If you’re stuck in a loop of too little profits, too many bills, and not enough time, our upcoming webinar “Cannabis Cultivation Finance: What You’re Missing For Better Profitability” is a must-attend. We’ll break down the three biggest financial blind spots that trip up cultivators. No overwhelming accounting jargon and numbers, just practical advice you can act on now.  

You’ll learn:

• How to calculate your true cost of production, including value-adds like trim and smalls.  
• Simple inventory tracking systems so you always know where your products and money are.  
• Cash flow tools to smooth out the long turnaround from planting to getting paid, so you don’t get surprised by shortfalls.

You’ll be empowered with the knowledge you need to move from survival mode to strategic growth, even when the government takes its cut.

Your speakers, from NCIA’s Cannabis Cultivation Committee:

• Velvet Kavanagh, a cannabis business consultant with experience in the legacy and legal sectors.  With 20+ years of business ownership in emerging and tight-margin sectors, she helps cannabis leaders build profitable, lasting companies.
• Raymond Guns, CPA, a Dope CFO accountant who understands cultivation management and how to simplify complex tracking systems.  He talks about money in plain language so you have the financial knowledge to make more confident decisions.

With visual tools, time for q + a, and free resources, this webinar is a must-attend whether you are new to money numbers or a finance wiz looking for cultivation-specific insight.

Don’t let another week go by losing time and money to financial systems that aren’t working for you.  It’s time to take control so you can break out of the no-profit loop.

Register for this game-changing free webinar today.

The post Committee Blog: Finance for Cultivators – How to Get Out of the No-Profit Loop appeared first on The National Cannabis Industry Association.

As a veteran of the cannabis industry, you’re already familiar with the regulatory complexities and operational risks that come with running a legal cannabis business. But even as the industry matures and expands—projected to reach $52 billion by 2026—banking remains one of the most persistent and misunderstood challenges.

Despite being legal in many states, cannabis remains a federally prohibited substance. That means financial institutions must follow federal laws, including the Bank Secrecy Act (BSA), Anti-Money Laundering (AML) protocols, and FinCEN guidance, if they choose to work with cannabis-related businesses. This legal conflict results in higher compliance costs, greater documentation requirements, and fewer financial services available to cannabis operators.  

Still, legitimate banking options are becoming more accessible. Businesses that operate transparently and work with proper compliance systems can secure reliable financial partnerships—without resorting to risky workarounds that often lead to frozen funds or account closures.  

Understanding the Rules of the Game  

Cannabis business owners must understand that banks operate under an entirely different set of rules. Even if your business is licensed and fully compliant at the state level, banks must verify that you also meet federal standards. This includes full  documentation of your business structure, licensing, tax status, and ownership—especially for individuals holding 25% or more equity in the company.  

Financial institutions also require evidence that you follow local rules, such as zoning approvals and municipal permits. The banking industry takes particular interest in ownership transparency, as previous cannabis operators have attempted to hide  beneficial ownership behind shell companies or layered corporate structures. While these tactics may have delayed scrutiny in the past, they are now seen as high-risk and typically result in terminated accounts.  

Laying the Groundwork: Due Diligence and  Documentation 

Before engaging with a financial institution, be prepared to undergo a deep due diligence process. Banks will expect to review your business formation documents, operating agreements, state and local cannabis licenses, tax filings, SOPs for compliance and security, and detailed financial statements. They may also request proof of your inventory tracking system, insurance coverage, and even video footage or plans related to your cash-handling procedures.  

The more organized and transparent your records are, the more confident a bank will feel in your business. This includes having an accurate and up-to-date organizational chart, verifying all ownership interests, and providing supporting evidence for your  business’s revenue, investments, and cash flow.  

Proving Your Controls: AML and Seed-to-Sale Integration  

Because cannabis remains a cash-intensive industry, banks are especially concerned about your ability to prevent money laundering. You’ll need to demonstrate that you have systems in place to document and trace every major transaction, identify  suspicious activities internally, and track the movement of cash throughout your business. Written policies, transaction logs, and surveillance data are all important tools in meeting these requirements.  

An essential part of building banking credibility is aligning your financial statements with your seed-to-sale inventory tracking system. If a bank asks how your product movement matches your reported income, you should be able to demonstrate a direct  connection. Inconsistencies raise red flags, while tight integration builds trust.  

Financial Discipline and Tax Transparency  

Using cannabis-specific accounting software and experienced CPAs is no longer optional—it’s expected. Your records should be clear, professional, and separated from any non-cannabis revenue streams you might have. Maintaining excellent tax compliance is also crucial, particularly around IRS Section 280E, which restricts the deductions cannabis businesses can claim. Banks want to see not only that you’re filing taxes properly, but that you understand and proactively manage your tax obligations.  

Relationship Management: Treat Your Bank Like a  Partner 

Just as you would with a supplier or regulator, maintaining a proactive relationship with your financial institution is key. Assign specific team members to handle banking communications. Keep your bank informed about changes in your business—whether  that’s a new owner, a license renewal, or a change in address. Fast, accurate responses to information requests demonstrate your professionalism and commitment to compliance.  

By contrast, businesses that open multiple accounts under vague business names, change banks frequently, or misrepresent their activities inevitably find themselves blacklisted. Several operators have lost access to funds or even shut down entirely due to deceptive practices.  

Modern Solutions for a Modern Industry  

Fortunately, the cannabis banking landscape has evolved. Today, more credit unions and state-chartered banks are stepping forward with programs designed specifically for cannabis operators. These institutions typically charge higher fees to cover the  added compliance workload, but they offer transparency and predictability in return.  

Additionally, cannabis banking platforms now exist to connect businesses with financial institutions that understand the industry. Some of these platforms also include tools for compliance documentation and reporting. New payment technologies are also emerging that reduce the need for cash handling while still staying within banking regulations.  

All of these options represent a shift away from outdated and dangerous practices— such as disguising cannabis income, running funds through unrelated businesses, or relying on holding companies to open accounts.  

