Rescheduling cannabis signifies a monumental shift for our industry, specifically presenting a potential pathway to alleviate the burdens imposed by Section 280E. In a new multi-part #IndustryEssentials webinar series, led by experts from our 14 member-led Committees, NCIA will provide a comprehensive analysis of the immediate and long-term impacts on different sectors within the cannabis industry.

In our debut session, led by the Banking & Financial Services Committee, we provided invaluable insights into the transformative implications of rescheduling cannabis to a Schedule III drug and its consequent impact on Section 280E of the Internal Revenue Code. In “Schedule III & Section 280E: What Does It Mean for Me?” broadcast LIVE on Thursday, May 30th, we explored the game-changing potential of this shift, offering actionable insights for businesses navigating the evolving regulatory environment.

We were privileged to have esteemed speakers (all members of NCIA’s Banking & Financial Services Committee no less!) contributing their expertise:

• Naomi Granger, CPA, MBA: As the Founder of National Association of Cannabis Accounting and Cannabis Tax Professionals (NACAT Pros), Naomi Granger brought her extensive background in cannabis industry advocacy and leadership to the moderator role of this session. 
• Neil Rosenfield, CPA: Provided insights into the significance of comprehending and championing advocacy organizations to address regulatory hurdles.
• Steven Gotsdiner, CPA: Illuminated accounting requirements tailored to cannabis businesses, drawing attention to the nuances across various states.
• Eric Kaufman, COO: Shed light on the hurdles encountered by cannabis enterprises, while also elucidating the potential benefits stemming from regulatory changes.
• Aaron Smith, NCIA: Emphasized the pivotal role of industry participation in policy reform endeavors, highlighting NCIA’s instrumental role.

Among the topics explored during the webinar was the profound impact of rescheduling cannabis on federal legality, state and local tax obligations, and the broader regulatory landscape. With cannabis poised to transition to Schedule III, businesses are poised to embrace newfound opportunities while confronting challenges inherent in navigating this regulatory terrain.

Neil Rosenfield of BakerTilly USA underscored the significance of contributing to and championing advocacy organizations to effectively address regulatory hurdles. Aaron Smith echoed this sentiment, emphasizing the pivotal role of industry participation in policy reform endeavors, highlighting NCIA’s instrumental role in spearheading these changes.

Another focal point of discussion revolved around the ramifications of rescheduling on tax obligations and deductions governed by Section 280E. The panelists provided invaluable insights into the implications for tax planning, including adjustments to tax bills, cash flows, and essential updates to accounting records and charts of accounts.

Steven Gotsdiner of HBK CPAs illuminated accounting requirements tailored to cannabis businesses, drawing attention to the nuances across various states. Eric Kaufman, COO of FundCanna, shed light on the hurdles encountered by cannabis enterprises, while also elucidating the potential benefits stemming from regulatory changes, such as managing surplus cash flows and preparing for shifts in interstate commerce.

Eric Kaufman explored whether rescheduling cannabis to Schedule III would reduce the cost of capital for operators and recommended strategies for deploying increased cash flows to scale and grow businesses effectively.

The webinar also delved into the anticipated timeline for these regulatory shifts, offering insights into potential implementation trajectories spanning from 2023 to 2025. Strategies for navigating diverse timelines and regulatory fluxes were discussed, equipping businesses with the tools needed to adapt and flourish in an ever-evolving landscape.

Thanks to the informed engagement of our audience members, a cornerstone of what makes our webinar series so valuable for members, the discussion touched on the definition of “Good Accounting Practices” and whether this includes Generally Accepted Accounting Principles (GAAP). The panelists also speculated on the possibility of new excise taxes replacing 280E and the potential impacts on federal protections like bankruptcy and IPOs.

As the program was extended in order to answer all of our audience questions, the session concluded with insights into how these regulatory changes might affect the CBD and hemp industries. The panelists emphasized the importance of staying informed and adapting to varying state-level requirements.

As the cannabis industry continues its evolution, proactive engagement with regulatory changes remains paramount for business success. The insights shared during NCIA’s #IndustryEssentials webinar series offer a compass to navigate the labyrinth of regulatory complexities and position businesses for enduring prosperity. By fostering active engagement and advocacy, cannabis enterprises can shape a regulatory landscape conducive to industry growth and development.

To continue facilitating these crucial dialogues amongst operators, regulators, and stakeholders, NCIA relies on the support of dedicated members like you. Join NCIA today to access exclusive resources, stay informed about the latest industry developments, and be part of a community committed to driving positive change in the cannabis industry.

Supporting advocacy efforts is integral to driving meaningful change in the cannabis industry. By becoming an NCIA member, you’re not just investing in your business’s success; you’re also supporting initiatives that shape the future of the industry. Together, we can amplify our collective voice and effect tangible change.

As we conclude this recap of our insightful session on Schedule III and Section 280E, we’re thrilled to announce the next episode in NCIA’s #IndustryEssentials multi-part webinar series: “Committee Insights: Advancing Cannabis Science: Research Opportunities and Challenges Post-Rescheduling.” Led by our esteemed Scientific Advisory Committee, this episode promises to explore the exciting realm of scientific research and consumer safety in the wake of cannabis rescheduling.

Join us for an engaging discussion with industry experts, gain valuable insights, and shape the future of cannabis science and consumer safety. Register now to reserve your spot and be part of the conversation!

There were two major cannabis policy developments from Washington, D.C. last week: language of the proposed rule for rescheduling became available (accompanied by a video from the President reaffirming his commitment to reform) and the long anticipated text of the farm bill was released.

The text of the proposed rule confirmed that the Attorney General is seeking to move marijuana from Schedule I of the Controlled Substances Act (CSA) to Schedule III. Doing so would provide tax parity for the cannabis industry by ensuring legal businesses would no longer be subject to an arcane provision of the U.S. tax code — Section 280E — that prohibits deductions associated with “drug trafficking.”

The Department of Justice asked for public comment on various topics, including:

• Facts and expert opinion on different forms, formulations, and delivery methods
• Dosage and concentration information
• Data on marijuana constituents, routes of administration, and impact of Delta-9 THC potency
• Information regarding the scope, duration, and significance of marijuana abuse
• Comments on the practical consequences of rescheduling marijuana to Schedule III under the relevant statutory frameworks 
• Comments on the economic impact of the proposed rule 
• Information on how rescheduling may impact “small entities”

The public comment period is officially open and will conclude on July 22. NCIA will be submitting comments during the rulemaking period on behalf of the hundreds of small businesses we represent in the legal cannabis industry. 

