David Holmes is founder of Clade9, a cannabis cultivation and genetics company that operates facilities in California, Arizona and Nevada. Although Holmes was classically trained as a mathematician and did research at NASA/JPL, he has 18 years of cannabis cultivation and breeding experience. Some strains he developed include Snake Eyes, Phoenix OG, Diamond Dust and Bract City.
Jillian Kramer is a New York City-based freelance journalist whose work has appeared in the online or print versions of Glamour, Food & Wine, SELF, The Wall Street Journal, and more.
Kerrie and Kurt Badertscher are co-owners of Otoké Horticulture, LLC and authors of “Cannabis for Capitalists.” They have worked with large-scale cannabis producers for more than six years. Kerrie has been involved with plants her entire lifetime and earned certification as a Professional Horticulturist by the 100-year-old American Society for Horticulture Sciences. Kurt brings his 34 years of corporate experience and operations management skills to bear on the business challenges of cannabis cultivation.
Richard Kwesell is the co-founder, along with his brother Mike, of Heartland Industries and Strawberry Fields. They produce 14,000 pounds of medical and recreational cannabis every year in Colorado. Kwesell designed, built and currently operates a 90,000-square-foot greenhouse located in Pueblo County.
Taylor Webb, LEED-AP, is the co-founder of Grow Group (which includes Manifold Design and Development, BCER Engineering and R&R Engineers) and founder/president of Manifold Design and Development. Webb has 20 years' experience in architecture, the last five of which have been heavily focused on the design of state-of-the-art cannabis cultivation and processing facilities. With built projects in Oregon, Illinois and throughout Colorado, as well as designs underway in several other states, Manifold has designed more than 800,000 square feet of cannabis facilities.
Byron Ballantyne, PE, senior MEP engineer with BCER Engineering, has more than 10 years' experience designing mission-critical facilities. Over the past four years, he has worked on more than 15 cannabis cultivation and processing facilities—ranging from 5,000 square feet to more than 200,000 square feet-which feature water-cooled chillers, energy recovery systems, bulk CO2 storage and automated fertigation systems.
Douglas Dunkin, PE LEED-AP, is the co-founder of Grow Group and President/CEO for R&R Engineers–Surveyors Inc. Dunkin has more than 25 years’ experience managing R&R, focused on providing survey, site due diligence, entitlement support and civil engineering design for land development across the Rocky Mountain region. Building on a 30-year history, R&R has worked on several retrofit and new-built cannabis cultivation and processing facilities in multiple states.
Kenneth Morrow has been writing cannabis-related articles and books for more than 20 years. He owns Trichome Technologies, a cannabis R&D company. He also is an award-winning grower and breeder. He has made contributions to many of today's extraction methodologies and holds multiple patents. He consults on all cannabis-related subjects. Find him on Facebook at: Trichome Technologies or Instagram: TrichomeTechnologies.
Robert Eddy has 25 years’ experience managing state-of-the-art research greenhouses, growth rooms and growth chambers at Purdue University and Dow AgroSciences. He’s specialized in developing plant growth methods that are repeatable, reportable and scalable. His e-pubs on optimizing greenhouse production of corn, rice and Arabidopsis have been downloaded more than 50,000 times around the globe. He is currently a consultant with CEA Consultancy, advising vertical farms, hydroponic growers and cannabis operations.
Jolene Hansen is a freelance writer based in Wisconsin’s Driftless Area. A former horticulture professional, she is a frequent contributor to the Horticulture Group publications owned by Cannabis Business Times’ parent company, GIE Media.
Rino Ferrarese is the COO of Connecticut Pharmaceutical Solutions, one of four licensed producers in the state. He has experience as a compliance officer working in FDA-regulated industries under the guidelines of current Good Manufacturing Practices (cGMP) for the production of prescription, Over-The-Counter (OTC) and homeopathic human drug products. He is a certified Six Sigma Black Belt and ISO auditor. Ferrarese also works with Elite Cannabis Enterprises developing and submitting competitive medical marijuana license applications for clients across the United States.Thomas Schultz is president of Connecticut Pharmaceutical Solutions. He is a Wall Street lawyer and investment banker turned pharmaceutical executive. In 1996, Schultz completed an IPO-oriented merger of the last major producers of witch hazel, the EE Dickinson Company and the TN Dickinson Company. He assumed leadership of Dickinson Brands Inc., the resulting firm, until 2014. By 2003, Schultz had led the buyout of the EE Dickinson interests and managed the acquisition of Humphreys Pharmacal Inc., a company that marketed witch hazel to Central and South American markets.