Yes, It’s More Expensive—But It’s Worth It  

Cannabis businesses must accept that they will pay more for banking services. Monthly fees often range from a few hundred to several thousand dollars. These charges cover the cost of suspicious activity report (SAR) filings, KYC verification, and ongoing  account monitoring required by federal law.  

While expensive, these fees are far less costly than dealing with frozen assets, last minute bank changes, or operating entirely in cash. The predictability and legitimacy that come with compliant banking relationships more than justify the investment. 

Understanding SARs and Staying Ahead  

Every cannabis-related account triggers SAR filings. Banks file one of three types: a Marijuana Limited SAR for compliant businesses, a Marijuana Priority SAR if the institution suspects a violation of state law, and a Marijuana Termination SAR if the  account is shut down for compliance reasons. Trying to avoid SAR filings by obscuring  your business type is a red flag and virtually guarantees eventual termination. It’s better to work with institutions that understand these requirements and have built  programs to manage them.  

Partnering with the Right Providers  

You don’t have to navigate all of this alone. Specialized platforms can help manage your documentation and connect you with cannabis-friendly banks. When choosing a provider, confirm they understand both banking and cannabis regulations, check their  track record, and make sure they offer strong data protection protocols.  

The Payoff: Long-Term Stability and Growth  

The benefits of strong compliance go beyond simply keeping your account open. Banks often lower fees over time for trusted partners, and access to services like lending and  merchant processing expands as your relationship matures. Businesses with stable banking relationships are better positioned to grow, raise capital, and scale without constant operational disruptions.  

Final Thoughts  

As a cannabis industry veteran, you already understand regulation. But banking requires a deeper level of documentation, consistency, and strategic communication. Avoid shortcuts. Invest in compliance. Be transparent with your financial partners.  While the process may be more rigorous than what other industries face, it’s navigable—and increasingly essential for sustainable growth.  

In today’s environment, legitimate banking relationships aren’t just possible—they’re a  competitive advantage.

The post Committee Blog: Banking Guide for Cannabis Industry Veterans appeared first on The National Cannabis Industry Association.

But one thing is certain: change doesn’t happen without action. That’s why there’s no better investment in the future of your business and the industry than attending NCIA’s 13th Annual Cannabis Industry Lobby Days and the inaugural National Stakeholder Summit in Washington, D.C., from May 13-15, 2025.

A New Era of Advocacy Begins with the National Stakeholder Summit

For the first time, we’re launching the National Stakeholder Summit, a deep dive into the policy challenges and regulatory shifts shaping the cannabis industry. This is where business meets policy, and where industry leaders set the stage for the advocacy that follows.

NCIA members enjoy complimentary access to the Summit, while non-members can attend for just $100. If you’re not yet a member, there’s never been a better time to join NCIA and unlock full access to this high-impact event.

Lobby Days: The Most Important Advocacy Event of the Year

After the Summit, NCIA’s 13th Annual Cannabis Industry Lobby Days provide a unique opportunity for cannabis professionals, business owners, and advocates to directly influence federal policy. As the industry continues to expand, engaging with lawmakers is essential to advancing sensible regulations, protecting businesses, and pushing for federal reform.

At Lobby Days, attendees will educate members of Congress and their staff on key industry priorities, including:

Banking access
280E tax reform
Federal legalization
Criminal justice reform
Sensible regulations for hemp products

Even more importantly, this is your chance to share your personal story. Lawmakers need to hear directly from industry professionals about the real-world impact of federal policies. Personal engagement can significantly influence legislative decisions and demonstrate the economic power and legitimacy of the cannabis industry.

Why Showing Up Matters

Beyond advocacy, Lobby Days offers unmatched networking opportunities, allowing you to connect with other business leaders, policymakers, and industry stakeholders. These relationships are critical for staying informed, forming strategic partnerships, and ensuring long-term success in the cannabis space.

This isn’t just about being seen—it’s about being heard. And the best way to ensure your voice carries weight is by standing with the largest and most influential cannabis trade association in the country.

Reserve Your Seat at the Table

NCIA’s Lobby Days is an exclusive, members-only event. Not yet a member? Join today to secure your spot and be part of the movement shaping the future of cannabis.

Already a member? Register now to stay up to date on our agenda, training sessions, and more.

Want to Maximize Your Impact?

Consider sponsoring Lobby Days to amplify your company’s voice and position yourself as a leader in cannabis advocacy. Sponsorship opportunities help you stand out before, during, and after the event.

Be in the room. Be part of the movement. Join us in Washington, D.C.

I look forward to seeing you there—just don’t forget to pack comfortable shoes!

Michelle Rutter Friberg
Director of Government Relations, NCIA

The post Make Your Voice Heard: Why You Can’t Afford to Miss NCIA’s Annual Lobby Days & National Stakeholder Summit appeared first on The National Cannabis Industry Association.

Here we will look at risk and risk mitigation techniques involved with identifying the right individuals for hiring in this regularly changing industry, employee training, and the best onboarding/ offboarding practices.

Hiring the Right Folks 

I’ve worked with clients across over a dozen different cannabis markets and one of the most recurring pieces of insight I get from newer business operators is a desire to work small. The fewer people the better. In many instances I’ve had clients who wish to not hire or pay anyone full-time at their cannabis operation except for themselves. 

While this can obviously decrease overhead costs by having a small personnel pool, it’s virtually inconceivable to have a regulated and compliant cannabis operation—be it a cultivator, manufacturer, retailer, or even a microbusiness—without well-trained and well-qualified individuals within the business. No one can do this work on their own, so you will need to hire the right folks for the job. 

From a risk mitigation standpoint, having the right processes in place is essential. This involves finding people with industry experience or at least relevant experience to their job duties, running thorough background checks for new hires, and assessing the specific needs of your own business operation from a personnel standpoint. What does this last point mean? Every cannabis operation is unique, and requires different demands of employees. For example, a manufacturer may want to make sure they have individuals comfortable with industrial machinery associated with extraction or have knowledge in packaging and labeling and the state-specific requirements for such. Human error can increase the overall risks of an operation, so it’s critical to find good people for the business. 

