. “I think it’s important to have options on the distribution side in medical, so that everybody can continue to feel comfortable accessing their medicine,” Brown said.

EQUAL OPPORTUNITY

Another concern is balancing a prompt and smooth rollout of adult-use cannabis with creating a safe and fair program. Brown also wants to ensure minority

62 Marijuana Business Magazine | October 2020

entrepreneurs are given an opportunity to participate in the state’s cannabis industry. “We’re extremely concerned about being able to provide opportunities to people affected by the war on drugs. We want social equity and social justice to be part of everything we do—whether it’s a medical market or looking ahead to an adult-use market,” Brown said. “All I can say is that, if I’m asked to work on the adult-use market, I think I would be focused on being as expedient as possible, but (it’s) also more important that we really do it right.” If New Jersey voters pass a recreational marijuana initiative, program administrative responsibilities will shift to a new Cannabis Regulatory Commission that will be under the Department of the Treasury instead of the health department. “We know that the Cannabis Regulatory Commission will be tasked with continuing to expand medical,” Brown said. He added that some specific things “will need to be implemented once the commission is up and running,” including home delivery, on-site consumption lounges, a certification program for marijuana handlers and medical research permits. One final concern: Enough product must be available to meet customer demand, Brown said. “What you really need to do on the industry side is ensure that there’s adequate supply and product going into adult use,” he said. Jeffrey Brown


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Marijuana on the Ballot

LETTER of the From Maine to Nevada, the way marijuana markets are legalized and regulated determines the success of businesses By John Schroyer

W

ith as many as five states poised to legalize some type of marijuana market in November, entrepreneurs might be wondering how soon they can start writing business plans. The viability of any state cannabis market will depend greatly on the industry regulations that end up being adopted—and the regulatory processes can differ greatly depending on the ballot referendum in question. For instance, New Jersey’s entire ballot measure, which would legalize adult-use marijuana in the state, is a scant four paragraphs. It simply asks if voters want to approve the production, sale and taxation of marijuana, leaving all the details up to the state’s Cannabis Regulatory Commission. Arizona’s ballot question would also legalize recreational marijuana, but the text of Proposition 207 is 17 pages long. The initiative has a laundry list of specifics for businesses and regulators to follow, but it leaves final industry rulemaking to the Department of Health. It’s likely there are plenty of entrepreneurs—and, in some cases, existing marijuana companies—eager to do business in each state facing a ballot measure. But the only real guarantee at this point is that success at the ballot box will lead to even more rules for legal operators.

LAW

“It’s just different in every state,” acknowledged David Boyer, a consultant who worked on the victorious 2016 adultuse legalization campaign in Maine. That’s because the laws, politics and procedures are different in every state—particularly for marijuana.

EXPECT HURDLES

Maine is a cautionary tale on this front because of what Boyer describes as a “series of unfortunate events” that kept recreational marijuana sales from beginning for almost four years after residents voted in favor of the initiative. As of press time, Maine’s adult-use sales were slated to begin in early October. “You can’t just do a citizen’s initiative and think that it’ll come out perfect and on time. You have to be talking to the people who are going to implement this,” Boyer said. “I never would have expected it would take this long.” Since 1996, when California voters approved Proposition 215 to legalize medical use, the politicking of marijuana has evolved significantly. Lawyers, activists, businesses and nonprofit organizations have become increasingly adept at crafting language for both ballot measures and legislative bills that are aimed at creating marijuana industries with solid foundations. But there are still fairly straightforward ballot questions such as

64 Marijuana Business Magazine | October 2020

the one going before New Jersey voters, despite all the policy questions that arise when the subject of how to regulate a federally illegal substance is presented. One reason for that is because 24 states—including New Jersey—don’t have any process for citizen-run campaigns to change state law, meaning it falls on the shoulders of state legislatures. New Jersey lawmakers couldn’t reach a consensus in 2019 on an adult-use marijuana bill, so they decided to ask voters to decide the issue. Hence the simple, open-ended legalization question, which would give the Legislature the political cover to move forward.

BALANCING ACT

But insiders don’t expect the New Jersey regulatory process will be any easier or harder to navigate than Arizona’s Tamar Todd or Montana’s just because it has a simpler ballot question. Tamar Todd, a former Drug Policy Alliance attorney who’s helped draft a dozen different state legalization initiatives, warned that ballot questions can wind up backfiring if they are too rigid.



Marijuana on the Ballot

PUBLIC QUESTION NO. 1

PUBLIC QUESTION NO. 2

PREGUNTA PÚBLICA NRO. 1

CONSTITUTIONAL AMENDMENT TO LEGALIZE MARIJUANA

PUBLIC QUESTION NO. 3

PREGUNTA PÚBLICA NRO. 2

PREGUNTA PÚBLICA NRO. 3

E L P M SA A R T S E U M PROPERTY TAX DEDUCTION AND EXEMPTION FOR PEACETIME VETERANS

CONSTITUTIONAL AMENDMENT TO CHANGE THE LEGISLATIVE REDISTRICTING SCHEDULE IF CENSUS DATA IS DELAYED

Do you approve amending the Constitution to legalize a controlled form of marijuana called “cannabis”? Only adults at least 21 years of age could use cannabis. The State commission created to oversee the State’s medical cannabis program would also oversee the new, personal use cannabis market. Cannabis products would be subject to the State sales tax. If authorized by the Legislature, a municipality may pass a local ordinance to charge a local tax on cannabis products.

Do you approve amending the Constitution to give a $250 property tax deduction to veterans who did not serve in time of war? Do you also approve amending the Constitution to give a 100 percent property tax exemption to certain totally disabled veterans who did not serve in time of war? The widow or widower of these veterans also would receive this $250 deduction or 100 percent exemption after the veteran’s death.

Do you approve amending the Constitution to change when new legislative districts are created if the federal census data is delayed? The current COVID-19 pandemic has delayed census data collection. If New Jersey does not receive the census data in a timely manner, new legislative districts may not be ready in time for State legislative elections in the year ending in one. This change to the redistricting schedule will allow legislators to be elected that year from their existing districts for their two-year term in office. The new districts will be used starting with the next scheduled general election for the State legislature.

INTERPRETIVE STATEMENT

This amendment would give a $250 property tax deduction to veterans who did not serve in time of war. The widow or widower of a veteran who did not serve in time of war would receive this deduction after the veteran’s death. The amendment also extends the 100 percent property tax exemption for disabled veterans to veterans who became disabled during peacetime military service. Persons who became disabled during peacetime military service and reside in a continuing care retirement community would not receive the 100 percent exemption for disabled veterans. Currently, these property tax deductions and exemptions are only given to veterans who served during time of war. The amendment would give the deductions and exemptions to veterans who did not serve in wartime.

This amendment would legalize a controlled form of marijuana called “cannabis”. Only persons at least 21 years of age could use cannabis products legally. The Cannabis Regulatory Commission would oversee the new adult cannabis market. This commission was created in 2019 to oversee the State’s medical cannabis program. The scope of the commission’s new authority would be detailed in laws enacted by the Legislature. All retail sales of cannabis products in the new adult cannabis market would be subject to the State’s sales tax. If authorized by the Legislature, a municipality may pass a local ordinance to charge a local tax on cannabis products. ENMIENDA CONSTITUCIONAL PARA LEGALIZAR LA MARIHUANA ¿Aprueba usted enmendar la Constitución para legalizar una forma regulada de marihuana llamada “cannabis”? Sólo los adultos de 21 años de edad como mínimo podrían usar cannabis. La comisión estatal que se creó para supervisar el programa estatal médico de cannabis también supervisaría el mercado nuevo de uso personal de cannabis. Los productos de cannabis estarían sujetos al impuesto estatal a las ventas. Si la Legislatura lo aprueba, una municipalidad puede aprobar una ordenanza local para cobrar un impuesto local a los productos de cannabis. DECLARACIÓN INTERPRETATIVA Esta enmienda legalizaría una forma regulada de marihuana llamada “cannabis”. Sólo las personas de 21 años de edad como mínimo podrían usar productos de cannabis legalmente. La Comisión Reguladora de Cannabis supervisaría el nuevo mercado de cannabis para adultos. Esta comisión se creó en 2019 para supervisar el programa estatal médico de cannabis. El alcance de la nueva autoridad de la comisión se detallaría en las leyes sancionadas por la Legislatura. Todas las ventas minoristas de productos de cannabis en el nuevo mercado de cannabis para adultos estarían sujetas al impuesto estatal a las ventas. Si la Legislatura lo aprueba, una municipalidad puede aprobar una ordenanza local /SI para cobrar un impuesto local a los productos de cannabis.

