WORCESTER—PRESS RELEASE—Following a public comment period that closed Oct. 15, the Cannabis Control Commission on Oct. 20 approved additional policy changes to its draft regulations that establish two Marijuana Establishment types authorized to provide limited delivery services to adult-use cannabis consumers in the Commonwealth. A final vote on all modifications to Massachusetts’ adult and medical use of marijuana regulations will occur at a subsequent public meeting slated for Oct. 29.
Previously referred to as Limited Delivery Licenses and Wholesale Delivery Licenses, the newly categorized Marijuana Courier and Marijuana Delivery Operator license types discussed Tuesday aim to further the Commission’s mission to ensure meaningful participation in the legal cannabis industry by communities that have been disproportionately harmed by marijuana prohibition and to satisfy consumer demand that is currently being met by illicit market participants. The Commission’s draft delivery regulations specify that both license types will be exclusively available to Certified Economic Empowerment Priority Applicants (EEAs) and Social Equity Program (SEP) Participants for a minimum of three years, with the exclusivity period beginning once the first Marijuana Delivery Operator commences operations.
To that end, among the additional delivery changes approved Tuesday, Commissioners put in place operations restrictions, modified caps on ownership and control, and limits to financial relationships with third-party technology platform providers in order to prevent entities from dominating this emerging delivery market segment. They include:
Requiring that marijuana products out for distribution by a delivery licensee will be associated with a specific, individual order to prevent entities from operating as mobile warehouses or retail stores;
Deeming a third-party technology platform provider with any financial interest—including but not limited to, a delivery agreement or other agreement for services—in a delivery license as a person or entity having direct control over that license, and limiting such control by those providers to one delivery license;
Preventing a single entity from holding direct or indirect control over more than two Marijuana Delivery Operator or Marijuana Courier licenses, under the Commission’s three Marijuana Retailer or Delivery License cap, and restricting a single Marijuana Delivery Operator to maintaining one warehouse as their principal place of business or operations;
Underscoring that the Commission shall maintain on its website its publicly available and searchable source of information about all operating licensees and include delivery licensees; and
Revisiting the provisions for Marijuana Delivery Operators two years after the first entity commences operations in the Commonwealth to study the competitiveness and concentration of the license type, and if necessary, responding with further regulatory changes or guidance.
The Commission also approved policy changes that bring the adult-use delivery regulations in line with sister state agency requirements for commercial vehicles and tax collection, including:
Requiring that commercial vehicles used to transport or deliver marijuana or marijuana products must comply with applicable Registry of Motor Vehicle (RMV) requirements, but may not include any additional external marking that indicates the vehicle is being used to transport or deliver marijuana or marijuana products;
Clarifying that although Marijuana Delivery Operators are not considered Marijuana Retailers under the Commission’s regulations, they must register as a vendor with the Department of Revenue (DOR) and collect and remit marijuana retail taxes in accordance with DOR regulations.
The Commission’s development of Marijuana Courier and Marijuana Delivery Operator licenses follows the promulgation of a Delivery-Only, Delivery Endorsement, and precertification licensing process in 2019 which received substantial public feedback during the agency’s current regulatory review period. The Marijuana Courier model represents an evolution of the Delivery-Only License the Commission had previously approved in 2019, and maintains those policies and provisions in order to keep barriers to industry entry low and support participation by applicants with limited capital.
In direct response to public comment received during the initial 2020 regulatory review period, the Commission approved the Marijuana Delivery Operator license authorizing businesses to purchase marijuana and finished marijuana products at wholesale from Cultivators, Craft Marijuana Cooperatives, Product Manufacturers, and Microbusinesses, and sell individual orders directly to consumers. By expanding the delivery operations available to licensees, the Commission also has adopted additional compliance requirements for Marijuana Delivery Operators pertaining to wholesaling, warehousing, white labeling and sales.
During Tuesday’s meeting, the Commission acknowledged the important role of municipalities allowing for delivery licensees to operate within their borders, including the local control provisions in state law. Under the Commission’s draft regulations, licensed delivery service will be able to occur within:
A municipality which the delivery licensee has identified as its place of business;
Any municipality which, after receiving notice from the Commission, has then notified the Commission that delivery may operate within its borders.
Marijuana Retailers and Microbusinesses with Delivery Endorsements will be required to inform their host municipality law enforcement authorities, including police and fire departments, about plans to deliver marijuana and marijuana products directly to consumers.