Dr. William Torello has over 35 years’ experience in the plant and soil sciences and has published more than 100 scientific and industry research papers in the areas of plant nutrition, organic fertilizer development, plant environmental stress, biological control of plant diseases and evaluating new plant varieties and cultivars. He works for Clade9 out of Los Angeles.
Kyra Reed launched Markyr Cannabis, a digital marketing and social media strategy agency, and Women in Cannabis, a support group for women entrepreneurs in cannabis, with four chapters in Northern California-in 2016. Reed’s cannabis clients include growers, manufacturers and software companies. She has spoken at cannabis conferences in California and Washington, D.C. Reed has also launched one of the largest Facebook groups for women in cannabis and Kadin Academy, an online business academy that educates women entrepreneurs in cannabis.
Dean Guske has more than 30 years of experience in taxation, accounting and business consulting. Guske’s firm, Guske & Company Inc., specializes in real estate and cannabis. He strives to develop successful tax strategies for cannabis industry entrepreneurs. Guske holds a master’s degree in taxation from Golden Gate University, is a licensed CPA in Washington and is part of the Washington Society of CPAs, where he serves on the taxation committee.
Welcome to my favorite issue of the year —our annual “Tips Issue”—which will hopefully be one of your favorites as well. This month, we go full bore and provide more than 160 tips aimed at helping you with all facets of your grow.
I am confident that from this issue you will learn at least a few, if not many things that will impact your cultivation operation. I learned from it as well. This issue made it even clearer to me that just like editors—few cultivators are alike.
For example, editors have different preferences on content direction, writing style, word usage, punctuation (don’t ever get a group of editors started on the Oxford comma), the separation of advertising and editorial, and much more.
Likewise, growers have many different methods for cultivating their crops based on their growing environment—from climate control and pest management strategies to nutrient and pH levels to lighting choices and business management practices.
I also learned that, like editorial, cultivation relies heavily on feedback. “Your ladies will tell you what they need,” commented one cultivator (yes, about his plants) who participated in our research for this issue’s “Smart Nutrients Special Report."
Readers also express their needs to editors, and we adapt our work to accommodate.
Because if you aren’t listening to your readers, or your plants, you’ll lose them.
To listen to you, our reader, our editorial team talks with growers, visits facilities and conducts reader research to discover what we can provide to help your business and your crops achieve their maximum potential.
Cultivators and editors also share an interest in testing. As editors, we introduce new columns and topics, then track how they’re received by readers. We monitor web traffic to see which articles are most read and shared. Throughout this issue, testing in cultivation has also been a common theme: Start here, then incrementally add x, y and z inputs, and track and measure your results. Data, data, data—the growers’ and editors’ path to success.
The importance of research and testing also means that no matter how much we think we know, we always can learn more—even if you have 20-plus years of experience, as I do. I learn from other editors, art directors, our publisher, our readers and more. You might learn from a remote cultivator in Alaska who is experimenting with innovative nutrient or lighting tests, a Ph.D. in plant science, or a business advisor or regulatory professional. Knowledge knows no boundaries.
This is the idea behind the tips issue: Provide as much information as possible from as many types of people as possible, so that you are sure to learn something.
So here’s to us: our confidence in what we know, and our desire to keep learning.
The cannabis industry has many thorns in its side, not the least of which is taxation. Taxes can be frustrating and daunting. Most cultivators/owners are not CPAs, and the complexities brought about by IRS code 280E make matters worse. Even CPAs familiar with the ins and outs of this complex industry can be challenged by a cultivator’s tax returns. But you can take steps to help yourself and your business prepare for tax season.
Here are 9 tips to get you started.
1. Hire Quality Professionals Familiar With the Cannabis Industry and Its Unique Characteristics, Including Your:
- Payroll service
- Other consultants, as needed.
2. Address Your Entity Structure Up Front
Most entities start as LLCs due to the flexibility it allows. LLCs can elect to be taxed as corporations or S corporations. Consult your professionals to determine what best fits your situation, ownership structure and unique operating conditions.
3. Deal with Your Employees ProperlyPeople working for you on a regular basis (even part-time) are employees, not independent contractors. Hire a payroll service to deal with all the tedious elements of payroll, including social security taxes, Medicare, federal tax withholding, state and federal unemployment taxes, workers’ compensation, and garnishments.
