Cannabis Study Committee Sends Adult-Use Legalization Proposal to South Dakota Legislature
The Marijuana Interim Study Committee recommended that lawmakers legalize, regulate and tax adult-use cannabis, as the South Dakota Supreme Court continues deliberating on the constitutionality of a voter-approved legalization measure.
South Dakota’s Marijuana Interim Study Committee has recommended that the state Legislature legalize, regulate and tax adult-use cannabis as the South Dakota Supreme Court continues deliberating on the constitutionality of a voter-approved legalization measure.
Amendment A passed with a 54.2% majority, but has been challenged in a lawsuit alleging that the measure violates South Dakota’s one-subject rule and does not simply amend the state constitution, but instead revises it. The revision would require a constitutional convention to be called by a three-fourths vote of members from both chambers of the state Legislature.
Meanwhile, the Marijuana Interim Study Committee has been studying cannabis legalization, with the Adult-Use Marijuana Study Subcommittee voting Oct. 19 to recommend adult-use cannabis legislation.
The full committee adopted the recommendation Oct. 27, according to theArgus Leader, thus sending the adult-use legalization proposal to the South Dakota Legislature for consideration.
"I'm not a supporter of marijuana but I'm trying to make sure that if we're going to have it, we've got a good, solid regulatory system that is in the middle somewhere," Rep. Hugh Bartels, the committee co-chair, told the news outlet. "That controls the product, makes sure it's safe, makes sure it stays away from our children as much as we can, and that it pays for itself."
The committee recommended levying a 15% sales tax on cannabis products, the Argus Leader reported. It also called for the state licensing of cultivators, testing facilities and dispensaries, and recommended allowing local governments to create restrictions and prohibitions for cannabis businesses.
The committee’s proposal would not allow home grow, according to the Argus Leader.
While the original proposal recommended by the Adult-Use Marijuana Subcommittee would have repealed most of South Dakota’s medical cannabis law, only leaving provisions intact to allow patients under 21 to use cannabis for medical purposes, the full committee scrapped that recommendation.
The Legislature’s Rules Review Committee approved the final rules for South Dakota’s medical cannabis program Oct. 26, and the Department of Health must begin issuing medical cannabis ID cards to patients and caregivers by Nov. 18. The department launched the application process for medical cannabis businesses Oct. 25.
The adult-use legalization recommendations must now be approved by the Legislature’s Executive Board before the proposal can be formally introduced during South Dakota’s next legislative session, according to the Argus Leader.
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Go Slow and Incremental with Your Lighting R&D Plans
Cannabis cultivation is a multi-variable equation; you cannot simply change X and expect Y without impacting Z.
Cannabis cultivation is a multi-variable equation; you cannot simply change X and expect Y without impacting Z (or A, B and C, for that matter). Very few agricultural products are as picky or delicate when it comes to optimal growing conditions for the highest quality product. While lighting is a massively important variable, it is far from the only one.
If you are considering lighting changes, especially in your prime cultivation space where product is destined for sale, it is best to make slow, incremental changes with R&D-dedicated plants and closely observe the results.
In GreenSeal’s lighting research trials, we’ve seen small changes in lighting variables lead to some pretty dramatic changes—both positive and negative—in yield, cannabinoid and terpene content, nutrient deficiencies, humidity and more. While some results become apparent overnight, others take a full harvest cycle or multiple cycles to confirm. As frustrating as it may be to wait to observe results, it is far better than growing a batch of unsellable flower.
California is the largest—and arguably most competitive—cannabis market in the United States. Itsdecades long cannabis
history makes it a long-standing market leader in cannabis production and sales, and this has led to an overage of supply in a market that has a proportionally small number of retail outlets. This supply imbalance has created fierce competition among brands fighting for shelf space, and the largest and most capitalized brands often muscle their way in through pay-to-play and race-to-the-bottom pricing tactics.
How can a small- to medium-sized brand compete in an environment with low margins and limited financial resources? The key is in strategic market positioning and brand differentiation. Here are a few tips to consider as you navigate the retail landscape and vie to win a coveted seat on dispensary shelves.