Tuesday’s session followed multiple public meetings and public comment periods held in June, July, August, and September covering proposed changes across both sets of Commission regulations. To review regulatory drafts, meeting summaries or minutes from those discussions, visit MassCannabisControl.com. To access video recordings of previous meetings, visit the Commission’s Facebook or YouTube channels. After the Commission reconvenes Oct. 29 to vote on the final adult and medical use of marijuana regulatory changes, those provisions will be submitted to the Secretary of State’s Office for their review and promulgation.
Additional information about the Commission’s regulatory review process is available at MassCannabisControl.com, by contacting the Commission by phone (774-415-0200) or email (Commission@CCCMass.com), or following the agency on Facebook and Twitter.
Courtesy of Engineered Extracts
6 More Lessons We Learned From Our Cannabis Business
Cannabis is susceptible to the “shiny object syndrome” in that it is easy to get distracted by activities and business deals that are not core to your long-term success.
Thomas Hobbes famously stated that life can be “solitary, poor, nasty, brutish and short.” Hobbes could have well been predicting the state of the 21st century cannabis industry, with all its brutishness and nastiness. But we hope this article puts us in solidarity with you and other cannabis business owners, mitigating the solitude, and we hope our advice results in your experience in cannabis being neither poor nor short.
Do not forget to budget for the “Oops, we forgot about...” In our prior article we emphasized understanding the revenue and expense cycles of the particular verticals you operate within (grow, processing, retail, etc.) and to pull them together into a pro forma. Almost every significant expense line will have unanticipated situations come up.
Let’s say you are designing an indoor grow and you are ready to install all your lighting and air management equipment. Your electrician says you need to upgrade the electrical capacity to handle all the equipment you identified. This could easily be a $50,000 additional expense.
Or, as another common example, labor expenses are often underestimated and can drain your cashflow before you start monetizing your crop. If, for example, you are delayed in planting your crop or processing by only a few months, your payroll budget still needs to cover the people you already hired. When doing your pro forma, and before you give any rosy scenarios to investors, it is best to add an additional six months of payroll expense as a “contingent payroll cost” (aka cover your assets (CYA)).
Another consideration for extraction operations: You will be working with highly tuned pieces of equipment that do wear out. A failed compressor, pump or chiller can easily take your machine down for a day or two—which is precious processing time. Budget cash to purchase extra key components to keep on hand—items that may otherwise have to be ordered or reconditioned before you can again get up and running.
Everybody is eventually wrong at some point in their cannabis journey. We’d even go so far as to say everybody will be wrong in a very big way at least once. “Everybody” not only includes you, but less intuitively, this lesson includes everybody else internal and external to your core management team. Be very careful of internal and external sources of expertise that advise by assertions. Assertions are dangerous, because if they are delivered with a sense of certainty you may just believe them if you trust the person providing the assertion. People who operate by assertion usually know less than they assert (a term for this, coined by authors Peter Boghossian and James Lindsay in their book “How to Have Impossible conversations,” is the “Unread Library Effect).
All information going into your management team’s decision making needs to be verified and re-verified. One of your best management skills is that of a highly skilled journalist. Such journalists try to have more than one source for their information—they corroborate the information they receive.
3. DON’T AVOID BORING ADMINISTRIVE TASKS
Engineered Extracts
Paperwork and administrative activities can become boring. It takes a special individual to be wired for the constant battle of fighting back against burial by paperwork. It is all boring until the moment there is a problem—then suddenly an existential crisis makes paperwork the opposite of boring. Crisis can include compliance issues around licensing, track-and-trace systems, accounting, payroll, insurance of all kinds, property taxes, payroll taxes, income taxes, warranties, standard operating procedures (SOPs), contracts of all kinds, on and on and on.
When companies start out, they necessarily put paperwork related to some of those areas on the back burner. They say: “Why do we need SOPs? It is just me and my buddies. We’ll get to that later.” Or, “Insurance in cannabis is so expensive, we’ll probably never need it.” Well the fallacy of that position has again been cast in the spotlight given all the recent fires in the Western states. How many times have you heard someone say they are operating on a handshake deal? How many times do you think these deals work out? Answer: practically never.
One of the most valuable individual(s) you will add to your team is someone with administrative skills. These will be dedicated individuals or key management members who take on the admin duties. Consider them the frontline workers of your company. The company will not exist in the future if all the administrative stuff is not complete. Don’t let the avalanche of paperwork bury your business.
4. STOP ADVOCATING FOR FEDERAL LEGALIZATION RIGHT NOW
There is incessant talk about federal legalization needing to happen immediately. But we believe that when federal legalization does come, the floodgates of competition will open. Especially if you are a small or mid-size cannabis company, you need as long a runway as possible to get on solid footing and to make yourself a survivor, either as a contender to buy other firms or as a target of a purchase. Each state has struggled with getting legalization correct. While you are dealing with these challenges, you don’t need an overlay of federal challenges to your survival.