YES NO/NO

INTERPRETIVE STATEMENT

INTERPRETIVE STATEMENT

This constitutional amendment changes when new legislative districts are created if the federal census data is delayed. The United States Constitution requires that a census be taken every ten years to count the people living in the country. Census data is then used to create new legislative districts to ensure residents have equal representation from elected officials. However, the current COVID-19 pandemic has delayed census data collection. This may delay census data to the states and may affect the creation of new legislative districts. The State Constitution requires an Apportionment Commission to create new legislative districts every ten years after the federal census is completed. If the census data is delayed, the new legislative districts may not be created in a timely manner to hold elections. This constitutional amendment requires the commission to delay creating the new districts if the Governor receives the federal census data after February 15 of the year ending in one. The commission will adopt the new districts after the November general election, but not later than March 1 of the year ending in two. The new districts will be used starting with legislative elections in the year ending in three. They will continue to be used until new districts are again created by the Apportionment Commission after the next federal census. For the June primary and November general elections in the year ending in one, Senators and Assembly members will use their existing districts to run for a term of two years. The old districts will also be in effect in the year ending in two if any legislative election is held in that year. This amendment requires the commission to begin conducting its business when the Governor receives the census data. It also requires the eleventh member of the commission to be appointed by the Chief Justice of the New Jersey Supreme Court within one month after the Governor receives the census data. Nothing in this amendment will alter the appointment of the members of the commission made by the State political party chairs pursuant to Article IV, Section III, paragraph 1 of the State Constitution on or before November 15, and certified by the Secretary of State on or before December 1, of the year in which the census is taken.

DEDUCCIÓN Y EXENCIÓN DEL IMPUESTO A LA PROPIEDAD PARA VETERANOS EN TIEMPO DE PAZ

¿Aprueba usted enmendar la Constitución para conceder una deducción del impuesto a la propiedad de $250 a los veteranos que no prestaron servicio en tiempo de guerra? ¿Aprueba también enmendar la Constitución para conceder una exención del impuesto a la propiedad del 100 por ciento a ciertos veteranos totalmente discapacitados que no prestaron servicio en tiempo de guerra? El viudo o viuda de estos veteranos también recibiría esta deducción de $250 o exención del 100 por ciento después de la muerte del veterano. DECLARACIÓN INTERPRETATIVA

Esta enmienda concedería una deducción del impuesto a la propiedad de $250 a los veteranos que no prestaron servicio en tiempo de guerra. El viudo o viuda de un veterano que no prestó servicio en tiempo de guerra recibiría esta deducción después de la muerte del veterano. La enmienda también extiende la exención del impuesto a la propiedad del 100 por ciento para los veteranos discapacitados a los veteranos que se tornaron discapacitados durante el servicio militar en tiempo de paz. Las personas que se tornaron discapacitadas durante el servicio militar en tiempo de paz y residen en una comunidad de retiro de cuidados prolongados no recibirían la exención impositiva del 100 por ciento para veteranos discapacitados. Actualmente, estas deducciones y exenciones del impuesto a la propiedad sólo se conceden a los veteranos que prestaron servicio durante tiempo de guerra. La enmienda concedería las deducciones y exenciones impositivas a los veteranos que no prestaron servicio en tiempo de guerra.

YES/SI NO/NO

VOTE BOTH SIDES OF BALLOT

26

ENMIENDA CONSTITUCIONAL PARA CAMBIAR EL CRONOGRAMA LEGISLATIVO DE DELIMITACIÓN DE DISTRITOS SI SE DEMORAN LOS DATOS DEL CENSO

¿Aprueba usted que se enmiende la Constitución para que se cambie cuándo se deban crear nuevos distritos legislativos si se demoran los datos del censo federal? La actual pandemia de COVID-19 ha demorado la recopilación de los datos del censo. Si New Jersey no recibe los datos del censo en forma puntual, es probable que los nuevos distritos legislativos no estén listos a tiempo para las elecciones legislativas del Estado en el año terminado en uno. Este cambio al cronograma de delimitación de distritos permitirá que se elijan a los legisladores ese año de sus distritos existentes para su mandato de dos años en el cargo. Los distritos nuevos se usarán a partir de las próximas elecciones generales programadas para la legislatura del Estado. DECLARACIÓN INTERPRETATIVA

Esta enmienda constitucional cambia cuándo se deben crear nuevos distritos legislativos si se demoran los datos del censo federal. La Constitución de los Estados Unidos establece que se debe realizar un censo cada diez años para contar a las personas que viven en el país. Los datos del Censo luego se usan para crear nuevos distritos legislativos para asegurar que los residentes tengan igual representación de parte de los funcionarios electos. Sin embargo, la actual pandemia de COVID-19 ha demorado la recopilación de datos del censo. Esto puede demorar los datos del censo a los estados y puede afectar la creación de nuevos distritos legislativos. La Constitución del Estado establece que una Comisión de Distribución debe crear nuevos distritos legislativos cada diez años después que finaliza el censo federal. Si los datos del censo se demoran, es probable que no se creen nuevos distritos legislativos de manera puntual para celebrar las elecciones. Esta enmienda constitucional requiere que la comisión demore la creación de nuevos distritos si el gobernador recibe los datos del censo federal después del 15 de febrero del año terminado en uno. La comisión adoptará los nuevos distritos después de las elecciones generales de noviembre, pero no después del 1 de marzo del año terminado en dos. Los distritos nuevos se usarán a partir de las elecciones legislativas del año terminado en tres. Continuarán usándose hasta que la Comisión de Distribución cree nuevos distritos después del próximo censo federal. Para las elecciones primarias de junio y las elecciones generales de noviembre del año terminado en uno, los senadores y miembros de la asamblea usarán sus distritos actuales para postularse para un mandato de dos años. Los distritos anteriores también estarán en vigencia en el año terminado en dos si se celebra alguna elección legislativa ese año. Esta enmienda requiere que la comisión comience a trabajar cuando el gobernador reciba los datos del censo. Además requiere que el onceavo miembro de la comisión sea nombrado por el presidente de la Corte Suprema de Justicia de New Jersey dentro de un mes a partir de que el gobernador reciba los datos del censo. Nada de lo que establece esta enmienda cambiará el nombramiento de los miembros de la comisión hecho por el presidente de los partidos políticos del Estado, conforme al artículo IV, sección III, párrafo 1 de la Constitución estatal el 15 de noviembre o antes, y certificado por el Secretario de Estado el 1 de diciembre o antes, del año en que se realice el censo.

VOTA POR LOS DOS LADOS DE LA PAPELETA

YES/SI NO/NO

MAGNOLIA BOROUGH

New Jersey state legislators voted to add Public Question No. 1, which would legalize adult-use marijuana, to the Nov. 3 ballot.

“It’s finding the balance,” she said. “You want to spell out enough detail to make sure it will happen, but then there’s less flexibility to adapt to the market.” Another complication, Todd noted, can be whether a state opts to change its statutes or the state constitution. The former might make it easier to get legalization in front of voters with a lower barrier to entry to the ballot, but it could also make the law easy for an anti-marijuana legislature to repeal or neuter. An attempt to change the state constitution might be tougher to qualify for the ballot, but it would be harder to amend should problems arise. “You can really screw yourself,” Todd said of the legalization process. “One of the areas where it’s most difficult is tax rates. If you’re taxing on percentage of sales, you may want to start very low and then—once the illicit market goes away, or if prices increase—maybe you’d like to increase it.”

A SEAT AT THE TABLE

There’s also a very big difference between states that are launching medical marijuana programs for the first time and those starting an adult-use industry on top of an existing MMJ market. The latter has been the standard, but South Dakota might break the mold if its voters approve both medical and recreational

not to enter that market,” marijuana next month, Sederberg said. “If it’s which would make it the a very general first state to do so. question—using “That’s sort of open New Jersey as an country, but I guarantee example—you’d have to you there are lobbyists look at the history of the up there working and MMJ market.” saying, ‘When this passes, Christian Sederberg Buy-in by state officials you have to be a resident can also be key. Voters in Nevada of South Dakota’” to own a cannabis approved recreational marijuana in business, said Denver attorney ChrisNovember 2016, and lawmakers allowed tian Sederberg, referring to common the existing MMJ businesses to transition state-residency requirements for maristraight to sales starting in July 2017, juana business ownership. only eight months after the vote. Sederberg, who worked closely on California-based consultant Avis the development of Colorado’s industry regulations, said having a seat at the table Bulbulyan said Nevada “killed it” in terms of time to market. “Nevada from will be one of the keys for those hoping the beginning decided, ‘We’re getting to enter the industry in New Jersey and into the business of cannabis,’” he said. other potential markets. “They just embraced the idea.” “It’s really about getting engaged with Bulbulyan echoed Sederberg’s point the legislature and your local government about participating in the rulemaking … to develop a regulatory system,” process. Sederberg said. “You can’t influence “The regulators are as hungry for anything if you don’t say anything.” information as anybody else,” he said. However, he said more detailed ballot “If you don’t get involved and you questions such as the one in Arizona might allow companies to start laying out simply wait for the state to roll out the program, you’re going to be dealing with their plans soon after the election. regulations that you had zero influence ENTREPRENEURIAL MARKETS over,” he said. “It’s not necessarily about “If it’s a more detailed initiative, who can cut the biggest check, it’s about you’ve got most of the tools as a who can provide the most valuable businessperson to decide whether or advice and guidance.”

