But eligibility is one thing. Along the way, hemp business owners would do well to keep in mind the learning curve that their industry presents. Hemp (and all of its attendant supply chain links and chemical compounds) is a new crop in the eyes of the law. Regulated banks and even commercial lenders, no doubt, will be extra cautious in working with the industry.
“The industry will need to educate many of these lenders, many of these bankers,” said Scott Moskol, partner and co-chair of the Cannabis Business & Law Advisory group at Burns Levinson, which ran a webinar on this topic with the team at Vicente Sederberg April 3. (Watch the full webinar below.)
Hemp growers will need to explain in detail what their particular license type allows them to do. Even terms like “isolate” and “biomass” may need to be spelled out.
The same hurdle that law enforcement agencies are jumping is in play here, too: Hemp and state-licensed cannabis plants (“marijuana,” in some terminology) are both Cannabis sativa L., a Schedule-I substance. Hemp, of course, becomes hemp when the plant’s THC content hits 0.3% or lower. This may seem like the sort of elementary facts that each grower must know before they decide to get into the space, but bankers and lenders may not be as familiar.
When maintaining your records, be as clear as possible.
“Teach your lenders along the way,” Moskol said.
The same is true—and doubly so—for the business-to-consumer side of the emergent hemp industry. CBD retailers may have a harder time picking up federal loan assistance, even in these trying times. While the U.S. Food and Drug Administration continues to prolong its regulatory debate over the cannabinoid, bankers and lenders will only grow more hesitant to support business that fall into this gray area.
Photo courtesy of Curaleaf
How Curaleaf is Managing Its Multistate COVID-19 Response
VP of Retail Chris Melillo shares insight into the multistate operator’s state-by-state approach to each jurisdiction’s everchanging regulations, as well as lessons he’s learned from this unprecedented situation.
After cannabis businesses were deemed essential in nearly every state in which vertically integrated multistate operator Curaleaf operates, VP of Retail Chris Melillo felt a greater responsibility to create a safe environment for the company’s patients, customers and employees.
“Everybody’s going through a lot right now,” Melillo tells Cannabis Business Times. “None of us have a roadmap or a game plan of how to address this. We’re all leaning on courageous leadership and … experience from crisis management in the past, and really just trying to absorb that responsibility, calm your team and be there for your patients.”
Curaleaf operates 54 dispensaries across 17 U.S. states and has maintained strict compliance with each jurisdiction’s sanitation and social distancing requirements. The company has set new SOPs to adjust to these uncertain times, but Melillo says making a standard, one-size-fits-all policy across all its operations has been difficult.
“You’re really over-indexing and getting pretty granular state by state to make sure that the changes that you make apply to all,” he says.
The company’s internal SOPs are designed to exceed each state’s minimum requirements, Melillo says, and Curaleaf’s management teams have been instructed to ensure that the company’s cleaning standards are followed in each of its facilities.
Beyond that, the company has remained flexible so it can adapt to everchanging coronavirus-related guidance on a state-by-state basis.
For example, when Massachusetts deemed medical cannabis businesses as essential but halted adult-use sales, Curaleaf became unable to serve customers who may have been accessing cannabis for medical purposes in the adult-use market.
“We now have limited ability to serve that customer,” Melillo says. “That has been a really hard challenge in Massachusetts. They’ve closed some of our stores.”
Another challenging market has been Nevada, which has mandated that all cannabis dispensaries must be delivery-only during this time. In that market, Curaleaf essentially launched a delivery service in a weekend to maintain a retail connection with its customers.
“We’re trying not to furlough people, so what we did is we took our internal staff from inside the store and said, ‘Guys, your job is changing. If you choose to do this job, you’re going to be delivery now,’” Melillo says.
To make the switch, Curaleaf’s Nevada staff had to install lockboxes in vehicles and get them certified for delivery, as well as set policies for mobile ordering. Although the company already had an online ordering system, it was supported with additional bandwidth to accommodate the increased demand.
“You can imagine setting up a completely online business, [and] then adding a delivery service with internal employees, training them quickly and getting it all underway in 72 hours,” Melillo says. “I think we went down with no sales for three days, maybe four, to get everybody up and running. … I’m shocked at how quickly we got them up and running while operating in other states.”
Outside of Nevada, Curaleaf is now using Waitlist Me, an application that allows the company to text customers when their order is ready in an effort to manage dispensary traffic.
