In this Q&A, The Farm Dispensary’s John Billings discusses the role of small and big business in the international landscape, as well as his market predictions for the U.S., Canada and beyond.
Although big business will likely be a large part of the cannabis industry’s future, smaller craft companies still have room for success in providing niche markets and product diversification, according to John Billings, head of cultivation for The Farm Dispensary, an indoor craft cannabis company located in Boulder, Colo.
Here, Billings shares how small businesses can compete in the broader global landscape, as well as his outlook on the U.S. hemp industry, Canada’s cannabis market and broader international trends.
Cannabis Business Times: With all the market consolidation, buyouts and publicly traded companies emerging in the cannabis space, is big business the future of cannabis?
John Billings: I believe that big business will be a large part of the future of cannabis. Obviously, with the amount of capital that big business can obtain and invest, they will have a large influence on the industry. If you look at other similar industries, like breweries and grocery stores, you will find there is space for both big and small craft companies to succeed. Smaller companies will provide niche markets and product/strain diversification. The cannabis space has room for both, as well.
As more states come online for recreational and the move toward interstate commerce becomes a reality, there will be significantly more consolidation. We believe that we will see the market consolidate in a significant way in the next one to five years, but there will remain the small business mindset, as the small business employees still hold the knowledge and experience. Although educated consumers will still want local and craft, it may take a while for the demand for the small businesses to bounce back after a consolidation period, as we saw with alcohol prohibition.
CBT: What are some ways that small businesses can survive and compete in this landscape?
JB: Promoting the amount of focus and dedication that goes into every process that is applied to creating the cannabis or cannabis products. Educating the consumer about connoisseurship. Some of these focus points could be individual plant care, IPM methods, how it’s harvested or trimmed, or how the product is extracted into concentrates. Creating recognizable brands and associating them to certain products and/or varietals is one way. If a company can grow one or two highly desirable strains that no one else has, or grows them better than other businesses, they can set themselves apart. The creation of cannabis products’ appellations could also help set apart smaller businesses.
CBT: What are your predictions for the U.S. hemp industry now that the Farm Bill has legalized industrial hemp?
JB: I believe the hemp-CBD market will help to propel the cannabis movement, especially the need for science and education, forward. It will be interesting to see how the FDA regulates CBD in food. How they choose to do so will have a huge impact on the CBD market, and ultimately will dictate how much product will be needed to supply the emerging national edibles market.
Over the coming years, it is likely we will see the hemp-CBD market flex with the cannabis-THC market, and we will see how consumers approach them separately and together. I only see ways that the hemp-CBD market will assist with combating the stigma that cannabis has had for such a long time. We will likely see this plant take over in ways we haven’t yet fully grasped. This plant can be used as medicine, food, fibers, textiles, fuels, paper, body products and more. We have only scratched the surface.
"The United States needs to figure out the future of cannabis and make a decision federally in order to compete, as we don’t want to get left behind."
- John Billings, Head of Cultivation, The Farm Dispensary
CBT: What overall market trends do you think will unfold in the U.S. versus Canada?
JB: Canada currently has restrictions on the production and sale of edibles. The demand of the edibles market in Canada will give some insight on the national demand of edibles in the States. The United States needs to figure out the future of cannabis and make a decision federally in order to compete, as we don’t want to get left behind. Market trends in the United States will continue to build foundational structures for national companies poised to go international.
The U.S. is facing an opioid epidemic. Many suffering from withdrawals find comfort with OG strains, which usually provide a heavy body high. These kinds of strains, flower and concentrates will be popular everywhere in the United States. Cannabis vape pen trends will continue to increase with demands for higher quality.
CBT: What trends do you see emerging in other international markets?
JB: As more markets open, international trade begins and research and science take a front seat in the coming years. Vape pens, they caught on so fast and the technology has advanced rapidly. There’s no reason to think this trend will not continue. People like the convenience of the pen. Growing plants/varietals with higher concentrate returns will help keep production costs down. You have old players (Israel, Jamaica, GW Pharmaceuticals and the U.S.) and new players (Canada and Mexico) coming into the scene with their own ideas and plans.
