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6 weird, outrageous and entertaining facts about marijuana policy and rhetoric

6 weird, outrageous and entertaining facts about marijuana policy and rhetoric

Cannabis Business, Just for Fun, News, POS System

6 Weird, Outrageous and Entertaining Facts About Marijuana Policy and Rhetoric

By John Garvey

A lot of the history of cannabis prohibition reads like satire. It’s bizarre, muddled and, depending on how you look at it, sometimes quite funny. We wanted to capture a few special moments without revisiting topics that have already been beaten to death. Below are some of those events, as well as the heroes, villains and oddballs that played central roles.

1) Underdog! Meet the bane of drug policy hardliners and the first federally sanctioned medical cannabis patient.

Human eye, close-upRobert Randall was dealt a tough hand in 1972 when he was diagnosed with advanced, open-angle glaucoma. He was only 24, and doctors told him he’d be blind by age 30. Prescription meds didn’t effectively curb the disease progression, but he discovered one thing that did. (I’ll give you two guesses as to what that was.)

Glaucoma causes vision loss by damaging the optic nerve. Cannabis alleviates it by reducing pressure around the eye, and Randall began growing his own. When he and his wife were arrested in D.C. for misdemeanor cultivation, they contested the charge on grounds of medical necessity.

The case could have been another footnote in the history of cannabis prohibition. But Randall learned that UCLA was conducting federally funded research on marijuana and glaucoma. The head researcher, Dr. Robert Hepler, assessed Robert’s condition and his response to medical marijuana.

“Robert was at UCLA for 10 days of study, which conclusively demonstrated that without marijuana Robert Randall would go blind,” writes Robert’s wife Alice O’Leary Randall in Cannabis Now.

Marijuana in its natural form is one of the safest therapeutically-active substances known to man.

– DEA administrative law judge Francis Young

Randall was found not guilty by means of medical necessity, provided access to federal supplies of marijuana, and thus became “the only individual in the country allowed to legally possess marijuana for medical purposes.”

The Randalls founded the Alliance for Cannabis Therapeutics—the first medical cannabis non-profit. The Alliance supported dozens of state laws that relaxed strictures on medical marijuana. The Alliance was also the leading party in re-scheduling hearings that, at the height of the Drug War, nearly succeeded in removing “marihuana” from Schedule I of the Controlled Substances Act.

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2) A DEA judge in 1988 recommended that the agency authorize medical marijuana.

DEA administrative law judge Francis Young, who presided over the re-scheduling hearings mentioned above, issued a strong recommendation that marijuana be re-scheduled. Young went as far as to state that “Marijuana in its natural form is one of the safest therapeutically-active substances known to man.”

Young dismissed arguments that allowing people access to medical marijuana would “send the wrong signal,” essentially claiming that it was callous and wrongheaded. In an extraordinary display of self-righteousness, DEA Administrator Jack Lawn dismissed the recommendation, questioning the motives of medical researchers, physicians and patients whose testimonies supported the ruling.[/vc_column_text]

3) A counterculture icon overturned the Marihuana Tax Act (sorta).

The Marihuana Tax Act of 1937 greatly limited any legally authorized use of cannabis and required people in possession to pay a steep tax. Most users couldn’t pay the tax if they wanted to because cannabis was illegal under a number of state laws, and the requirements for federal compliance were burdensome. So the act effectively criminalized cannabis. That’s background.

In 1965, counterculture icon Timothy Leary got busted with a small amount of undeclared cannabis in Texas—a violation of both Texas law and the 1937 Tax Act. A federal judge sentenced Leary to 30 years in prison. Leary, a Harvard psychologist, was an outspoken supporter of psychedelics, which probably motivated the harsh sentence.

For a brief period in the early days of the Nixon presidency, the federal government had
no enforcement powers over marijuana possession.

Leary contested the sentence in a case that wound up before the Supreme Court (Leary v. United States). He argued that compliance with the Tax Act would compromise his 5th Amendment rights by forcing him to admit to possessing an illegal substance. That made the charges under the Tax Act bunk (no pun intended). The Court agreed in the 1969 ruling, and overturned the law.

And so it was that, for a brief period in the early days of the Nixon presidency, the federal government had no enforcement powers over marijuana possession and in-country trafficking.

4) “Pot can make you gay.”

Pride parade with rainbow flagsDepending on which side you listen to, Reagan’s drug czar Carlton Turner either claimed marijuana turned young people gay or, at least, suggested that it lead gay people to be more gay. The Newsweek reporter who wrote of this in October 1986 challenged him on the claim that one lead to the other, and his quoted response was that homosexuality “seems to be something that follows along with their marijuana use.”

Turner also floated the idea that cannabis can speed the progression of AIDS.

Turner might have been made to look more inept than he was, and the reporter herself said that the article headline (“Reagan Aide: Pot Can Make You Gay”) was “overdrawn.” But one has to marvel a bit at the way rhetoric evolves to justify policy.

5) The Gateway Theory is supported by very creative data management.

Author Dan Baum writes of the methodology behind the Gateway Theory in the book Smoke and Mirrors: The War on Drugs and the politics of failure:

“[T]he researchers looked in only one direction, asking heroin and cocaine users if they first used marijuana and predictably finding that a great many had. They didn’t ask, though, whether the addicts had first used alcohol, tobacco, or caffeine – any of which might also be described, under the study’s methodology, as the ‘gateway.’ More important, the researchers failed to track marijuana smokers on how many gradate to harder drugs. Whenever the question is asked that way, the percentage is in the single digits.” (153)

  • “Amount saved by California from 1976 to 1985 by reducing marijuana possession to a finable offense: $958,305,499.

  • “Percentage increase in California marijuana use during that time: 0%.”

– Smoke and Mirrors, 223

If you’re reading this, you probably didn’t need to be convinced that the Gateway Theory was fallacious. Still, it’s interesting to know about the methods used to arrive at it.

Gathering data with the intent of confirming a hypothesis? That’s against the rules! Sheesh.

6) We once had a relatively pragmatic, responsible drug czar.

Jimmy Carter’s mid-term drug strategy, drafted under then drug czar Peter Bourne, was a harm reduction approach. Bourne was plainspoken about this:

“Drugs cannot be forced out of existence; they will be with us for as long as people find in them the relief or satisfaction they desire. But the harm caused by drug abuse can be reduced. We cannot talk in absolutes—that drug abuse will cease, that no more illegal drugs will cross our borders—because if we are honest with ourselves we know that is beyond our power.”

Carter echoed this reasoning, backing the decriminalization of marijuana before Congress in 1977:

“Penalties against possession of a drug should not be more damaging to an individual than the use of the drug itself; and where they are, they should be changed. Nowhere is this more clear than in the laws against possession of marijuana in private for personal use. … Therefore, I support legislation amending Federal law to eliminate all Federal criminal penalties for the possession of up to one ounce of marijuana.”

Well, you know the rest of the story. It was all downhill from there as far as drug reform goes.

… Wait.

The short reign of Peter Bourne as drug czar stands as the high-water mark of technocratic, scientific, unemotional drug policy. It also stands as the high-water mark of drug-policy naivete.

– Dan Baum, Smoke and Mirrors: The War on Drugs and the politics of failure

Happy 4th! Enjoy your freedoms.

In today’s heady environment of legal, statewide cannabis programs, it’s easy to forget just how difficult it was for those of us involved in  MMJ activism in the early days.

– Alice O’Leary Randall, pioneering medical cannabis advocate and spouse of the late Robert Randall

Man riding longboard wearing an American flag

As the events above show, the U.S. isn’t exactly perfect. But it’s still a wonderful country. For all the heated rhetoric taking place on today’s political stage, an appreciation of history can grant a certain perspective: Things have been a lot worse.

Nobody here is advocating complacency. But they’re growing hemp again at Mount Vernon, we have an all-volunteer military, and Americans in over a dozen states can celebrate Independence Day by smoking a doob—no medical justification needed.