So, what do you advocate for? Advocate for decriminalization, not federal legalization. Advocate for the repeal of IRS Tax Code Section 280E.
Finally, we should all be advocating for the expungement of past criminal records related to cannabis on principle alone.
5. WHAT KIND OF BUSINESS STRUCTURE SHOULD YOU BUILD?
This is the kind of question that can be hard to ask yourself, especially if you have your heart set on only being in retail or being “the best grower” ever or geeking out permanently with your buddies extracting oil and distillate and hoping to scale to stay in business. Our admittedly biased opinion is that you have to build some kind of vertically integrated intrastate business.
We don’t have the perfect template, but we define a vertically integrated cannabis business as one in which you are in at least three verticals. For example, you have a grow, a processing division and a retail outlet. Or maybe you have a grow, a distribution business and an intellectual property licensing business. The idea is that each business has its own revenue cycle (see our previous article) and the whole is greater than the sum of its parts. With multiple opportunities to capture margin, why risk everything on one market segment?
Say you own a grow operation and you can wholesale your flower at $1,500 per pound. Let’s assume you don’t have any commission charges for distribution. Now, if you owned a retail shop, you can sell that same pound of flower, broken down into 1/8ths for double or triple the $1,500. You also could create and sell your own oil and distillate without the tolls charged by contracting such services.
We can go on and on with examples, but the important idea is to think through what the long term game plan is. As we noted above, we believe federal legalization will be an extinction event for most cannabis companies. By being vertically integrated and managed well you will become a target for purchase by a much larger firm; or you become a target for investment allowing you to scale your dream. Long-term, there will be standalone firms in each vertical, we grant that outcome. But the standalones will be so large they will basically be part of oligopolies in each vertical. They will serve their purpose, but they won’t create much diversified value. We believe more value will be created per dollar invested in a vertically integrated company than a vertical one only and vertical integration will increase your survival odds.
6. BE AWARE OF WHIZ BANG TECHNOLOGY
Automation, smart devices, artificial intelligence, sensors, remote controls, etc., are all great ideas, and in a perfect world you would have an unlimited budget to try out all these productivity- touting applications. However, balancing the appeal and benefits of technology with your financial bandwidth is essential. As is exploring any technology’s long-term viability. Choose your initial equipment wisely. Do your due diligence and talk to actual people who are running the equipment you are looking at to learn about benefits and any specific issues with the equipment.
IN CONCLUSION
We offer these lessons as the result of our own learning curve. Cannabis is susceptible to the “shiny object syndrome” in that it is easy to get distracted by activities and business deals that are not core to your long-term success. This industry is a slog. The more the slog you endure, the stronger and deeper you build the foundation of your business and elevate your chances for success. As we noted in our prior article, we touched upon the concept that a chain of objective successes is the result of a multiplication of probabilities. And learning from others is the cheapest way to increase any and all of your objectives’ probability weightings.
Loren Picard is CEO at High Desert Flower Inc. in Oregon.
Andrew Olsson is vice president at High Desert Flower Inc. and is the co-founder of Engineered Extracts LLC, also in Oregon.
Namaste Technologies Expands Cannabis 2.0 Product Offerings, Introduces New BHO Products and Signs Exclusive Agreement with Stigma Grow
CannMart has launched a new live resin product line to be sold under the Phyto Extractions brand and signed an agreement with Stigma Grow to offer shatter, crumble and live resins.
TORONTO, Oct. 6, 2020 /CNW/ - PRESS RELEASE - Namaste Technologies Inc., a platform for cannabis products, accessories and education, has announced the expansion of its Cannabis 2.0 product offering with the launch of a new butane hash oil (BHO) live resin product line to be sold under the Phyto Extractions brand. In addition, Namaste also announces that its wholly-owned subsidiary, CannMart Inc., has entered into an exclusive agreement with Stigma Grow, a licensed producer and processor, to distribute shatter, crumble and live resins through CannMart's B2B channel of provincial body supply agreements and its B2C online medical channel.
"Our ongoing mission is to align with cannabis growers, distributors and retailers to ensure the highest-quality cannabis concentrates are available wherever savvy consumers are looking for something exceptional," said Travis McIntyre, CEO of Stigma Grow. "This agreement with CannMart is in perfect alignment with our promise to Canadians and builds on the success and momentum that we have already seen in the provinces where our products are currently sold. We're excited to bring our unique live resin, full-spectrum BHO products to as many stores across Canada as possible."