Editor’s Note: This interview has been edited for length, style and clarity.
Cannabis cultivators use standard operating procedures to keep their plants safe and healthy, so it only makes sense that they should pay attention to the safety of their workers, as well.
Personal protective equipment (PPE) is one way to protect employees against chemicals, falls and other common hazards in cultivation facilities. Every facility should have an employee dedicated to safety to protect the well-being of the staff and comply with state and federal laws, according to Roberta Smith, occupational health program manager for the Colorado Department of Public Health and Environment.
“That might not be the biggest role that people think of when it comes to a cultivation, but keeping workers safe is just as important as keeping the plants safe,” she says.
Laws regarding safety vary state by state, Smith says, so cultivators should reference their specific state guidelines before implementing a safety program and PPE at their facility. While some states follow Occupational Safety and Health Administration (OSHA) guidelines put forth at the federal level, others have state OSHA plans that override the federal rules.
In Colorado, the cannabis industry is regulated by OSHA at the federal level. OSHA requires cannabis cultivators to perform a hazard assessment in their operation to determine what hazards exist. If there are chemicals being used, for example, or other hazards present, business owners should generally try to eliminate the hazards before implementing PPE, which should be used as a last resort if hazards cannot be removed, Smith says.
When PPE must be implemented, it can include the use of gloves, coveralls and respirators when handling pesticides, for example. The Environmental Protection Agency (EPA) has a Worker Protection Standard guideline that can dictate which type of respirator is required with which pesticides, Smith says.
Slip-resistant shoes are another example of PPE and should be worn in cultivation facilities where the floor is wet to avoid slips, trips and falls. Some facilities also require employees to wear Tyvek sleeves, or at least long-sleeved shirts, when they harvest because the stickiness of the terpenes can cause skin sensitivity, Smith says.
“I think the key message is every cultivation facility is going to be different,” she says. “[Operators should be] looking at each task and understanding the hazards of each task and then what is going to be required to protect the worker.”
If employers do not follow applicable laws and protect workers against potential hazards, they could face OSHA citations, Smith says. Fines vary state by state and depend on the violation, but if a worker files a written complaint to OSHA, the organization will investigate, either in person or in writing.
Employers should pay close attention to OSHA’s general duty clause, Smith adds, which says that if an operator is aware of a hazard in the workplace, he or she must take steps to protect employees against it.
“A lot of things can fall under that general duty clause in regards to PPE and protecting the worker,” she says. “There are specific PPE standards within OSHA for glove use. There’s a respiratory protection standard. … If you are using respirators in a facility and you’re requiring employees to wear respirators and you don’t have a written plan, that can be a citation, and in fact, that generally falls under OSHA’s top 10 violations, not adhering to a respiratory protection plan.”
But even the best laid plans can derail if employees don’t use the required PPE. Training is essential to ensure that employees know how to properly use and maintain their equipment. Safety training generally happens when a new employee starts his or her job, but it should also occur if a process changes within the facility, Smith says.
“If you get, let’s say, a new bud trimming machine, people should be trained on how to use that appropriately,” she says. “If there are any changes in respirator use, you need to have training then.”
Training should also happen on an annual basis, she adds, as a refresher course on the company’s safety policies.
And once trained, employees need to do their part to ensure safety, Smith says. “If your employer is requiring you to wear PPE, it’s because there’s a hazard that has been identified,” she says. “If you are using PPE, it’s there for a reason, and it’s probably the most fail-able aspect of the whole hierarchy of controls, we call them, because it involves humans. People forget, or people won’t wear their PPE appropriately. It’s very important if an employer has chosen PPE for you to wear, that you wear it appropriately. If it needs to be cleaned and maintained, that you know how to do that, as well, because if PPE is cracked or torn or fails, it’s not going to protect you like you think you are being protected."