Setting politics aside, it’s a pretty good time to be American.

Talk to one of our reps to learn how our industry-leading point of sale and inventory management solutions can help keep your dispensary sprouting upward.

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Expert insights on cannabinoid science from Ethan Russo (Part II of II)

Expert insights on cannabinoid science from Ethan Russo (Part II of II)

Cannabis Business, POS System, Specialty Retail

By John Garvey
A leading medical marijuana researcher weighs in on cannabis cultivation, public health and cannabis classification

If you were stranded on a desert island and had to pick one plant to meet all your needs, this would be the best choice.

–        Ethan Russo, M.D.

Last month we introduced physician and medical researcher Ethan Russo, who among other distinctions served as the Senior Medical Advisor to GW Pharmaceuticals for 11 years. Russo now heads the International Cannabis and Cannabinoids Institute (ICCI) in Prague.

Part I of this discussion focused on quality assurance, marijuana concentrates and public health. Today we’ll discuss plant classification, cultivation and cannabis pharmacology.

Like this discussion? Click here for more ICCI educational opportunities.

1) A pervasive misconception: THC + CBD is not a “spectrum.”

Of the hundreds of terpenoids and cannabinoids in cannabis sativa, THC and CBD are by far the best understood. Yet we know there are dozens of terpenes and other compounds that modify their effects and also work in isolation. Isolate CBD and THC from other plant compounds, and you have a lot of lost value.

CBD in isolation is an anti-inflammatory, anticonvulsant and has some other applications. In some respects, THC and CBD are complimentary. Yet full-spectrum products rich in terpenes and other cannabinoids more likely to benefit patients.

Of course most, if not all, recreational users prefer full-spectrum cannabis products.

2) Plant classification is an evolving, fascinating discussion.

Cannabis classification at its most basic goes something like this:

  1. Is it hemp or marijuana? (This has only to do with THC concentration, and given how many uses cannabis has, it’s really arbitrary.)
  2. Is it an indica, sativa or hybrid?

But as HEMP Magazine and have Cannabis Now recently discussed in detail, the way industry leaders classify different cultivars is evolving.

Recently, a number of competing nomenclature systems have come forward … to determine the proper taxonomy for cannabis,” reports Mitchell Colbert in Hemp Magazine. “Out of these, the one which has gained the most acceptance among scientists and hemp farmers is known as the ‘Phylos taxonomy,’ utilized by Oregon-based biotechnology company, Phylos Bioscience.

The Phylos taxonomy places cultivars into three simple classifications:

  • Type I: THC dominant with relatively-low CBD
  • Type II: CBD and THC balance
  • Type III: CBD dominant, often with below 0.3% THC, legally classifying it as hemp

This is one of the categorizations Russo uses, though he also classifies plants based on morphological characteristics (narrow- vs. broad leaf, plant height), terpenoid content, fiber and seed production, and specific cannabinoid content.

Russo says an ideal cannabis classification scheme will take all these into account, plus scent, taste and specific effects on patients.

Talk to one of our reps to learn how our industry-leading point of sale and inventory management solutions can help keep your dispensary sprouting upward.

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3) Grow outdoors whenever it’s an option.

The main benefits of growing outdoors are energy savings and plants which are healthier for consumption. (When we say “outdoors,” we’re speaking broadly to include greenhouses and other partially-enclosed structures.)

We touched on this our April 9 blog.

Indoor grows are the most susceptible to fungi, bacterial and insect contamination. They’re also the most likely to have residual pesticides. Dr. Russo also pointed out that the prevalence of indoor growing and related health risks are largely a consequence of prohibition. The illegality of cannabis literally kept growing operations underground and many of the best-known techniques for producing high yields involve indoor growing.

But does growing outdoors mean sacrificing yields? Nope. More and more anecdotal accounts suggest that outdoor growing may yield superior cannabinoid and terpene production. Stick that in your pipe and smoke it.

Russo offered two key pest control suggestions:

  1. Mechanical pest control. Yellow sticky cards which attract and trap pests are a safe and effective example of this.
  2. Biological pest control. Another alternative to spraying is biological pest control, or the use of insects that prey on harmful mites and the like. Applied Bio-nomics (OR) is one company with cannabis-specific pest solutions.

4) CBD is on top, but don’t knock the medicinal value of THC!

Hemp SalveCBD might be king right now, particularly since the FDA approved Epidiolex in June of last year. But however valuable we now understand CBD and terpenes to be, THC shouldn’t be sidelined in the discussion of cannabis as medicine. THC is itself an anti-convulsant with neuroprotective and mood-enhancing properties. Some THC present in CBD-dominant products also renders them more effective, says Russo. This reduces the required dose for symptom relief.

Not only is every medical condition unique; every human body is unique.

So tell your boss you’re not just doing it for fun. (Actually, it might be best to defer on that conversation.)

5) Patient care should allow for individualized treatments, but guidelines also apply.

In general, individualization of dosing is a good policy with cannabis-related medicine, says Russo, who has decades of experience as a practicing physician.

He adds that unfortunately, the tendency in pharmaceuticals is towards a one-size fits all approach.

Not only is every medical condition unique; every human body is unique. A therapy that’s successful for 19 out of 20 patients might not work for the odd one out. So some may achieve greater relief by vaping at a higher temperature that delivers greater amounts of THC, even at the cost of burning off some beneficial terpenes.

As a general guideline, patients who want individualized dosing and prompt relief of symptoms will benefit most from vaping terpene-rich, CBD-dominant (Type III) flower. Ideally, cannabis should be grown using organic farming standards in soil free of heavy metals.

Optimal THC presence is also, of course, highly individualized.

There are situations where THC dominance is useful, but it never hurts to have CBD, Russo says. CBD will not detract from the medical benefits of THC and brings medical benefits of its own.

Keep your dispensary sprouting upward

Expert insights on cannabinoid science from Ethan Russo (Part I of II)

Expert insights on cannabinoid science from Ethan Russo (Part I of II)

Cannabis Business, POS System

By John Garvey

One of the world’s foremost medical marijuana researchers weighs in on cultivation, public health and much more.

“If you were stranded on a desert island and had to pick one plant to meet all your needs, this would be the best choice.”

– Ethan Russo, M.D.

Ethan Russo knows more about weed than anyone you know.

Physician and medical researcher Ethan Russo is one of the foremost medical cannabis/medical marijuana experts worldwide.  Russo, who is board certified in neurology with specialized expertise in pediatric neurology, was the Senior Medical Advisor to GW Pharmaceuticals for 11 years (2003 – 2014). He has also been chairman of International Association for Cannabis as Medicine and president of the International Cannabinoid Research Society.

Russo is currently the director of R&D for the International Cannabis and Cannabinoids Institute (ICCI) in Prague.

So there.

In Russo’s April 9 webinar, “Making Cannabis Safer and Better,” (hosted by the ICCI), he discussed several key issues, including:

  • Cannabis consumption & health
  • Best practices for cultivation and quality assurance
  • Medicinal properties of terpenoids and cannabinoids
  • Public health and safety concerns associated with pesticides and heavy metals
  • Plant classification

This month, we’re discussing six key takeaways on health and quality assurance. (All quotes are Russo’s unless otherwise noted.)

1) Residual pesticides in cannabis present “a clear and present danger.”

“Pesticide-contaminated products present a clear and present danger, particularly to young patients with epilepsy and other neurological conditions. We cannot wait and watch the results of carcinogen exposure years down the road.”

Due largely to the lobbying power of the tobacco industry, “There are no EPA guidelines on acceptable pesticide levels for any smoked product,” notes Russo. Noxious pesticides are especially common in black market cannabis.

From a public health and regulatory standpoint, Russo’s greatest concern is inadequate regulation and testing of pesticides used in cannabis cultivation.