In addition to this exciting announcement, the House Agriculture Committee also released the text of the overdue 2023 farm bill (the bill’s original deadline was September 30, 2023, but was extended for one year). 

Included in the bill is language regarding hemp and hemp production. The 2018 farm bill legalized hemp by authorizing the production of hemp and removing hemp and hemp seeds from the CSA. Since then, the proliferation of hemp derived products containing various cannabinoids (CBD, Delta-8, THC-A, etc) has become commonplace. The increase of intoxicating products derived from hemp has concerned many — including those in Congress. 

During the Committee markup, an amendment was offered by Rep. Mary Miller (R-IL) that would federally ban all ingestible hemp products with any level of THC. The amendment passed via voice vote.

This is an area we at NCIA are keeping a close watch. As the association that represents the entire cannabinoid industry, we are urging Congress to eschew the failed policies of prohibition and to instead move to regulate hemp and marijuana-derived products equally.

Make sure you check out our brand new position paper “Navigating the Future of Cannabinoid Regulation: Balancing Safety, Innovation, and Consumer Access”, which delves into the complexities of cannabinoid production, differentiating between plant-extracted and synthesized cannabinoids. It also addresses the challenges posed by the current regulatory landscape and advocates for a common-sense federal framework that emphasizes safety, consistency, and quality across all cannabis-derived products.

In 2012, child-resistant packaging legislation prevented access to children while the legal cannabis market began to open up but the issue persists over a decade later and the topic is still controversial to some.

“CR [Child-resistant] packaging on flower products makes no sense. On edibles sure, but flower? Not to mention that alcohol has no CR, and I’d argue is 100x more harmful to a kid who gets into it…. It feels like a piece of legislation to make regulators feel good about themselves but is a frustration to everyone else,” voiced Tyler Works on his LinkedIn page. 

Works, the Director of Account Management for Cannabiz Media, is not alone on this sentiment.  The delicate balance between protecting products and ensuring consumer safety is continuously challenged by concerns over its efficacy and common sense. 

“When we worked on these rules, this was considered but it was more important to satisfy the minds of the people terrified of kids getting into cannabis,” chimed Gus Green, who helped states adopt the Code of Federal Regulations for the Poison Prevention Packaging Act due to cannabis being a Schedule 1 drug, therefore automatically deemed harmful to children.  “Now is a better time to breach the subject. The Poison Prevention Packaging Act states that any product deemed toxic for a child under 5 years old should be in child- resistant, and senior-friendly packaging. I worked with state agencies around the country to adopt these. The rule is a bit more specific than that if you dive in though, it’s about the ability for a child to ingest a toxic amount within a specific timeframe…[For example] travel-size Listerine bottles are not always CR, but the large bottles are always CR.My specialty was child-resistant, or specialty packaging. Packaging specialists should be the ones rewriting these rules but I often see committee members with no background in the field attempting to write them.”

CFR 16 PART 1700 refers to Title 16, Part 1700 of the Code of Federal Regulations (CFR), which specifically deals with Poison Prevention Packaging. This regulation focuses on the packaging requirements for substances that are potentially hazardous or poisonous, especially to children. The key objective is to prevent accidental ingestion by children and reduce the risk of poisoning incidents.

The regulation outlines standards and specifications for packaging design and labeling to ensure that products posing a poisoning risk are packaged in a way that makes it difficult for children to open or access the contents. This includes child-resistant closures and barriers to entry. The goal is to enhance the safety of household products, medications, and other substances that could be harmful if ingested by young children. Compliance with CFR 17 PART 1700 is essential to meet safety standards and protect consumers, particularly children, from accidental poisoning.

It seems straightforward enough but there are many problems inherent in adopting a rule that was not specifically made for the cannabis industry.

The Dose Makes the Poison

Works’ earlier sentiment is essentially that “the dose makes the poison”. This fundamental concept in toxicology states that any substance can be harmful in large quantities but may be safe at lower levels. 

Proponents of this sentiment argue that cannabis flower contains THCA, which is a non-psychoactive cannabinoid, meaning it does not produce the “high” associated with THC and cannabis use. THCA is a precursor to THC through decarboxylation, which converts THCA to THC with the application of heat, typically when it is smoked, vaporized or cooked. Therefore, ingestion of THCA is unlikely to cause intoxication in a child. Moreover, Works argued that requiring child-resistant packaging for THC flower is inconsistent with the treatment of other potentially harmful household items that are not subject to the same level of regulation, such as bottles of alcohol that do not require child-resistant packaging despite their inherent availability and quantity in a household.

Advocates for the deregulation of child-resistant packaging of flower might suggest that just like for alcohol, home environment control would suffice in controlling cannabis as a safety measure for children. Storing THC flower in an inaccessible location followed by strong educational measures urging parents to responsibly store and prohibit access could be effective in preventing accidental ingestion.

While these points are presented for the sake of argument, it’s important to reiterate that child-resistant packaging regulations are designed to prioritize child safety. The potential risks associated with accidental ingestion of THC or other substances are serious, and any discussion around exemptions should carefully consider the well-being of children. Public health and safety regulations are typically enacted with the aim of preventing harm and protecting vulnerable populations. But this is not the only issue people have in mind regarding packaging. 

Child-resistant packaging for flower not only seems problematic because it is incongruent with regulations for other harmful household substances including alcohol but also because it creates trash. A lot of it.

The Single-Use Abuse

The Sustainable Cannabis Coalition estimated that in 2020, the US Cannabis Industry used almost one billion pieces of single-use plastic that mostly ended up in landfills.  Research and testing activities–including those for the cannabis industry–adds up to over 12 billion pounds per year. The majority of these plastics cannot be recycled due to their diverse material composition. A whopping 40% of total emissions are attributed to our procured goods and services.

Packaging materials, particularly plastics, are composed of various substrates such as polyethylene, each with distinct properties. Sustainability concerns arise as certain laminated plastics prove difficult to recycle. Challenges persist, especially in the context of single-dose packaging and restrictions on child-resistant reclosable plastics.