17 Tips to Maximize Your Cannabis Dispensary Insurance Coverage
As the cannabis industry has flourished, dispensary insurance options have grown.
Insurance. For many cannabis business owners, that word evokes memories of coverage rejections, outlandish premiums and uninsured losses. But as the cannabis industry has flourished, dispensary insurance options have grown. These 17 tips from experienced cannabis insurance advisors can help you obtain coverage to protect your dispensary.
Michael Aberle
Senior Vice President, CannGen Insurance Services
1. Obtain product liability coverage that covers your products. Aberle describes dispensaries as the “end of the river,” where everything, including potential liability for product issues, flows. “All retail stores should have product liability because you can’t control what the manufacturer, the grower, the distributor or the warehouse did,” he explains. “A lot of people will say, ‘That’s not my fault.’ You forget, the lawyer is going to name you in a lawsuit.”
Watch for policy provisions that restrict or remove coverage for products you sell. “Before you sign the contract, ask if your policy has any exclusions for cannabis, hemp, CBD, Schedule I, health hazards, whatever,” he says. “Make sure you put it in writing and then require that [the insurance carrier] respond in writing. Every single time.”
2. Protect against risk associated with labeling. As cannabis labeling requirements become stricter, Aberle recommends personal advertisement injury coverage to protect against claims of misleading or incomplete label statements. Fluctuating state labeling regulations do not alleviate you of responsibility or potential liability.
For example, Aberle points to labels that suggest a product will make you happy: “What if I’m not? … You might say this product may make you happy, but to pinpoint that it will make you happy? That’s where the plaintiff attorneys are going to eat this stuff up.”
3. Understand your workers’ compensation requirements. Aberle warns that trying to avoid workers’ comp premiums by claiming your regular employees are “1099” self-employed contractors won’t fly. “You need to understand what the labor laws are in your state and what it means across state lines as well,” he says. “When you send someone to a trade show, what does that mean [for workers’ comp]?”
Employee classifications impact costs significantly. Premiums for clerical workers are a fraction of the cost for other classifications, but Aberle says guidelines are strict. “[Most states] are not allowing the 8810 clerical classification unless [the employees] sit in a room and don’t touch the weed, don’t touch the money, don’t [do anything but] straight clerical [work].”
4. Don’t count on standard personal or commercial auto insurance. Auto accidents, whether on deliveries or supply runs, can translate to major losses without transparency and cannabis auto coverage. “People say, ‘I have personal insurance,’ or, ‘I have commercial insurance.’ But did you put it in writing that you’re a cannabis business? Just because you have personal auto doesn’t mean that if you were found with any business cannabis in [the vehicle] that they can’t decline that coverage,” Aberle says. “It’s so important that you put this in writing to your carrier.”
5. Have general counsel or an insurance lawyer review every insurance policy. “The insurance is a legal document, that’s all it is. I strongly recommend that every insurance policy be reviewed and signed off by general counsel or an insurance lawyer,” Aberle says. “Most businesses pay all this money to have [attorneys] read the city and state guidelines, but they won’t have them look at their insurance.”
Mike Bush
Partner, National Cannabis Insurance Services, LLC
6. Request that vendors name your dispensary as an Additional Insured party on their policy. “When there are issues with product, the person who bought that product can pull in anyone in the chain, from manufacturer all the way to sale, whether negligent or not. In the case of faulty product or faulty labeling, your dispensary could be liable,” Bush says. “Defense costs can be very expensive even against what could be a bogus claim. By taking this step, the dispensary has access to the coverage and defense provided by the vendor.”
7. Go above and beyond compliance requirements for coverage. “You can make a choice to be compliant and just meet the necessary limits and coverage as required by the municipality, county or state, or you can choose to be protected,” Bush explains. “The difference is compliance might only require you to have certain limits and coverages that may not cover the full magnitude or scope of your real [risk] exposure. Compliance doesn’t always mean that you’re protected.”