1. Focus on a Niche Target Market
The largest and most well-resourced brands tend to dominate segments of the shelf that generate the highest sales volume. Although a unique brand and product strategy can certainly help you penetrate the high barrier to entry on the shelf, your chances of success are slim if you cannot compete on pricing and promotion. Low prices with aggressive promotions, budtender incentives, and paid placement tend to win the high-volume game in California. So, if you can’t outcompete the leading brands, then under-compete them.
To effectively under-compete, you must think about niche audience segments and highly differentiated product offerings. For example, if the largest brands in the vape category are selling cheap distillate cartridges with mass-market components and generic packaging, maybe you can focus on something more unique and specialized–like an organically grown, full spectrum cartridge with beautifully designed, sustainable packaging that caters to the health and wellness market (think yoga moms!). Admittedly, this, too, is a tough path to follow, but at least you will have a more unique story to share with buyers, budtenders and consumers. Heaven forbid that you show up at a dispensary with another undifferentiated distillate cart that is not competitively priced—that is a quick way to hit a wall of silence. So, your job is to create a product and brand story that sets yourself apart and captures attention. And in a crowded marketplace, this is often accomplished by targeting a niche market and demonstrating that your brand has a laser-focused and active following.
2. Spend Time in the Field
One thing that most brand owners fail to do is spend time in the field visiting retail stores. Your sales reps and brand ambassadors are usually your frontline staffers, but are they the ones making decisions about your merchandising strategy and packaging design? Often, decision-makers sit behind a desk and don’t have a good sense of what retail shelves look like in terms of available space, merchandising displays, competing brands, customer traffic flow, etc. Understanding these factors is critical in terms of knowing how your brand might best stand out on a shelf. For example, when assessing the competitive landscape, look at packaging colors, styles, sizes, form factors, logo design, etc. Take these insights into consideration as you develop your design and market positioning strategy.
You should also be aware of how brands in your category are displayed. Some products are placed in a glass display case, sit back on a shelf, hang from a hook or sit in a refrigerated case. Other times a store has premium placements in high traffic/visibility areas. Get a sense of how and where your products might best fit into this landscape, and this could give you the edge you need to stand out from the competition.
3. Strategically Focus on Select Retail Stores
If you operate in a state like California that has a very diverse population, then you shouldn’t assume every store is a right fit for your brand. Demographic and psychographic profiles vary greatly by geographic location, so you should spend time understanding each market and selecting the ones that contain the consumer purchasing behavior that is most congruent with your brand. For example, if your brand focuses on high-priced craft cannabis, then a regional market that primarily consists of price-sensitive frugal shoppers may not be the best fit. This approach will ensure that the hard work you do to get on shelves pays off by being relevantly positioned among brands that may not have as much staying power.
A primary way to keep your brand on a retail shelf is to have strong customer affinity and sales velocity. If your brand resonates with the customer preferences of a given retail store, then you will have a more distinguished presence than brands that might be misplaced or less relevant to that audience. Focusing on select retail stores also enables you to offer greater brand support to your accounts. The larger and more well-established brands tend to cast a broader net to maximize market penetration. If your strategy is to under-compete, then you should shoot for depth, not breadth. This means working more closely with fewer accounts, instead of spreading yourself thin and providing a shallow level of support to a greater number of accounts.
So, your playbook should be to:
spend more time with each account;
get to know the buyers and budtender staff really well (e.g., show them love, praise their efforts, reward their support);
strategically work with retail managers to SKU target, increase sales velocity, and dial in your shelf placement; and
develop meaningful customer relationships through deeper in-store engagement with your brand ambassadors.
This approach is also a more efficient and strategic way to utilize your limited sales and marketing resources.
4. Build Consumer Demand and Engagement
Many brands rely on retailers to develop and manage consumer relationships. As a result, buyers and budtenders are the people who most influence consumer purchasing behavior. If you successfully manage to get your products on a retail shelf, then that achievement may be short-lived if budtenders ignore your brand and recommend the competition.