“No current method is available to legally certify organic cannabis culture.”

Colorado mandates pesticide testing, but few if any other jurisdictions do. Legal cannabis in Washington analyzed and found to have alarming amount and frequency of pesticide residue.

2) Vaping is great, but quality product comes first.

Vaporizers, for all their merits, do not eliminate all harmful elements such as polyaromatic hydrocarbons and residual pesticides. By eliminating combustion, vaping provides a healthier route of consumption, but it doesn’t solve everything.

Plus, regulators aren’t scrambling to accredit a new route of medication delivery.

“It is going to be a hard road to get a vaporizer approved by the Food and Drug Administration or other regulatory bodies.”

On the other hand, the FDA will never recognize any smoked product as medicine. I will literally eat my shirt if I turn out to be wrong on this one.

3) For optimal effect, make it a priority to preserve terpenes/terpenoids.

“What we really need for optimal medical preparations are the kinds of [extraction] techniques that preserve [terpenoids].”

Even with CO2 extraction, terpenoid concentrations tend to decrease. Some terpenoids are more vulnerable than others. If you know anything about terpenes, you know their presence affects the psychoactive and physiological effects of cannabis.

  • Pinene, for instance, is uplifting and offsets short-term memory loss, which is one side-effect of THC. Pinene-rich strains will be better for people needing to function at a high level cognitively and physically.
  • By contrast, myrcene, the most common terpene in marijuana, has a relaxing, sedating effect. That generally makes myrcene-dominant cannabis undesirable for daytime use.

It’s worth reiterating that not only CBD but also certain terpenoids can have a buffering effect against undesirable traits of THC intoxication. These include discomfort, paranoia and short-term memory deficits.Woman vaping

4) Concentrates: To dab, or not to dab?

Butane extraction, in particular, concentrates not only THC (an obvious appeal to certain recreational users) but also any contaminants. It also strips away terpenoids. People who use concentrates quickly develop high tolerances and are more likely to experience withdrawal symptoms than people who smoke or vape flower.

Russo has concluded that smoking or vaping concentrates has no medical purpose. While they’re extremely effective for producing intoxication, nobody needs to get that high to achieve symptom relief.

Adults have the right to do as they like, but industry professionals should recognize that. Smoked or vaped concentrates are better at quickly delivering THC into the body than any other method. But they’re inferior from a medicinal standpoint.

5) Soil quality influences more than yields.

Russo noted that cannabis is a bio-accumulator, meaning it absorbs heavy metals from soils. This makes it highly valuable in bioremediation (hemp was used to cleanse the soil after the Chernobyl nuclear disaster), but it also raises public health concerns. If cannabis is grown in soil containing heavy metals it can pass those contaminants along to consumers. Soils should be tested for mercury and other heavy metals before they’re used in crop production.

6) Recreation vs. Medicine, in a nutshell:

Russo cited efficacy, safety, consistency and accessibility as “The Four Pillars of True Medicine.” In brief, here’s what each of those terms mean:

  • Efficacy (as demonstrated by Phase I – III Randomized Controlled Trials, or RCTs)
  • Safety (also proven, ultimately, by RCTs)
  • Consistency (standardization of production techniques and testing)
  • Accessibility (supply chain is efficient and regulated; costs aren’t prohibitive)

GW Pharmaceuticals has largely achieved this with the approval of the first cannabis-plant-based medicine. But sometimes the conversation gets pretty murky. Calling marijuana “medicinal” in many cases is indisputably correct; calling it “medicine,” without rigorous testing and standardization for specific conditions, is technically incorrect.

To continue moving the conversation forward, it would probably benefit advocates to be clear on the distinction between a plant with valid medicinal applications and a medicine in the literal sense.

Russo had plenty more to say about plant classification, cultivation and pharmacology that we’ll share next month. In the meantime, we’d love to hear your own thoughts on any of the above points.

Cannabis Enterprise Business Solutions

Talk to one of our reps to learn how our industry-leading point of sale and inventory management solutions can help keep your dispensary sprouting upward.

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Curb Expenses & Increase Cannabis Yields With Systems Thinking

Curb Expenses & Increase Cannabis Yields With Systems Thinking

POS System

Capital expenditures, environmental impact, yields and your bottom line

By: John Garvey

Say you have an indoor cannabis grow and 40 percent of your utility costs go to lighting. You replace your HID (high-intensity discharge) bulbs with LEDs. To make the math easy, let’s say conservatively that you save 25 percent on lighting costs and the effect on yields is neutral. Cutting your lighting costs by a quarter reduces your overall utility costs by 10 percent, right?

Wrong. The math* is right, but the reasoning is not. LEDs generate less heat than HID bulbs, which saves you money not only on lighting but on air conditioning. That, in turn, makes it easier to minimize temperature fluctuations, reducing the strain on dehumidifiers and other systems.

  • * (25% savings x 40% of total utilities = 10% overall savings)

Systems thinking

The big idea behind this, and one that’s all too often ignored in evaluating capital investment decisions across all business sectors, is systems thinking.

Systems thinking, a design approach that arose in the mid-20th century, is all about looking at how individual elements of a system act upon one another. Seemingly disconnected things have a way of complimenting or hampering each other’s performance. In an office environment, for instance, window placement will influence light quality, increasing or decreasing reliance on artificial light. This influences utility bills and, more importantly, employee productivity. (There’s a clear link between access to daylight in the office and productivity.)

HVAC systems, insulation, fenestration (window placement), decor, employee absenteeism and turnover, indoor air quality and microbial activity are all related. You shouldn’t look at any of them in isolation. This is true of our homes, offices, schools, communities, and yes, grow houses.

Green Studio Handbook“Systems thinking realizes that nothing ever occurs in a vacuum,” states The Green Studio Handbook. “Every element and event is seen as being a part of, and interacting with, a larger system, and that system in turn is part of an even larger system of interactions.” (The Handbook is about eco-friendly, functional building design and has nothing specifically to do with cannabis.)

When you view individual problems and solutions as part of a whole, you recognize they tend to have a cascading effect. As a cannabis operator, systems thinking can reveal opportunities to save money and reduce your environmental impact without sacrificing yields.

Case in point: LEDs

“LEDs have caught up (to other lighting systems) in what they can do for the plant,” recently stated Jess Peters, Oregon Cannabis Association board member and co-founder of Eco Firma Farms, in Marijuana Business Magazine.

Peters has seen LED lights outperform HIDs in terms of terpene production and yield per cubic foot. LEDs also last longer than HIDs, helping growers recoup additional up-front costs.

In fact, rebates for energy upgrades provided by utilities such as Xcel Energy in Colorado abound. So up-front costs may be nominal.

GreenhouseLED lights haven’t always offered the ideal light spectrum for growing cannabis, but the technology has advanced a lot in the last two years. With the possible exception of vegetative lights, LEDs should affordably meet all your needs. At least anecdotally, they’ve been shown to improve yields. (We also touched on this subject last October in an interview with John Torkelson, Senior Operations Manager at Point Seven Group.)

Indoor vs. outdoor grows

Cannabis consultant Van McConnon, in a recent interview with Marijuana Business Magazine, rather bluntly suggested indoor growing isn’t economically viable in the long run.

“The indoor facilities are the noose that’s going to hang these businesses. My advice to every client I talk to is, ‘Do not spend another dollar on indoor grows. Period. You want to save money on indoor? Don’t build it.”

While regulations around greenhouse and hoop house growing vary from one locality to the next, and a large, existing indoor growing infrastructure is already in place, the industry seems to be heading in the direction of outdoor growing by default. We’re not telling you how to grow, just talking about a potential opportunity.

Last month, Peters advised growers in a separate interview, “Get out of the municipal [water] system if you can. This is an unnecessary expense.”