The Importance of Training 

No matter how knowledgeable and experienced an individual may be, they will still need to be trained in a myriad of standard operating procedures, employee handbooks, and other processes. This is critical not just for a cannabis operation in general, but also for the business specific needs for each business’s unique structure.

Training is important not just from an onboarding perspective (more on that later!) but also for recurring purposes such as when regulations and laws change. We have all seen how states decide to update or modify rules and regulations, so it’s important to stay compliant with even the smallest changes that can impact a business. Being out of compliance with even minor updates can result in steep fines or even revocation of a cannabis license. 

As a tool for employees, training throughout their time at a business allows them to become more comfortable with operational readiness, improves one’s overall effectiveness with problem solving, and offers employees better resources to report any wrongdoing they may encounter. Well-trained and knowledge employees make for a better managed business and a business that’s taken proactive steps to reduce risks within their workplace environment. 

The Most Critical Employee Related Steps 

While air travel is safe, the most dangerous times are during takeoff and during landing. In many ways, this is applicable to employees and working in cannabis. When onboarding a new employee, it’s crucial to mitigate risks appropriately. This means, as mentioned previously, making sure the employee in question passes a robust background check. This is more often than not required by states too, but the strictness and the disqualifying factors an individual may vary. 

Additionally, when an employee leaves a cannabis business, appropriate offboarding procedures are essential. Diversion is one of the biggest threats which a cannabis operator will face. Luckily, there are steps to mitigate this and the easiest one often relates to employee training and offboarding. Should an employee be identified as having engaged in diversion, offboarding steps—which may include changing SOPs, having a detailed exit interview with said employee, updating keycards or access points for cannabis and cannabis products, and/or increasing physical security personnel on or around a premises—are valuable to have in place.

Offboarding is critical to compliant operations and operations which have taken appropriate steps to reduce risk. Documentation and fair, timely communication through a potentially emotionally charged process can assist with covering one’s legal and financial bases and ensure for a smoother transition between employees working in the same or similar capacities. 

Risk with Employees

On the whole, yes there are risks associated with anything and everything human related. This is true beyond just the cannabis space but is particularly unique here given the overall higher level of risks associated with working in this industry. However, every risk can be assessed and mitigated accordingly and this is also true with the people involved. Hire right, train well, and handle crises well and the risks overall can be more adequately addressed.  

The post Committee Blog: Mitigating Risk in Your Cannabis Workforce appeared first on The National Cannabis Industry Association.

In an increasingly competitive cannabis market, understanding how to measure and maximize your marketing and PR efforts is essential. Our latest Industry Essentials webinar brought together top industry experts from NCIA’s Marketing & Advertising Committee to break down effective strategies for increasing visibility, proving ROI, and aligning marketing efforts with business growth.

Key takeaways from the discussion included:

• PR isn’t just about press—it’s about measurable business impact. Understanding how earned media translates to sales and brand credibility is crucial.
• Data-driven marketing decisions lead to stronger ROI. Identifying the right KPIs ensures you’re focusing on what truly moves the needle.
• A strong brand strategy outperforms disconnected tactics. Thoughtful, integrated campaigns create long-term success rather than short-term spikes.

Access Exclusive Resources from Our Panelists

Watch the full webinar on demand: Register Now

Learn how to measure PR success: Avaans Media’s Guide for CMOs

Optimize your marketing strategy: Get a free audit & consultation from Hybrid Marketing

Put your numbers to work: Try the KPI Calculator

Stay ahead of industry trends and ensure your marketing efforts deliver real results. Catch the replay now and level up your strategy!

The post Proven Strategies to Maximize Cannabis Marketing ROI: Key Insights & Free Tools appeared first on The National Cannabis Industry Association.

This article explores how cannabis insurance can safeguard your business from legal risks, outlining vital coverage options and the importance of risk management in this evolving industry.

Understanding Legal Risks in the Cannabis Industry

Businesses in the cannabis industry need to grasp the legal difficulties that affect them. The cannabis business operates under strict regulatory parameters which make businesses exposed to major market challenges stemming from compliance problems and legal complications. Several of the most frequent legal risks encompass:

Breaches of Regulatory Compliance

All cannabis companies must follow every law enacted by the federal government and state authorities, together with regional ordinances. Business operations face severe consequences when any compliance violation occurs, regardless of intention since it leads to potential business shutdowns or heavy fines together with legal action. Insurance coverage helps pay for the legal expenses that arise from compliance cases.

Lawsuits for Product Liability

Users may encounter safety risks when using cannabis products that include edibles and tinctures, and vaporizers. Experiencing negative reactions from customers who believe their product is faulty could trigger expensive legal proceedings for a business. The insurance protects companies in case clients bring product liability claims.

Claims Related to Employment

Possible legal challenges arising from workplace discrimination combined with unfair dismissal and harassment issues affect all industries including cannabis. EPLI provides coverage to pay for legal costs and compensation required in employment claims.

Property and Theft Hazards

The expensive marijuana stock maintained by cannabis companies makes them especially vulnerable to theft incidents. Business disruption can occur because of fire incidents combined with vandalism or natural disasters damaging property. The coverage provided by property insurance enables businesses to recuperate after experiencing such events.

Cybersecurity Risks

Cannabis companies currently use online systems to store sensitive corporate and client information. Businesses which obtain cyber liability insurance gain safeguarding against financial consequences and data breach losses together with hacking incidents.

Key Insurance Policies to Protect from Cannabis Operations

Businesses operating in the cannabis industry must buy specialized insurance plans that protect them against relevant dangers. Several mandatory insurance protection plans exist, which include:

1. General Liability Insurance

General liability insurance helps businesses avoid legal expenses after claims from external entities when these entities suffer property damage or experience customer injuries. Every cannabis business needs this policy for essential protection purposes.

