Health Canada, the federal agency that oversees the country’s cannabis producers, reported that as of April 2020, licensed producers (LPs) held in excess of 600,000 kilograms of unpackaged dried cannabis and an additional 46,413 kilograms of packaged flower. (This is not counting what is being held in stock by distributors and retailers) … I spoke about this surplus with multiple Canadian sources (who asked to remain anonymous), all of whom explained to me that the overstock cannabis held in storage by Canadian LPs is over a year old. They expressed that most of it would be considered undesirable to potential customers … If I were hoarding old cannabis, I could investigate the possibilities of profitably extracting or isolating alternative cannabinoids and research all potential alternatives for various applications. Otherwise they will end up disposing of it or turning it into compost because customers in the current adult-use cannabis market will not buy it, nor will it pass testing standards.
Cannabis producers in Canada and the U.S. alike may have read these proposals for the use of surplus cannabis and thought they sounded extremely appealing. With cannabis inventory still far outmatching (legal) demand across the continent, utilizing surplus stock before its shelf life is up would be ideal. And now, the move represents an even more important tactic in a time when many are facing financial constraints and calls for increased revenues.
But if manufacturers are to invest in the development of products that tap into this inventory, will consumers respond? Are these products, in fact, appealing and in demand? The short answer is: they appear to be, insofar as consumers know they exist.
According to Brightfield Group’s 2020 Canadian consumer survey data, minor cannabinoid awareness is on the rise among cannabis consumers, despite few products being available or advertised.
11.6% of consumers were aware of CBN in Q2, versus 10.1% in Q1.
Among consumers with insomnia, figures went from 13.7% to 15.1% from Q1 to Q2.
CBG awareness was 9.2% in Q2, versus 8.2% in Q1. Awareness is roughly double that among medical users.
Furthermore, consumers have indicated a keen interest in a variety of minor cannabinoids, with 42-45% of those aware of each cannabinoid indicating they would be very likely to purchase CBD and THC versus 29% for CBN and CBG, were it to be available. There is disproportionately strong interest among regular users in Canada—particularly experienced medical patients.
Though it is tough to make the argument that minor cannabinoid products will make up a significant part of major cannabis players’ portfolios given their relative obscurity even among cannabis users, these products do have their place.
As Morrow mentioned, they may offer benefits not experienced with THC or CBD-dominant products, that appeal to various consumer segments—particularly medical patients.
Minor cannabinoids also offer an interesting point of differentiation in crowded markets, especially those with highly restrictive frameworks for labeling and promotion. When companies are unable to create flashy ad campaigns, social media pages, logos, or even particularly appealing product formats, shapes or flavors (as current Canadian legislation prohibits), they typically can highlight minor cannabinoids, a unique selling point. While conveying information on these cannabinoids’ qualities to prescribing doctors, budtenders and, ultimately, the consumer will require effort, educating the public on cannabis is a task that many in the industry are already undertaking and can expand upon.
Ultimately, though consumer awareness of CBN and other minor cannabinoids is limited, if companies can effectively build awareness and tap into the consumer groups the cannabinoids and their qualities will uniquely resonate with, they do offer a distinct window of opportunity for those with far more product than they can possibly store or sell using traditional methods.
Maine Dishes Out First Six Adult-Use Cannabis Business Licenses
Maine’s Office of Marijuana Policy (OMP) today issued the state’s first six adult-use cannabis business licenses, paving the way for retail sales to begin in October. The businesses include three cultivation facilities, two retail storefronts and one testing facility.
As the Portland Press-Herald reported, the two retailers are Theory Wellness of Maine in South Portland, just outside the state’s largest city, and Sweet Relief Shop in Northport, farther up the coast.
Room 5, Gele and Grass Roots Marijuana each received a cultivation license. Nelson Analytics received the state’s first testing license.
More licenses are expected to be issued prior to Oct. 9.