66 Marijuana Business Magazine | October 2020



Marijuana on the Ballot

GET THE BEST Return on Investment Industry veterans share which sectors are the most profitable in new markets By John Schroyer

68 Marijuana Business Magazine | October 2020


Consumers line up to purchase cannabis at Chicagoʼs Dispensary 33 on Jan. 1, 2020, the first day of legal adult-use sales in Illinois. Courtesy Photo

W

ould-be entrepreneurs might be eyeballing the marijuana industry in markets poised to launch based on results of the November election. But what entry points provide the best return on investment? Could it be retail, with lines of customers that stretch around the block in new markets? What about cultivation or edibles manufacturing, with products that become “musthaves” for marijuana connoisseurs? Maybe distribution, or even an ancillary company that provides packaging, security or some other type of service?

ANCILLARY THE EASIEST

The simplest answer for anyone looking to make as much money as possible in the state-legal U.S. marijuana markets

is to forget about launching a planttouching business and start some type of ancillary company, several industry experts agreed. The main reason for that is Section 280E of the federal tax code, which disallows standard business deductions for anyone who traffics in a controlled substance, such as state-licensed marijuana companies. That single provision regularly costs marijuana businesses millions of dollars. “Why do you think I’m starting an ancillary business? That’s why I’m getting out of the (plant-touching) game,” said Karl Keich, who ran a retail marijuana shop in Seattle for years before selling to a larger conglomerate in 2018. “I was under audit for six years by the IRS. I’m sick of these guys. I’m

starting a software company.” The lack of a tax burden for ancillary businesses easily inflates their profit margins far beyond what most marijuana retailers, growers and manufacturers enjoy, said Andrew Livingston, director of economics and research at Denverbased law firm Vicente Sederberg. Arguably, Livingston said, those who make the most profit these days are consultants who traffic only in their own know-how, since there’s no overhead for producing advice. Consultants often are able to parlay their expertise into an ownership percentage of plant-touching companies. “Sometimes, the people who make the best ROI aren’t even the people who are selling the picks and shovels,” Livingston said. “It’s the people who sell advice

October 2020 | mjbizdaily.com 69


Marijuana on the Ballot

on where to get the picks and shovels, because that costs nothing.”

Mitzi Hollenbeck

EVALUATE EACH MARKET

In terms of plant-touching businesses, there’s no hard-and-fast rule about which sectors are the most profitable. That’s because there are just too many differences in how state markets are structured. Some states have no limit on the number of business permits that can be issued (Colorado, Oklahoma and Oregon, for example) while others allow only a handful of companies to comprise the entire industry (such as Florida, Minnesota and New York). Also, some states mandate vertical integration while others choose to license growers, manufacturers, retailers and other businesses separately. “Every state has its own situation,” said Mitzi Hollenbeck, a Rhode Island-based attorney who consults with cannabis companies all over the country. For those trying to win a marijuana business license, the first step is to analyze how many licenses will be available and choose strategically which type to go after. For instance, Livingston said, a limited-license market with only a handful of cultivation permits available might put license holders in the best position to reap financial rewards because only a few companies will control the entire legal marijuana supply for a whole state. But the reverse can also be true: If there are a large number of growers or infused product makers but a relatively small number of retailers, then the retail permits are going to have more intrinsic value. “Let’s say you’re one of the few retailers in Boston or in a prime location in Seattle: There are going to be a lot of different cultivators you could source from, but you have a lot less competition in your small regional area,” Livingston said. “In that relationship, you’re going to have

In states where it is allowed, vertical integration—where a single company controls its supply chain from seed to sale—might be the most profitable planttouching business type, Livingston said. Those companies are able to streamline in ways that stand-alone retailers or growers can’t reproduce.

THE LANDSCAPE WILL CHANGE

more bargaining power and (can) push those cultivators to compete against each other to provide you with a lower wholesale price.”

CASH IS KING

Hollenbeck emphasized it’s also crucial to crunch the numbers and analyze what’s doable with the amount of capital immediately available. In that light, she noted, it might be more profitable to invest in a cheaper retail operation than to try to outfit an entire cultivation facility. “The cost of capital and the cost on the capital investment (for cultivators and manufacturers) is very, very high. … A lot more so than retailers,” Hollenbeck said. A major downside for many retailers is expensive rent. Hollenbeck warned that marijuana companies often pay five times market price for commercial space, simply because the industry is federally illegal. Additionally, retailers often have more 280E exposure than growers and manufacturers, Livingston noted, because companies on the production side of the supply chain can fit more expenses into the cost-of-goodssold column, which qualify as tax deductions. For retailers, that means “a lot less of their total operational costs are deductible” when it comes to federal taxes, Livingston said.

70 Marijuana Business Magazine | October 2020

A final factor for new market entrants to consider is that change is the only constant in the marijuana industry. That means planning for federal legalization and the possibility of interstate commerce at some point in the coming decade. “I look at all these clowns that are in Florida … and I see all these cannabis dispensaries that are … doomed for failure,” said Keich, the former Seattle MJ retailer. “When interstate commerce is legalized, it’s going to change the game.” Keich and others believe the production costs for indoor grows, in particular, are going to be far too high once interstate commerce is legal, which will give way to outdoor and greenhouse cultivation operations that rely mostly on sunlight to drive down their operation prices. “You can grow a pineapple anywhere. Are you going to grow pineapples in Hawaii, or are you going to grow them in Alaska?” Keich offered as an example. “Building a brand that can survive legalization federally, that’s the big one.” Keich and Livingston both said multistate licensing deals offer some of the best return on investment for plant-touching businesses. Licensing gives a business passive income from new partners but also offers brands the ability to build on a national scale. “The best ROI is building a brand that people really like and then being able to license that brand out to other states,” Livingston said. “It’s like capital you’ve built and then are able to profit off of by having your partners in other states take up a lot of those costs.”



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y a l P s ’ Child By Margaret Jackson

Product and packaging manufacturers must work together to create aesthetically pleasing childproof designs that seniors can open

Packaging molds like the ones created by Pollen Gear can cost thousands of dollars if they have to be remade. Courtesy Photo

74 Marijuana Business Magazine | October 2020


It’s tricky to develop attractive cannabis packaging that will keep children from opening it while still enabling seniors seeking relief to access what’s inside. Many states that mandate child-resistant packaging for cannabis require the containers to go through a rigorous—and expensive—testing process. That’s why it’s important for packaging designers to be wellversed in what works and what doesn’t before sending finished items to a testing laboratory. Cypress, California-based KushCo Holdings provides packaging to many cannabis businesses. Currently the company is working on a project for a large U.S. marijuana business, and KushCo sent a team to the Chinese factory where the packaging is being made to test the design. “They said, ‘This isn’t going to pass. This isn’t going to work,’” said Brian Stewart, KushCo’s senior vice president of sales and product development. Stewart said states are “doing the right thing” by requiring childproof testing, but the process is pricey. With a cost of nearly $8,000 to test a product and the amount of time and money it takes to produce the 400 samples that are required for childproof testing, it pays to have a solid understanding of what will pass. “I understand why it’s expensive: You’re using children and seniors and doing timed studies. That’s not something that’s easy to do. We couldn’t just bring a bunch of kids in here and test them.” For the third-party tests, labs invite panels of 50 children and divide them into three age categories: 42-44 months, 45-48 months and 49-51 Child-resistant packaging must go months. The children are through a rigorous and expensive instructed on how to open testing process before cannabis businesses can fill containers with each package and given their products. Here are some tips for permission to use their packaging success: teeth. Then, they’re given • Have a solid understanding of what 10 minutes to try to open will cause packaging to fail childthe package. If the results proofing tests. are inconclusive, • Weigh your options: Do you want additional testing is something designed specifically for your product, or will packaging that’s required of one or more already been approved suffice? groups of 50 children • In addition to finding a certified each—up to a maximum packaging company, perform of 200 children. internal tests to ensure the product KushCo sources its meets your company’s standards. packaging from China, • Start with a 3D-printed model to get an idea of how the end product Germany, Mexico and will look and feel. Make sure your Taiwan. There is a good packaging properly conveys your packaging producer in brand’s image. the United States, Stewart • Ensure that your child-proofing said, but it won’t work technology does not keep seniors from being able to open the product. with cannabis companies.