A septic system and bioswales provide an alternative to those able to manage it, notes Peters. (The Green Studio Handbook defines bioswale as “densely vegetated open channels designed to attenuate and treat stormwater runoff,” although the definition clearly extends to agricultural and industrial runoff. It’s a simple, under-utilized approach to environmental mitigation.)

Suburban Bioswale
A suburban bioswale in Mequon, WI. Courtesy of Aaron Volkening, Flicr

Recognizing that some cultivators are practically married (by necessity) to their water utilities, Peters offers some practical advice such as purpose-built water filtration solutions and recapturing water coming off dehumidifiers.

A values call, or a hard-nosed business decision?

Marijuana Business Magazine also reported in January that “[I]nvesting in environmental improvements and efficiencies—even beyond those required by law—may mean the difference between success and failure in these days of razor-thin wholesale margins among growers.” Increasingly strict environmental requirements are being imposed on the industry. Waste reduction, water and energy conservation are higher priorities than they were five years ago due to a combination of shrinking margins and regulatory mandates. Radical resource efficiency is less and less a values call, more and more a hard-nosed business decision.

Not surprisingly, Boulder, CO has the most stringent environmental regs in the state if not nationwide. The city now requires cultivators to report energy use and offset it by paying into the new Energy Impact Offset Fund. Boulder created the fund specifically to address the cannabis industry’s energy footprint.

Regardless of whether you operate in a locality with strict environmental regulations, controlling costs is the other side of the sustainability coin. Investing in better lighting and water recovery processes may seem like a tough call if your margins are being squeezed. But working with your local utility may improve the financial appeal of making investments in resource efficiency.

Being as green as your product would be a pretty big undertaking, but it has been managed.

Later this spring we’ll circle back to this topic, highlighting 5 – 7 companies that have developed exciting innovations in water conservation and eco-friendly lighting technologies.

Cannabis Enterprise Business Solutions

Talk to one of our reps to learn how our industry-leading point of sale and inventory management solutions can help keep your dispensary sprouting upward.

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Two Key Insights You Should Be Considering as the Cannabis Industry Enters its Adolescence

Two Key Insights You Should Be Considering as the Cannabis Industry Enters its Adolescence

Cannabis Business, News, POS System

Thinking and Acting Strategically as the Legal Cannabis Industry Enters its Adolescence

It starts with having clarity about your exit strategy

By: John Garvey

Last July, shortly after Canada legalized cannabis, Canadian firm Aurora Cannabis (NYSE: ACB) acquired MedReleaf for CN$3.2 billion—or $2.3 billion U.S. A record-breaking cannabis industry acquisition, it signaled that the industry’s transition to adolescence. The number and value of acquisitions surged in 2018 and, barring catastrophe, the trend towards consolidation will continue well into the coming decade.

Five years from now, there will still be some boutique dispensaries, small-scale MIPs producers and growers in the cannabis industry staying profitable with a slow growth strategy. However, a large portion of cannabis retailers are looking at one of three exit strategies:

  1. Acquisition: Make sure your ducks in a row and position yourself for a profitable acquisition.
  2. IPO: Expand through acquisitions and position yourself for an eventual IPO.
  3. Growth without public financing: Shield your brand from acquisition without going public, relying on alternative corporate financial strategies for growth (private equity, M&A, employee stock ownership plans, etc.).

Too good to refuse

Having clarity about your exit strategy is a critical, often overlooked priority, regardless of how you currently feel about your business. Whatever the case, you might end up leaving a lot of money on the table if there are any ambiguities relating to your inventory, cash flows or compliance.

Many operators are at a point in their growth where they feel it might make sense to invest in enterprise-level software, including more advanced seed-to-sale tracking, labeling, CRM, time tracking and business intelligence capabilities. It’s a considerable investment, raising the question: At what point does it make sense to make that investment?

For those who have even begun toying with the idea, the probable answer is, “Yesterday.” It boils down to compliance, attractiveness (to investors), efficiency and quality of life.

We’ve previously written about the importance of compliance and integration between accounting, inventory tracking and other systems. While these are important to any heavily-regulated industry, we want to stress two things here:

I. Investors and prospective buyers want accessible, clear data

Woman Analyzing DataIf you’re a cannabis touching business (a retailer, grower or processor), there’s a good chance you’ll get an offer on your license in the next three years that’s too good to refuse. Investing in ERP software that provides you better in-house access to data, generates reports and seamlessly tracks inventory in real time will put you in a strong negotiating position when that time comes. That data will inform your own valuation of your business and give you something to lean on when making counteroffers.

“99 percent compliance is not compliant.”

John Torkelson, Senior Operations Manager at Point 7 Group

RCS has made cannabis industry specific customizations to NCR Counterpoint, our retail support solution for POS, CRM, inventory management and time tracking solution. Those customizations, including automated reports, low inventory alerts and security measures,  improve your day-to-day operations and help position you for a profitable acquisition.

II. The right business management solutions deliver profits and peace of mind

Due to various regulatory constraints and stigma, cannabis operators have struggled to find satisfactory banking, point of sale and other business support solutions. While this is often discussed as a liability, it’s also a matter of being able to enjoy your business.

“I like manual data entry.” – Nobody, ever

Knowing you’re on solid ground and having your data where it belongs (instead of a courier bag stuffed full of receipts) just makes life better.

Woman Sleeping

You’re not just investing in compliance, you’re investing in customer retention and a good night’s sleep.

Getting your baby off to college

The motivations that originally brought cannabis operators into this industry are probably as varied as Van Gogh’s color palette. For those who understood that some of the risks were overstated or misunderstood, it has been a great opportunity. Many in the industry have fared admirably in spite of the constant uncertainty.

Perhaps you were drawn to it because of a deep sense of purpose that comes with providing people a way to manage chronic illnesses, or providing a safer recreational alternative to alcohol.

Then there’s the excitement of being part of a new, dynamic industry. It continues to be a great conversation starter even as the industry has grown more accepted and conventional.

Whatever the case, the passion was there. That remains, but economic forces (including the entrance of big players in pharmaceuticals and consumer products) are pushing the cannabis industry inevitably towards consolidation. If you see your dispensary as your baby, you might liken it to a child ready to go off to college. Making sure your books are in order and that fewer details require your day-to-day attention is a good thing. It’s like making sure your kid knows how to do laundry and budget for groceries and entertainment before you send him or her off into the world.

Whether you do business with us or not, consider investing in enterprise level software with capabilities specific to the cannabis industry. If you want to remain a boutique, stand-alone dispensary or small chain, that may be beyond your needs. Either way, the right retail management software and hardware will improve your day-to-day life and profitability.

Contact us for an assessment of your cannabis POS needs. You’re not just investing in compliance, you’re investing in customer retention and a good night’s sleep.

A Look Back on an Epic Year for the Cannabis Industry

A Look Back on an Epic Year for the Cannabis Industry

Cannabis Business, E-commerce, POS System, Specialty Retail

A Look Back on an Epic Year for the Cannabis Industry

… and a peek into 2019

By John Garvey

It’s never been easier to find cannabis-related topics to write about, but providing accurate information that improves the quality of the conversation is another thing altogether. The overall conversation surrounding medical cannabis, cannabis banking and the industry at large definitely moved in the right direction last year despite some obstacles.

In case you ate a giant weed brownie on New Year’s Eve 2017/18 and are just waking up, 2018 was an epic year for cannabis. Here are highlights: Auld lang syne!

Law enforcement

Police in riot gear lined upAnother year went by with no major Justice Department action against prudent legal cannabis industry operators. This in spite of a big scare when (now former) Attorney General Jeff Sessions repealed the Cole Memo in January. Either because Sessions was posturing all along or because he had other things competing for his attention, he never took action against the industry.

If that means you won a bet with one of your neurotic stoner friends, cash in your chips.