“Maine will have the unique distinction of being the only state to launch its adult use marijuana program during a pandemic,” OMP Director Erik Gundersen said in a public statement. “Public health and safety are themes that have been part of the Office of Marijuana Policy’s mission statement since day one. Accordingly, our highest priority remains the wellbeing of this new industry’s employees and consumers.”
Indeed, the OMP had originally slated opening day for June, but the coronavirus pandemic threw those plans out the window.
Growth Goals: 9 Expansion and Franchising Tips for the Cannabis Industry
Cresco Labs and Diego Pellicer executives share how they successfully expanded their retail network.
Charlie Bachtell, left, CEO of Cresco Labs, and Nello Gonfiantini III, right, CEO of Diego Pellicer.
Photos by Jake Gravbrot
This article was originally published in December 2019, as part of a series looking back on that year's Cannabis Conference.
In August, Cresco Labs Inc. took a step toward “building the most strategic and valuable geographic footprint in the cannabis industry” when New York state regulators approved the company’s purchase of Gloucester Street Capital, the parent company of Valley Agriceuticals, said CEO and co-founder Charlie Bachtell in an Aug. 8 press release.
Cresco Labs, a multistate, vertically integrated cannabis operator based in Chicago, has been focused on expansion since its inception in 2013. “From Day 1, we wanted to have a multistate footprint—that we knew we wanted to be more than just Illinois operators,” said Bachtell during the 2019 Cannabis Conference.
Bachtell and Nello Gonfiantini III, CEO, Diego Pellicer Worldwide, discussed challenges of multistate expansion for dispensary owners and cultivators during a panel discussion at the 2019 Cannabis Conference. Expansion offers brand-building and growth opportunities; but it requires a steadfast focus on regulatory compliance, talent acquisition, training and best practices for consistency of quality and efficiency, the panelists said.
Attendees at the 2019 Cannabis Conference could ask the speakers questions at the end of most sessions. Here, attendees line up at the microphone to address Charlie Bachtell and Nello Gonfiantini III.
Here, Cannabis Dispensary recaps some of Bachtell’s and Gonfiantini’s expansion and franchising tips and provides a glimpse into what’s to come for the 2020 Cannabis Conference in Las Vegas, Sept. 1-3.
1. Know the regulations. Prior to entering the cannabis space, Bachtell, who also is an attorney, worked in the mortgage banking industry as executive vice president and general counsel of Guaranteed Rate. During that time, he learned that navigating the regulatory landscape is critical to success. “You either embrace regulation, engage in regulation and do regulation better than the guy across the street … or we could go out of business,” he said. Guaranteed Rate thrived amid stringent post-recession regulations because the company excelled at the regulatory process, he said. Similarly, in the cannabis industry, companies looking to enter new legal markets must understand how to operate in states with different laws, Bachtell said.
2. Create a compliance program. Gonfiantini, also a former banking professional, recommended that cannabis businesses adopt compliance programs to ensure they’re staying ahead of quickly changing regulations. For franchisers, compliance programs may be more complicated because they’re dealing with individual operators. They should explain to their operators the importance of being proactive when it comes to regulatory compliance, he said. “We try to influence them and convince them that it’s a lot cheaper now to pay for some compliance than later on when regulators ask you to, for example, pull up the last 100,000 transactions and go through every one of them,” Gonfiantini said.
3. Tap into the existing supply chain. Expansion can be much more seamless and less risky if the state already has a strong network of cannabis businesses in place. One of the keys to Cresco Labs’ expansion into California was its deal to acquire Canadian branding and distribution company Origin House, which operates throughout California, for C$1.1 billion in April. (At press time, the deal was still pending regulatory approval.) “For us, the infrastructure ... [and] the relationships they have, the authentic nature of their operations in that state—where authenticity is No. 1—it was really good for us,” Bachtell said.