If you choose to manage this internally, use a comprehensive software package to ensure it’s all handled properly. Be sure to have clear job descriptions for your employees, and track their job functions. It’s important to be able to categorize wages into inventory-related activities and non-inventory related activities.
4. Keep Great Records
Ensure you’re gathering reportable information in these three categories:
- Accounting. Keep your receipts, bank statements, invoices, etc., and make sure you provide them to your bookkeeper on a regular basis.
- Payroll. Keep timecards, employment verification and copies of all payroll tax returns.
- Production. It’s a must to keep diligent production records. This is necessary to assist you in knowing which methodologies are working, and where modifications need to be made to produce better results-not just production-wise, but cost-wise. It’s also necessary for year-end to assist your accountant in valuing any inventory (especially growing plants). At year-end, your accountant will typically want to know:
- Total volume of finished goods produced for the year;
- Number of plants growing and where they each are in the growth cycle;
- Typical growth cycle; and
- Average plant yield.
If you can get a bank account for your cannabis entity, do so, and use it for everything. This may seem obvious, but many cannabis business owners shy away from the additional fees that banks often want to charge industry businesses. Having a bank will dramatically simplify your financial life and is well worth the fees.
There is a likelihood that many of your transactions will be in cash, so it’s imperative to keep comprehensive cash logs to show where the money came from and/or where it went.
7. Be Informed on Industry Rules and Regulations
Stay compliant with the various state and local regulations. Violations typically come with fines or business closure, so the stakes are high, especially if there have been prior violations.
8. Be Aware of Which Costs are Deductible and Which Are Not, and Manage Them Appropriately
Remember that cannabis entities are subject to Internal Revenue Code Section 280E, which forbids deductions other than cost of goods sold (COGS). Anything that becomes part of your product will offset income as COGS. Costs that aren’t part of the product are not deductible. These include selling expenses, delivery, administrative overhead and advertising, to name a few.
9. Taxes, Taxes, Taxes—Understand Them and Stay Current
- Federal Income Tax
- State Income Tax
- Marijuana Excise Tax
- Sales Tax
- Property Tax
- Personal Property Tax
- Payroll Tax
Keep a due-date calendar for all tax types so you know which payments are due, and when.
Dean Guske, CPA has over 30 years’ experience in taxation, accounting and business consulting. He serves several hundred clients in the cannabis industry.
If you’re like many young cannabis companies today, you’re likely facing the challenge of brand building. Understanding what a brand is and how you can use it to create a highly recognized and widely popular business can help give you a giant leg up on your competition.
The term “brand” originated as a mark burned on livestock to identify the owner. In modern business, the term has evolved to include not only a company’s products, but its values, promises and personality. A brand is the lens through which the public views the company. In fact, the term brand is now so widespread that it has become interchangeable with terms like company and business.
Building a strong brand from scratch is never an easy task, especially in the cannabis industry. Not only are you facing a myriad of rules and regulations on everything from packaging to advertising, you also have the added challenge of creating a brand in an industry that has been notoriously bad at branding.
Many consumers who’ve never interacted with the cannabis industry perceive it as misogynistic, criminal and full of the stereotypical stoners with red eyes and the munchies toking on bongs. In fact, I was just talking with a friend who wants to micro-dose for her anxiety, and her husband whispered to me, “I don’t want my wife to become a pothead.”
While cannabis entrepreneurs have made significant steps toward more sophisticated and welcoming marketing and branding, the industry needs more brands that will elevate and legitimize the medical and recreational markets. To appeal to more consumers, we must move from the illicit and stoner perceptions to those of respected, legitimate businesses with products used by people from all walks of life. The fastest way to make this happen is through branding.
Brand building requires more than just a logo, icon, color palette and tagline. A brand is an ongoing experience that your customers have with your company. Consumers demand a tangible, relatable and value-driven experience with companies. How your business meets that demand is a key factor in building your brand. To be successful at this feat requires a great deal more work than most companies realize.
It requires a dedication of the leadership and the staff to ensure the brand is consistent and aligned across all touch-points customers have with your company. This includes:
- Social Media Channels
- Public Relations/Publicity
- Customer Service
- Thought Leadership
If you have visions of creating a brand that stands out on the shelves, has a loyal following with state or even national recognition, these steps are critical to your success:
Optics: Logo, Color Palette and Style Guide
The first encounter with your brand is via packaging or promotion. Your logo gives you a recognizable mark that instantly identifies your company.