“People want to recycle bioplastics but they don’t have good barrier properties,” Gus Green states. “There is also a problem with the idea of biodegradables because they are designed to break down. Biodegradable plastic is not allowed in child-resistant reclosable plastics because the mechanism will fail because the material is frail, but laminated plastics that have great barrier properties cannot be recycled.” 

The Sustainable Cannabis Coalition blog announced that in 2021, CULTA, a cannabis company, partnered with The High 5 Initiative, a non-profit company that’s working to keep Polypropylene #5 plastics out of landfills through recycling. Patients can return packaging to CULTA, where the initiative team sorts and processes the materials, recycling over 95% and transforming #5 plastics into Post Consumer Resin (PCR) for manufacturing other products.

Despite the environmental benefits, transitioning to eco-friendly packaging faces challenges, including cost implications. For instance, CULTA notes that switching to eco-friendly cellulose packaging would increase costs, making it economically challenging for cannabis companies, coupled with perceived quality issues with thinner and more pliable cellulose bags (which may seem cheaper, thus impacting consumer acceptance).

The Future of Plastic Waste in Cannabis 

New metalized child-resistant compostable cellulose film bags have entered the market for the first time and offer the opportunity for both home and industrial composting, including the cannabis industry.

“In Canada, Wyld has adopted child-resistant compostable pouches. Many edibles brands are moving to an inner-outer pack combo with individually-wrapped pieces inside a mother bag, similar to many traditional candies.  Think caramels, Starburst, cough drops, Hershey’s Kisses, Reese’s cups, etc. – cannabis consumers want fresh products, and individual wraps accomplish that.  To avoid more single-use plastics, NatureFlex is seeing significant, promising interest,” Elisha Hedin, a regional sales manager from Futamura, manufacturer of NatureFlex explained. “Compostable films can actually have a very good barrier and NatureFlex is an ideal packaging material for both gummies and flower.  There’s a perception in the industry that compostable materials are low quality and that’s simply not true.”

Wyld, a Climate Neutral Certified brand, offers the cellulose-based packaging made from cellulose film laminated to a biosealant for their gummies. In home composting, this metalized compostable film degrades completely in 12-16 weeks. In industrial settings, it takes twice as fast to convert the cellulose into water, CO2, biomass, and mineral salts in just 6-8 weeks.

Meanwhile, in the research industry, Polycarbin has touted itself as the world’s only circular economy for single-use lab plastics. This California-based company helps labs achieve their sustainability goals by diverting these valuable materials from landfills and incinerators into the next generation of low-carbon lab products.

“Much like with food-tech and biotech, the cannabis industry is driven by a growing dependence on single-use plastics. From the harvest fields to the QC and QA laboratories, it is more important than ever that this industry consider the carbon footprint associated with its supply chain,” James O’Brien, CEO of Polycarbin emphasized. “Through responsible waste stream management and sustainable procurement, the cannabis laboratories can significantly attenuate the environmental impact of a major source of its scope three emissions—fossil fuel-derived, single-use plastics.”

As the packaging and research industry grapples with the complex interplay of material properties, sustainability challenges, and stringent safety standards, a delicate balance must be struck. Navigating the evolving landscape requires continuous innovation, collaboration, and adherence to regulations, ensuring that the packaging not only safeguards products but also contributes to a sustainable and secure future.

Navigating environmental requirements and reviews can be one of the most challenging and costly aspects of obtaining a cannabis cultivation license. Environmental standards and regulatory requirements differ from state to state and within local jurisdictions. While regulations may vary, cannabis operators encounter similar environmental requirements nationwide. Environmental reviews and impact assessments require an evaluation of cultivation policies and operations for sediment and erosion control, water usage, wastewater discharge, energy efficiency and carbon footprint, air quality, and odor control. This guide will aid operators in establishing the best practices for these environmental concerns to create a smoother environmental review process for the cultivator. 

Sediment and Erosion Control

Sediment and erosion control methods are required for outdoor cultivation to ensure the facility has a comprehensive mitigation plan to prevent adverse effects the outdoor crop may cause to the land. Sediment controls are structural measures intended to complement and enhance the implemented erosion control practices and reduce any sediment discharge. Erosion control is a soil stabilization process consisting of mitigating measures to prevent soil particles from detaching and moving into stormwater runoff. Ensuring this compliance may include implementing Best Management Practices (BMPs) for Sediment and erosion control. These BMPs should be implemented before the onset of the rainy season, typically in October. Sediment and erosion control devices and measures should be replaced when they deteriorate. 

Sediment Control BMPs

• Silt fences
• Fiber rolls
• Hydroseeding
• Sediment Trap
  • Inspect the trap on a routine schedule for litter and debris
  • Remove the sediment built up in the trap and sprinkle it lightly over vegetated areas to increase soil fertility
• Gravel bag berms
• Sandbag barriers
• Straw bale barriers
• Observation station on the property for visual monitoring of sediment pollution
• Add gravel to dirt roads
• Add stormwater detention basins

Erosion Control BMPs

• Vegetative Swales & Buffers
  • Swales should be trimmed to prevent restriction of flow
  • Routinely monitor for any debris and overflow
  • Buffers should be added to the edges of parking lots and storage areas
• Placement of straw mulch over disturbed land
  • Should be replaced often
• Soil binders
• Vegetation preservation
• Vegetation replacement for any disturbed areas that will not be in use
  • Seed mixes containing native grass and wildflowers
  • Hydroseeding
• Earth dikes

Waste Usage and Wastewater Discharge

Water usage and wastewater discharge management plans are required to ensure the cultivation facility legally and efficiently obtains its water and that no hazardous water is dumped onto the land surface, directly into the ground, or into another body of water where it could negatively impact the environment. Water usage may require obtaining documentation demonstrating you own the water rights to your facility or property. Cultivations connected to their municipalities’ water district may only need to report that information to meet this requirement. Such a facility may also need to contact its water provider to create a water rights letter showing the operator has the right to use that water. Cultivations that use other water supply methods, like wells, may need to provide a detailed report of their water quality and have well flow testing performed. Depending upon your state, you may also need to show how your water will be conserved. A cultivator may be required to create a water conservation plan detailing the procedures implemented at the cultivation site to conserve water. Wastewater discharging typically will require a cultivation site to apply for a Wastewater Discharge permit. Wastewater discharging plans that thoroughly explain how the cultivation will discharge any hazardous wastewater and what mitigating practices will be implemented to prevent wastewater from entering the environment untreated are also frequent requirements for this process.