2. Product Liability Insurance

Product liability insurance protects businesses from legal consequences that stem from releasing dangerous defective products onto the market. Additions to legal costs and settlement payments, together with damages awarded during legal cases, fall under the scope of this insurance.

3. Workers’ Compensation Insurance

Through the workplace policy employees can receive medical care together with income benefits when their job injuries occur. The manual nature of cannabis businesses necessitates workers’ compensation insurance due to the high risks of workplace injuries.

4. Property Insurance

The protection given by property insurance provides monetary compensation for physical structures including dispensaries along with warehouses and cultivation buildings. This policy protects organizations by paying for costs arising from fire damage as well as theft events and natural disasters.

5. Employment Practices Liability Insurance (EPLI)

Employment Practices Liability Insurance which you may also know as EPLI, protects cannabis businesses from employment-related lawsuits that might occur when employees face discriminatory action and harassment at work and unfair termination.

Benefits of Cannabis Insurance for Legal Protection

Investing in cannabis insurance provides numerous benefits in addition to financial protection. Here are several important advantages:

1. Ensures Compliance with State Laws

Numerous states mandate that cannabis companies possess certain types of insurance to fulfill their licensing obligations. Possessing appropriate coverage guarantees adherence and avoids licensing problems.

2. Minimizes Financial Losses

A business unprepared with insurance faces financial challenges when trying to afford costs of court procedures and payment of settlements. Insurance alleviates the monetary stress of legal actions and claims.

3. Enhances Business Credibility

Being insured at proper levels represents both professional conduct and responsible management of accountability. A cannabis business protected by proper risk management attracts more customers and investors together with business partners who demonstrate trust in its operations.

4. Protects Business Owners and Employees

Insurance provides legal advocacy along with monetary support when defending against lawsuits to shield both organizations and their personnel against unpredicted legal responsibilities.

5. Reduces Business Interruptions

Unexpected incidents, such as theft or property damage, can disrupt operations. Insurance helps businesses recover quickly by covering losses and repair costs, minimizing downtime.

Choosing the Right Cannabis Insurance Provider

Choosing the appropriate insurance company is essential for thorough coverage. Here are several important factors to keep in mind:

1. Industry Experience

Select an insurance provider that specializes in cannabis policies and comprehends risks particular to the industry.

2. Policy Customization

Seek out providers that deliver customized coverage choices suited to your business requirements, regardless of whether you run a dispensary, cultivation site, or distribution firm.

3. Reputation and Financial Stability

Investigate the insurer’s financial stability, customer feedback, and claim handling effectiveness to guarantee dependability.

4. Compliance Knowledge

Due to variations in cannabis laws among states, collaborate with an insurance provider that remains informed about changing regulations to guarantee compliance.

Conclusion

Risk management for the cannabis industry requires proactive strategies since insurance serves as an essential component among such approaches. Companies that invest in wide-reaching cannabis insurance coverage protect themselves from regulatory fines and legal actions as well as property damage and multiple types of liabilities.

Businesses that adopt proper insurance coverage mechanisms get protected from financial instability and also gain regulatory compliance while enhancing their credibility and building enduring business success. The cannabis sector’s development requires businesses to obtain suitable coverage that minimizes their risks and enables secure business operations.

The post Member Blog: How Cannabis Insurance Can Safeguard Your Business from Legal Risks appeared first on The National Cannabis Industry Association.

State-level cannabis regulations are a moving target; or rather, 50 moving targets. Despite nationwide movement in nearly every US state towards a regulated, adult-use market, each state has approached cannabis sales with their own unique flair. 

Although it has been fun to watch each state’s program mature under their own particular point of view, as we move forward into 2025 our committee wants to call attention to some of the states we feel are getting it right.

The National Cannabis Industry Association State Regulatory Committee (NCIA’s SRC) hopes that by highlighting the successes (some of them unlikely) in individual states, we can inspire states to come together to share best practices, work towards eliminating redundancies for multistate operators, and create a streamlined framework that allows for greater access to the market for both would-be operators and consumers.

Without further ado, here are the National Cannabis Industry Association State Regulatory Committee’s CannaStars for 2024!

Best Social Equity Program: Illinois

Through the Illinois R3 Program (Restore, Reinvest, Renew), 25% of Illinois cannabis tax revenue is reinvested into communities disproportionately impacted by the War on Drugs, funding initiatives like job training, reentry services, and legal aid. Since launching, this has amounted to $244M in marijuana-funded revenue grants to community organizations that address disinvestment and excessive incarceration in Illinois. 

Illinois also prioritizes social equity applicants for licensing by offering additional points on applications, reduced fees, and conditional licenses for roles such as craft growers and transporters. Further, the Cannabis Business Development Fund provides low-interest loans and grants to social equity applicants, helping reduce financial barriers to starting a cannabis business.

Like every state, Illinois continues to navigate the complexities of implementing a fair social equity program. However, the state has also backed up their commitment to restorative justice with criminal record reform. They have identified more than 770,000 records of “minor cannabis offenses” that may be eligible for expungement.

Currently, of the 25 jurisdictions with legal adult-use cannabis programs, 18 have an active social equity program. NCIA’s SRC believes that Illinois leads the nation with a model for social equity within cannabis that truly prioritizes a fair, restorative model.

Best Hemp Regulation: Kentucky

Kentucky’s hemp program stands out as a model of safety, transparency, and innovation due to its prioritization of registration and rigorous testing of hemp products. In Kentucky, all hemp-derived cannabinoids must undergo purity testing and remain compliant with THC limits. Packaging and labeling must also be clear and meet rigorous standards, similar to those in the adult-use markets of other states.

Although enforcing hemp producers and sellers to comply with tight standards has been met with some controversy, NCIA’s SRC believes that Kentucky’s efforts are a good thing and reinforce trust in the marketplace for consumers. California’s outright ban on intoxicating hemp derived products in 2024 has made it clear that lax regulations on hemp put the reputation of the entire cannabis industry at risk.