4. Establish standard operating procedures (SOPs). Cresco operates in 11 states and owns 22 dispensaries and a total of 56 retail licenses, according to the most recent figures cited on Cresco’s website. Maintaining consistency and quality becomes more challenging when every store is operating independently without standard, company-wide protocols. “It’s ‘Cresco’ in 11 states, and, of course, that’s a very challenging operational structure, especially with the fragmentation with the siloed operations,” Bachtell said. But the establishment of SOPs, business models and brands allows the company to design and build each dispensary the same way, he said.
However, in a franchise model, businesses must be more flexible because each dispensary is an independent operator, Gonfiantini said. He recommended that companies allow for a certain amount of creativity in their SOPs. “We trust that they know their market,” he says. “On the other side of the coin, they go beyond what we would consider the lines of the brand and the way we like to see it. It’s always a balancing act between tightening up the guidelines [and] loosening them up.”
Nello Gonfiantini, CEO, Diego Pellicer Worldwide talks about expansion and franchising best practices during the 2019 Cannabis Conference.
5. Communicate with your partners. In a franchise model, communication is critical, Gonfiantini said. This includes weekly calls and updates to make sure everyone is on the same page and shares the company vision, he said. “It takes constant communication for us to make sure the brand is consistent, the message is the same and we’re always telling the same story and going down the same path together.”
6. Make sure your talent shares your vision. As the industry grows, finding qualified, skilled talent becomes more challenging. Diego Pellicer’s corporate team works with its operators to ensure they’re looking for employees who share the company’s vision, according to Gonfiantini. “Having highly educated budtenders on the floor, having good financial people is always difficult to do when you’re doing it once removed,” he said. “We try to work with our operators to make sure they’re looking for the right people and make sure they have that vision. Again, that’s the vision from the operator to the employees.”
7. Create an interview checklist. Bachtell suggested cannabis companies develop a checklist to help identify qualified job candidates. He typically includes questions that help the company determine whether the interviewee is the right fit culturally, including questions that focus on Cresco’s mission, vision and core values. “I don’t like to talk in absolutes, but it would be very difficult to have a successful company in this space if you didn’t have the right culture throughout the organization and in total alignment in the direction that you’re going,” he said.
8. Train workers on processes and standards. In a highly regulated market, the margin for error is very small, so training on SOPs is critical, Bachtell said. “From a training perspective, the bigger you get, the more sophisticated [you get],” he said. “We just launched our LMS—a learning management system. You can’t leave that to chance. You have to be super solid in your SOPs, in your onboarding and your training.”
Charlie Bachtell, CEO, Cresco Labs Inc., talks about expansion and franchising best practices during the 2019 Cannabis Conference.
Training is particularly critical for store operators, Gonfiantini said. “[We] try to ensure the operator understands the standards that we want to live [up] to,” he said.
9. Educate the consumer. Brick-and-mortar retailers, in general, often struggle to remain competitive in today’s e-commerce world. Dispensaries can learn from strategies retailers in other industries have adopted, Bachtell said, including experiential retail. “It’s not just a store. It’s an experience; it’s an education; it’s an opportunity.” Bachtell pointed to the Apple Store as an example of a retail business that provides both an education and an experience to consumers. “You go there and ask questions,” he said. “You get to experience their products.”
He also cites online grocery shopping as another example of how consumer buying preferences have changed. He suggests cannabis companies explore similar models. “E-commerce, direct to consumer—those should all be part of your dispensary model to help stem the risk of traditional brick and mortar,” he said.
Jonathan Katz is managing editor for Cannabis Business Times and Cannabis Dispensary magazines.
How to Make the Most of Virtual Events This Year
Now that many of us have settled into our work-from-home routines, we’re also discovering new ways to take advantage of virtual experiences.
Now that many of us have settled into our work-from-home routines, we’re also discovering new ways to take advantage of virtual experiences, such as industry conferences and events. Rather than catching a flight, booking a hotel and blocking off multiple days to hobnob with fellow attendees face-to-face—nowadays, all you need are an internet connection, web camera and email log-in to create meaningful industry connections and expand your market knowledge.
