LAS VEGAS, Nevada, September 21, 2021 - PRESS RELEASE - Planet 13 Holdings Inc., a vertically integrated national cannabis company, announced the opening of its expanded dispensary floor, doubling the size of the cannabis retail area and adding 40 registers for higher sales volume and faster customer checkouts. In addition to doubling the points-of-sale, the company has added more premium display cases and new entertainment features, including an 80-feet wide by 20-feet tall LED wall showcasing immersive entertainment, like a giant cascading waterfall creating an incredible visual effect for customers.

"Planet 13 defines what the cannabis shopping experience can be with entertainment and personalized service. I'm thrilled to open our expanded dispensary and show customers what we've been working on behind the curtain to continue to innovate and improve on our leading customer experience," said Larry Scheffler, Planet 13 Co-CEO. "This expansion was absolutely critical, especially on weekends and our busiest days where wait times could be over an hour. Now we can shorten those peak-period wait times dramatically and move more customers through much faster. The addition of more premium cases gives us greater flexibility in promoting products and helps us augment our revenue with new advertising engagements."

September 20, 2021--SANTA FE, N.M.--(BUSINESS WIRE)--Santa Fe Farms, a leader in the production, manufacturing, and distribution of hemp and hemp-derived products for industrial use, proudly announced today that Kimberly Kovacs has been named to the prestigious Forbes 50 Over 50 Investment 2021 list for her investment acumen and drive to advance initiatives in sustainability, carbon sequestration and industrial hemp across the commercial marketplace.

RELATED: How Santa Fe Farms is Developing an Industrial Hemp Ecosystem

With more than 10,000 nominations submitted, Kovacs' achievements, including founding six companies, raising over $120 million and dual role as managing director of Arroyo Ventures, a venture capital and strategic advisory firm focused on female investors and founders, caught the attention of Forbes’ 50 over 50 judges microfinance juggernaut Andrea Jung, iconic fashion designer Diane Von Furstenberg and Janice Bryant Howard, CEO of the nation’s largest privately held, woman- and minority-owned workforce management companies.

To crack down on illegal cannabis operations in Oregon, the state’s legislature created and passed House Bill 3000, and Gov. Kate Brown signed it into law in July 2021.

Photo courtesy of Allay Consulting | allayconsulting.com

The bill gives more enforcement power to the Oregon Liquor and Cannabis Commission (OLCC), the state’s cannabis regulatory agency, said Kim Stuck, founder and CEO of Allay Consulting.

“Now, they will be able to monitor some of these hemp farms and make sure that they're following the rules and that they're actually growing what they say they're growing, and they have the amount of plants that they say they're going to have, and they're in the areas that they say that they are, and that their potency level is where it's supposed to be,” Stuck said.

In late August, the Oregon Department of Agriculture (ODA) filed its new proposed hemp rules, which intertwine with the OLCC cannabis rules, and is seeking public comment on those by Oct. 22.

Building off of the bill, the proposed rules are largely intended to prevent growers from using hemp as a front for legacy cannabis operations, Stuck said. The rules also more closely align the state’s hemp program with the U.S. Department of Agriculture (USDA) rules and address additional issues, such as contamination.

Below are some of the proposed rule changes that Stuck discussed with Hemp Grower.

Detailed Lab Reports

The proposed rules state that, starting on Jan. 1, 2022, all Oregon testing laboratories must submit test results to the USDA with various information about the grower, lab and test, such as “Grower’s registration number,” “Business address of the grower,” “Harvest lot identifier” and “Whether it is a retest.”

While many labs already include this information on certificates of analysis, Stuck said these requirements would improve product tracking and tracing.

“What they're trying to do is, when someone is testing at a [certain] level—whether it's a contaminant or potency—they want to know right away where that farm is and who it is that farmed that,” said Stuck, who  previously worked as cannabis and hemp specialist at the Denver Department of Public Health and Environment.

“When I was a regulator, if I went in and had to go, ‘OK, we've got to go to the lab; we’ve got to ask the lab who these guys are,' [and] if they didn't know who they were, then we would never know where that product originated,” she said. “Doing something like a recall or a disposal at that point would be virtually impossible.”

Sampling and Testing Requirements

In the next calendar year, the proposed ODA rules state, samples will no longer pass testing if they test between 0.3% and 0.35% total tetrahydrocannabinol (THC), as calculated using a state-provided formula. The THC content of samples will instead need to test at 0.3% or less, with testing measurements of uncertainty taken into account. “If the sample of the harvest lot passes THC testing under these rules, the harvest lot corresponding to the sample passes required THC testing,” the rules state.