Beyond safety, Kentucky’s Cabinet for Health and Family Services does an outstanding job fostering collaboration. They engage farmers, processors, and retailers through education and support, and are transparent about regulatory changes and best practices. Their forward-thinking approach has positioned Kentucky as an ideal place for farmers and cultivators throughout the country.

Best Balance of Cannabis and Hemp Regulations: Minnesota 

When Minnesota voted to legalize adult-use cannabis in 2023, the state already had a thriving hemp-derived THC product market. Instead of bulldozing the existing hemp market, Minnesota has instead worked to bridge the gap and create a cohesive framework that supports existing businesses, innovation, while also prioritizing public safety and further economic growth.

One of Minnesota’s key strengths is its integrated approach to regulation: hemp and adult-use cannabis are regulated centrally. This is a substantially different model than many other states, where cannabis and hemp are managed by separate regulatory bodies. By overseeing hemp-derived THC products and cannabis under a unified system, the state avoids market confusion and ensures consistent quality standards. 

By carefully integrating cannabis and hemp regulation, Minnesota has positioned itself as a model for other states. NCIA’s SRC believes that the Minnesota model – a two-tiered system where lower THC products can be manufactured and sold more readily while higher concentrates of THC are sold through a traditional adult-use framework – merits consideration nationally as a way to increase access, safety, and roll-out adult-use without disrupting existing businesses.

Best Legislator: New Mexico State Senator Katy Duhigg 

Elected in 2021, Senator Katy Duhigg (D) represents Albuquerque Senate District 10. Duhigg is the former Albuquerque City Clerk, with a background in election and consumer protection, and is currently one of the premier cannabis attorneys nationally, as a member of Sutin, Thayer & Browne’s litigation group. Her current practice is focused on cannabis law, including corporate development and governance, regulatory compliance, administrative advocacy, and contracts. As a State Senator, she brings extensive cannabis knowledge to her role, and has been critical in allowing New Mexico to emerge as an unlikely success story in adult-use cannabis.

Senator Duhigg serves as Chair of the Senate Rules Committee, and as Vice Chair of the Senate Judiciary Committee, where cannabis-related legislation enjoys the most rigorous discussion. Her commitment to the cannabis industry was witnessed during her very first legislative session, wherein the Cannabis Regulation Act was passed, legalizing cannabis for adult use in New Mexico. 

The Cannabis Regulation Act was signed by Governor Lujan Grisham in June, 2021 and New Mexico was able to roll out their program quickly and effectively. Less than a year later, on April 1, 2022, New Mexico was open for business. There are now 2866 active license holders. 

Since the passage of the CRA, Sen. Duhigg has been absolutely implemental, leading the charge in the Senate to improve the enabling legislation and to ensure New Mexico’s cannabis industry continues to mature, with strong equity protections that include uplifting the existing medical operators who have been serving the state since the beginning of New Mexico’s medical cannabis program in the 1970s. 

Best Age Verification Guidelines: Nevada

Cannabis is frequently subject to “think of the children” style regulations and moral panic, but states often miss the mark when actually trying to put guidelines in place that protect minors and keep products out of their hands. 

Nevada is still the first, and only, state to require any type of ID authentication to detect fake and suspicious IDs, and the Nevada Cannabis Control Board remains the most well-educated regulatory body on the subject of the forensic document analysis required to actually separate adult users from minors presenting false identification. 

Furthermore, in March 2023, Nevada Assemblyman Brian Hibbets introduced AB342 – special interest legislation – that would have required onerous, and expensive third party checks as part of the Nevada dispensary age verification process. The Nevada State Legislature smartly shot down this amendment, which was vendor-specific language desperately seeking a problem that doesn’t exist in a state where every dispensary is doing the absolute most to detect fake IDs and keep minors out. 

As of May 2024, Nevada is also the only state to include any guidelines for age verification of cannabis purchase via eCommerce, or age verification for cannabis delivery. This makes Nevada the top state in the nation for preventing underage sales, but with a common-sense approach that doesn’t try to add unnecessary burdens to their cannabis operators.

Best Challenge to the DEA: Georgia 

In 2023, Georgia took the bold step of deploying their medical program directly into independent pharmacies across the state. With a limited product mix and a nascent patient base, this was an innovative way to jump-start a program and avoid high capital costs. The program was on track to get 90% of the medical cannabis patient base accessible within a 30-minute drive within 6 months of launch. 

Unfortunately, in November 2023, the DEA sent an ominous letter to ice the exciting new rollout, reminding pharmacists that cannabis is still a Schedule I substance. However, instead of capitulating to the threat, the industry persisted and the state stood by to support the program with 52 pharmacies remaining active license holders. NCIA’s SRC celebrates Georgia’s commitment to medical cannabis patients and increasing access, in spite of federal threats. 

Best Tax Rate Reform: Washington State

The culmination of a 5-year effort finally succeeded in removing all state taxes from Washington Department of Health-compliant products when purchased by registered medical patients. This matches the standards for pharmaceutical purchases in nearly every US state, where prescribed medications are non-taxable. Washington now joins 10 other states who do not tax medical cannabis purchases.

Since 2016 The Cannabis Alliance, Washington’s largest cannabis trade organization, has been advocating for the reduction or removal of the 37.5% state excise tax on medical cannabis products. Now, as of June 6, 2024, registered medical patients can purchase prescribed cannabis tax-free, a nearly 50% reduction in total cost to medical consumers. The state also introduced new higher testing standards for medical products, a patient registry, and a medical cannabis consultant license provided to budtenders. 

Although adult-use cannabis in Washington still remains subject to a 37% tax, and the NCIA SRC acknowledges that taxes are needed to continuously fund state cannabis programs, we want to highlight Washington as the first state in the nation to treat medical cannabis as a medical necessity under the tax code, easing consumer financial burdens, and helping better position medical cannabis as a legitimate and needed treatment for many conditions.