Robbie Wroblewski, Seed & Smith’s director of community outreach, advised other companies to practice opening and closing packages several times to make sure they do not break down with repeated use. Courtesy Photo

October 2020 | mjbizdaily.com 75


Child’s Play BEYOND CHILD RESISTANCE Companies such as vertically integrated marijuana producer Seed & Smith in Denver rely on packaging giants, including KushCo, to make sure they are compliant with state regulations. “We’re really at the will of the (packaging) manufacturers when they go and get these certifications,” said Robbie Wroblewski, Seed & Smith’s Robbie Wroblewski director of community outreach. “For a small business like us, it’s a cost efficiency.” When Seed & Smith is evaluating packaging design, the No. 1 thing it is looking for is whether the packaging is child-resistant. It also considers whether it is functional, aesthetically pleasing and eco-friendly. “Can it be recycled? Can it be reused? Can it fulfill some (function) other than trash?” Wroblewski said. Reliability is another key factor. Seed & Smith has encountered a few manufacturers that get the necessary certifications, but the packaging still seems faulty. In one instance, Seed & Smith was presented with cardboard packaging that was certified as child-resistant, but when the company performed its own tests, the manufacturer’s claim didn’t hold up. “We kept opening and closing it,” Wroblewski said. “It started breaking down after six or seven times. After nine or 10 times, it could be opened easily.”

MAKE PACKAGING SENIOR-FRIENDLY Keeping children out of cannabis containers isn’t the only consideration for packaging designers. Packages also must be seniorfriendly, so that’s tested as well: 100 adults 50-70 years old are tested individually. They’re given five minutes to open and, if it’s reclosable, properly close the child-resistant package. If they can’t open the child-resistant package in five minutes, they are screened to determine their ability to open and close two non-child-resistant packages in one minute. For packaging to pass the test, 90% of the adults tested must be able to open and properly close the package during both the five-minute and one-minute tests. If the packaging fails, it has to be redesigned and sent back for another round of testing— and an additional fee, though it’s not as steep as the original cost. Then there’s the cost to redesign the packaging molds and make another 400 sample packages to send off for testing. The cost of remaking the molds can range anywhere from $2,000 to $50,000, depending on how many

76 Marijuana Business Magazine | October 2020

Considerations for Custom Packaging Cannabis companies have lots of options when it comes to selecting child-resistant packaging. They can select from the array of products that packaging companies have already designed and put through rigorous third-party testing, or they can start from scratch and design something that is unique to their brand. If a cannabis business decides to have packaging designed for its specific products, the process can take anywhere from three to eight months, depending on the material used, said Brian Stewart, senior vice president of sales and product development for Cypress, California-based KushCo Holdings. The first step is to start with a design concept. Stewart uses a pineappleshaped glass jar as a hypothetical example. The concept is presented to a packaging manufacturer to determine whether glass can be molded into a pineapple shape and if it would work with a child-resistant top. Stewart recommends his clients spend a few hundred dollars on a 3D-printed mold to get an idea of the look and feel of the product. “Then, we would proceed with a pilot mold for first articles of production. Once approved, we would move on to a production mold for large volume,” Stewart said. “The pilot mold can usually be adjusted to some degree, while the production mold is essentially permanent.” Creating the mold can take a few months because it has to be cut from steel, which can withstand the heat when molten sand is poured into it to create glass. Stewart estimates that boxes and tins can be produced in three to four months, while glass and plastic containers take four to eight months. And while the pineapple jar is only hypothetical for now, Stewart said it’s likely to become a real product in the future. “A coworker found a pineapple jar (being used for another product),” he said. “We are looking to make a child-resistant pineapple jar at some point in the future.” – Margaret Jackson


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Child’s Play

To access Coda Signature’s truffles, consumers must push two tabs while simultaneously pulling out a plastic tray such as the one above. Courtesy Photo

cavities are in it, said Ed Kilduff, president of Hermosa Beach, Californiabased Pollen Gear. “You get charged again by the factory,” Kilduff said. “If it’s an injectionmold plastic part, you would have to cut out part of the mold and weld another piece in there.” In addition to being child-resistant, many cannabis companies want their packaging to convey a certain image and stand out on store shelves. Denver-based Coda Signature, for example, is striving to position itself as a luxury confection brand, and its packaging must reflect that, said Kevin Roff, product development manager for Coda Signature. “For a mainstream brand like Godiva, it’s a no-brainer,” Roff said. “But for a cannabis brand, how do you create a package that looks, feels and behaves like your typical high-end box of chocolates but also protects child safety?” Coda Signature’s solution was to build safety features into the box itself. There’s always a trick to opening the packaging or a feature that can be triggered only through a specific sequence of movements so the packaging can’t be opened by accident. Coda Signature’s truffle boxes, for example, have a mechanism that can be opened only by pushing in two tabs at the same time while simultaneously pulling out the plastic container holding the truffles. “The tab mechanism is an elegant solution because it allows us to convey the aesthetic look of luxury chocolates while also making it very difficult for a child to open,” Roff said.

78 Marijuana Business Magazine | October 2020

“For a mainstream brand like Godiva, it’s a no-brainer. But for a cannabis brand, how do you create a package that looks, feels and behaves like your typical high-end box of chocolates but also protects child safety?”

– Kevin Roff Coda Signature


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Promoting a

Diverse

Workforce

82 Marijuana Business Magazine | October 2020


Diversifying your operation starts with job descriptions and interviews, continues through onboarding and professional growth By Adrian D. Garcia

October 2020 | mjbizdaily.com 83


Promoting a Workforce

Diverse

any businesses are being challenged to advance racial diversity and social equity in their communities—and cannabis companies are no exception. Diverse staffing should be part of the marijuana industry’s holistic approach to corporate responsibility, experts say. In that vein, cannabis businesses will likely need to analyze and adjust their current hiring practices to recruit and retain talented individuals from unique and underrepresented backgrounds. Support from the top is key for advancing internal diversity, said Lisa Raja, chief of staff for Oakland, California-based infused ingredient producer Vertosa. “If the founders, the CEO or top-tier management is interested in diversity—if that is part of their moral compass or interests—that’s where it starts, and that’s when you have the strongest chance for (inclusion) to actually happen,” Raja told Marijuana Business Magazine. About 80% of Vertosa’s 14 employees are from diverse backgrounds, she said. The issue is important to CEO Ben Larson, according to Raja. Larson and the Vertosa management team have taken steps to promote a diverse corporate culture such as recognizing Juneteenth as a company holiday and creating an employee listening session during a weekly staff meeting after George Floyd was killed during an encounter with police in May. In 2017, an analysis by Marijuana Business Daily determined that 81% of cannabis business owners and founders were white. And a recent study commissioned by Denver regulators found that 75% of cannabis business owners and 68% of industry employees in that city were white.

GETTING STARTED Businesses that want to add more women, people of color and individuals from marginalized backgrounds must

Lisa Raja

Diversity and inclusion are getting renewed interest this year after nationwide protests for criminal justice reform. Adding employees from underrepresented communities will likely require businesses to reevaluate current hiring practices. Here are some considerations for how to recruit and retain diverse talent: • Assess why diversity is important to your firm and company leadership. Be prepared to invest time and resources on this initiative. • Understand the current demographics of your business. Ask staff to complete an optional survey and use the collected information to help inform your diversity and inclusion strategies. • Review the language included in your job postings as well as your branding materials to ensure they are as welcoming to diverse applicants as possible. Think creatively about how to cast a wider net for candidates. • Develop a hiring committee, scoring rubric and interview script to try to reduce bias during the interview and selection processes.

84 Marijuana Business Magazine | October 2020

start by assessing why they care about this initiative and what resources they are willing to invest in recruiting and retaining a more diverse staff, said Kelly Perez, CEO and co-founder of Denverbased KindColorado. Perez and KindColorado President and co-founder Courtney Mathis consult with cannabis firms on how to develop social-responsibility and community-engagement plans. Through their new membership organization, Cannabis Doing Good, they hope to develop a directory of cannabis businesses owned by people of color. Part of their work includes anti-bias and anti-racism training and staff mapping with company leaders. “I don’t know that you get to be a diverse and inclusive company without doing some of that uncomfortable work of figuring out why do you even want to go there,” Mathis said. A lack of strategy could signal to existing and potential employees that the company is concerned more about appearing diverse than addressing broader equity problems. Even well-intentioned leaders could inadvertently cause offense without some foundational knowledge of race and gender issues. For instance, the war on drugs and gentrification are two issues linked to the cannabis sector given that zoning often favors locating cannabis companies in neighborhoods most impacted by the war on drugs.