“We’re communicating with our customers to space out our crowds for social distancing, and no one has to wait outside for an hour to [pick up] an order,” Melillo says. “We have complete control to disperse the crowd and create safety for our customers as well as our employees.”
Curaleaf has also dedicated the first hour of the day to seniors at its retail locations and has seen a shift in sales trends. For example, some customers who had been purchasing flower have transitioned to edibles or vapes for a more discreet option while riding out the quarantine, Melillo says.
A Learning Opportunity
Melillo has learned plenty of lessons throughout this process, but one stands out to him as the most important: communicate more.
With state regulations and company policies changing almost daily, communication is the key to keeping operations running smoothly, but that’s only part of the equation, Melillo says.
“We are an essential business and we need to be open for our clients,” he says. “You have to teach your employees what that means.”
Robust leadership is also critical, Melillo adds, and that includes not only communicating effectively, but also being an active listener.
“Get the feedback when you try things,” he says. “You have to listen to what’s working and what’s not.”
When implementing a new service, such as curbside pickup, Curaleaf launches it in a few markets first before rolling it out to all its markets in order to trial the changes on a smaller scale.
The COVID-19 crisis has also highlighted the fact that many technological innovations simply don’t apply to the cannabis industry, Melillo adds.
“You can’t use credit cards in our industry, but if you could, that would alleviate a lot of the pressures,” he says. “We’re still doing delivery where we need to pick up cash, or curbside [pickup where] we have to deal with cash out on the curb. This is an evolving time for us, but [if there is] a technology solution that a lot of the world is using but we can’t, you’ve got to create workarounds.”
Finally, Melillo is taking this as an opportunity to show gratitude.
“Thank your team … [and] buy coffee, buy donuts—whatever you can to show gratitude,” he says. “Understand what they’re going through and then thank them for what they’re doing while they’re going through it. Not enough can be said about how we treat our retail teams, grow teams and manufacturing teams. It’s all about taking a moment, while the whole business is shifting around us and we’re adapting to that shift. … It’s just understanding who’s doing all the work. We’re all in this together, and we need to show a little bit of gratitude."
The Makings of Great Customer Service
Positive client experiences start with the example managers set.
I visited three retail cannabis stores recently and made purchases in two. The three stores were in two different cities in Southern California's Coachella Valley, and each presented a fairly different shopping experience.
What made such an impression were the attitudes and skills of the employees I encountered in each dispensary, and my overall experiences as a consumer. Each store was designed differently, with product variety and placement obviously catering to its local market. The “vibe” of each store also reflected the demographics of the area being served. For example, the dispensary located in a high-end shopping area was like walking into an expensive jewelry store: Product was displayed in separate glass and chrome cabinets with modern lighting, showcasing product merchandised with small pieces of art and décor.
The budtenders were all women wearing uniforms that appeared custom made—black pencil skirts and green long-sleeved tops with dispensary logo—and they took me on a guided tour. Security was discretely present. At the end of my shopping experience, another woman walked me to the lobby and asked me how I liked the experience and whether my needs were met.
Another dispensary located near the freeway was similar in that it had a security person inside and a front desk person who checked IDs. The atmosphere was very different once you entered the product area. This store was set up for efficiency and convenience, two factors that its customers (travelers and tourists) would want. Product was organized by delivery system (i.e., smoking/vaping; edibles; extracts and oils; etc.) and displayed on wall merchandisers and in long glass counter cabinets. Budtenders were positioned along the counters by product area. Regardless of these differences, all the budtenders I encountered were knowledgeable, polite, initiated conversations, didn’t rush me and seemed genuinely glad to help me decide among the varieties of products that they presented to me.
I must say that my entire experience was very different than the consumer experiences I have had in other retail shops selling non-cannabis products. At the dispensaries, I experienced customer service as originally defined, and it made me want to come back. This was where the owner/manager’s leadership, staff training, the selection of products, back office support and the standard operating procedures (SOPs) all came together to define the store’s mission through a single transaction between the customer and the budtender.
Leaders with emotional intelligence are more likely to create a workplace where employees are committed to providing excellence in customer service.
Delivering Great Customer Service
Do my customer service experiences sound like they would happen in your dispensary? Do you have employees who want to come to work every day and provide excellent service to your dispensary customers?