"With our new Phyto branded BHO live resin and Stigma Grow's shatter, crumble and live resins, we are leading the marketplace with high-quality Cannabis 2.0 products," said Meni Morim, CEO of Namaste Technologies. "Stigma Grow's shatter, crumble and live resins are known for their quality and are an excellent addition to CannMart's line of cannabis products and accessories. Phyto is a leading legacy brand in Canada and their hydrocarbon extracts are a hit with cannabis enthusiasts. Stigma and Phyto products will be available across Canada online at CannMart.com medically, and through our business-to-business distribution channels throughout our provincial customers starting in BC and Saskatchewan. We believe there is pent up demand for these high-quality, higher-margin products and we will look to leverage the past success of the Phyto brand to continue to grow our sales."
In December 2019, Namaste's subsidiary CannMart Labs Inc. entered into an exclusive licensing agreement with Phyto Extractions to use Phyto trademarks on certain cannabis products such as cannabis vaporizing pen cartridges and batteries, cannabis capsules, and cannabis tincture bottles and jars. Phyto is a well-known and award-winning legacy brand which has strong brand recognition with cannabis aficionados seeking high-quality cannabis products. Phyto vaporizing pen cartridges have experienced significant growth since their introduction in 2019 and are now one of CannMart's best sellers on its medical platform.
Stigma Grow, a subsidiary of CanadaBis Capital Inc., holds cultivation and processing licenses from Health Canada and uses leading-edge BHO cannabis extraction techniques, product development and R&D to produce consistent high-quality shatter, crumble and full-spectrum live resins capable of offering the purity, potency and precision that cannabis customers demand. Stigma Grow uses a state-of-the-art butane hydrocarbon extraction system at their Red Deer, AB facility to process some of the only full-spectrum concentrate products available on the legal market today.
Acreage Begins Trading on the OTCQX Best Market
Both of the company['s new Class D “floating” shares and Class E “fixed” shares commenced trading on the OTCQX Best Market operated by OTC Markets Group on Oct. 7, 2020.
NEW YORK, Oct. 07, 2020 (GLOBE NEWSWIRE) -- PRESS RELEASE -- Acreage Holdings, Inc. has announced that both its new Class D “floating” shares (OTCQX: ACRDF) and Class E “fixed” shares (OTCQX: ACRHF) will commence trading on the OTCQX Best Market operated by OTC Markets Group on Oct. 7, 2020.
The OTCQX is the highest market tier of OTC Markets Group. The OTCQX market is reserved for established U.S. and global companies that meet high financial standards, provide timely news and disclosure to investors, and have a professional third-party sponsor introduction.
Acreage was sponsored for its OTCQX trading by Dorsey & Whitney LLP, a qualified third-party firm responsible for providing guidance on OTCQX requirements and recommending membership.
ECC Test Lab Becomes First ISO/IEC 17025:2017 Accredited Cannabis Lab in Virginia by A2LA
ISO/IEC 17025 accreditation by A2LA confirms that laboratories have management, quality and technical systems in place to ensure accurate and reliable analyses.
October 15, 2020, Frederick, MD – PRESS RELEASE – A2LA has announced the accreditation of ECC Test Lab to ISO/IEC 17025:2017 for cannabis testing. East Coast Cannalytics (dba ECC Test Lab), based in Blacksburg, Va., is the first cannabis testing laboratory accredited to the standard in the state by A2LA.
“ECC is thrilled to be ISO/IEC 17025 accredited! In the cannabis industry ISO/IEC 17025 is a beacon for labs that have rigorously validated methods and hold the highest standards for quality,” said Becky Hobden, CEO at ECC Test Lab. “As a leading cannabis lab in the southeast, we are honored to work with A2LA and demonstrate that we meet the quality standards set forth in ISO/IEC 17025. Thank you!”
“We congratulate East Coast Cannalytics on being the first laboratory to be accredited for cannabis testing in the state of Virginia,” said Anna Williams, Accreditation Supervisor at A2LA. “A2LA is excited to have assisted ECC Test Lab in achieving this milestone. We are glad to see the continued growth of our cannabis program in another state, which further promotes the value that accreditation adds in ensuring quality in this emerging industry. We look forward to our continued relationship with ECC Test Lab in serving their accreditation needs.”
Achieving ISO/IEC 17025 accreditation by A2LA is the pinnacle in third-party laboratory accreditation, as it confirms that laboratories have management, quality and technical systems in place to ensure accurate and reliable analyses, as well as proper administrative processes to ensure that all aspects related to the sample, the analysis and the reporting are standardized, measured and monitored.
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