Water Conservation Methods

• Recycling irrigation systems
• Automated irrigation systems
• Precision emitters
• Watering more frequently throughout the day in smaller amounts
• Planting pots 
• Divert the dehumidifying and cooling system’s piping into a holding tank to reuse the water for irrigation
• Use organic mulch around each plant to prevent moisture loss
• Rainwater harvesting, if allowed in your area
• Substrate sensors to monitor water saturation

Wastewater Discharge Measures

• Using planting pots to prevent excess runoff
• Vegetative swales and buffers to capture wastewater
• Recycling irrigation systems with reverse osmosis and ultrafiltration or thermal evaporation 
• Recycling systems that don’t have a filtration system can hold any hazardous wastewater in a holding tank and have it transported to an approved wastewater treatment facility
• Substrate sensors for the prevention of excess runoff
• Stormwater runoff prevention
  • Store pesticides, chemicals, and fertilizers indoors and away from any outdoor growing areas and in approved containers
  • Covering wastebins 
  • Divert stormwater away from any stockpiled materials

Energy Efficiency and Carbon Footprint 

Cultivation energy efficiency and carbon footprint reporting are becoming more popular among regulators as the country moves toward environmentally friendly practices. Energy efficiency may require the cultivation site to comply with specific requirements for equipment and lighting. Many licensing bodies also require an energy efficiency plan that details what mitigating measures the operator will implement to reduce energy costs. Carbon footprint reporting may require greenhouse gas emission (GHG) reporting, which can require a cultivator to purchase carbon offsets. Green energy plans are sometimes required; these plans demonstrate how the cultivation will utilize green energy options to reduce their carbon footprint. 

Energy Efficiency

• LED lighting 
• Automated irrigation systems
• Automated blackout curtains for greenhouses 
• On-site composting 
• Low-flow fixtures
• Split ductless air condition
• Chilled water systems for dehumidification
• Modulating hot gas reheat forced air systems
• Sensor motion lighting in rooms that aren’t frequently entered
• Adjust lighting schedules based on the weather if using mixed-light
• Installing solar panels
• Request an energy efficiency review from your utility provider 

Carbon Footprint

• Sign up with a clean energy provider that partners with your utility company and reinvests the funds from the program into clean energy initiatives in your state
• Avoid generation use wherever possible
• Install renewable energy sources at your facility, like solar panels 
• Replace pesticides with biocontrols using predatory insects
• Use recycled or biodegradable packaging, even for wholesale flower
• Cultivate companion plants that deter pests and attract beneficial insects
• Reduce or eliminate lighting requirements by establishing a greenhouse or outdoor cultivation facility

Air Quality and Odor Control 

Air quality reviews may be triggered for cultivation facilities, including the requirement to obtain an air permit. Air permits allow an operator to release a limited amount of pollution within certain restrictions. Air quality reviews for cultivations are triggered by several factors based on the state requirements, some of which may include drying, processing, generator use, fugitive emissions, and pesticide application. If a cultivator is required to obtain an air permit, they will be licensed to perform those activities. Cultivations going through air quality reviews may need to provide an Air Quality Control Plan outlining the mitigation efforts the cultivator will make for air quality pollution. Odor Control Plans are one of the most common regulatory requirements for cannabis businesses. If your environmental review includes odor control and you operate an outdoor cultivation site, you may be required to conduct an odor control study on your facility. These studies use wind patterns to measure the distance the odor from your cultivation will travel. Based on your state or local jurisdiction’s requirements, an odor control study may require you to move the border of your canopy. Conversely, an odor control study may prove that your cultivation will not be a nuisance due to odor pollution, and no mitigating measures will be required. Odor control plans should detail precisely what mitigating measures the cultivator will implement and, if available, data on how effective those measures will be. 

Air Quality Control Plans

• Wetting the surface of dirt roads during the dry season
• Encourage ride-share amongst your employees
• Reduce VOCs wherever possible 
  • This can include timing harvesting to reduce ozone impact
• Include a chemical usage plan that describes how pesticides, fertilizers, and other agents will be stored and disposed of in alliance with the manufacturer’s recommendations
  • Detail how you will maintain Safety Data Sheets (SDS) on all chemicals at the facility 

Odor Control Plans

• Indoor cultivations and greenhouses can implement the following measures:
  • Use carbon filters 
    • Explain in your plan how carbon filters work, provide data on their filtration rates, which you can locate in the manufacturer’s guide, and how often you will replace them
  • Use wet scrubbers for indoor cultivation or greenhouses
    • Explain how the air is treated when it passes through the scrubber
  • Implement biofiltration measures
    • Explain how the air will pass through soil, mulch, or other organic matter to filter the air
  • Use oxidization treatments through your facility’s ventilation system 
    • Explain how the process of oxidization removes odor 
  • Have open communication with your neighbors regarding odor 
    • Explain how you will speak with your surrounding neighbors about any odor concerns and request your neighbors contact you if they do smell odor so you can begin an assessment into structural or equipment failures and, if needed, implement further mitigating measures to your plan

• Outdoor cultivations can implement the following methods:
  • Hire a professional to do an odor study to prove your facility’s compliance
  • Plant fragrant flowers around the exterior of the site 
  • Use oxidization treatments through high-pressure misting devices around your cultivation area 
    • Explain how the process of oxidization removes odor 

• All cultivation types should have open communication with surrounding neighbors regarding odor
  • Explain how you will speak with your surrounding neighbors about any odor concerns and request your neighbors contact you if they do smell odor so you can begin an assessment into structural or equipment failures and, if needed, implement further mitigating measures to your plan

As regulatory requirements vary across the country, cultivators should carefully read their regulations and contact state and local departments for guidance on requirements specific to their operations. A thorough understanding of what plans must be created, studies performed, and special permits obtained will create a smooth environmental review process. Join the upcoming NCIA webinar from the Cannabis Cultivation Committee to dive deep with industry professionals on navigating environmental reviews across the United States.

One of the most powerful applications of audience data is in personalizing the customer experience. By segmenting their audience based on demographic information, cannabis brands can tailor their messaging and offerings to resonate with individual customers. Whether through targeted email campaigns, customized product recommendations, or educational content, this level of personalization not only enhances the customer experience but also drives engagement and loyalty.