There are many available resources and opinions about what makes a great customer service representative. Here are the attributes that I experienced:
1. Patience: They took the time to truly figure out what I wanted or needed.
2. Intuition: Understanding and intuiting what I was telling them, by listening for subtle clues about my current mood, my personality and how I expressed my needs.
3. Product knowledge: They knew their dispensary’s products, how they typically perform, the differences between delivery options (vape, edible, oil, tincture, etc.), and had suggestions for what might work best for me.
4. Staying positive and using positive language: When making product comparisons, they pointed out the positive qualities of each product. They all had a cheery persona despite the number of questions I asked and my lack of knowledge.
5. Keeping calm under pressure: Excellent customer service providers can “keep their cool” in stressful situations.
6. They were articulate: Each budtender shared a compelling message about their dispensary’s products.
7. Work ethic: There seemed to be a willingness on the budtenders’ part to not take shortcuts and to do what it takes ensure I was a satisfied customer.
8. Closing the sale: They ended the conversation with an intent to make a sale based on ensuring I was satisfied with the purchase.
Customer service is not a department, but a philosophy to be embraced by every employee, according to Forbes. Certainly, “good” service isn’t good enough anymore given the competition for dispensary customers. A dispensary is service-driven, and customer expectations are high. Dispensaries must not only get it right for customers each time, they must do the “extra things” that inspire loyalty and make the customer want to come back.
My recent customer service experience leads me to wonder what drives the employees in those dispensaries to want to come to work and provide excellent customer service?
One critical factor that influences all others is the positive relationship between employees and their direct manager, who often is the dispensary owner. The leadership behavior of an employee’s manager is highly correlated to employee engagement. And engaged employees are those who are committed to your dispensary’s mission of providing outstanding customer service.
When dispensary leadership is committed to making the dispensary a great place to work by engaging employees, we often find that the owner/manager displays the leadership trait of emotional intelligence.
According to the Society for Human Resource Management, “Emotional intelligence is the ability to understand your own and others’ emotions and how they drive behavior, and then using that knowledge to motivate others.” Emotional intelligence has to do with one’s ability to both recognize and control his/her own emotions, as well as an awareness of and sensitivity toward others’ emotions. A dispensary owner/manager’s emotional intelligence can influence how they manage the dispensary team and how they interact with each employee.
Leaders with emotional intelligence are more likely to create a workplace where employees are committed to providing excellence in customer service. Decades of research now point to emotional intelligence as the critical factor that sets superior leaders apart from average leaders; these are leaders who pay attention to people, provide a work environment where employees feel comfortable to take risks and to voice their opinions. These leaders are aware of how others will react emotionally and can leverage emotions for the good of the organization. This is the kind of leader who cultivates a work culture that makes employees want to work for them. Because these employees have this type of leadership, they are then able to pass on their positive feelings about their job to the customer. And thus, the foundation of excellence in customer service is established. Because the employee is engaged, they care about the success of the dispensary and are emotionally connected to its success. Again, success for most dispensaries is defined by the experiences of its customers. Excellent customer service that is replicated continuously and consistently, every hour of every day the dispensary is open, means success for the dispensary and for the dispensary employees.
A telltale sign of leaders who need to work on managing their emotions is that they frequently have upsetting or difficult interactions with others.
Emotional Intelligence How-To
A lack of emotional intelligence in leaders or the management team can be devastating to the rest of the dispensary workforce. Leaders who are low in emotional intelligence tend to react poorly in stressful situations because they fail to manage their emotions. Sometimes this failure comes across as aggressive or as a verbal attack. This will create an even more stressful environment where workers are nervous about when another outburst or awkward situation might happen. This could have a very negative effect on productivity and certainly on customer service, as employees are distracted and not focused on the customer.
A telltale sign of leaders who need to work on managing their emotions is that they frequently have upsetting or difficult interactions with others.
Lacking emotional intelligence means that the leader sets a poor example of how to treat people—an example that can “trickle down” through the dispensary, often resulting in low morale, lack of employee engagement, and high turnover. An employee who feels unmotivated or dislikes management will likely reflect that feeling when dealing with customers.
Thus, to increase customer service performance in your dispensary, you might want to improve your emotional intelligence. The good news is that it is possible to develop these skills by focusing on the four elements of emotional intelligence:
Self-Awareness: Get some honest feedback about your current behavior.
Social Awareness: In social interactions, focus more on the other person than yourself.
Self-Management: Take a 20-second pause that allows your "thinking brain" to control your behavior rather than engaging your "emotion brain."