8. Protect against employment-related claims such as discrimination, harassment and wrongful termination. “If you were to terminate somebody or there was an issue of alleged harassment in the workplace, Employee Practices Liability Coverage steps in to provide defense and pay out money if it’s identified that you were negligent,” Bush advises. “Age discrimination, gender discrimination, sexual discrimination—any of those things can be claimed, whether they’re bogus or not. You want to have this coverage in place so it’s not an out-of-pocket expense for you to have the services of a lawyer defending you against these claims.”
For more information on wrongful termination, see HRHQ.
9. Consider cyber liability coverage to protect against expenses related to data breaches. “As a dispensary, you’re taking in a lot of personal information,” Bush warns. “If you’re warehousing that information in a computer system and you’re hacked, you are responsible: No. 1, to notify all those people that their information was compromised; No. 2, if bank account information was provided, [you might have] to provide them credit-monitoring services; and, No. 3, you as a dispensary are also responsible for forensic analysis of how that breach occurred. It’s a very, very real exposure for dispensaries.”
Patrick McManamon
CEO, Cannasure Insurance Services
10. Obtain proof of insurance and proof of testing from your suppliers. “As a dispensary, you may not have made the products you sell, but that doesn’t guarantee you wouldn’t get pulled into a lawsuit. Make sure that your suppliers have their insurance in order. Obtain proof of insurance from them as well as proof of testing, even when it is not required by the state,” McManamon advises.
“Don’t get complacent. Make sure you’re always verifying [proof of insurance and testing] and not just taking it for granted. If you stop asking, you don’t know if they stopped testing or they have lower [coverage] limits than you are comfortable with or they’ve dropped their coverage completely.”
11. Purchase product withdrawal expense coverage. “Product withdrawal expense coverage is readily available, rarely purchased, but very necessary. If you are subject to a product recall, there’s going to be expense associated with notifying the public, pulling that product off the market and managing that process. Even if you are just a dispensary selling the product and you aren’t the manufacturer, you will probably still have some expense associated with it,” McManamon says.
“Product withdrawal expense covers that expense associated with getting the word out, collecting that inventory, bringing that all back in. For a relatively inexpensive premium, it’s a pretty good coverage that hopefully you never have to use. But if you do, it will be worthwhile.”
12. Thoroughly understand the warranties you are agreeing to in your policy. “Warranties are those things that the insured [party] is guaranteeing they’ll do in order for coverage to apply in the event of a loss,” McManamon explains. For example, you warrant on your coverage application that you’ll keep inventory in a locked vault during non-business hours. If cameras show otherwise and a robbery occurs, coverage will be denied.
“Warranties are going to show up at the time you get your quote,” he says. “Your signature literally is at the bottom of a document that has these bullets points of X, Y and Z. Review each one with your agent to avoid any potential issues or delays in claim payment when you file a claim.”
13. Pay attention to basic retail safety and security. “Dispensaries are high-volume retail places. Make sure that your facility, inside and out, is safe and secure. Make sure there aren’t trip hazards in the parking lot or that kind of thing,” McManamon says. “The No. 1 claim we’re going to see, outside of theft, is trips and falls because the parking lot or the sidewalks weren’t maintained.”
JB Woods
President and Owner, Greenpoint Insurance Advisors
14. Have plans and controls in place to limit risk of internal theft and external robberies. “The chances are going to be relatively high that there’s going to be some sort of internal theft [of money and cannabis] by employees, and then external robberies where criminals are coming in and stealing money and product,” Woods says. He recommends role-playing robbery scenarios with employees. “How do you react if somebody comes in with a gun and requests money and product? What do you do? Those are really important questions to ask,” he says.
