Last week, New York Gov. Kathy Hochul appointed Reuben R. McDaniel III and Jessica Garcia to the state’s new Office of Cannabis Management (OCM). McDaniel is the president and CEO of Dormitory Authority of the State of New York (DASNY), and Garcia is the assistant to the president of Retail, Wholesale Department Store Union (RWDSU).
The move comes just weeks after Hochul nominated former New York Assemblywoman Tremaine Wright for chair of the Cannabis Control Board (CCB) and former Drug Policy Alliance staffer Chris Alexander for executive director of the OCM.
As previously reported by Cannabis Business Times, the five-member CCB will govern the OCM office, which is responsible for regulating the state's adult-use cannabis market and overseeing existing medical cannabis and hemp programs.
McDaniel and Garcia are Hochul's final appointees to the OCM board, and Hochul said in a press release that she is confident that the two "will serve the board with professionalism and experience as we lead our state forward in this new industry."
"New York's cannabis industry has stalled for far too long," Hochul said. "I am making important appointments to set the Office of Cannabis Management up for success so they can hit the ground running."
Luis Vega, owner and CEO, ¡WEPA! Farms
Photo courtesy of Luis Vega
This National Hispanic Heritage Month, Luis Vega Shares Industry Optimism
As he and his team continue celebrations, Vega, of ¡WEPA! Farms, discusses successes and opportunities for Black, Indigenous and people of color in the hemp market.
Every year from Sept. 15 to Oct. 15, Americans celebrate the cultures and achievements of Hispanic and Latino Americans during National Hispanic Heritage Month.
“We do dinner, we do lunches,” said Luis Vega, owner and CEO of Connecticut-based hemp operation ¡WEPA! Farms. “During the month, we take part in a lot of the local Latino and Hispanic heritage celebrations that go on locally.”
Vega, who is Puerto Rican and identifies as Latino, is a member of local chambers of commerce in Connecticut. He said ¡WEPA! Farms, a vertically integrated hemp business, sponsors events in both New Haven and Meriden, Conn.
“We have a local town salsa event that we participate and sponsor,” Vega said. “So, during this time, there’s a lot of festivities that go on throughout the community, and just being a good member in the community, we take part in them. And then we help support other Latino businesses in the area. So, if it's some place that makes something, we’ll usually purchase some of the items, or if it's one of the local nursing homes that has a large Latino base, we’ll send a lunch over their way or something.”
White people make up many of the cannabis and hemp industries’ ownership and leadership roles, but Vega said more Hispanics, Latinos and Latinas and other Black, Indigenous and people of color (BIPOC) are becoming owners and organizational leaders.
“We used to be mostly the employees, and in all honesty, working the fields and working the laborers,” Vega said. “Now, we’re moving more into the managerial roles at some of those places. We’re just taking on the responsibility ourselves, going out and leasing some land and starting to do some small farms. I know that in the Northeast, there has been a growth in BIPOC farmers and farmsteaders and beekeepers in our area.”
Photo courtesy of Luis Vega
Hemp growing at ¡WEPA! Farms
At ¡WEPA! Farms, operations are growing, facilitated by a team with unique backgrounds and experiences. The operation is up to 15 employees, five of whom are full time. “I have convicts; I have guys that spend their entire day at church,” Vega said of his employees. “I have the entire gambit of what we’ve got going on.”
In addition to growing about 270 acres of CBD and fiber hemp in Connecticut, Vega and his team added a 50,000-sq.-ft. facility for processing and final product development, and a 50,000-sq.-ft. storage space. Gummies, capsules, massage oils, pet treats and tinctures are all new product offerings from ¡WEPA! Farms since Hemp Grower featured Vega on the cover of its March issue.
As they’ve expanded, Vega and his team have linked up with some women business owners in the hemp space. ¡WEPA! Farms now produces product for Her Highness, a women-owned CBD brand based in New York City.
This year, Vega said federal and state governments have stepped up to assist BIPOC farmers.
Some of that assistance comes in the form of the American Rescue Plan Act, which President Joe Biden signed into law in March. According to PBS, “A provision in the pandemic relief law directs USDA to pay off the farm loans of nearly 16,000 minority farmers and begin to address racial equity challenges.”