Pharmaceuticals

Epidiolex, an anti-epileptic drug developed by GW Pharmaceuticals (NASDAQ: GWPH), became the first cannabis plant-derived drug to receive full FDA approval last June. (Long-approved anti-nausea and appetite-stimulating drug MARINOL is made with synthetic THC.) We wrote an entire blog mainly in response to the fear that cannabidiol/CBD would become patented or trademarked by GW Pharma (the claim was malarkey).

Legislation

Stack of papersTwo pieces of major federal legislation were introduced last June: the STATES Act and the Marijuana Freedom and Opportunity Act. Either would be a huge boon to the cannabis industry. Although recent setbacks indicate that neither is likely to pass, the proposed reforms were bold and historic. The fact that these issues are being discussed seriously in a bipartisan manner is huge.

We covered this in-depth in our July blog. If you didn’t catch it, here’s a synopsis:

  • The STATES Act sought to extend federal trademark protections to the industry, improve access to banking services and shield compliant operators against seizures by the Department of Justice. “If passed,” we wrote, “the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, co-sponsored by Sen. Cory Gardner (R-CO) and Elizabeth Warren (D-MA), will be to the cannabis industry something like the SpaceX Falcon Heavy launch was to private space travel.”
  • Shortly after the STATES Act was introduced, the Marijuana Freedom and Opportunity Act was introduced in the Senate. We wrote, “Above all, passage of the MFOA would provide advocates something they’ve been salivating over the mere thought of since 1971: rescheduling ‘marihana’ to a less-restrictive place in the CSA’s inherently flawed controlled substances schedule.”

Canada

Canada legalized cannabis, making it the second country to do so (after Uruguay). The only problem is I think my wife has a thing for their Prime Minister so I still don’t fully trust them.

California

California Flag
Hope California’s cannabis industry veterans and incumbents are keeping up on their blood pressure meds. Because that sounds stressful.

Two decades and change after California passed the historic Compassionate Use Act (Proposition 215, which made CA the first state to legalize medical cannabis), legal recreational cannabis sales began. Implementation has been complicated due in part to the established grey market operators struggling to meet compliance guidelines or disregarding them altogether. Some licensed, compliant operators may feel that they’re competing against establishments whose main competitive advantage is avoiding taxes and compliance costs. True?

California’s MMJ industry has long been comprised largely of collectives and co-ops. Most municipalities still aren’t allowing licensed cannabis dispensaries to operate locally, the state isn’t issuing nearly enough licenses, and all the unlicensed operators were set to lose their remaining legal protections on January 9, 2019. Licensing, third-party testing, distribution, enforcement, clear rules and point-of-sale capabilities were all lacking to varying degrees through 2018.

It’s been a bear (pun intended).

Newbies

Vermont became the first state to legalize recreational cannabis by legislative action rather than ballot. Michigan also legalized the whacky weed, the first Midwestern state to do so. This brings the tally of fully-legal states to 10, plus the District of Colombia.

Medical marijuana was legalized by ballot in three red states including Utah, Oklahoma and Missouri—the latter two winning approval by huge margins.

Hemp

Hemp was removed from the Controlled Substances Act (i.e., legalized) thanks to a provision in the 2018 farm bill, signed into law on Dec 20, 2018. The FDA issued a surprisingly comprehensive and interesting press release.

Investing

Five Canadian cannabis firms were listed on major U.S. securities exchanges—three on the New York Stock Exchange and two on the Nasdaq. Meanwhile, dozens of U.S. cannabis companies were listed on the Canadian Stock Exchange.

We started an awesome cannabis industry blog

In the last year we’ve written about intellectual property law, licensing and compliance, strategy, industry consolidation, various issues pertaining to dispensary operations, and terpenes.

If you ever meet our parents, please don’t tell them how much we know about weed.

Things to watch in 2019

It might take two, three or four more attempts to achieve a substantial, legislative drug policy reform at the federal level, but it will happen and soon. What will that look like? We have our guesses. We’ll continue sharing strategic insights about opportunities in the cannabis industry, dispensary operations and new cannabis regulations.

Cannabis Enterprise Business Solutions

Talk to one of our reps to learn how our industry-leading PCI compliant point of sale and inventory management solutions can keep your dispensary running smoothly.

Waxing on Cannabusiness with LivWell (part II of II)

Waxing on Cannabusiness with LivWell (part II of II)

Cannabis Business, Featured, POS System, Specialty Retail

Waxing on Cannabusiness with LivWell (part II of II)

By John Garvey

This month we’re talking again with our friends at LivWell Enlightened Health, one of the nation’s largest cannabis retail chains and cultivators, about the challenge, inspiration, and oddities of … well, selling weed.

In last month’s blog we spoke with three people from different departments about their backgrounds and what inspires them as cannabis industry professionals. For part II of this blog, we’re talking about the nuts and bolts of compliance and cannabis retail ops.

I. A high-stakes decision

One of the highest-volume retailers in the cannabis industry is LivWell’s Garden City marijuana dispensary in Northern Colorado.

And the busiest day

for the busiest of 14 Colorado locations

for one of the largest cannabis retailers in the state is … (drumroll)

4/20

April 20th. Always has been, always will be.
Cannabis Buds in Jars
If you’re reading this you probably already know that 4/20 is like a combination of Independence Day and Black Friday for marijuana dispensaries (except 4/20, in contrast to Black Friday, is an actual holiday as far as I’m concerned).

Illinois native Mandy Leseure, the General Manager at LivWell’s Garden City branch, had a lot on her mind the week leading up to 4/20 this year. Her store switched to NCR Counterpoint—Anthea’s point of sale (POS) system—in the midst of the holiday shopping surge.

“We got the new system two days before 4/20,” Mandy recalls, “and we did that strategically because we knew our previous POS system would not be able to support what we were going to be doing that day.”

The POS system LivWell had been using frequently crashed, no doubt causing people’s blood pressure to skyrocket even on less busy days. The risks of not switching POS platforms included not only thousands in lost revenue over a single day, but also inventory tracking errors and liabilities.

So how did things pan out with this time-sensitive system overhaul?

The day itself was exciting, but the Counterpoint/Anthea transition went just the way Mandy had hoped: boring. … At least in the sense that nothing went wrong.

“I had staff members that used Counterpoint for the very first time on 4/20, so its ability to be user-friendly was fabulous,” Mandy states. “Basically, if they were able to read they could use it, and it didn’t crash once during that entire 4/20 sales binge.”

Sorry. This story would have been more interesting if things had gone horribly wrong. If you want to learn some fascinating background on 4/20, however, we recommend this podcast:

Criminal: The Meaning of 420

  • Hosted by award-winning journalist Phoebe Judge, @PhoebeVJudge

II. Nothing says “fiasco” like a missing lollipop

Compliance and inventory tracking

Row of lollipops on purple backgroundIn addition to point of sale solutions, Anthea integrates marketing functions, seed-to-sale inventory management, accounting, and other systems seamlessly. Manager of Retail Compliance and Corporate Security, James Bauer, can attest to that. The previous system, he says, was pretty good for inventory tracking, but LivWell needed a single platform that everyone across departments—purchasing, accounting, marketing, auditing—could use. That’s important when dealing with what is perhaps the most heavily-regulated inventory in the country.

James says the State’s expectation regarding cannabis inventory tracking and compliance is perfection:

“Anyone who’s worked any retail job and has ever dealt with any inventory accounts knows no one’s perfect. The challenging part for us is we employ over 500 people—200-plus on our retail side—so to expect them to never make a mistake isn’t realistic.

“When a department store like Kohl’s would look at a missing tee shirt, they’d write it off and carry on with their day, … one medicated lollipop that we spent maybe six or seven dollars on can become a major liability if it’s unaccounted for.”

“If we have someone who forgets to scan that and it goes out the door, then during our audit our inventory catches that discrepancy. We have to launch an investigation and see where it went and how it occurred so that we can report that accurately and compliantly to the state. So, that’s one of my biggest concerns on the inventory end.”