The proposed rules align with federal laws and USDA rules, Stuck said. “A couple of states have tried to increase the percentage to like 1% or something like that, to cut down on the loss of crops because of going over that percentage,” she added. “But it hasn't really worked. [The USDA hasn’t] really approved any hemp plan that is more than the 0.3.”

Also beginning in 2022, growers would be able to arrange state-mandated samples up to 30 days prior to harvest, as opposed to the current 28 days.

Similar to the THC requirements, Stuck said the 30-day window lines up with USDA rules. “And if you can give the growers a little more time, that's always good,” she added. “I don't think it's going to hurt anybody to have a few more days added on.”

Corrective Action Plans

Under the proposed rules, the ODA may ask businesses that have committed a violation to submit a corrective action plan. Stuck said businesses should draft a Corrective and Preventive Action (CAPA) plan, which is a standard operating procedure (SOP) for addressing potency, pesticides, microbials and other contamination issues.

“I think [the regulators] want people to realize that they need a CAPA plan in place, and they want them to be ready for when that happens, because I guarantee, no matter what, in any manufacturing or any other kind of agricultural company, like in any other industry, you will have problems,” Stuck said. “You’re going to have a recall at some point, or you're going to have at least a disposal before [product] goes out the door, at some point. It's a matter of being ready for that.

“If you can write a good corrective action plan for the regulators, it's going to not only help everything go a lot more smoothly and quickly, but it really shows that your company knows what they're doing and they actually care about the consumers and their product. So, it's really good for your brand identity anyway.”

No Animals in Grow Sites

The proposed rules state: “Failing to maintain safe conditions may include allowing unrestrained animals on the grow site….”

Stuck said pets can sully a hemp plant, as growers focused on production of flower material can’t wash off hair or other contaminants. “This is their way of trying to cut down on contamination, because [with] animal hair and animals in general, if they're using the bathroom in the field or anything like that, there could be some major issues with E. coli and all kinds of stuff,” she said.

Thorough Recordkeeping

Under the proposed rules, growers will need to keep various records, such as of “The harvest lot, seed lot, and immature plant lot identifier as applicable” and “Grow site and production area identifiers.” They also must take photos or videos of any disposed hemp.

Additionally, licensees transporting hemp will need to carry a “copy of the invoice or bill of lading” and “a copy of the pre-harvest test results … and sampling documentation,” per the proposed rules.

The regulators are putting forth these rules, Stuck said, “because of the things that they've run into in the past, with people growing high-THC cannabis instead of hemp, and they don't know where those plants are going.”

Generally, Stuck said the proposed rules ask more of the state’s hemp farmers, but that she believes they help legitimize the industry.

“Any time that you have more testing and more documentation and you're following regulations that line up with more federal regulations, it just shows your credibility and really shows that the products that you're producing are safe for human consumption,” Stuck said.

She added: “I think that putting these kinds of things in place getting GMP [good manufacturing practices] certification and ISO [International Organization for Standardization] certification and those kinds of things just really help your company shine and help consumers feel a lot better about buying these kinds of products. There still is a lot of fear and bias against our industry, so the more legit that we can be, the better off we’re going to be in the long run.”

If there is such a thing as a perfect business plan in adult-use cannabis retail, it involves teams that are majority owned by military veterans—at least that’s the standard in Illinois. 

Among the 185 cannabis dispensary licenses recently awarded by the Illinois Department of Financial and Professional Regulation (IDFPR), 75 were reserved for top-scoring applicants in what was intended to be a competitive licensing process.

The dilemma?

KPMG, the global accounting firm that IDFPR bestowed a no-bid contract worth $4.2 million to grade the applications, awarded 21 groups perfects scores. In turn, the 75 licenses reserved for the top-scoring applicants were to be divvied up among those 21 groups. Overall, 937 candidates submitted 4,518 applications seeking those 75 licenses, according to the Chicago Sun Times.

While there was a cap on how many licenses applicants could win, which was 10, there was no cap on how many times applicants could apply. The 21 groups with perfect scores collectively submitted more than 300 applications.

The kicker?

Five of the 250 points necessary to receive a perfect score were reserved for applicants with businesses that were majority owned by military veterans, essentially providing veterans a monopoly over those licenses, said Irina Dashevsky, a partner in the cannabis law practice group at Greenspoon Marder.

Perfect Scores

Dashevsky

Dashevsky and her team at Greenspoon are involved in litigation in a Cook County case that is currently challenging the five veteran points and their constitutionality. It’s just one of many cases currently unfolding in a licensing saga that began in early 2020. The IDFPR cannot issue actual licenses to the lottery winners with a current court order blocking the rollout.