Relationship Management: Practice being positive with your employees to give them a sense of hope and commitment to the goal.
Increasing your emotional intelligence takes work, but the benefits make the effort worthwhile. As an emotionally intelligent leader, you will see positivity in your dispensary, increased engagement of your employees, and satisfied repeat customers who have received excellent customer service.
Note: This column is not to be considered as legal or financial advice nor does it address all HR regulatory actions that may impact your business.
The DEA Has Descheduled Epidiolex. What Does That Mean?
This latest move may foreshadow a future of pharmaceutical drugs that contain CBD.
Effective immediately, the U.S. Drug Enforcement Administration (DEA) has descheduled GW Pharmaceuticals’ Epidiolex, an anti-epileptic drug that contains cannabidiol (CBD).
At the time, many industry stakeholders stressed that this move did not reschedule CBD alone as a Schedule-V substance. CBD, as a single compound, remained under Schedule I with the rest of the cannabis plant. (Shortly after Epidiolex was approved, the U.S. Congress passed the 2018 Farm Bill and legalized hemp. CBD derived from hemp, then, was removed from the list of controlled substances. Still, CBD derived from cannabis plants that contain more than 0.3% THC remained Schedule-I.)
By then, though, the fact that CBD was listed as an active ingredient in an approved pharmaceutical drug prevented it from being added freely to food and beverages. It would be comparable to adding acetaminophen to a latte: not permitted under federal law.
Thus, the U.S. Food and Drug Administration began its ongoing quest to understand and regulate CBD. This process continues to this day, leaving CBD product manufacturers in a sort of limbo as hemp producers and state-legal cannabis growers operate further up the supply chain.
In the meantime, the Schedule-V classification for Epidiolex began to change the way that regulators might conceive of a drug that contains CBD. Those drugs are seen as having a proven medical use and a low potential for abuse (like Robitussin-AC, for another example, which contains codeine and is listed under Schedule V).
While Epidiolex can be purchased with a physician’s prescription, the pricing stands at around $32,500 per year. The company declined to get into specifics on insurance reimbursement during an earnings call last fall, but U.S. Chief Commercial Officer Darren Cline did say that, “Yes, again, we're pleased with the payer coverage. There's kind of this escalation, if you will, from more restrictive to a little bit more open. We're not breaking out what that looks like at this point. But I think if you look at the execution around Dravet, LGS, we find the payer community to be very, very favorable to that utilization there. So we're very pleased with it.”
“This notification from DEA fully establishes that Epidiolex, the only CBD medicine approved by FDA, is no longer a controlled substance under the federal Controlled Substances Act,” GW CEO Justin Gover said in a public statement. “We would like to thank DEA for confirming the non-controlled status of this medicine. Importantly, the descheduling of EPIDIOLEX has the potential to further ease patient access to this important therapy for patients living with Lennox-Gastaut Syndrome and Dravet syndrome, two of the most debilitating forms of epilepsy.”
Dave Newman | Adobe Stock
Arizona Campaign to Place Cannabis Legalization Initiative on November Ballot Asks State Supreme Court to Allow Electronic Signatures Amid COVID-19 Crisis
Smart and Safe Arizona is one of four ballot initiative campaigns that filed a petition asking the Arizona Supreme Court to allow the campaigns to collect signatures digitally.
Smart and Safe Arizona is one of four ballot initiative campaigns in the state that filed a petition April 2 to ask the Arizona Supreme Court to allow the campaigns to gather electronic signatures amid the COVID-19 crisis, according to Ballotpedia.
The petition asks the court to allow Smart and Safe Arizona, Arizonans for Second Chances, Invest in Education, and Save Our Schools Arizona to collect signatures digitally through E-Qual, the state’s online signature collection platform. E-Qual is currently available for federal, statewide and legislative candidates, but not for ballot initiatives, according to Ballotpedia.
No states currently allow ballot initiative campaigns to collect signatures electronically, and the Arizona campaigns are not the first to face obstacles due to the coronavirus outbreak; at least 15 campaigns in eight states have suspended their signatures drives as of April 2, Ballotpedia reported.
Smart and Safe Arizona had collected more than 320,000 of the 356,467 required signatures as of March 27, according to a Tuscon.com report, although only 237,645 were valid.
Legislative Map
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
Eric Sandy
Melissa Schiller
Maria Denzin