SURVEY STAFF Companies also must take stock of their existing leaders, employees and vendors, Mathis said. “Whenever a business owner doesn’t know the demographics of their staff, it actually tells us that they have not committed to creating a more equitable workforce—whether it’s for people of color or women or LGBTQIA folks,” she said. Businesses can start by asking their workforces to provide optional demographic information. This outreach



Promoting a Workforce

Diverse

Diversity in U.S. Agriculture Women

Black

Asian

Hispanic/Latino

Crop production

26.7%

2.2%

1.7%

34%

Agricultural support

36.8%

3.2%

1.6%

39.8%

Total U.S. employment

47%

12.3%

6.5%

17.6%

Source: Bureau of Labor and Statistics Copyright 2020 Marijuana Business Daily, a division of Anne Holland Ventures Inc. All rights reserved.

could also include questions about what level of knowledge workers already have about race, social justice and equity topics. The survey results can provide businesses with baseline diversity information, which can help the company determine where to focus its improvement efforts. The staff feedback can help shape the firm’s diversity and inclusion strategy, Mathis said.

“The most important thing is just having a script of what questions you’re going to ask and to actually stick to that script. You have to set it up so that you’re putting everyone through the same process as much as possible.”

– Danielle Schumacher, THC Staffing

FIX THE LISTING “If you’re looking to hire people coming from communities of color, they typically want to work for organizations where they feel that they’re represented,” said Kaliko Castille, vice president of the Minority Cannabis Business Association (MCBA). Companies can look at their websites and social media presences to assess whether they’re amplifying diverse voices and images.

“Ultimately, it’s going to be a more long-term struggle than just being able to put up stock photography on your website and say that you’ve hired a couple of Black and brown people, so you’re diverse,” Castille said. Companies can partner with recruiting services and consultants to help them bring in a wider range of candidates. Executives should look

86 Marijuana Business Magazine | October 2020

for providers that have incorporated diversity and inclusion into their approach, said Danielle Schumacher, CEO of Chicago-based THC Staffing. “It really starts with job descriptions,” Schumacher said. “A lot of people will take a template and rush through getting the job description posted to Indeed and some of these mainstream sites.”



Promoting a Workforce

Diverse

Simply breaking out which skills are really required for a role instead of which would be nice to have in a candidate can make a job listing more approachable, she said. For instance, does a cultivation director really need a Ph.D. to do the job, or would that just be an added perk from an applicant? There are also websites and apps, such as Textio and Gender Decoder, that will flag gendered, racist and classist language that can be tweaked so potential employees are not deterred from applying. Including an anti-discrimination statement or equal opportunity statement in the listing can also be encouraging, but companies should think through and customize the language being used rather than just copy and paste boilerplate text, Schumacher advised.

FIRST CONTACT The interview is another area hiring managers can scrutinize for internal bias or roadblocks to diversity. “The most important thing is just having a script of what questions you’re going to ask and to actually stick to that script. And make sure that everything you’re asking is legal,” Schumacher said. “To be fair, you have to set it up so that you’re putting everyone through the same process as much as possible.” Hiring managers can establish a rubric or scorecard to help evaluate candidates based on key factors such as their experience rather than superficial information like where they went to school. They can also break the interview into stages where they ask initial and overview questions during the first meeting and more detailed follow-up questions in subsequent interviews. Companies seeking to improve diversity might be doing themselves a disservice by focusing on subjective parameters such as looking for someone who is a good culture fit or will be a part of the existing team. “You’re asking them to blend into your white culture, so you’re going to think that somebody who’s not like you is not a

Kelly Perez, left, and Courtney Mathis co-founded KindColorado. Courtesy Photo

good fit. In my opinion, that would be a good thing if they’re not able to blend in, because it’s good to seek out difference,” Schumacher said. One way cannabis firms can guard against bias is establishing a hiring committee where multiple—ideally, diverse—people make the decision rather than one individual.

RETAINING EMPLOYEES “It’s not just about hiring folks who are Black or brown or other people of color just to have them in the building,” said Ru Johnson, an MCBA board member and executive producer at Denver-based Roux Black Consulting. “We’re talking about amplifying the voices of many Black and brown people of color who have the skills to do this work and to give them a seat at the decision-making table,” Johnson said. The employee experience is important for retaining diverse candidates—and that starts during the onboarding process, Raja said. “Something that makes the process easy in the beginning is automation, like a digital handbook that they might be able to get before they even start,” she said. It’s helpful to create a single repository where employees can find information about the company and its

88 Marijuana Business Magazine | October 2020

best practices as well as training videos. “And as silly as this sounds, having an office buddy or being linked to someone who can help answer questions where you don’t feel judged and who you can lean on when you don’t have the answers can be super helpful,” Raja said. Vertosa is flexible about allowing those connections to happen organically or tasking someone to be a new hire’s point person. The company also encourages weekly or regular individual checkin meetings between managers and employees as well as reviews every six months. These interactions give managers an opportunity to check on their workers both personally and professionally as well as gauge opportunities for growth. “It’s my job to understand my team and their hot spots and cold spots and to see how to better bolster and support them,” Raja said. “A lot of times, I know someone’s looking to take the next leap in their career path, and (I need to know how I can) help support that—whether that’s figuring out a way to alleviate job responsibilities so they can focus on bigger things, whether that means providing additional classes or literature to grow, whether that means helping to find more space so that they can generate ideas or whatever that might be.”


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Promoting a Workforce

Diverse

Companies looking to add diversity to their workforce should offer a clear path for advancement. Photo by Laura Drotleff

Representation By Laura Drotleff

Matters in Hemp

Agriculture is often lacking in diversity, but farms and agribusinesses can take steps to make recruiting more inclusive eople of all ethnicities want to feel comfortable in the workplace, and that often begins with seeing faces that look like their own represented within their company and the industry as a whole. It also means seeing a clear path for advancement within an organization

beyond becoming a token employee or “checking a box” and feeling a connection with the company’s mission. In agriculture, that’s a challenge, as many people see it as an industry owned by “old white guys.” And demographics back up that assertion. According to the U.S. Department of Agriculture’s 2017 Census of Agriculture, 95% of American farm

90 Marijuana Business Magazine | October 2020

producers were white, the average age was 57.5 and producers had been on their current farm for an average of 21.3 years. Those trends project into the hemp industry, as many farmers of traditional crops are diversifying into hemp production. Non-farm agribusinesses often are less diverse than other industries as well. And yet, farms and agricultural


businesses perennially complain about a talent shortage. Securing high-level managers and growers can take up to a year or more in some cases because of increasing competition within agriculture and other industries.

“Black people and Latinos are qualified, but if you don’t give us a shot, then how do you see how we perform? Let me in the door and show you what I can do.”

DIVERSITY IN HEMP In the agriculturally focused hemp space, Jackson Garth, CEO of Atlantabased hemp and CBD company Verde Leaf Group, said he had to build his own vertically integrated seed-to-store company and related ancillary firms to have the opportunities he wanted to achieve as a Black businessman who didn’t grow up on a farm. He’s now working to develop a diverse workforce within his own company as well as connecting people of color—whether farmers or executives—with other companies in the industry. For people of color, it’s all about access, Garth said. “Black people and Latinos are qualified, but if you don’t give us a shot, then how do you see how we perform?” Garth said. “Let me in the door and let me show you what I can do.” Limiting workforce diversity also limits the company’s view and potential profit centers, according to Garth. “It’s like trying to get to a store,” Garth said. “When you have a diverse workforce, it’s kind of like having all these different streets to get to your end goal—and that’s invaluable because you’re going to hit so many different roadblocks.”

BENEFIT FOR BUSINESS Companies need to take a macroeconomics-type view toward the end result, according to Andrei McQuillan, vice president of sales and marketing for EcoGen Laboratories, a vertically integrated hemp and CBD company based in Grand Junction, Colorado. “The only way any company in America is going to truly embrace diversity to the core is when it has a

– Jackson Garth, Verde Leaf Group positive impact on their revenue and their finances and the economics of the business,” McQuillan said. Diversification can have geographical limitations as well—especially in an agriculturally based industry such as hemp. Attracting people of color to rural areas might seem challenging when hemp businesses are competing with more diverse industries in urban centers. If hemp companies are serious about wanting to recruit people of color, they might need to employ creative recruitment strategies, said Ru Johnson, a board member with the Minority Cannabis Business Association and executive producer at Denver-based Roux Black Consulting. “This is where people really have to get outside of their comfort zones,” Johnson said. “The onus is on the company to create a stronger, more diverse look and feel for their company. And it has to do with education, with marketing of their company, with more inclusive Andrei McQuillan

information and with more inclusive images on their website.” Hemp companies can also solve geographical personnel recruitment issues by accommodating flexible schedules and remote work—especially for those in executive roles—and recruiting from adjacent consumer packaged goods industries, according to McQuillan, who joined EcoGen with a background in the spirits and entertainment industries. Beyond traditional college recruiting centers, hemp companies should also consider visiting historically Black colleges and universities, several of which are agriculturally focused. It also helps to have people of color in leadership positions who can help recruit, McQuillan said. Jeff Gray of SC Labs in Santa Cruz, California, said his company works with the Society for Advancement of Chicanos/Hispanics and Native Americans in Science (SACNAS) and the University of California, Santa Cruz to recruit minority students with STEM majors into the cannabis industry. Ultimately, becoming more inclusive in hiring and retaining a diverse workforce has to be authentic—and that starts at the top, Gray said. “Keep diversity and inclusion as an ongoing priority and find allies,” Gray said. “Recruiting for the best talent is always difficult, and this is no different. So create a plan, assess your practices and maintain this as a priority.”