“What ended up happening in practice, which was unprecedented, is perfect scores,” Dashevsky said. “So, IDFPR hired KPMG, and KPMG gave out perfect scores, and perfect scores to my knowledge still had never existed before in any cannabis licensing contest in any jurisdiction. So, whether it’s medical or rec, whether it’s Illinois or somewhere else, perfect scores weren’t really a thing.

“And it’s surprising that they were a thing here, right? Like, how do you say someone’s business plan is perfect or someone’s operations plan is perfect? It’s suggested that there wasn’t a good amount of scrutiny on that. And then the idea that not just one was perfect, 21 were perfect, is at least curious and unprecedented.”

Since those 21 perfect scores were revealed more than a year ago—on Sept. 3, 2020—the scoring system and its application have come under fire. In addition, an employee who works as a risk management consultant for KPMG is also a partner in one of the 21 groups that secured perfect scores, the Chicago Sun Times reported, leaving the integrity of the process in question. 

The Intended Process

In a competitive application process with competitive scoring, applicants who did not pick up the five points because of a lack of veteran ownership, but were perfect elsewhere, could still have scored as high as 98% and should not have been shut out, Dashevsky said.

“Those five veteran points literally became critical and many [applicants], based on what was proposed, thought, ‘OK, it’s just five points out of 250,’” she said.

Dashevsky said she believes the 75 licenses weren’t intended to be reserved for perfect scores. In addition, the notion of a lottery, as outlined in the state’s Cannabis Regulation and Tax Act (CRTA), was originally written as an emergency tiebreaker rule, she said. 

For example, if two applicants both received 90% scores in a tie for the final license available from their Bureau of Labor Statistics (BLS) region, then those two applicants would have a lottery between just them to decide the winner of that specific license.

RELATED: Illinois Establishes Tiebreaker for Awarding Conditional Adult-Use Cannabis Dispensary Licenses

“But here, because of perfect scores, you had a tie for all [75] licenses,” Dashevsky said. “I think the issue here is that you can do anything you want, but what you should not have done is passed and written this complex, 700-page piece of legislation that put forth a very competitive licensing process and have that culminate in nothing more than an all-in lottery.”

Marshaling Perfect

Dashevsky said she and her team remain curious about why some groups submitted more applications than 10—the cap for how many licenses they could potentially win—unless they knew in advance that a lottery provision would be triggered and extra submissions would essentially be lotto balls in a random drawing.

After the scoring was called into question from within the legal realm, Gov. JB Pritzker and the IDFPR issued a supplemental deficiency notice process, which allowed applicants to receive notice of where they lost points and the opportunity to fix those points. But applicants could not go out and reconfigure their ownership status to satisfy the veteran-owned or Illinois resident points since they did not apply for those points from the outset.

Allowing for amended applications was basically a corrective process marshaling folks, who had lost points elsewhere, toward perfect scores, Dashevsky said. But Pritzker and IDFPR faced an apparent lose-lose situation, as three of the original 21 finalists for the dispensary licenses filed a lawsuit over the state’s decision to give losing applicants a second chance.

Nonetheless, the corrective process eventually allowed more groups beyond the original 21 to eventually achieve perfect scores and become eligible for the original 75 licenses.

Lowering the Bar

That all happened in September and October 2020. Navigating through months of lawsuits and delays, the IDFPR eventually unveiled a plan in late April to roll out the 75 original retail licenses in conjunction with 110 new licenses for applicants scoring 85% or better. The five veteran points were still in play for the 110 licenses, but they were no longer a be-all and end-all.

Lotteries transpired on July 29 and Aug. 5 for the 110 licenses, while a third lottery for the 75 original licenses was held Aug. 19.  

“So, the legislative fix was adding two more lotteries and setting a lower bar to get into those lotteries,” Dashevsky said. “They set a bar at 85%, which I was against, and we argued that that very much undermines the competitive nature of the whole thing, right? Like, on the one hand, you’re giving out perfect scores and giving out licenses to people who are absolutely perfect. And the other hand, you’re giving out that same license to anyone who achieved 85% or better.”

Part of the equation set forth in the CRTA was that 20% of all available points in the process would go to social equity applicants with the focus of righting past wrongs caused by the drug war. In turn, partnerships were created with social equity applicants to achieve those points, Dashevsky said.