Cannabis Conference Virtual (taking place Sept. 15, 22, and 29) is making this possible by bringing together hundreds of industry professionals for the highest quality networking and education the cannabis market has to offer, all from the safety of your home or office.
It's a little different than attending a conference in-person, of course, so the Cannabis Conference Virtual staff put together a few tips to help you make the most of your experience at events like this.
Cannabis Conference Virtual’s education program includes most of the line-up from our originally scheduled in-person event. That means you’ll have your pick from dozens of sessions, with 65+ experts at the top of their game ready to share their insights with you. Just like an in-person event, you’ll want to peruse the program ahead of time to make sure you’re attending the sessions most relevant to your professional development. Our intuitive platform also includes a personalized schedule, so you can add your most desired sessions and networking breakouts in a streamlined calendar.
Cannabis Conference Virtual has made compartmentalizing your event time easier than ever! For instance, we’ve split our education into targeted tracks—so no matter where you are on your cannabis journey, you’ll be able to find sessions geared toward your needs.
Day 1 (Sept. 15) is our Launch, Expansion, and Business Day—so if you’re new to the industry or expanding your operations, this should be your first stop. On this day, attend sessions such as, “How to Launch a Cultivation Business,” “Growing a Brand,” “Embarking on the Hemp Journey,” “Monitoring and Improving Company Performance and Capital,” and “The Global Cannabis Market Forecast and Legal Landscape.”
Day 2 (Sept. 22) will be specifically geared toward Cultivation & Hemp professionals. This education track includes the in-depth sessions, “Lighting and Its Impact on Plant Growth and Cannabinoid Production: The Latest Research,” “Find Your Ideal Genetic Line-Up: Cannabis & Hemp,” and “Lean Management and Six Sigma in Cultivation and Farming.” Plus, experienced cultivation experts will share their lessons learned in a special spotlight session, and much more.
Day 3 (Sept. 29) is our Deal-Making Summit, as well as our Dispensary education day—which means you’ll have opportunity to learn from some of the industry’s biggest players as it relates to mergers & acquisitions, as well as how to optimize a retail operation. Sessions on this day include, “Using Data to Boost Sales” and “Dispensary Marketing: The Best Options for Growing Your Customer Base and Fostering Loyalty.”
You can view Cannabis Conference Virtual’s full event schedule here!
And check out more tips for your virtual conference experience right here.
A2LA Accredits Viridis Laboratories to ISO/IEC 17025
Viridis, based in Lansing, Mich., is A2LA’s first cannabis testing laboratory accredited in the state of Michigan.
“Our company is incredibly proud of achieving this milestone of ISO/IEC 17025 accreditation through A2LA’s rigorous assessment program,” said Greg Michaud, Viridis Laboratories’ CEO. “The choice to partner with A2LA was a simple one due to their international reputation as a global leader in accreditation programs. Additionally, their partnership and certification program through the American’s for Safe Access strengthens our accreditation further and helps solidify Viridis as Michigan’s premier cannabis testing laboratory. “
“We congratulate Viridis Laboratories on achieving accreditation through A2LA”, said Chris Gunning, A2LA General Manager. “A2LA is excited to see the continued growth of our cannabis program into another state. This addition further promotes the value that accreditation adds in ensuring quality products in this emerging industry. We look forward to our continued relationship with Viridis Laboratories 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.
About A2LA A2LA is a non-profit, non-governmental, third-party accreditation body, offering internationally recognized accreditation services to testing and calibration laboratories, inspection bodies, sole-sampling organizations, proficiency testing providers, reference material producers and product certifier.
About Viridis Laboratories Our company’s roots start from decades of experience gained within the Michigan State Police forensic science laboratories. Our 75+ years of analytical knowhow ensures daily, that the highest quality and most ethical testing is being achieved, resulting in bringing maximum confidence to the consumer. We consider ourselves fortunate in keeping true to our mission of bringing health and safety to Michigan’s citizens.
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