“There's been a big focus on getting farmers that identify in the BIPOC community actual land access so that they become landowners,” Vega said. “One of the biggest problems in agriculture for a BIPOC members is having that access to land, or having that access to capital to buy land.”
More than a year and a half after it hit the U.S., the COVID pandemic continues to affect supply chains and other aspects of business, Vega said.
“We’ve just had to overcome, adapt and pivot, so, just like everybody else, fixing the problem or issue that we’re seeing and just finding an effective solution for it,” Vega said. “We just are happy, and we are still pushing forward as positively as possible, with a little help from extra CBD.”
During the pandemic, Vega said he’s seen more people farming various crops in urban areas; he likens these plots to victory gardens.
When it comes to Cannabis sativa, Vega is continuing to not only grow hemp stateside, but helping family in Puerto Rico with hemp operations. He’s also looking to add high-THC cannabis in the mainland U.S. and Puerto Rico.
Vega has a message to the industry this National Hispanic Heritage Month: “I would love for everybody to support their local farm stands, support their local BIPOC farmers, urban farm initiatives. … Any way we can create access to the urban areas goes a really, really long way in exposing our more urban-area students to agriculture."
Marina Hahn, Member, Jushi Holdings Inc. Board of Directors
Courtesy of Marina Hahn
Cannabis Beverage Boom 'Inevitable:' Q&A With SVEDKA Founder Marina Hahn
Hahn, who is a member of Jushi's board of directors, says smart branding and targeting will be key for cannabis companies' products to 'stick' with consumers.
In May, vertically integrated multistate operator Jushi Holdings Inc. announced it had appointed Marina Hahn, a founder of SVEDKA Vodka, to its board of directors. With decades of experience at beverage behemoths such as Pepsi and Anheuser-Busch, Hahn’s expertise is in creating and identifying strong, fast-growing brands that resonate with consumers. Four years after founding SVEDKA Vodka, the startup became one of the top-selling vodkas in the U.S., and Constellation Brands picked it up for $384 million in 2007.
“I’ve wanted to get involved in cannabis because I love emerging businesses, and I’ve tried to be a part of emerging businesses my whole career,” Hahn says. “The other reason why I joined cannabis is that I predict the cannabis beverage segment could be a huge movement in the world of beverage.”
Here, Hahn shares lessons she's learned and how cannabis companies can improve branding.
Michelle Simakis: What led you to joining the Jushi Holdings Inc. board, and what were your impressions of the cannabis industry?
Marina Hahn: I was recruited by five companies in the space, and I did a ton of due diligence, and I wanted to join Jushi because I really love the team. Of course, assets are important, but if the team isn’t really strategic or is going to drive a business in a smart way, in sort of a cowboy-esque arena, then I would have no interest. It’s kind of like the startup days, where 99% of startups don’t work, and in the world of cannabis, many of those don’t work. Without a great team, businesses fail.
I do think the time is right now for more sophisticated talent to come into the cannabis industry. I'm hopeful that it will continue to recruit smart people who have had backgrounds like me, where I've had both the experience of large companies and a lot of startups that actually did do OK. But I think that combination is helpful in the cannabis space because it is about consolidation, but it's also about really entrepreneurial people who can figure out how to drive shareholder value, but also growth in a very now regulated, but also starting to be commoditized, space.
MS: Why do you have confidence that Jushi will be one of the cannabis companies that is long-lasting and makes it?
MH: Jushi has started to create a brand portfolio that's interesting, but they are committed to brand and that's my sweet spot. As cannabis grows up, it's going to be a brand fight. In these highly commoditized spaces, if you don't know what you're doing terms of building smart brands that target in a really successful way, you're not going to win.
MS: People draw many parallels between alcohol and beverages and the cannabis industry. What are the important lessons for cannabis?