Best Employee Protections: Nevada

Nevada leads the way with some of the strongest employee protections in the United States to ensure legal users of medical or adult-use cannabis do not face workplace discrimination. In 2020, Nevada was the first state to prohibit most employers from rejecting job applicants based on pre-employment marijuana tests. This landmark legislation, codified under Assembly Bill 132, effectively protects job seekers who legally consume cannabis, while still allowing employers to maintain workplace safety standards for positions in safety, aviation, and other high risk roles. Additionally, Nevada law protects employees from penalties for lawful off-duty cannabis use. This includes the stipulation that employers cannot take adverse actions against employees for testing positive for cannabis unless there is a direct safety concern or violation of company policies. 

For medical cannabis users, Nevada law goes a step further by requiring employers to attempt reasonable accommodations for qualifying medical conditions. This requirement, enacted under Assembly Bill 453, emphasizes that individuals using medical cannabis for legitimate health concerns are entitled to workplace protections, similar to those afforded to employees using other prescription medications.

Notably, the Nevada Supreme Court has affirmed employees’ right to sue for violations of these protections, cementing the legal precedent that employees have the right to challenge discriminatory actions based on cannabis use. The court’s decisions have reinforced Nevada’s position as a model for other states considering similar workplace protections for cannabis consumers. These legal safeguards represent a forward-thinking approach to balancing employee rights with workplace safety, and have set a gold standard for workplace cannabis policies across the United States.

Best Regulatory Addition for Market Diversification: Massachusetts

Better late than never, the Massachusetts Cannabis Control Commission recently drafted new social consumption regulations and has moved to the formal public comment stage. As mature markets struggle with oversupply and overlicensing the rate of entity failures and state court receiverships (both voluntary and involuntary) of licensees are steadily on the rise. Massachusetts is among the first states to proactively offer a diversification opportunity for their cannabis program in the form of consumption lounges. 

The draft regulations contemplate three different varieties of social consumption licenses – supplemental, hospitality and event organizer – and would restrict social consumption licenses to only Social Equity Businesses, Social Equity Program Participants, Certified Economic Empowerment Priority Applicants, Microbusinesses, and Craft Marijuana Cooperatives for the first 5 years after program launch. Supplemental licenses would be available to certain existing marijuana establishments and allow for on-site consumption within or attached to an existing facility. Hospitality licenses would permit non-CCC licensed entities to host on-site consumption events in partnership with certain existing marijuana establishments. Finally, event organizer licenses would permit certain existing marijuana establishments to host temporary consumption events.

9 states have already active consumption lounge licensing, and Massachusetts has been considering a social consumption pilot program since 2019, but the NCIA SRC wants to highlight Massachusetts for a considered approach focused on increasing revenue streams for smaller operators and social equity license holders.

Lifetime Achievement Award for Innovation: California

California has consistently led the nation when it comes to innovative and inclusive cannabis policy, going back to their first legalization ballot initiative in 1972. They were the first state to legalize medical cannabis in 1996, and today California still remains a leader in the cannabis industry, driven by its vast market, progressive regulations, and culture of experimentation. 

A key milestone in this evolution was the 2024 California State Fair, which became the first state-sanctioned fair to integrate cannabis sales and consumption on-site, embracing cannabis culture into the mainstream. The state is also pioneering new business models, with cities like West Hollywood and San Francisco operating cannabis lounges that combine cannabis with art, food, and entertainment, reshaping consumption and creating new opportunities and economic growth in hospitality and entertainment. 

California’s commitment to research further enhances its role as a leader, with the University of California system partnering with private enterprises to explore cannabis’s medical potential, including at the UC San Diego Center for Medicinal Cannabis Research. Together, California’s groundbreaking events and innovative business models position it as the epicenter of cannabis innovation.

NCIA’s SRC expects that California will continue to lead the way with an innovative and focused approach to growing its legal cannabis industry.

Conclusion & Congratulations

Congratulations to the 2024 National Cannabis Industry Association State Regulatory Committee’s CannaStars winners! The committee has enjoyed supporting the progress of medical and adult-use cannabis programs across the US, and can’t wait to see what new developments every state has in store for 2025.

The post Committee Blog: Announcing Winners of NCIA’s State Regulatory Committee 2024 CannaStar Awards appeared first on The National Cannabis Industry Association.

In an industry as scrutinized as cannabis, a crisis can escalate quickly—having a solid plan in place can make all the difference.

Given its unusual balance between federal illegality and regional legality, the cannabis industry sometimes feels like it’s under a microscope.  Indeed, because of this microscope, a cannabis crisis can blow up fast. From product recalls to regulatory and legal issues, the Avaans Media team has worked with cannabis companies – and non-cannabis companies –  can face in moments of crisis. No crisis is ever “planned.” Because the very nature of a crisis is that it creeps up when you least expect it. Think it can’t happen to you? Seventy-nine percent of companies will experience a crisis with service disruption and media implications. 

A moment of crisis doesn’t even have to be the brand’s fault. Many companies have gotten caught up in social media rumors, it could have to do with police, government officials or product recalls and yet in those cases, it is the company’s crisis to handle. 

A crisis plan can be the unsung hero of an emergency. Putting a crisis plan in place may seem tedious, but a cannabis crisis is high stakes, and understanding when, who and how your company will handle a moment could save you millions in legal and PR fees, while also preserving the valuation of the brand, and the reputation in the eyes of customers, regulators, and the media. Crisis PR professionals can assess a situation quickly and guide you through this process. And a crisis plan will help you in those early critical moments. Tabletop exercises and media training are the muscle behind a crisis response.

Yet, if you find yourself in a crisis without a plan in place, there are three strategies to employ in a crisis.  

Follow the traditional process of response. 

We see this played out repeatedly, the traditional response to a crisis is to address the facts publicly, acknowledge the concern and the problem, apologize, and rectify.  This is a well-worn process, and the media are all very familiar with this process.