October 2020 | mjbizdaily.com 91




A cannabis cultivator struggling to gain name recognition could accelerate that process by co-branding with an established company. Photo by Bart Schaneman

94 Marijuana Business Magazine | October 2020


How Growers Can Execute a Branding Deal California marijuana brand Cookies contracts with cultivators in other states to expand flower market By Bart Schaneman

N

ational cannabis brands are common in several sectors including infused products, vape pens and retail. But the industry has not seen many national flower brands. For one thing, flower can’t be transported across state lines, so it can’t reach consumers in other markets. Additionally, growers often pride themselves on creating flower with characteristics specific to their location. When each state’s cannabis market is insular, it’s difficult to establish a national reputation. But at least one marijuana producer has taken steps to achieve this. Cookies, a cannabis company from California’s Bay Area, has established itself as a recognizable flower brand in several states, including Colorado, Massachusetts, Nevada and Washington, among other markets.

COLORADO CONNECTION Denver marijuana producer Veritas Fine Cannabis entered a licensing deal with Cookies last fall to sell Cookies-branded flower in 50 Colorado retail stores. Cookies Colorado products launched statewide in May 2020.

While the marijuana industry is familiar with multistate brands for infused products, vape pens and other items, national flower brands are less common and come with their own unique set of challenges. Cannabis cultivators looking to partner with established flower brands might consider: • The vetting process should go both ways and be extensive. • Making sure both companies’ values align, including commitment to quality and maintaining solid reputations. • Leveraging cross-branding opportunities so that both companies benefit.

Jon Spadafora, partner and head of sales and marketing at Veritas, told Marijuana Business Magazine that initially Veritas wasn’t sure growing flower under the Cookies brand would be a good fit. Cookies was founded by Gilbert Milam Jr., a rapper who goes by the name

October 2020 | mjbizdaily.com 95


Execute a Branding Deal

Cookies has achieved a loyal following in several states in part by joining with cultivators that have well-established reputations. Courtesy Photo

Berner. Spadafora said he worried the rapper’s name was supposed to sell the product by itself. “We were concerned it was just another celebrity-driven brand,” Spadafora said. Meanwhile, he believed Colorado’s cannabis consumers were too discerning to pay a premium if the cannabis wasn’t of high quality. But when Spadafora and a few members of the Veritas team took a trip to see Cookies’ commercial grow in Los Angeles, his opinion changed. “We were struck by, one, how clean and beautiful the space was,” Spadafora said. He also noticed the staff ’s passion, “that twinkle in the growers’ eyes,” and could tell the cultivators on the Cookies team loved to grow cannabis. “That’s important,” Spadafora said. “Everybody cares, and they care because everyone loves the end product.” The team visited another Cookies

Berner

facility in Northern California—and after that, Spadafora knew the two companies’ values aligned.

TWO-WAY STREET The vetting process went the other way, too. Tori Cole, vice president of

96 Marijuana Business Magazine | October 2020

marketing for Cookies, said the company was looking for “like-minded partners” and found one in Veritas. Even though Cookies has a range of other products including vapes and cannabis-infused items, the company has always been focused on growing different strains, she said. When looking for an out-of-state cultivator, the company was seeking a partner that “understands the phenomenon of Cookies.” They wanted to work with growers who had the same attention to detail and the ability to work in a collaborative environment. “There’s a lot of sharing between teams,” Cole said. But it really comes down to how good the growers are. Reputation often precedes the introduction for cultivation companies, Cole said, adding, “It’s a small industry.” Beyond vetting the reputation of potential partners, Cookies will also visit



Execute a Branding Deal

Joe Brenzy

Denver-based Veritas Fine Cannabis is able to leverage Cookies' brand name to cross-promote its own company. Photo by Bart Schaneman

grow sites to determine if companies’ existing cultivation practices fit their ethos, paying attention to details such as irrigation systems and lighting. Once the product starts to hit store shelves, the Cookies team monitors what consumers say on social media and how they’re voting with their dollars, Cole added. Cookies fans have been known to line up around the block when the company announces product drops.

ONGOING PARTNERSHIP Before the COVID-19 pandemic, the quality-control arm of Cookies’ sales team would travel to check on its partners’ operations. Now, Zoom fills that function, and Berner will often participate in the video calls and ask to see the flower up close. “It’s a pretty entrenched process on both sides, and everyone is talking to each other,” Cole said. Spadafora agreed, adding that the Veritas grow team and Cookies cultivators were “geeking out over humidity,” for instance. Spadafora said Veritas has allocated about 15% of its production to growing for Cookies, with the intention of ramping up to about 40%.

The deal the companies entered stipulates that Veritas will grow for Cookies for a set amount of time (the companies declined to disclose exactly how long) and then the partnership will be reevaluated.

MORE TO COME Spadafora said that although Veritas had already established itself as a premium flower brand—one reason he believes Cookies wanted to work with his company—the cross-branding opportunities also bring a lot of value. The Cookies name is featured the most prominently on the brand’s Colorado-grown products, but it also notes that the cannabis inside was grown by Veritas. That’s important in a more mature market, where the consumer wants to know where cannabis originates, Spadafora said. “Cookies has done a great job giving Veritas credit,” he said. In the end, Spadafora said the relationship between the two businesses seems to be a good fit that goes beyond making money. “This isn’t just putting your name on something and collecting a check,” he added.

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A Promising Business Model It’s unusual for a marijuana flower brand to expand across the country. But Joe Brezny, a Las Vegas-based cannabis consultant, sees the upside for growers willing to take on another company’s brand rather than trying to start one from scratch. “Building a competitive brand in a competitive environment … that’s really hard and takes a long time,” Brezny said, adding that he could see why a grower in Nevada, for example, would want to partner with a company like Cookies. “There’s a chance for a win-win in states like Nevada,” Brezny said. As the flower market becomes more saturated, he expects to see more deals like those Cookies has with regional cultivators. “That could be a lifesaver for some of the cultivation and production licensees,” he said. “Because suddenly, you’ll go from someone who has to sell their flower at a discount because the market is flooded to someone that has the exclusive rights to carry flower that is flying off the shelf.” – Bart Schaneman


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BestPracticesInExtraction | Bart Schaneman

How to Source and Select Vape Hardware Quality raw materials, redundant supply-chain relationships and design are keys to creating a safe, reliable product

C

annabis extraction companies labor over making perfectly flavorful and potent oil. But if that oil ends up in poor-performing or otherwise substandard hardware, consumers won’t buy it again. Choosing and sourcing vaping hardware for extraction companies involves several key considerations, including: • How to weigh price versus quality. • Finding hardware that is easy to work with. • Building redundancy and consistency into the supply chain. • The storage of oil in vape cartridges. “The key consideration in sourcing a component for our vaporizers is clarity,” said Jamie Rosen, CEO and founder of Las Vegas-based Dr. Dabber, a CBD vaporizer company. “It is crucial our suppliers are clear on Dr. Dabber’s quality requirements and the design of the components.”

Cannabis lab technicians can make the perfect oil, but the accompanying hardware needs to be on par for the customer to have a quality experience. Photo courtesy of The Blinc Group

Quality Over Cost Cheaper hardware can break, leak and—even worse—release harmful toxins such as heavy metals into the oil that consumers vape. Arnaud Dumas de Rauly, co-founder and CEO of New Yorkbased vape manufacturer The Blinc Group, said it’s important to remember that just because a supplier says its hardware is lead-free doesn’t mean that’s the case. He prefers stainless steel in all the places where oil interacts with the

Cannabis extraction companies need to source the best possible hardware to ensure marijuana oil and other concentrates are safe for the consumer to use. When selecting which hardware to purchase, consider: • Striking an appropriate balance between price and quality. • Sourcing materials that are easily manipulated, such as stainless steel. • Buying from suppliers with multiple supply streams. • How well the material will store over time.

100 Marijuana Business Magazine | October 2020

vape pen’s components because oil can’t leech harmful toxins from the corrosion-resistant metal. The molds used to create glass vape cartridges can be made of lead, Dumas de Rauly said. If the supplier doesn’t properly clean the glass particles, lead could still be present in the cartridge and get into the oil. “It’s really about understanding where all this material comes from,” he added. A common mistake Dumas de Rauly sees is new companies ordering hardware online without properly vetting the source and testing the materials.