Veteran Monopoly

While the 110 additional licenses helped diffuse the perfect-score quandary, the 75 original licenses still created a veteran-owned monopoly, she said. While veterans represent roughly 6% of Illinois’ adult population, Dashevsky said, they took control of 40.5% of the 185 new licenses.

“And the question is why—why such a windfall for veterans?” she said. “What we do understand is why social equity applicants deserve this boost. Why veterans? And we’ve argued in our case there’s no rational basis for giving veterans these five points or anything.”

Veterans often return home after sacrificing life and limb for their country without asking for anything in return.

Some of them receive VA health care for service-connected injuries. Some of them receive special loans for home mortgages or college tuition through the GI Bill. Some of them get special preference in hiring for government employment. And some veterans receive access to military exchanges or retail discounts at places like their local hardware shop.

Many of them also receive respect from their fellow citizens and are recognized during Armistice Day every Nov. 11.

“Look, no offense to veterans. In fact, thank you veterans,” Dashevsky said. “But in this regard with respect to retail ownership of cannabis dispensaries in Illinois, there is no rational basis for why you should have a boost versus some other group.”

In arguing that the Illinois adult-use retail licensing points for veterans is unconstitutional special legislation, Dashevsky and her Greenspoon Marder team are making a case that the government is supposed to create laws that apply to everyone.

“If they’re going to create a law that singles out a group for a particular reason, there has to be at least a rational basis for it,” she said. “Usually, veterans get perhaps special preference in hiring in government employment. That’s typically where that special preference has been upheld.”

Illinois licensing officials have broadly said that veterans suffer from PTSD—one of many qualifying conditions under Illinois’ medical cannabis program—and that’s relevant to the five veteran points, Dashevsky explained.

“We have been saying it’s not relevant to retail ownership, and you’re not helping veterans broadly,” she said. “You’re helping a handful of veterans have ownership in an industry, but what does PTSD have to do with retail ownership?”

Licensing Remedies

In the meantime, the IDFPR did admit to a clerical oversight error on data entry that wrongfully excluded applicants from the three-part lottery process and announced earlier this month its intentions to hold a corrective lottery to rectify the slipup by awarding additional adult-use licenses.

But the IDFPR will not hold that corrective lottery or any others until court approval and cannot formally issue licenses to the 185 winners unless Cook County Circuit Judge Moshe Jacobius lifts a standing order blocking the rollout. During an Aug. 16 hearing, Jacobius said there was a possibility the state would have to redo its entire lottery process.

Through the administrative review law period, which is 35 days from the final announcement of license winners, the IDFPR has indicated its willingness to have separate remedies for anyone who’s successful through that review, Dashevsky said.

“I don’t know whether judges will agree with that all around, and that is not withstanding the veteran issue,” she said. “Our argument has always been that everyone who achieved a 245, which is a perfect non-veteran score, should have been in lotto three [on Aug. 19].”

But Dashevsky said she doesn’t know if the right answer would be to redo the entire lottery or to include all the perfect non-veteran scores in a supplemental lottery with similar odds.

“I think judges are in a tough place, but I don’t think they need to think about the remedy,” she said. “I think they need to just focus on the constitutional question with respect to the veteran points. But a lot of time and resources were put into these lotteries and getting folks to this place and we’re already quite delayed. So, I think you’ve got to kind of balance all that out.”

Lessons learned

Pursuant to the amended CRTA, the IDFPR can award up to a maximum of 500 adult-use dispensary licenses. The department stated it intends to award 50 more in 2022.

With the current saga involving the 75 original licenses getting dragged out well beyond a year, there are lessons that other states could learn from Illinois, especially when it comes to varying extremes seen in current medical markets—from Oklahoma’s unlimited licensing system to Florida’s limited-license market that’s majority controlled by a few multistate operators.

While Greenspoon Marder is challenging the constitutionality of veteran points in the Illinois licensing process, Dashevsky said she applauds the IDFPR’s efforts.

“I think that what Illinois did and attempted to do and is still striving to do is extremely commendable,” she said. “The legislation itself is a blueprint. I think the application process and how it all rolled out is a little different, but Illinois attempted to strike a balance and give a boost to social equity applicants. And I think that it’s in the process of perhaps achieving that.”

Dashevsky concluded and said, “I think that it’s tough to have such a competitive licensing process turn into essentially lotto balls, but it is what it is. I don’t think other states should be looking to this and saying, ‘Let’s do a lotto.’ That wasn’t ideal. That’s not really what was put forth here. It’s a little messy and it’s not merit-based.”

States that want to achieve an equilibrium between the number of licenses issued and who wins those licenses must tiptoe a fine line to get there, she said.