Optimizing Marketing Strategies

Audience data also serves as a compass for guiding marketing strategies in the cannabis industry. By analyzing the performance of various marketing channels, content types, and messaging approaches, brands can identify what resonates most with their audience and allocate resources accordingly. Whether it’s investing more heavily in content creation, refining digital advertising tactics, or experimenting with email campaigns, data-driven insights enable brands to optimize their marketing efforts for maximum impact.

Predicting Trends and Forecasting Demand

In addition to informing day-to-day marketing decisions, audience data can also provide valuable insights into larger industry trends and consumer preferences. By analyzing macro-level data trends across their customer base, cannabis brands can identify emerging market opportunities, anticipate shifts in demand, and stay ahead of the curve. Whether it’s launching new product lines, expanding into new geographic areas, or pivoting to meet evolving consumer needs, data-driven forecasting empowers brands to make informed strategic decisions.

Enhancing Product Development

Finally, audience data can play a pivotal role in shaping product development strategies within the cannabis industry. By soliciting feedback from customers through surveys, reviews, and social media interactions, brands can gain valuable insights into product satisfaction, preferences, and needs. This feedback loop not only informs the development of new products but also enables brands to refine existing offerings based on real-time customer input, ensuring that their products remain relevant and competitive in a rapidly evolving market.

Conclusion

In conclusion, audience data is a potent asset for cannabis brands seeking to unlock the full potential of their marketing efforts. By analyzing demographic information, understanding consumer behavior, personalizing the customer experience, optimizing marketing strategies, predicting trends, and enhancing product development, brands can gain a deeper understanding of their customers and elevate their overall success in the cannabis industry. As digital marketing opportunities continue to evolve, brands that harness the power of data will undoubtedly emerge as leaders in this dynamic and rapidly growing market.

Among the first two states to legalize and the first market to open, Colorado has had adult-use cannabis regulations in place for more than a decade now and helped set a standard for all the programs that came after it. 

But Colorado’s testing regiment, like the industry, is ever evolving, with the state testing for additional pesticides beginning this year, for example. In addition, the state’s new “reduced testing allowance” could make the whole process easier for manufacturers in good standing. 

Like many states, Colorado requires testing of the final product, be it flower, edible or pre-roll, which means not only must your flower be clean, but everything else you put into your products as well. In the case of pre-rolls, that means the paper used in the pre-rolled cones, as well as the filter tip. 

All products must be screened by a state-licensed and accredited laboratory for the following:  

• Moisture Content and water activity; 
• Residual solvents and processing chemicals; 
• Residual pesticides; 
• Microbial impurities; 
• Mycotoxins; 
• Foreign materials; 
• The “big four” heavy metals (arsenic, cadmium, lead and mercury); and 
• Cannabinoid potency. 

WATER ACTIVITY 

Like every state, Colorado testing requires laboratories check for water activity because high amounts of moisture can create an environment with the potential for mold growth.  

Any water activity above 0.70 Aw creates the conditions for mold to grow, which can be harmful if consumed, which is why Colorado caps water activity at 0.65 Aw in flower and pre-rolls. 

PESTICIDES AND SOLVENTS 

Colorado also requires testing for residual pesticides and other chemicals and has been slowly ramping up its required pesticide testing.  

For example, on January 1, 2023, the state tested for a total of 13 different pesticides. By July 1, 2023, that number had increased to 28. But new regulations going into effect this year drastically increase that number.  

Beginning July 1, 2024, state law requires labs to test cannabis products, including completed pre-rolls, for 99 different pesticides, each with their own actionable limits that can cause a whole batch to be destroyed. 

Additionally, the state requires cannabis concentrate products, including those used in infused pre-rolls that combine flower with a concentrate for increased potency and flavor, to be tested for residual solvents. 

The state requires testing and provides actionable limits for 13 specific solvents that can be used to make extracts and concentrates, as well as requiring “none detected” for “any other solvent not permitted for use.” 

HEAVY METALS 

The Centennial State also requires testing for the heavy metals mercury, cadmium, lead and arsenic. All four metals are toxic to humans, even at small doses, and can damage all the body’s vital systems, including pulmonary, reproductive and even the central nervous system.  

Testing for heavy metals is especially important because cannabis plants are a well-known bio-accumulator that absorbs and collects heavy metals from the soil in which it grows.  

For all inhalable products, including pre-rolls, the state sets the pass/fail actionable level at 1.5 parts per million (PPM) for mercury and arsenic, 0.5 PPM for cadmium and 1 PPM for lead.   

MICROBIALS AND MYCOTOXINS 

But while heavy metals are dangerous, they do not pose the greatest risk to human health among the testing. That distinction is reserved for microbials and mycotoxins. 

Among the microbes – bacteria and fungus – for which Colorado requires testing are salmonella, Staphylococcus aureus and e coli. There is also a total yeast and mold limit. 

Mycotoxins are a toxic compound produced by molds, such as Aspergillus, and can suppress the immune system and cause liver damage. Testing for mycotoxins help ensure cannabis products are safe for human consumption.  

Colorado requires testing for two classes of mycotoxins, Aflatoxins and Ochratoxin A, each with an actionable limit of 20 PPM. Both have properties that can alter DNA and potentially cause the formation of cancer cells.  

PRE-ROLL TESTING 

But it’s not just the flower that needs to be tested in Colorado. Products must be tested in their final form, which means that pre-rolls, for example, must be tested after they have been packed, so the paper has to be as clean as the flower. And with no regulations or requirements on the testing of rolling papers themselves, several manufacturers have run afoul of the rules because of untested rolling papers or wraps. And testing by SC Labs, one of California’s licensed testing labs, found that 11% of rolling papers tested during a recent study would fail testing. So even if you are packing your own pre-rolls, it’s important to make sure the paper you choose is tested and clean. 

Colorado has also had issues with this in the past, particularly in palm leaf wraps and blunts. In 2022, the states Marijuana Enforcement Division issued a recall for King Palm products due to unsafe mold and yeast levels found in the products. 

“Take due diligence to make sure your product is viable,” says Custom Cones USA Compliance Manager André Bayard, noting that manufacturers should work with suppliers that are working to set industry standards. “Any one issue can be detrimental to your brand reputation.” 

REDUCED TESTING ALLOWANCE 

Recognizing the unique challenges and cost of testing, Colorado has introduced new reduced testing allowances, including one tailored for pre-roll cannabis products. This allowance enables cannabis manufacturers to submit composite samples for testing, rather than subjecting each individual batch of pre-rolls to separate testing.  