Integration across departments

An inventory management system that can integrate accounting, auditing, and other functions across departments not only makes occurrences like these less frequent but reduces the number of hours needed to investigate if they do occur.

Counterpoint is capable of generating over 40 reports, and James’ department uses six or seven on a regular basis, providing a “huge” operational advantage.

“The reports that you guys have provided us with, including the forensics and history reports that help us track down the sales ticket and who sold those products, and the ability to search with the Metrc number are key for us,” James states. “So that’s definitely been a huge benefit of moving to this platform: the reports that are generated from it.”

Where we’re at now, it’s never been better. The audits are quicker, our inventory counts are quicker, there’s more accuracy on them, and then the reports are huge.

III. The Wild West is behind us

Wild west buildings with wagon and old truckIT and reporting

Tech savvy Danielle Biddy began at LivWell 4 ½ years ago as a budtender. Her promotions to Assistant Manager, Retail Project Manager, and now IT Systems Manager were driven largely by her technical aptitude and curiosity.

Danielle is glad to be working in a maturing industry. For her, Anthea’s solutions have played a big role, allowing LivWell to operate like a business in any other industry.

Nonetheless, industry-wide challenges, including sky-high compliance expectations, remain. That’s why you can’t skimp on tracking capabilities. Anthea’s solutions allow LivWell to track seed-to-sale with Metrc RFID tags and barcodes. Ensuring that each budtender is selling from the correct batch and being able to barcode products in-house are also extremely important capabilities. Only solutions providers with a cannabis industry specialty can offer these.

“Anthea is helping because we can specify that it’s Metrc-specific,” Danielle says. “We can make purchase orders on this product, which is not something you can do with other systems.”

Retail and inventory reports

Danielle runs numerous weekly sales reports, including sales by category, by item, and hourly sales trends. These allow LivWell to anticipate demand, reduce stock-outs and surplus inventory, and schedule staff more efficiently.

Counterpoint’s reports also make it a lot easier to keep an eye on open transfers.

“The Anthea reports that we have are a lifesaver actually,” she says. “We have so many more options in terms of what we can get out of the system, such as transfers and alerts.”

Cannabis Enterprise Business Solutions

Talk to one of our reps to learn how our industry-leading point of sale and inventory management solutions can keep the boogie man away from your cannabis dispensary.

Read Examining the Cannabis Industry with LivWell (Part I of II) to learn more about what inspires people in the cannabis industry and what keeps them awake at night.

Examining the Cannabis Industry with LivWell (Part I of II)

Examining the Cannabis Industry with LivWell (Part I of II)

Cannabis Business, Featured, Just for Fun, News, POS System

Examining the Cannabis Industry with LivWell (Part I of II)

By John Garvey

This month we’re talking with our friends at LivWell Enlightened Health, one of the nation’s largest cannabis retail chains and cultivators, about the challenge, inspiration and oddities of … well, selling weed.

Three people from different departments were kind enough to share their insights and experiences with us. We’ll start by discussing what inspires them and then talk about the nuts and bolts of compliance and cannabis retail ops in part II.

I. James Bauer, Manager of Retail Compliance and Corporate Security

James Bauer, a former combat medic in the U.S. Army, returned with an injury from his second tour in Afghanistan in 2010 after serving with the 1-66 Armor Battalion, 4th Infantry Division. He transitioned into the cannabis industry after being honorably discharged in early 2013 and joined LivWell a little over three years ago.

“If there’s one lesson I learned during my tours of service that has helped me in the cannabis industry,” James says, “it’s: be prepared for anything.”

As of January, James oversees the entire Retail Compliance and Corporate Security department. Given that LivWell has 14 dispensaries in Colorado, one in Oregon, and several large grows in Colorado’s Front Range, it’s safe to say his knowledge of cannabis goes far beyond knowing the differences between Sativas and Indicas.

What lights you up about the cannabis industry?

Brightly lite cannabis plants“It’s important to me being a veteran because I see my buddies come home and from my observations, they’re prescribed 20, 30 medications. In my experience you take one medication for one problem but there’s three side effects and then you’ve gotta take three medications for those side effects. And next thing you know, you have like 20, 30 prescriptions. I’ve spoken with so many of our patients and customers who say that cannabis can help them in ways they feel are far superior to these more traditional kinds of medications.”

“I came home diagnosed with PTSD, they had me on all kinds of medications. And since I’ve gotten out and gotten into this industry that’s been one of the biggest game changers for me.”

“Obviously I’m biased here, but if we’re willing to send these guys to the other side of the world and put them through worst-case scenarios and nightmares, and in my opinion, I think it’s important for us as a country to give them anything and everything that’s going to help them get back to where they need to be. So me personally, I would say that’s one of the more enjoyable aspects of being a veteran and being in the cannabis industry.”

“So what lights me up about cannabis? Just being a part of the industry, and specifically being a part of LivWell, because we do strive to do it right, follow every single rule and be the example.”

II. Mandy Leseure, Retail Manager, LivWell Garden City

Originally from Illinois, Mandy has been with LivWell for two years at the Garden City location. She got into the cannabis industry by accident, which she laughs about to this day.

“When I applied to LivWell Enlightened Health I thought it was a health food grocery store. … So after I got called for an interview I started really looking into the company and making sure I had all my Ps and Qs straightened out. And then I realized it was marijuana.”

Browse LivWell’s Products including flower, concentrates, specialty brands and apparel

What gets you out of bed in the morning?

“I get to sell and talk to people about weed all day long. That is just the coolest thing that I’ve ever been able to do, to actually speak openly and honestly about what I believe this product can do for people that need help.

But it’s also just fun.”

Sign that says I weed, you weed, he weed, she weed, it weed, we weed, you weed, they weed.Mandy interacts daily with people on both the medical and recreational side of the store, so she knows people who smoke or consume cannabis aren’t all party animals and concert-goers (although there’s nothing wrong with that!). Cancer patients and caregivers make up the largest patient segment at the Garden City location she manages—which is significant.

“We are the highest-volume store for the company,” she states. “We’re probably one of the highest-volume stores for the industry period.”

Mandy frequently speaks with patients and consumers who tell her that cannabis helps them cope with chronic pain, opioid withdrawal, anxiety, post-traumatic stress disorder (PTSD) and a laundry list of other things. Her oldest patient (adjusting for life expectancy because the patient is a different species) may be a 30-year-old elk who uses LivWell’s CBD pet tincture to manage arthritis.

“I was a flower person first, and I still am,” Mandy says. ”But I’ve really learned to appreciate CBD products in general. My favorite ones are tinctures and patches. I used both of them after my surgery because the painkillers they were giving me were making me sick. So I quit taking those and just started using tinctures and patches.”

“I fell in love with those and now everybody in my family uses them.”

Check out LivWell’s primer on CBD and browse products

III. Danielle Biddy, Systems Manager (IT)

Danielle moved to Colorado from Texas in 2013 to be part of the cannabis industry and soon found employment at LivWell, where she just completed her fifth year. She had never been in a dispensary before interviewing at LivWell.

What inspires you about working in cannabis?

Cannabis plant with drop of water on it“Mostly just seeing how many people actually use cannabis and how many people this is affecting. Scientists, artists, businesspeople, young adults, vets—it’s amazing to me how all these people are brought together over a plant. It was illegal for so long, it kinda blows my mind.”

The many challenges related to both public perceptions and the cannabis industry’s rapid growth are a call to arms for Danielle. The U.S. has come a long way in terms of accepting the industry as a legitimate business enterprise in the last five years. Still, she continues challenging herself with questions relating to those fundamentals:

“What can we do next to show people that this is a real industry, a viable product? How can we innovate and make this better as an industry, a product, as a whole?”

Anthea has been a big part of that at LivWell, helping to coordinate activities between departments, ensure compliance and keep things running smoothly at the point of sale.

“Being able to run it like a normal company has just made a huge difference,” Danielle says. “I mean we’ve just saved so much on labor costs and time management.”