When creating your logo:
1. Keep it clean and simple.
2. Use images and colors that reflect the brand values and personality.
3. Be unique.
4. The color green.
5. Images of joints, pot leaves or other obvious cannabis-related objects for a logo.
6. Exaggerated fonts, colors and images.
Your color palette sets the tone and feeling that you want identified with your brand, and your style guide ensures the cohesion and consistency that makes your brand look and feel legit.
Your logo will likely contain one to three colors. You may choose to add a few more colors (six to seven in total) that are closely related to the logo colors. These make up your color palette. Use only these colors in your packaging, marketing and advertising.
Your style guide ensures the cohesion and consistency that makes your brand look and feel legit.
A brand style guide is the primary visual DNA of your company’s branding, though it can also reference grammar, tone, word usage and point of view. Essentially, it’s a document that describes, defines and presents examples of what your brand looks like in various visual media such as print, Internet and broadcast.
When it comes to your style guide:
7. Use the same fonts and colors in all your sales, marketing and packaging, website, etc.
8. Make it policy that any materials produced by the company must follow the style guide.
9. To ensure consistency, give your style guide to any outside agencies with which you work.
The right packaging can make or break your business, as this is often the first point of engagement with a customer. There are also many legal regulations to consider when designing your packages.
When designing your packaging:
10. Follow traditional branding guidelines for font, font size and color.
11. Study the packaging of brands you like in other industries.
12. Be consistent across all products.
13. Waste that valuable space on confusing or inconsistent visuals.
14. Forget to check and double-check your local and state packaging laws before you go to print. (A misprint, omission or false claim on your packaging could mean thousands of dollars in printing gone to waste, or worse.)
15. Copy the competition. Just because it works for them doesn’t mean it will work the same for you, and your packaging will not be distinct and recognizable.
How you communicate with the public is as important to building your brand as your visual elements are. Visuals are how you look; communication is how you convey the brand personality. It’s how the public will get to know you.
Share your company values, create products, services and experiences that your customers want/need and produce content (blog posts, photos, sales brochures, etc.) that clearly communicates who you are and what you offer.
Creating a brand that is on-point with the above is more likely to inspire customer loyalty and the elusive word-of-mouth marketing so valuable to a company’s growth.
When conveying your brand messaging:
16. Communicate the values and mission of your company.
17. Listen to your customers’ needs and wants, and deliver on their requests.
18. Create experiences for your customers that are memorable and positive.
19. Talk only about yourself and push sales too hard.
20. Produce products and services that your audience doesn’t need or want. (This may seem obvious, but it isn’t uncommon for businesses to fail because they were out of touch with their customers’ needs.)
21. Create negative experiences for customers. This happens most often in customer service. Not returning calls, making returns and refunds difficult, and talking down to customers are all ways to turn someone against your brand. Nothing hurts a brand more than unhappy customers.
Every day, more professionals are making the leap from the traditional business world to cannabis. They know what it takes to develop a powerful brand experience. They can help you cut out unnecessary steps and bring their knowledge of current trends and customer psychology to the table.
When seeking outside help:
22. Hire professionals with traditional business experience.
23. Trust them to guide you and teach you about what it takes to develop the kind of brand you want to be.
24. Take an active role in developing the brand with them.
25. Hire professionals with no cannabis knowledge. This can create problems. (See packaging section above.)
26. Second-guess the advice you get or cut corners. This doesn’t mean to blindly follow everything your contractor says, but trust that you hired the right person and let her do her job.
27. Turn over brand development to someone and walk away. You know your company values and mission better than anyone, and you need to be a part of determining its brand.
Today, you have a rare opportunity as a young company to grab significant market share with a brand that speaks to cannabis customers and provides meaningful experiences for them; but it’s getting crowded fast. Investing in a standout logo, and awareness campaigns and actions, can help you accelerate your brand out in front of the competition.
If you don’t have the budget to hire a professional or a team of contractors, take classes and educate yourself before attempting to develop your brand. Building a successful and well-loved brand is not impossible, and it doesn’t require gobs of money for advertising. But without great visuals and a consistent customer experience, your brand will be treading water. Give it your all, share your heart out and create great experiences. The public, and your customers, will reward you for it.
Kyra Reed launched Markyr Cannabis, a digital marketing and social media strategy agency, in 2016. Reed’s cannabis clients include cultivators, manufacturers and software companies.
Cannabis Business Times’ interactive legislative map is another tool to help cultivators quickly navigate state cannabis laws and find news relevant to their markets. View More