For example, a manufacturer may achieve a Reduced Testing Allowance for contaminant testing for a specific product, like pre-rolls, if every production batch that it produced during at least a four- to eight-week period passed all contaminant tests. However, if those pre rolls are produced using different input materials, such as a different cannabis category (e.g. flower or trim), different wrapper materials, different processes or different equipment, they must get a separate Reduced Testing Allowance. 

Additionally, effective July 1, 2024, to achieve or maintain a Reduced Testing Allowance for microbial contaminants, a cultivation facility must have a Hazard Analysis and Critical Control Point (HACCP) System in place. An HACCP must contain elements defined in ASTM D8250-19: “Standard Practice for Applying a Hazard Analysis Critical Control Points (HACCP) System for Cannabis Consumable Products” that addresses each product type for which a microbial contaminant Reduced Testing Allowance is sought. 

It’s important to highlight that not all cannabis products qualify for this reduced testing allowance, and pre-roll manufacturers must meet specific criteria to be eligible for this exemption. For example, to get a reduced testing allowance for microbial testing, a company must maintain cleaning records and maintenance records.  

Reduced testing allowances are valid for one year. 

It’s a complicated program to be a part of, but well worth it for manufacturers who have their procedures locked in, as well as a supplier that also tests their pre-rolled cones and tubes to the highest standards to ensure passage of these important tests. 

FINAL THOUGHTS 

Colorado’s pre-roll cannabis testing regulations play a vital role in safeguarding public health and ensuring consumer confidence in the state’s legal cannabis industry. And from a business standpoint, a testing failure can be costly, especially for smaller businesses, and can follow a company and its products even after the issue is corrected. 

Make sure your suppliers take the same care as you do to ensure passage of all required tests. And always ask for COAs.  

In the ever-evolving landscape of the cannabis industry, staying ahead of the curve is essential for businesses looking to thrive. With the National Cannabis Industry Association (NCIA) providing exclusive access to valuable resources and partner discounts, entrepreneurs have a powerful toolkit at their disposal. In this blog, we’ll delve into the insights shared by industry experts during a recent NCIA #IndustryEssenitals webinar, focusing on the importance of leveraging data analytics and news aggregation to drive growth and navigate industry challenges.

Understanding Market Trends with New Frontier Data:

Amanda Reiman, an expert in data-driven decision-making, emphasized the critical role of market insights provided by New Frontier Data. She highlighted the significance of identifying trends, opportunities, and challenges within the cannabis industry. By leveraging data analytics, businesses can make strategic decisions to optimize marketing efforts, enhance product offerings, and improve overall performance. Exclusive member benefits offered by New Frontier Data provide NCIA members with access to invaluable resources, empowering them to stay ahead of the competition.

Driving Growth with Data-Backed Strategies and BDSA:

Lexie Barton expanded on Amanda’s insights by focusing on the practical applications of data analytics, particularly through BDSA. She discussed the importance of optimizing sales strategies and harnessing the power of data to inform product innovation, pricing strategies, and market expansion. By maximizing sales with BDSA’s insights, NCIA members can gain a competitive edge and drive business growth in a rapidly evolving market.

Meeting Information Needs with Cannabis NewsHub:

Samantha Hobbs shed light on the role of Cannabis NewsHub in meeting the information needs of cannabis businesses. By centralizing industry news and delivering tailored updates directly to businesses, Cannabis NewsHub streamlines the process of staying informed and ahead of industry developments. With access to the latest news and updates, businesses can anticipate challenges, identify opportunities, and adjust their strategies accordingly.

Optimizing Business Decision-Making with NCIA:

Aaron Smith, Co-Founder & CEO of NCIA, underscored the importance of leveraging professional resources and strategic partnerships to optimize business decision-making processes. He emphasized the value of NCIA membership in driving sustainable growth and success within the cannabis industry. By accessing exclusive partner discounts and resources, NCIA members can make informed decisions, mitigate risks, and capitalize on emerging opportunities.

Conclusion:

In conclusion, the insights shared by industry experts during the most recent NCIA #IndustryEssentials webinar highlight the critical role of data analytics and news aggregation in navigating the complexities of the cannabis industry. By leveraging tools provided by partners like New Frontier Data, BDSA, and Cannabis NewsHub, businesses can make informed decisions, identify growth opportunities, and stay ahead of the competition. Additionally, NCIA membership offers exclusive benefits and resources that further empower businesses to succeed in the dynamic cannabis market. Stay informed, stay ahead, and maximize your business potential with NCIA and its esteemed partners.

Ready to dive deeper into the world of cannabis industry insights? Be sure to watch the full recording of our webinar for a comprehensive look at leveraging data and news for success in this ever-evolving market. Click the link below to access the complete program and gain access to exclusive tips, strategies, and resources tailored specifically for cannabis businesses.

[embedded content]

Call to Action:

Ready to leverage data and news for success in the cannabis industry? Join NCIA and gain access to exclusive partner discounts and resources. Strengthen your position in the industry and unlock the tools you need to thrive in the ever-evolving cannabis market. Don’t miss out on this exclusive opportunity to maximize your business potential with NCIA and its esteemed partners.

Creating cohesive teams in the rapidly growing cannabis industry involves overcoming unique recruitment and hiring challenges, including evolving regulatory landscapes and societal misconceptions. The shift from traditional recruitment methods to innovative, AI-driven approaches marks a fundamental transformation in how companies identify, evaluate, and onboard talent, promising a more efficient, equitable, and effective hiring process.

Traditionally, the cannabis industry, like many others, relied on posting job openings on industry-specific job boards, sifting through resumes, conducting face-to-face interviews, and relying on gut instincts. These methods, while having their merits, come with significant limitations, especially in an industry as specialized and fast-paced as cannabis. The reliance on subjective assessments and the potential for bias, along with the inefficiency and high risk of overlooking culturally fit candidates, highlight the need for a new approach.