“Our last system, it crashed on a daily basis. So having a system that’s reliable makes a huge difference. When the system goes down and you’re writing hand-written tickets that’s not good for business. The reliability of Anthea is just a huge weight off our shoulders.”

* LivWell Enlightened Health makes no claim regarding the health and medical benefits of cannabis

Cannabis Enterprise Business Solutions

Talk to one of our reps to learn how our industry-leading point of sale and inventory management solutions can help keep your dispensary sprouting upward.

Stay posted for part II of this blog where we’ll talk in more detail about the challenges of working with what may be the most heavily-regulated inventory in the country.

Waxing On Cannabis with Point 7 Group:  Industry trends, challenges, opportunities and risks

Waxing On Cannabis with Point 7 Group: Industry trends, challenges, opportunities and risks

Cannabis Business, News, POS System

Waxing On Cannabis with Point 7 Group: Industry trends, challenges, opportunities and risks

by John Garvey

John Torkelson
Today we’re talking with John Torkelson, Senior Operations Manager at Point Seven Group, a business solutions and consulting firm in the cannabis space.

John moved to Colorado from Illinois in 2010 after graduating from Columbia College with a degree in Arts Entertainment Media Management. As a cannabis consultant he does a little bit of everything: facility design, seed-to-sale tracking, compliance, extraction, pre-licensing, marijuana-infused products (MIPs) and operations management.

John’s experience in and understanding of the industry makes him a solid resource for those wishing to go into cannabis cultivation, extraction or retail. He’s helped design cannabis facilities in four states and helped dozens of aspiring cannabis industry pros navigate the licensure application process.

My start into the cannabis space was very organic.

“I actually had never seen a real-life, flowering cannabis plant before I moved out here,” John says.

“I didn’t really think I was going to get into the industry and then I came out here and got my [medical marijuana] card and it was like, ‘Holy s***, this is a real industry with young people, movers and shakers. This is really cool.’”

John grew up gardening with his mom and dad and entered the industry as an entry-level trimmer. In time he worked his way up to head R&D Grower for a Denver-based cultivator.

“I was kind of left to my own devices in a 10,000 square foot facility for a while and just got to pop seeds and look at new stuff and that was really fun,” he recalls.

From there he moved into the company’s larger production facility where he lead the implementation of the company’s clone division. They quickly scaled from selling a couple hundred clones a month to selling thousands of clones with A-list genetics at a time.

“There are plants with our genetics all over the state now, which is pretty cool,” he states.

Cannabis Plant
A flowering cannabis plant grown under John’s care. (I mean damn, the guy has a green thumb—I can barely keep a cactus alive.)

John left that company a couple years ago and moved into cannabis consulting with Point7. The team at Point7 has almost three decades of collective experience in regulated cannabis markets, which is a lot for such a young industry.

Newbies: What you need to know

It’s a topic for a book (actually, a number of books by now), but here are a few key things to be aware of up-front if you want to start a marijuana dispensary, cannabis growing operation or extraction facility:

  • Be aware of how competitive the pre-licensure application is, and …
  • Be prepared to spend at least $5,000-$10,000 on the application process (sorry)
  • Have in-state partners if you aren’t already in-state
  • Have a clear exit strategy from day 1
  • Have a compliance mindset from day 1

Pre-licensing

“I cannot stress enough that it is getting much more competitive from state to state.”

The competitive nature of the application process requires you to drop 4 – 5 figures just to get a license. People wanting to enter the industry are thirsty for information about legal issues including contracts; application and compliance costs; and how to put together partnerships.

Unless you’re ridiculously driven, detail-oriented, experienced and naturally competent across all these dimensions, you need someone on your team with considerable industry experience or an outside consultant. No point in giving yourself an arrhythmia.

Compliance

Cannabis Plant“99 percent compliance is not compliant.”

“Compliance is no longer a grey area at all,” warns John. “These regulators and these inspectors, you have to be compliant. And having a good software partner that understands regulatory compliance at a state level and a municipal level is really, really important.”

Quality software with industry-specific features will keep the dogs at bay by helping you maintain clear records and channels of communication across your company. Do it.

Partnerships

Some states are responding to the industry’s rapid growth and consolidation by creating residency requirements. Missouri, for instance, will require 51 percent in-state ownership for cannabis operators. (Amendment 2 in Missouri, which would legalize medical cannabis, is likely to pass in November.) Other states have more stringent requirements. It’s generally a good idea to have local partnerships in most industries, although residency requirements make that all the more important in cannabis.

That said, regulators in newly legal states view a history of compliance in other states favorably. Consider an out-of-state partner or experienced consultancy if you’re pursuing a license in a newly-legal state.

Book a consultative call with John

Exit strategy

We’ve noted in previous blogs that the cannabis industry is experiencing rapid consolidation, making exit strategy an important topic of discussion tied to compliance.

“Big Pharma companies, Big Ag companies that are used to running compliant and heavily-regulated businesses—they want that same level of confidence in the groups they’re buying out,” John says.

“If you have the state inspectors knocking on your door every other week because you can’t get your inventory put together at your dispensary, at your cultivation facility, that doesn’t look good to a potential buyer. If you have those dings on your record as an operator, that’s something people absolutely look at when they’re talking about investing in a company.”

Lemon Sorbet cannabis plant
Lemon Sorbet: One of John’s creations. Yum.

As the price of flower continues to drop, how do you keep your product from becoming commoditized?

“As the margins drop and as more people are able to grow lots of cannabis I think we’re going to see a split between craft cannabis vs. the Anheuser Busch or Coors model, as we’ve seen in the alcohol realm. It’s the difference between Black Shirt Brewing in Denver or Renegade vs. Coors over in Golden.

“You’re never going to be able to keep up with their production but at the end of the day if you want whatever the hippest new flavor is, the big players aren’t going to have that. They’re going to have Blue Dream, they’re going to have Sour Diesel. The stuff that works and does what it’s supposed to do but that is one way to differentiate yourself is to have the new hot flower and stuff that only you have in the market.”

In a nutshell, good genetics, proprietary genetics, and generally growing high-quality cannabis are keys to keep your brand from becoming commoditized.

Green Ops: Energy resource management

A common point of discussion, both with regard to operating expenses and environmental impact, is the huge amount of energy it takes to grow cannabis indoors. What steps is the industry taking to reduce these financial and environmental costs?

“I think LED technology has really there in the past 18 months, at least for the [vegetative] side of things. I think that LEDs can absolutely do what you need in veg and they pull a lot less power.

Whoever comes up with the first really killer vegetative LED light is going to be a rich person in this industry.

John’s recommendation? Get a relationship going with LED companies and energy companies to identify rebate opportunities and other ways to save.

Opioids

“As far as public policy, I think that what is exciting for me and what I’m seeing more and more talk of medical marijuana decreasing opioid addiction and overdoses.

“And as someone who unfortunately has lost two very good friends to opiate overdoses, it’s very encouraging to see that in these regulated states that have [legal cannabis] programs … we are seeing a decline in the amount of fatal opioid overdoses when medical marijuana is available. So that’s really exciting.”

It’s a fact: States with legal medical cannabis markets have lower rates of opioid use.

Innovation

Getting cannabis into a water-soluble state—an aspiration among some chemists in the industry—will increase bioavailability and allow for more precise dosing. It could also make for a very interesting cup of coffee.

“I was just talking with someone that’s working on figuring out a way to get cannabis into a water-soluble state. When that happens it’s going to open up all kinds of different avenues to creating new products because cannabinoids aren’t water-soluble they’re fat-soluble. Figuring out how to get it so that it doesn’t separate out in a drink is really kind of the next step.

“There’s a lot of cool technology that’s happening around product development right now that’s gonna prove to be really interesting in the coming years.”