It’s important with this strategy to consider the methods of response and that the urgency matches the level of the crisis. Spokesperson, media format, and timing are essential elements in this strategy.

What level of response does this moment demand? If the problem hasn’t hit the media, but your customers are upset, how will you deal with that differently than if the media is calling?

The truth is always your north star. That’s particularly true during tumult. Tell the truth, stick to the facts.  If you don’t know the answer, it’s perfectly OK to say you don’t know and will return with an answer when you have one. Don’t make promises you aren’t sure you can keep. 

Where and how you issue a statement is a message. Who issues the statement? Will you issue a statement on YouTube or on Instagram. Both? Will you talk to the media at a press conference, or will you issue a written statement to the media?

Use the Crisis to Effect Change

Sometimes, a crisis can be used as an opportunity. No doubt, this is a risky choice and should be taken with sincere consideration and expertise about when and how to share the story. 

High Seas Dispensary in Costa Mesa, California did this recently when they ran into a sudden brick wall with city leaders who were withholding their city business permit.   This came a surprise to the founders of High Seas Dispensary who had always been reputable players in California cannabis. 

News coverage of the situation soon started bubbling up and the withholding was rescinded, allowing the dispensary to finally open its doors, albeit months later than planned.  

The pre-opening crisis created an early interest with cannabis media, and it helped secure coverage of its opening.  

Let The “Crisis” Die

This may be the riskiest choice of all. Because response is critical if a crisis has or will reach the media level. The first step in a crisis is to decide if it is an actual crisis and if so, what response there should be. 

Indeed, some low-level crises feel stressful in the moment, but the reality is that a public response will only fan the flames. An example of this is when things heat up with a few negative social media comments. It feels alarming, and it feels urgent, but unless those comments are part of a larger issue that should be addressed, feeding the trolls is only going to make more people aware of the situation.

Yet, a fast response may allow you the opportunity to tell your side of the story. An example of this is a cannabis recall client we worked with who called us after the story hit the TV news; there’s no going back. What’s done is done. We would have put the CEO on the news to respond which would have given the story a more well-rounded presentation and put a face to the recall, and because the CEO was highly credible, empathetic and well spoken, could have actually improved the brand reputation.  

But ignoring a crisis is a risky choice, too. We’ve all seen brands that wait days before responding to a crisis that continues to spiral out of control, at which point, the public statement feels inadequate.  This is a strategy, again, which should only be taken with a clear view of the risks. 

Think of a crisis PR plan as business insurance. A good plan can stop a crisis its tracks. Feeling prepared is the difference between panic and composure.

The post Member Blog: The Cannabis Crisis Plan – Business Insurance for the Future appeared first on The National Cannabis Industry Association.

20+ Cannabis-related associations shared their thoughts on the value and member benefits they offer and these “INSIGHTS” were shared on Cannabis NewsHub’ s social media channels and are posted on their website.  In addition, attendees of MJBizCon’ s Association Day had the opportunity to meet these associations in person on December 3 in Las Vegas.

The “INSIGHTS” shared in this series vary greatly and provide for the benefits of membership to each organization. Examples of benefits include professional networking, business development, trend tracking, advocacy, educational programs, continuing education credits, federal lobbying efforts, engagement, promotion, foster economic opportunity, industry specific training, and more.

It is our hope that sharing these INSIGHTS will help you navigate the various member benefits, learn about organizations, and help you determine what memberships best align with the mission of your business.

Thanks to all who participated as well as thanks to our partners at MJBiz  who promoted this campaign to the participants of the 2024 MJBizCon pre-show forum, Association Day.  In addition, a special thanks to the  National Cannabis Industry Association (NCIA), and the International Cannabis Bar Association who helped to kick off this series.

For more information on Cannabis NewsHub  or how to subscribe,  please contact Samantah Hobbs, Sr. Marketing Manager shobbs@newsbank.com

The post Member Blog: The Value of Associations appeared first on The National Cannabis Industry Association.

Contributors:

• Tapan Ramachandran, Otterz Inc. | hello@otterz.co
• Neil Rosenfield, Baker Tilly – neil.rosenfield@bakertilly.com
• Steven Gotsdiner, HBK, – sgotsdiner@hbkcpa.com
• Rochelle Dallons, Yield Bookkeeping Services – r.dallons@yieldbookkeeping.com
• Naomi Granger, National Association of Cannabis Accounting and Tax Professionals – naomi@nacatpros.org
• Curtis Winar, MGO CPA – cwinar@mgocpa.com
• Dorothy Kolb, Planet Earth Accounting & Advisory – dorothy@planetearthaccounting.com
• Pat Gately, Leyton – pgately@leyton.com

As the cannabis industry continues to expand, operators face unique challenges in tax compliance and financial management. Among the most daunting prospects for any business owner is an IRS audit, and for cannabis companies, the stakes are even higher. Proper preparation is key to ensuring your business is ready for this possibility.

The Increased Likelihood of an Audit

Cannabis companies are significantly more likely to be audited than those in other industries. A 2020 study by the Treasury Inspector General for Tax Administration found that cannabis businesses were 4.7 times more likely to be audited than non-cannabis businesses of similar size. This heightened scrutiny underscores the importance of being thoroughly prepared.

Building the Right Support Team

Assembling a team that understands the intricacies of the cannabis industry is essential. Key players include:

• Cannabis-Specific CPA: Expertise in 280E compliance, state-specific tax laws, and cost accounting methods tailored for cannabis businesses.
• Cannabis Tax Attorney: Specializes in cannabis tax law, provides regulatory guidance, and represents your business during audits.
• Compliance Officer: Ensures adherence to regulations, maintains proper documentation, and implements internal controls.
• Inventory Management Specialist: Oversees tracking systems, accurate inventory valuation, and optimization of Cost of Goods Sold (COGS).

Accurate Accounting and Documentation

Maintaining precise accounting records and documentation is critical. Essential records include sales receipts, vendor invoices, bank statements, payroll records, and inventory logs. Well-organized documentation supports your accounting entries and provides a solid foundation during an audit.