The adoption of AI-driven recruitment strategies represents a significant leap forward. Platforms leveraging advanced technologies can streamline the hiring process and enhance the quality of matches between employers and candidates. For instance, AI platforms such as jobworX ai, can analyze vast amounts of data quickly and accurately, evaluating candidates across various workplace personality factors, and providing employers with actionable insights into candidate capabilities, personality traits, and potential cultural fit. These insights are crucial for aligning recruitment choices with organizational goals and the unique demands of roles within the cannabis industry. For instance, predictive analytics can forecast a candidate’s success in a particular role, while natural language processing (NLP) and machine learning (ML) enhance the efficiency of sifting through applications, identifying top talent based on predefined criteria This comprehensive approach allows for a more nuanced understanding of each candidate’s potential fit within a given role and organizational culture, addressing the unique challenges of the cannabis sector.

AI-driven recruitment strategies reduce reliance on subjective judgments, mitigate the risk of bias, and expedite the selection process. By focusing on personality traits and cultural fit alongside technical qualifications, these platforms enhance job satisfaction and retention rates. This holistic approach is invaluable in the cannabis industry, where adaptability and alignment with the company’s mission are crucial.

Moreover, AI tools facilitate a deeper understanding of market trends and candidate expectations, allowing cannabis companies to adapt their hiring strategies in real-time. This adaptability is essential in a sector where regulatory landscapes and consumer preferences constantly shift. By harnessing the power of AI, cannabis employers can navigate these complexities with confidence, ensuring their teams are not only compliant but also diverse, innovative, and aligned with the company’s mission and values. In essence, AI transforms data into strategic decision-making power, setting the stage for sustainable growth and competitive advantage in the cannabis industry.

Navigating regulatory frameworks and societal misconceptions is a significant challenge in the cannabis industry. AI tools can help businesses make hiring decisions that are compliant, fair, and unbiased. By automating and streamlining the vetting process, AI ensures that all applicants are evaluated against the same legal standards, reducing the risk of non-compliance. 

Looking toward the future, several key predictions and trends emerge, highlighting how AI technologies will continue to revolutionize hiring in the cannabis industry. Predictive candidate matching, an enhanced focus on cultural and personality fit, streamlined and efficient hiring processes, increased accessibility and equity in hiring, and data-driven insights for continuous improvement are all trends shaped by AI integration. These advancements promise to reshape the landscape of recruitment and talent acquisition, making the process more efficient, equitable, and effective.

Building cohesive teams and maintaining a strong organizational culture is crucial for success. AI-driven recruitment tools, such as jobworX.ai, are revolutionizing the way companies approach this challenge by focusing on matching candidates with roles that align with their personalities and values. Kristina Etter, a freelance writer and journalist based in Colorado, highlighted in her article, Cannabis Hiring 2.0: jobworX ai’s Game-Changing New Approach, the innovative approach to recruitment within the cannabis industry via jobworX.ai, employing a Personality Assessment tool to match job seekers’ personality traits with the specific needs of cannabis roles. This method boosts job fit, worker satisfaction, and organizational synergy. It highlights the transformative role of AI in modernizing hiring practices by leveraging AI and personality assessments to ensure that candidates are not only technically skilled but also culturally and personally compatible, marking a significant advancement towards more streamlined and harmonious recruitment processes in the cannabis sector.

By leveraging advanced AI algorithms and comprehensive personality assessments, these platforms provide a data-driven approach to identifying candidates who not only possess the necessary skills but also fit seamlessly into the company’s culture. This emphasis on cultural fit is particularly important in the cannabis industry, where passion, innovation, and adaptability are key drivers of success.

AI-driven tools analyze candidates’ workplace personality traits, such as teamwork, leadership, and interpersonal dynamics, to determine their potential for contributing to a positive and collaborative work environment. By prioritizing these factors alongside technical qualifications, companies can build harmonious teams that foster a sense of shared purpose and drive organizational growth.

Moreover, by streamlining the recruitment process and reducing the risk of bias, AI-driven platforms help create a more diverse and inclusive workplace. This diversity of thought and experience is essential for driving innovation and navigating the unique challenges of the cannabis industry.

In conclusion, the integration of AI-driven hiring strategies within the cannabis industry marks a pivotal evolution in how companies approach talent recruitment and onboarding. By moving beyond traditional recruitment methods and embracing AI’s capabilities, the industry is set to revolutionize the way it builds teams, fostering environments that are not only more cohesive but also rich in diversity and innovation.

AI-driven tools offer a more nuanced and comprehensive evaluation of candidates, analyzing a wide range of workplace personality traits to ensure potential hires will contribute positively to a collaborative and innovative work environment. This focus on creating teams that share a sense of purpose is essential for driving organizational growth and maintaining a strong organizational culture amidst the rapid changes and regulatory complexities of the cannabis industry.

The advancements in AI-driven recruitment, including predictive candidate matching, a focus on cultural and personality fit, streamlined hiring processes, and data-driven insights, are set to make the hiring process more efficient, equitable, and effective. As the cannabis industry continues to grow and evolve, integrating AI into hiring practices will be instrumental in building adaptable, innovative teams capable of overcoming the sector’s challenges and seizing its opportunities.

In essence, the future of hiring in the cannabis industry, shaped by AI integration, is bright. It offers the promise of a more strategic, data-informed approach to recruitment that aligns with organizational goals, fosters diversity and innovation, and sets the stage for sustainable growth and competitive advantage. As companies navigate the complexities of the cannabis market, AI-driven hiring strategies will undoubtedly become a cornerstone of successful talent acquisition and management, ensuring that the industry remains at the forefront of change and innovation.

Compostable

Compostable packaging refers to packaging that will decompose into nutrient-rich organic matter, CO2, and water in a controlled environment in the home or commercial composting facility. According to the U.S. Composting Council, compost diverts waste from ending up in landfills, conserves water, improves soil health, promotes plant growth, and combats climate change. Because of their organic composition, cannabis products are an emerging application for compostable packaging made from hemp and other plant-based materials. Compostable products must meet strict testing requirements for decomposition, such as specific environment, specific time frame, environmental toxicity, etc. Compostable should not be confused with biodegradable packaging, which has no such requirements and may contribute to greenwashing. Compostable packaging solutions are available for cannabis products, including pre-rolls, flower, and edibles.