Vetting and testing materials is paramount because vaping hardware can add toxins to cannabis oil. Photo courtesy of The Blinc Group

A company might save 10 cents buying cheaper hardware, but it will also lack control over the end product. Dumas de Rauly also recommends buying from a domestic company so that if something does go wrong, it’s easier to communicate with the business about problems. Rosen considers design, manufacturability and the function of each component before he begins sourcing vape hardware. “We’re striving for a perfect product in our customers’ eyes but at a price that is also deemed affordable,” he said. Since each component is part of the product design, if one component has manufacturing issues and requires a redesign, several other components might also need to be redesigned as well.

Rosen works directly with suppliers that manufacture components straight from raw materials. “We can determine a component’s approximate cost based on the material selection,” he said. Each component has strict requirements that must be met, significantly impacting the final price, Rosen added. Those include goals in defect rates, requirements for materials that are in contact with concentrates and function requirements. Richard Huang, CEO of Cloudious9, a cannabis vaporizer manufacturer based in Hayward, California, said his due diligence process includes making sure the company’s rawgoods providers pass a database screening, open-source review and reputation review as well as have the

correct supply-chain documentation, on-site inspections where applicable, corporate documents and any independently verified raw-goods certifications. “It becomes very clear which rawgood providers have the best quality based upon the standards that we have set,” he said. “We always select our raw goods based upon quality, not price.”

Ease of Use While other materials might be cheaper, Dumas de Rauly recommends ceramic components to create medical-grade products as well as coils made from quartz and carbon. Those materials cost more—maybe $1.80 versus $1.60 per unit for cheaper materials—but they keep the oil stable and don’t add toxins.

October 2020 | mjbizdaily.com 101


BestPracticesInExtraction | Bart Schaneman Rosen said high-quality steel is the easiest material to work with. “Steel is relatively easy to machine, can be made in all shapes and can be fitted together with a wide range of other components,” he said. Stainless steel also can be medical grade for use in vape products and contact with concentrates. Rosen has found that cartridges with a large, open mouth are easiest to fill. His company’s cartridges have both an upper and lower assembly, with the lower assembly being composed mostly of the reservoir tank, which can be easily filled before the upper assembly is installed.

Secure the Chain For Dumas de Rauly, making sure the hardware supplier has a redundant supply chain is very important. With each raw material, his company has two major suppliers and two minor suppliers. “You need to have control of the supply chain,” Dumas de Rauly emphasized. Rosen said COVID-19 significantly impacted his company’s suppliers, prohibiting them from being able to manufacture for some time. “As soon as our suppliers were allowed to be operational, we were able to get our orders on top of their lists due to our relationships with them,” he said. While the company has redundancy for several components in the supply chain, Rosen prefers critical components that include intellectual property be kept to a single supplier in an effort to protect confidential information. According to Huang, the coronavirus pandemic “greatly affected” international shipping because of the massive decrease in air travel, which drastically affected air freight costs. Customs offices around the world began prioritizing PPE shipments, he said, resulting in large backlogs of

Workers at The Blinc Group test different oil formulations with vaporizer hardware.

Photo courtesy of The Blinc Group

normal items and slowing the arrival of Cloudious9’s finished goods. “We are in the process of building redundancy for the future by doubling our inventory held locally,” Huang said.

Storage Concerns Dumas de Rauly recommends longterm stability testing because each type of cannabis oil interacts with materials differently. He tests products after a couple of days, then a week, two weeks, a month, two months and three months before he’s satisfied the hardware is performing correctly and not leeching heavy metals. For Rosen, cartridges manufactured with medical-grade steel, glass and organic cotton withstand prolonged encounters with concentrate the best. “The biggest concern we have for long-term storage will always be contamination of the concentrate, either from the cartridge itself or from the environment it is stored in,” he said. Environmental factors such as temperature, humidity and elevation must be considered along with the type of oil.

102 Marijuana Business Magazine | October 2020

The company’s CBD cartridges, for example, include silicone seals and medical-grade hardware to help prevent oxidation and water vapor from humidity impacting the CBD oil. The cartridges are also designed with medical-grade materials to ensure no leaking or corrosion occurs from the CBD oils. “The biggest consideration for long-term storage of cannabis oil in vape pens is leeching,” Huang said. According to Huang, a large number of disposable vape pens and carts out in the marketplace are substandard and have already resulted in heavy metals or other contaminants leeching into cannabis oil. “Luckily for the consumer,” he added, “most legal markets have recognized this problem and are testing for heavy-metal leeching.”

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


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IndustryPlayers | New Hires & Promotions

Meredith Miller

By Omar Sacirbey

Growing MSO Hires Red Bull Exec to Tame Michigan

M

eredith Miller hopes to do for Grown Rogue, a multistate marijuana business, what she did for multibillion-dollar energy drink giant Red Bull. Miller took over as director of sales for Oregon-based Grown Rogue in July. Miller sold Michigan’s first can of Red Bull out of the back of her car in October 2000. By the time she left Red Bull in 2019, Miller had sold more than 5.6 million cases of the product and risen to the position of general manager for Michigan and Ohio, generating about $150 million in annual sales for the company. “As I was considering whether to accept (Grown Rogue’s) offer, there were a couple of things that I weighed. The first was, ‘Will I be able to make a difference with the organization?’ Not just externally with consumers but internally, contributing to launching and building a brand again, which is what I really did at Red Bull,” Miller recalled. “I helped build the brand with marketing strategies, product education and great retail partnerships—and a really strong team. I hope to do the same at Grown Rogue.” Miller, who spent 11 months as Michigan sales manager with Dosist, a California-based cannabis oil and tablet company, said her network and knowledge of Michigan is a major advantage. “I know this market very well. Even though I spent the majority of my career in beverages, there are ironically a lot of the same players on the dispensary side here that actually came from the beverage industry,” Miller said. Miller said she hopes to launch Grown Rogue’s Michigan presence around Oct. 1. In terms of goals, she wants “to continue to contribute product and marketing ideas that will add to the company’s longterm growth.”

104 Marijuana Business Magazine | October 2020

A look at some recent hiring moves in the marijuana industry

 CannaCraft Nabs Two Papa & Barkley Vets CannaCraft, a cannabis manufacturer in Santa Rosa, California, appointed Angela Pih as chief marketing officer and Ron Gray as vice president of sales. Pih most recently served Angela Pih as the chief marketing officer for California cannabis brand Papa & Barkley. Before joining the industry, Pih held senior roles in women’s fashion, serving as chief marketing officer at New York-based Halston + Haute Hippie and senior vice president of marketing at Planet Blue in Santa Monica, California. She also is on the board of ThinkLA, a media and marketing nonprofit association, and is a founding member of the L.A. chapter of Chief, a network of female executives. Before CannaCraft, Gray spent three years as senior vice president of sales for Papa & Barkley. Previously, he held various sales roles in the pharmaceutical industry.

 Lab Exec Joins CannaSafe California testing lab company CannaSafe appointed Bosco Ramirez as vice president of operations, a role in which he will oversee laboratory operations. Ramirez has more than 30 years of experience as head of operations at various testing companies in environmental and food industries. Ramirez spent more than 25 years at Eurofins TestAmerica, a U.S. environmental testing company based in Ohio. In 2017, Ramirez was appointed president of one of Eurofins’ business units dedicated to testing potable water. He joined CannaSafe in July.

Revolutionary Grower Massachusetts cannabis firm Revolutionary Clinics hired Mark Vlachos as director of cultivation. In his role, Vlachos will lead Revolutionary Clinics’ grow operation in Fitchburg, Massachusetts. He will be responsible for directing and optimizing Revolutionary Clinics’ current cultivation and postharvest operations. Before joining Revolutionary Clinics, Vlachos spent five years as head grower for another Massachusetts


cannabis business, Sira Naturals, working from its initial licensing, design and facility startup, through its retail expansion and eventual acquisition by a multistate operator.

 Aleafia Hires Chief Commercial Officer

Aleafia CEO Geoffrey Benic and lead the development and execution of the company’s product launches, sales, marketing and corporate development initiatives in the adult-use, medical and international cannabis markets.

Global Cannabis Company Hires Legal Chief

Multinational cannabis company Aleafia Health appointed Tricia Symmes as chief commercial officer. Symmes was most recently general manager at CX Industries, a wholly owned subsidiary of WeedMD. Her other past posts include serving as chief operating officer and general manager of multinational public companies such as Alcon Canada and Novartis Pharmaceuticals. She will report to

TerrAscend, an international cannabis company based in Ontario, Canada, appointed Jason Marks as chief legal officer. Most recently, Marks served as the chief legal officer, general counsel and corporate secretary of InflaRx N.V., a publicly traded biotechnology company. Marks was also responsible for the operations of the company’s U.S. subsidiary. Before joining InflaRx, Marks was senior vice president and head of global litigation and government investigations at Bausch

Health, a Quebec, Canada-based pharmaceutical company. He was also lead lawyer for Salix, a $2 billion division of Bausch, and created its first legal operations and enterprise riskmanagement functions. Marks also held senior roles at Novartis’ Alcon division, including the head of legal for North America, and at Stryker Corp. TerrAscend, whose subsidiaries include U.S. MSOs Ilera Healthcare and The Apothecarium, also announced the departure of general counsel Brian Feldman and chief strategy officer Heather Molloy.