Standard Operating Procedures (SOPs)

Documented SOPs covering all areas of operation are vital, especially in a cash-heavy industry like cannabis. SOPs help mitigate risks such as misappropriation of funds, fraud, theft, and safety issues, ensuring consistency in your operations.

Consistent Employee Training

Regular training for employees is crucial due to the high turnover in the cannabis industry. Staff should be well-versed in handling cash, maintaining accurate records, and following SOPs to ensure compliance and security.

Internal Audits and Controls

Given the fluid nature of the cannabis industry, internal audits are essential. Regular self-audits help identify and correct potential issues before they escalate into major problems during an IRS audit.

Cost of Goods Sold (COGS) and IRC 471(c)

Accurate COGS calculations are vital for compliance with Section 280E, which disallows most business expense deductions except for COGS. Additionally, under IRC Section 471(c), small businesses may use a simplified inventory accounting method, potentially reducing tax burdens by including more costs in inventory rather than disallowed deductions. Ensure your business qualifies as a small business under IRS guidelines and maintain proper documentation to support the use of 471(c).

Managing Multiple Banking Relationships

If your cannabis business maintains multiple banking relationships, it’s essential to keep all records reconciled, including any intercompany and inter-bank transfers. Proper record-keeping and reconciliation are crucial for transparency and audit readiness.

State Audit Considerations

State audits can be particularly rigorous in the cannabis industry. Here are key considerations:

• Licensing and Compliance: Ensure you have all necessary licenses and permits, and can demonstrate adherence to state regulations, security protocols, and quality control standards.
• Financial Projections: Develop detailed financial projections, including revenue, expenses, and profitability. Use a cannabis-specific Chart of Accounts (COA) for accurate tracking.
• Operational Plans: Document all operational processes, from cultivation to distribution, and be prepared to present these during an audit.
• Risk Assessment and Contingency Planning: Identify and mitigate potential risks such as supply chain disruptions, regulatory changes, and security vulnerabilities.
• Security Measures: Most states require comprehensive security plans, covering aspects like surveillance, access controls, product storage, cash handling, and employee background checks.
• Document Management: Establish an organized system for storing essential documents, including licenses, compliance records, financial statements, and operational manuals.
• Policies and Procedures: Ensure that your policies and procedures are well-documented, covering safety, inventory reconciliation, and waste disposal.
• Professional Assistance: Hiring an accounting and tax professional with cannabis industry expertise can be invaluable for audit preparation and compliance.

Strengthening Your Approach to IRC 471(c) Compliance

IRC Section 471(c) offers cannabis businesses the opportunity to simplify their inventory accounting and potentially reduce their taxable income. However, successfully leveraging 471(c) requires careful planning and meticulous record-keeping. Here’s how to optimize your compliance strategy:

Key Requirements and Best Practices

1. Eligibility and Qualification:
   • Under 471(c), small businesses with gross receipts under $25 million (adjusted for inflation) can use simplified inventory accounting methods.
   • Ensure your cannabis business meets the IRS’s small business threshold, and keep records that prove your eligibility. This includes tracking and reporting your gross receipts accurately.
2. Accurate Categorization of COGS:
   • One of the main benefits of 471(c) is the ability to allocate more expenses to Cost of Goods Sold (COGS). This can include indirect costs that were previously non-deductible under 280E.
   • Carefully document and categorize every expense that contributes to inventory costs, ensuring you capture all eligible expenses without overstating them. This may include direct materials, labor, and even some overhead costs.
3. Detailed Documentation and Record-Keeping:
   • Maintaining thorough documentation is critical when applying 471(c). Every transaction, from purchasing raw materials to labor costs, should be meticulously recorded.
   • Keep records of how you allocate expenses to COGS under 471(c). This includes detailed explanations of the methods used for allocation, supported by invoices, receipts, and financial statements.
4. Regular Financial Reviews:
   • Conduct regular internal audits and financial reviews to ensure ongoing compliance with 471(c). This helps identify discrepancies early and allows for adjustments before filing tax returns.
   • Regularly reviewing your financials also helps ensure that your accounting methods align with both federal tax laws and state-specific regulations, reducing the risk of errors during an IRS audit.
5. Use of Specialized Software:
   • Employ accounting software specifically designed for the cannabis industry that supports 471(c) compliance. These tools help streamline the process of categorizing expenses, managing inventory, and generating accurate financial reports.
6. Professional Guidance:
   • Work with a tax professional who understands the intricacies of IRC 471(c) and the cannabis industry. They can provide tailored advice on optimizing your tax position and ensuring that your accounting practices align with the latest IRS guidelines.

By strategically implementing IRC 471(c) and maintaining strict adherence to its requirements, your cannabis business can benefit from reduced taxable income while remaining compliant with federal tax laws. Proper documentation, regular financial audits, and the use of industry-specific software are essential to maximizing the benefits of 471(c) and minimizing the risks during an IRS audit.

Conclusion

Preparing for an IRS audit as a cannabis operator requires a proactive approach and a knowledgeable team. By assembling the right professionals, maintaining accurate records, implementing strong internal controls, and staying informed about regulatory changes, you can navigate the complex world of cannabis taxation with confidence. Remember, the cost of proper preparation is always less than the potential consequences of being caught unprepared.

Investing in competent professional service providers may seem costly, but it can save you significantly in the long run. A 2022 survey by the National Cannabis Industry Association found that cannabis businesses working with industry-specific accountants and lawyers were 62% less likely to face major compliance issues during an audit.

For more detailed information, you can refer to the IRS guidelines for the cannabis industry and explore the Cannabis Industry Frequently Asked Questions. Additionally, these sources offer valuable insights on how to avoid an IRS cannabis tax audit.

The post Committee Blog: Cannabis Companies – Be Ready and Prepared for an IRS Audit appeared first on The National Cannabis Industry Association.