“For internal employee controls, we suggest what we call ‘dual control’ or ‘dual custody.’ As an example, when counting money, have two people count together so both must sign off,” Woods adds. Limiting your risks for theft with measures such as these may ultimately have a beneficial effect on your insurance coverage.
15. Prohibit budtenders from recommending specific products to treat specific medical conditions. A recent Denver Health study found that a majority of budtenders surveyed recommended cannabis products to treat morning sickness in pregnant women. “That’s a problem,” Woods warns. “Budtenders who recommend particular products to treat specific medical conditions could result in some sort of litigation or claim.”
“If a budtender is aware that they shouldn’t be making these kinds of recommendations and then they intentionally are making those recommendations, the carrier could opt out of coverage,” Woods says. “Not only the employee is going to get named, but the employer absolutely will get named.”
16. Establish and maintain good relationships with your landlords. “Dispensaries must establish good relationships with their landlords, and they do this by meeting all of the lease terms and obligations. Over the years, I’ve seen incidents, claims and, ultimately, lawsuits where tenants aren’t meeting those terms and conditions and then landlords say, ‘You’re in breach of contract,’ and they’re going to evict you,” Woods explains.
“There’s always going to be an insurance provision inside of those contracts. Making a good faith effort to meet those obligations becomes really important. When it comes to some sort of accident or negligence, you can get coverage for that. There is no coverage for breach of contract.”
17. Understand your product liability risks in selling cannabis product manufactured by another company. “If there’s some sort of issue related to product liability with a product your store sold to the public, it’s really important for the store to understand who is responsible,” Woods says. Two components in that determination are 1) the state laws and 2) the contractual relationship between the retailer and the manufacturer. “The third component is going to be if the retailer and the manufacturer are collaborating in some way with that product,” Woods says. “For example, the labeling or the product is being changed, particularly by the retailer. That retailer’s liability most likely just went up. Now they’re acting in a kind of joint capacity.”
VANCOUVER, January 25, 2019 – PRESS RELEASE – C21 Investments Inc. has announced that it has closed the transaction to acquire 100 percent of Megawood Enterprises Inc., which is the owner of the Pure Green Dispensary in Portland, Ore. Pure Green is a 3,000-square-foot retail dispensary and has been operating since January 2014 as a local retailer for both medical and recreational products.
“The co-founders of Pure Green, Meghan and Matt Walstatter, will continue to work with the C21 Investments team on the expansion of the company’s retail network throughout Oregon,” said Robert Cheney, president and CEO of C21 Investments. “Pure Green has an enviable reputation and we want to replicate its success throughout our operations.”
“We’ve seen a lot of changes in the cannabis industry and Matt and I believe joining the C21 Investments team will elevate our brand and further our capabilities,” said Meghan Walstatter. “We want to continue to provide Oregon’s medical patients and recreational customers with affordable, quality cannabis. The resources of C21 Investments will allow us to bring our community-oriented approach to customer service and strong emphasis on product knowledge to an ever-expanding audience."
"Pure Green understands the Oregon canna-businesses, and we knew it was time to become part of something larger and C21 Investments is the perfect fit,” said Matt Walstatter. “We're impressed by the dynamic combination of brands and personalities that comprise the C21 Investments family."
HARRISBURG, Pa. - Gov. Tom Wolf joined Lt. Gov. John Fetterman Thursday as Fetterman announced he will be launching a statewide listening tour to hear from Pennsylvanians about the possibility of legalizing recreational marijuana.
“I’m here today to support Lt. Gov, John Fetterman in his effort to hear directly from the people of Pennsylvania on this issue,” Gov. Wolf said, according to a release from the governor's office.
“More and more states are successfully implementing marijuana legalization, especially those surrounding Pennsylvania, and we should learn from their efforts, and better understand the potential fiscal impacts of this reality before taking any collective action.”
Tour dates will be released in the next few weeks and Fetterman has committed to visiting every county in the commonwealth.
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
Melissa Schiller
Jolene Hansen