Philip Morris Exec Goes for CBD Taat Lifestyle & Wellness, a Las Vegas-based company preparing to launch a brand of CBD-containing hemp cigarettes later this year, appointed a former Philip Morris strategist as its CEO.

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IndustryPlayers | New Hires & Promotions At Philip Morris, Setti Coscarella led a commercialization team in Toronto and was a strategist for so-called Reduced Risk Products, an emerging category in the tobacco industry to provide alternatives for smokers. He also worked as an analyst and in investment-banking roles at three of Canada’s “Big Five” financial institutions—as well as positions in private equity and management consulting.

C21 Chooses Board Chair C21 Investments in Vancouver, British Columbia, appointed current director Bruce Macdonald to the role of non-executive chair of the board. He has been a director on the board since 2018. Macdonald spent 38 years with RBC Capital Markets, including serving as chief operating officer of RBC Capital Markets and president of RBC Dominion Securities. In addition to his role with C21, Macdonald serves as chair of the Canadian Capital Markets Association and chair of The Canadian Depository for Securities. Macdonald is certified by the Institute of Corporate Directors.

Another Top Executive Departs iAnthus Beth Stavola resigned as chief strategy officer and board director for troubled multistate cannabis operator iAnthus Capital Holdings. The company did not expound on the resignation of Stavola, who previously served as a senior vice president at Wall Street firm Jefferies & Co. before joining MPX Bioceuticals. MPX merged with iAnthus in 2018. Stavola’s resignation comes after Mark Dowley stepped away from the board in May. In April, Hadley Ford resigned as CEO and director after a company investigation found he failed to disclose two loans totaling $160,000 in what was determined a “potential or apparent” conflict of interest.

 New CEO at Leafly Seattle-based Leafly appointed its general counsel, Yoko Miyashita, as CEO. In her new position, Miyashita will drive the company’s strategy to connect consumers with cannabis retailers and brands. Miyashita was hired as general counsel at Leafly last year. Before joining the company, she worked for nearly 14 years at Getty Images in Seattle, most recently serving as senior vice president-general counsel. She also served as an associate at the Perkins Cole law firm in Seattle. Miyashita replaces Tim Leslie, whose tenure of less than a year was marked by layoffs and closure of the company’s Germany headquarters. Miyashita is the company’s third CEO in three years. Former CEO Chris Jeffery was removed by Leafly’s board of directors in September 2018 over “management concerns.”

 CBD Company Finds Leader in Tobacco Executive Humboldt, Californiabased Boldt Runners Corp., the exclusive licensee of Cannadips CBD, a smokeless dip pouch with CBD, appointed former Altria executive Peter Diatelevi as CEO. He will also join the company’s board of directors. During his 20-plus years at Altria, Diatelevi held various senior executive roles, including vice president of regional sales and VP of sales operations. His responsibilities

106 Marijuana Business Magazine | October 2020

included customer service and supplychain logistics, trade marketing, sales analytics, sales infrastructure and state and trade relations. In his new role, Diatelevi will help the company complete its $5 million Series A fundraising round. The funds will go toward hiring experienced CPG executive talent, enhancing in-house manufacturing and executing the go-to-market strategy at both retail and online. Boldt Runners Corp. co-founder Case Mandel will move into the role of president and continue to lead product innovation. Mandel has also been appointed chair of the company’s board of directors and will continue to oversee the direction of the product and brand.

 Flower One Adds to Board Flower One Holdings, a cannabis holding firm headquartered in Toronto and Las Vegas, appointed Salpy Boyajian to its board of directors. Boyajian officially joined Flower One in October 2018 after the acquisition of NLV Organics, which she co-founded in 2014. Boyajian currently serves as Flower One’s chief operating officer for Nevada operations and was one of the original applicants granted cannabis licenses by the state of Nevada. Boyajian is a licensed clinician and psychotherapist. Hired or promoted someone for a senior-level position? Send a news release or general information to omar.sacirbey@mjbizdaily.com.



QuestionoftheMonth | Product Makers and Retailers By Omar Sacirbey

E

ach month we survey a group of cannabis executives and ask them an industry-related question. We welcome your suggestions for topics. Email us at magazine@mjbizdaily.com. Since this has been a tough year for many companies, we asked retailers: Have any of your product suppliers—cultivators, concentrate and cartridge makers, edibles and infused products makers, etc.—closed or experienced production difficulties? If yes, how did that affect your business, and how did you respond?

Has you r ca business nnabis retail bee by produ n affected ct s interrup upply tions?

Paul Henderson

President and chief operating officer, High Times, Los Angeles, California When we saw our normal suppliers put restrictions on how much flower we could purchase at any one time, we did two things: • Started immediately reaching out to suppliers that have never been in our store (Synergy in Redding, California). • Asked a few key suppliers to allow us to receive more flower than our provided allotment. We still struggled to keep up with customer demand … but these two actions allowed us to continue to keep our shelves stocked with flower.

Ed Alexander

Founder, Sol Cannabis, New Washoe City, Nevada We have seen a huge disruption in our glassware, like bowls and bubblers. It’s harder to get glassware from China, and a lot of the more renown domestic glassmakers aren’t set up as production facilities. So when they get an inrush of folks they’re not accustomed to dealing with, it creates challenges.

Krista Saxby

General manager, Remedii Stateline, Morenci, Michigan Our suppliers haven’t run into difficulties other than a temporary statewide vape-cartridge ban. Production of these vapes were put to a halt, and we had to take them off our shelves for them to be retested for vitamin E acetate. While our loyal patients were disappointed, we educated them on why. ... They understood and went on to try different products.

Zachary Pitts

CEO, Ganja Goddess, Seattle In Seattle, some retailers have started pre-buying from grows that haven’t even harvested yet. We’ve worked incredibly hard to ensure stability across our supply chain by staying in constant contact with our vendors and tracking when, precisely, products are available. … These issues have prompted us to expand the number of brands and strains that we carry, which weren’t previously on our radar.

108 Marijuana Business Magazine | October 2020


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MarketAtAGlance | Nevada

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evada’s cannabis industry was hard hit when the coronavirus pandemic halted tourism. Clark County, where Las Vegas is located, saw adult-use marijuana sales fall 25% year-over-year in May. By August, however, the trend had turned back to growth.

Oversight of the state’s industry transitioned from the Department of Taxation to the Nevada Cannabis

Compliance Board in July, and the new regulators have taken swift action against noncompliant companies. The economic downturn that came with the pandemic also slowed acquisition and expansion in the state, as investors and executives took a more cautious approach to capital expenditures during the uncertainty. – Jenel Stelton-Holtmeier

Main measures

State tax requirements

Application fees

License fees

Question 2 2016

15% excise tax on first wholesale sale, state sales tax (varies between counties and municipalities) and additional 10% retail excise tax on adult-use sales.

Retail store: $5,000 Cultivator: $5,000 Processor: $5,000 Distributor: $5,000 Testing lab: $5,000

Retail store: $20,000 (new); $6,600 (renewal) Cultivator: $30,000 (new); $10,000 (renewal) Processor: $10,000 (new); $3,300 (renewal) Distributor: $15,000 (new); $5,000 (renewal) Testing lab: $15,000 (new); $5,000 (renewal)

110 Marijuana Business Magazine | October 2020


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NotableQuotes | Insightful Industry Observations

This is still all quite novel for pharmacies. Many prefer to first wait and see how the market begins unfolding instead of trying to be the pioneers. – Maritza Reátegui

Lawyer who counsels on pharmaceutical matters, on why so few Peruvian pharmacies have sought approval from authorities to dispense medical cannabis. Source: Marijuana Business Daily International

It was an opportunity for people to learn the difference between CBD and THC. I felt a lot of people came away with knowledge of CBD and DRAM and of the benefits of using it.

– April Johnson

Co-founder of Washington DC virtual platform Happied, on the virtual happy hour for which attendees were sent a full-size bottle of Gingergrass Adaptogenic Drops from Colorado CBD company DRAM and given a list of ingredients to purchase for the event. Source: Hemp Industry Daily

It’s really hard to tell until the crop is finished and then it’s been tested, as to whether (the smoke has had any impact. I’m knocking on all the wood.

– Amanda Reiman

Vice president of community relations at Mendocino County cannabis distributor Flow Kana, on the difficulties California farmers face in trying to assess the damage wildfires in the state caused to their crops. Source: Marijuana Business Daily

114 Marijuana Business Magazine | October 2020


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