Data chart from a 2021 Headset report: Determining the right product assortment in cannabis retailA recent study by Headset, a cannabis data and analytics company, looked at the number of SKUs in an average retailer's store, and found that in California, 14% of the SKUs had zero sales over the previous 90 days. Just because you manage to get your product placed on a shelf, doesn’t mean that the hard work is over.
Your job is to constantly make sure that your brand is top of mind for your budtenders; however, this approach has the downside of putting your brand’s destiny in someone else’s hands. So, it is equally important for you to create consumer demand by directly engaging your end customers. Use social media and other marketing channels to build brand awareness and educate consumers about the benefits of your products. By delighting your customers, adding value to their lives, and developing meaningful relationships, you can turn an indifferent cannabis consumer into an outspoken advocate for your brand. Retailers love it when brands help to drive traffic and conversion, so by investing in direct-to-consumer marketing, you will ensure that your brand is distinguished in the minds of both consumers and retailers.
Claudio Miranda is the co-founder and CEO of Guild Enterprises, a brand management company that oversees a family of cannabis brands including award-winning concentrates producer Guild Extracts.
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Nevada’s Cannabis Compliance Board Extends Deadline for Dispensaries Stuck in Limbo Due to Local Moratoriums
Entrepreneurs were up against a February 2022 deadline to exercise their licenses, but regulators have given them an extra year to wait out their municipalities’ bans on cannabis businesses.
Nevada’s Cannabis Compliance Board has extended the deadline for dispensaries to exercise their licenses in order to give operators time to wait out local moratoriums that are keeping their businesses in limbo.
Entrepreneurs were up against a February 2022 deadline to get their retail operations up and running, but regulators have given them an extra year, until February 2023, to wait out their municipalities’ bans on cannabis businesses, according to a Nevada Current report.
The Cannabis Compliance Board voted unanimously Oct. 26 to extend the deadline, the news outlet reported, effectively delaying the final inspections for Essence Henderson LLC, Essence Tropicana LLC, Pure Tonic Concentrates LLC, Green Therapeutics LLC and HH Sub One LLC, which are all in the crosshairs of local moratoriums.
The move has been applauded by Clark County Commissioner Tick Segerbloom, who told the Nevada Current that licensees should have more time to wait out local moratoriums “or be allowed to transfer to another jurisdiction."
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South Dakota Lawmakers Approve Changes to Medical Cannabis Rules
The Legislature’s Rules Review Committee signed off on the regulations in a unanimous vote.
South Dakota lawmakers have approved the latest version of medical cannabis rules, paving the way for regulations to take effect before the Department of Health starts processing patient and caregiver applications next month, according to a KELO report.
The Legislature’s Rules Review Committee signed off on the regulations in a unanimous vote Oct. 26, the news outlet reported.
The rules will implement Initiated Measure 26, a medical cannabis legalization proposal that voters approved in the 2020 election.
The measure requires the Department of Health to begin issuing medical cannabis ID cards by Nov. 18, according to KELO.
The Legislature’s Rules Review Committee approved the majority of the regulations for South Dakota’s forthcoming medical cannabis program last month, but rejected six of the proposed rules, KELO reported.
Five of those six rejected draft rules, which were amended prior to going before the Rules Review Committee a second time, were approved in this week's vote, according the KELO.
The latest regulations specify that a physician’s recommendation that a patient be allowed to cultivate more than three cannabis plants at home will expire 200 days after the date of the recommendation, the news outlet reported. Under IM 26, patients could grow a minimum of three plants per household.
The revised rules also stipulate that a physician’s recommendation for an expanded plant count must specify the reason for the recommendation, according to KELO.
The Department of Health launched the application process for medical cannabis business licensing Oct. 25, the news outlet reported, which follows the department’s issuance of guidelines for applicants seeking state and local licensure.
The Adult-Use Marijuana Study Subcommittee voted Oct. 19 to recommend legislation that would allow adults 21 and older to purchase up to 1 ounce of cannabis for personal use. The full committee, which is studying both medical and adult-use cannabis legalization in South Dakota, is expected to consider the legislation in the coming days.
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