Shiny objects

“We see more and more money and more technology come into the space every day which is really exciting. But if you don’t have someone on your team that understands the cannabis space and has seen this progression over a number of years you can get sold a bunch of snake oil. We’ve seen that happen time and time again with clients that end up buying stuff they really don’t need and then not really using the technology for what it is. It ends up being either a talking point for tours or it just kind of sits there and collects dust.

If you don’t have someone on your team that understands the cannabis space you can get sold a bunch of snake oil.

“We also try to work with our client groups to really spend money on what’s important and not spend money on what’s the newest, coolest thing out there.”

Scaling Extraction Operations

“I don’t think a lot of companies were really expecting to have to make machines so big so quickly. There are a couple companies that are tackling the idea of big machines— hundred liter machines, two-hundred liter machines. But the bigger the machine and the bigger the chamber, the thicker it has to be to contain that pressure.”

Again, every solution presents its own challenges. Ergo, you need a solid team with technical, financial, regulatory and marketing expertise.

“It’s really about efficiency.

“People are looking to get more efficient wherever they can because as we’re seeing throughout the industry, the price of herb is going down. And so the only way that you can keep your margins is to get more efficient. There gets to a certain point where you can’t grow a pound for any cheaper.

“I don’t think we’re there yet … but when you take into account that people have to get paid and overhead is expensive and labor is expensive, whenever you can get a machine to do something for you in an automated way I think people are excited about that. But it comes at a price.”

The Future is Clear: The Future is Hazy.

… Er, you know what I mean

In time, the cannabis industry is going to become much like any other industry. Like it or not, Big Ag, Big Pharma, and other large industry efficiencies are entering the cannabis industry. As trademark protection, financial services and other legal protections are extended to the industry, investment in cannabis will only accelerate.

Cannabis Enterprise Business Solutions

Talk to one of our reps to learn how our industry-leading point of sale and inventory management solutions can keep the boogie man away from your dispensary.

The G7 of Cannabis? We’re working on it…

The G7 of Cannabis? We’re working on it…

Cannabis Business, E-commerce, Events, POS System

 Recap and discussion of the Cannabis Technology Workshop

by John Garvey
Some of the most experienced operations managers, IT professionals and service providers in the cannabis industry came together at Anthea’s Cannabis Technology Workshop, held July 19 in Denver. The purpose of the workshop was to exchange ideas and insights in a young industry with higher than average risks as well as returns. Participants included competitors as well as business partners and friends.

Three overarching themes emerged during the course of 11 presentations by industry leaders:

  1. Business Partnerships: “Find the right partner.“ A healthy business partnership is about having a team that understands your operation, that can adapt to changing strategies or regulations, and provides personalized, on-going support and training. It’s all about trust.
  2. Data Availability and Integrity: Using data to guide decisions about inventory forecasting, manufacturing and marketing isn’t a competitive advantage, it’s a necessity. As importantly, it’s a security issue and a compliance issue requiring your A game.
  3. Consolidation: “Plan for growth, or plan an exit strategy.” The cannabis industry is feverishly consolidating. Good data will enable you to pursue effective growth strategies and also make you more attractive as an acquisition to other entities.
Jake from CPShop talking at Cannabis Workshop
Anthea table at Cannabis Workshop

After the event I sat down with Jack Oxton, Retail Solutions Advisor at Anthea, to discuss key takeaways as well as his own outlook on the cannabis industry. I think I know a lot about the industry, but he can run circles around me. He’s excited to be supporting cannabis retailers for several reasons: the opportunities, the challenges and the impact it can have on a patient’s quality of life.

“I think as more and more research comes out and more medical uses are found, the Schedule I classification is going to change,” Jack says. “And this will be one of the largest opportunities in a long time.

“Beyond that I’ve had firsthand experience with family members who are on chemotherapy or have had other debilitating illnesses that have found a lot of comfort in cannabis. And before they had that option they were taking really heavy opiates like OxyContin and stuff. The difference in quality of life is astronomical. That’s something that I’ve always felt really strongly about.”

Jack expanded on the three themes mentioned above, drawing from his own knowledge and that of our partners.

1. Finding the right partner is paramount.

Annie Iselin speaks about industry trends at the Cannabis WorkshopWhat do you want in any business partnership?

  • First, you want someone who is trustworthy, competent and accessible. Ideally, this is also someone who believes in what you’re doing beyond the purely business rationale.
  • Second, if your partner has any role in compliance, security, accounting or managing data, they need to have experience working in regulated industries.

NCR Counterpoint, for instance, has specialty solutions for alcohol, tobacco and firearms sales. When you’re working in a heavily-regulated industry, experience and specialization matter a lot. When MJ Freeway had a series of operational disruptions and security issues ten months ago, a lot of people learned this the hard way.

  • There are also issues such as whether your partner offers the right suite of services for you, whether those solutions are integrated and whether your partner is reliable and available when needed for support.
  • Finally, it’s valuable to have people who take a personal interest in the business and regulatory environment. In Colorado, cannabis regulations vary widely by locality, making this a practical consideration as well as a cultural one.

Jack loves finding ways to overcome challenges unique to the cannabis industry, but acknowledges that they’re weighty:

“Even in Colorado, just from city to city there might be significant differences in the way you have to either restrict your sales or report on those sales. Or maybe there’s specific hurdles you have to jump through to offer online ordering or something of that nature.“

2. Consolidation

Anthea entered the cannabis market at a tumultuous time, Jack recalls. “Consolidation was happening on a dramatic scale here in Colorado where they issued a freeze on new licenses and it just turned into crazy acquisition wars.”

“With the 280E tax code I think a lot of people found out really quickly that it was tedious, it was a tremendous amount of paperwork and compliance concern, tremendous amount of back-end work to barely break even in a retail dispensary environment. If you don’t have a vertical supply chain where you’re producing your own goods … it’s really, really hard to turn a profit with the tax codes and the inability to claim cost of goods.”

The 280E tax code, banking issues and other challenges undoubtedly drove consolidation and reaffirm how important good enterprise-level software is.

“I don’t think there’s anyone left who’s just kind of idling at this point,” continues Jack. “They’re either preparing themselves to be acquired or they’re preparing to grow.“

Documentation and compliance. Whichever path you’re on, you need it. We also touched on this in our April blog.

Email us to receive information on the next Anthea  Cannabis Technology Workshop.

3. Data Integrity: Integration is key

Andee Williamson speaking at Cannabis WorkshopWhether you’re actively expanding, preparing to expand or positioning yourself for an acquisition, data integrity is hugely important. If your retail solutions aren’t both good in themselves and well-integrated with one another you won’t have data integrity.

Traditional retailers have moved away from using a single piece of software to manage all their operations towards using very tightly integrated, specialized solutions. This is much needed in the cannabis industry.

“I think there’s a lack of proven retail platforms in the industry and when we started exploring the market … we found that there really wasn’t any enterprise level software that was available.

Poor integration means that you can’t trust the data you’re collecting or that you have to enter a lot of data manually. Either way, you’re going to be miserable.

With good integration between systems, you can use data from your retail transactions to make marketing and manufacturing decisions.

Quality enterprise resource planning (ERP) and business intelligence tools allow you to effectively quantify demand or get far more accurate forecasting. These things have been widely adopted by traditional retail today, but they’re just finding their way into the maturing cannabis industry.

The right ERP system integrates sales, accounting, inventory and compliance. It’s secure, meaning customer data and your reputation are secure.

Trying to do seed-to-sale tracking, accounting, managing staff, ecommerce, on-site point of sale, digital marketing and other business functions with a single software solution is untenable. Having separate solutions that are poorly-integrated presents its own headaches. Poor integration means that you can’t trust the data you’re collecting or that you have to enter a lot of data manually. Either way, you’re going to be miserable.

Cannabis Enterprise Business Solutions

Talk to one of our reps to learn how our industry-leading point of sale and inventory management solutions can keep the boogie man away from your dispensary.