Recycled Materials

Beyond using recyclable packaging, today’s brands are increasingly using recycled materials like post-consumer recycled (PCR) plastics, ocean-bound plastics, and recycled paperboard to demonstrate a commitment to the environment. Post-consumer recycled content in packaging contributes to a circular economy by extending material life cycles. According to the US Plastic Pact, it reduces landfill waste, conserves natural resources, saves energy, and lowers greenhouse gas emissions. Adding PCR content to packaging decreases its carbon footprint (reduced energy use, greenhouse gas emissions, extraction of finite natural resources, and landfill disposal) compared to using 100% virgin materials, helping brands meet their sustainability goals. In addition to consumer demand, government regulations are also driving the use of PCR materials. New York introduced requirements for PCR plastic use in cannabis packaging. The Marijuana Regulation & Taxation Act (MRTA) states, “cannabis product packaging cannot be made of any plastic, unless that plastic contains a minimum 25% post-consumer recycled content.”

Reusability

Reusable shopping bags, refillable water bottles, and metal drinking straws are just a few reuse initiatives people have worked into their everyday routines over the past several years. Reusability reduces single-use packaging waste and promotes a circular economy. Consumer packaged goods brand owners – including those in the cannabis industry – are beginning to capitalize on the growing refill and reuse mentality by introducing reusable packaging. Reusable cannabis packaging can be refilled with more cannabis or used for other purposes. Material selection is essential to ensure reusability is practical and sustainable. Glass containers and high-quality, durable plastics are long-lasting and well-suited for reuse. Food-safe packaging solutions provide added functionality and additional usage occasions.  Dockside Cannabis dispensaries feature seven ways to repurpose old cannabis containers.

Paper, Inks & Labeling

Secondary packaging, label components, and decoration can also play a role in a brand’s sustainability story. Using Forestry Stewardship Council (FSC) certified paper for shipping cases, secondary cartons, and inserts helps protect healthy, resilient forests. Several cannabis brands use FSC paper for their rolling papers. Inks may not be top of mind when considering eco-friendly packaging, but even seemingly minor details can have a significant impact. Inks, dyes, and coatings can inhibit recyclability and/or reusability, so using soy-based, water-based, or vegetable-based inks contributes to the lifecycle of a package. Soulshine Cannabis uses paper sourced from sustainable PNW forests and prints with vegetable-based inks as part of its commitment to be an environmentally conscious cannabis company. 

Shipping Efficiencies

For a packaging solution to be truly sustainable, it needs to perform at every stage of its journey, from the warehouse to the consumer. Shipping is a big part of a package’s journey and an important part of its carbon footprint. According to the EPA, greenhouse gas (GHG) emissions from transportation account for about 29% of total U.S. greenhouse gas emissions. When it comes to transportation – and cannabis – size matters. Sizing is an essential factor when selecting the proper cannabis packaging, as it can impact the quality of the product. However, right-sizing your package to ensure it’s not larger than it needs to be can reduce the environmental impacts of shipping. Light-weighting – reducing the weight of your package by rethinking the size, material, or unneeded components – can also make a difference. Efficient packaging can reduce fuel consumption and emissions associated with shipping. 

When it comes to sustainable cannabis packaging, there is no one-size-fits-all solution. Brands should consider a variety of tactics including material, size, weight, decoration, and more to find the most effective and impactful package for their product.

Published by NCIA’s Risk Management & Insurance Committee (RMIC)

2024 is shaping up to be a bang-up year for cannabis whether its constant news about the potential for federal action regarding rescheduling, or multiple states expanding their current cannabis markets or entering the cannabis space for the first time. As exciting as all this is for prospective cannabis business owners and operators, there’s an issue which we in the cannabis industry often encounter time and time again.

There’s plenty of businesses seeking to enter the industry who overlook the importance of insurance and risk management. This may not be the most exciting topics when thinking about cannabis, but its one of the most important and often sidelined. Here, we’ll dive into how insurance and risk management can impact your cannabis business and why it’s important not to delay this vital step in your business development. 

Insurance and Cannabis 

Due to the current federal illegality of cannabis, just the process of getting insurance for your cannabis business can be a headache. But just because it can be frustrating to get, doesn’t mean that this important business step should be forgotten about or ignored. If anything, starting early on your cannabis insurance path will help set you apart from others in early licensing phases and can often help with getting a license itself. 

All states which have their own cannabis market require some form of insurance, and many require insurance documentation as a requirement for the licensing process. This can often be any form of insurance—from fire protection to property—so long as it’s up to date and follows the state regulations and guidelines. 

What Are the Risks? 

Perhaps no bigger risk in working with cannabis nowadays is the federal side of business. While we are eager about the prospects for rescheduling and with that, hopefully, some banking regulations such as some version of the SAFE Banking Act, there is always the federal risks. The odds are low that the federal government is going to step in and shut down all cannabis operations in states, but they aren’t entirely eliminated risks either. 

Of course, when it comes to risk management, the federal government and their response to cannabis business isn’t the only thing business owners need to be concerned with. There’s the risks of theft of cash, diversion of cannabis and cannabis product, and even high turnover of staff. These are all inherent risks that should be managed and assessed when pursuing a cannabis license. This is also the case for businesses which may be up and running, though it is most critical to assess the risks and your own handling of them as early as possible.   

Early Steps to Take 

Let’s say you’re interested in opening your cannabis business. Maybe you’ve received a provisional license from the state, or perhaps you’re waiting for an application licensing round to open. What should you do when it comes to insurance and risk management? 

Simple; start sooner than you anticipate. Over the years, clients have asked me countless times, “When should I get to work?”. It never hurts to be over-prepared, but it can torpedo your chances at licensure or opening a compliant cannabis business if you delay or rush some of the most important and necessary business functions. Insurance and risk management may not be what gets people into cannabis (I’m a nerd and think both these areas or interesting but even *I* wouldn’t say they’re what got me into this industry!) but they are essential. Start early and begin doing your own research in these areas.

Thankfully, there are insurance providers who will work with “plant-touching” businesses such as a dispensary or cultivation facility. They may not be the easiest to come by, but they are out there and are familiar with cannabis operations and the risks associated with insuring a business like yours. 

And when it comes to risk management, identify your own risks through a thorough SWOT analysis (strengths, weaknesses, opportunities, and threats) or a detailed risk assessment. Find professionals who can guide you through this too if needed, as they’ll be the ones who can highlight what are some of the unique and individualized risks your business may have. For example, an outdoor cultivator has different risks than an indoor cultivator or a hoop-house cultivator. 

When it comes to insurance and risk management, it’s never too early to begin discussing and meeting with professionals who can help and this is an area which shouldn’t be ignored or put onto the back burner for too long.