MH: That's the other reason why I joined cannabis, is that I predict the cannabis beverage segment could be a huge movement in the world of beverage. And eventually it will end up being owned by the big guys, but there’s always room for smaller players with experience here, but only if you have differentiated offerings. The same has been true in the world of beverage where my advice would be get in early to compete in emerging beverage segments and try to be a first mover in beverage innovation. I have learned many lessons working at Pepsi and ultimately at Anheuser-Busch and starting my own business, SVEDKA Vodka, they know their audiences really well, and that's critical. We also take packaging very seriously, that’s critical. In the world of cannabis, there are going to be many cannabis beverages, but the key is how you differentiate a beverage so that it is truly unique and is something that the consumer didn't know they needed but, after consuming, really desire it.
When I was the co-founder of new businesses, ZX, which is the growth arm of Anheuser-Busch, we bought companies that we felt were emerging and offered the consumer something really special. Cutwater [Spirits] canned cocktails is now a no-brainer, as canned cocktails are everywhere, but when Cutwater was an emerging business, Anheuser-Busch was smart to buy them. So that's an example again of us getting in early to emerging segments and trying to be a first mover in innovation. I think that's important for cannabis.
MS: Cannabis beverages are still a small percentage of overall sales. According to BDSA, the edibles market represents 15% of all cannabis sales in the U.S., and beverages make up just a small portion of edibles sales at 5%. What needs to happen to really change that?
MH: Think prohibition. It was the same thing, right? Spirits are taken for granted now, but the stigma's still there [for cannabis]. It's lessening; by the time the stigma goes away, and [for] people [who] don't want to smoke, there [will be] plenty of other options to get that enhanced value, whether it's medicinal or whether it's just for pleasure. It's inevitable that beverages will be a big, big part of cannabis. I mentioned packaging, but it’s also what's inside the product. The consumer usually gravitates to brands that are meaningful to them and that they can emotionally connect to. So how do you do that through packaging, product, and messaging? There are so many elements from the world of spirits that will probably migrate over to cannabis; it's not an if, it's a when. Why it hasn't happened is probably because it's an emerging space and the kind of people who understand that business are just not in cannabis yet. I think there needs to be a more sophisticated approach to strategy and creative in the world of cannabis to create the growth in beverages.
MS:What do you think cannabis companies need to do to bring to their branding to prepare for federal legalization? Where are they lagging, but also, what are they doing really well?
MH: I think there are only a handful of brands that are even interesting in the cannabis space right now. And I'm not going to name whether it's Jushi or somebody else, but it gets back to what are your favorite brands in general, and why? And I think that pull or that interest from consumers just isn't there yet in a big, big way, because the brands aren't that compelling. I think the strategy is lacking. It’s just a handful of stuff thrown on the shelf that all looks the same.
MS:What advice would you give to operators about how they should be approaching expansion?
MH: Be very careful. I mean, you can dilute your efforts in five seconds. There's just so much that can be done, but I think a company has to stand for something, and whether their prowess is in retail or in branding or in growing, it's really hard to do everything really, really well. The big guys can do a lot more, but as a cannabis company comes up into the ranks, they have to be known for something. I would just pick your flavor and do really well. And for the vertically integrated, again, it's back to team and if you have a sophisticated really smart team, you can make it happen. But over time, just be patient. The rush to do everything is probably not going to work because it just takes time to build smart franchises, whether it's a retail franchise or whether it's brands, anything consumer-facing takes time.
MS:Is there a pitfall you see a lot of brands making when they expand too quickly?
MH: How many brands really succeed? When I spent 10 years of my life at SVEDKA, I always said there are only four brands on a back bar that the consumer's going to remember. For us to compete on the back bar, meaning, when you walk into a bar and you see brands, you have to figure out what your strategy is.
[You] can't assume you're going to be able to do it all with a) small budgets and b) without the right team and c) without a really sound strategy. My advice is always, don't try to do too much and build it slowly, and build it against a very finite target audience initially. Make sure you understand your strategy upfront and then take a lot of creative risks and use your intuition and go for it. Make sure you've got the right people who have done this before so you're not just blindly creating brands that won't have stickiness down the road.
MS: How did you differentiate your marketing strategy at SVEDKA to stand out?
MH: I envisioned an outrageous fem bot spokesperson, who we called SVEDKA_Grl, who became this pop culture icon. Talk about small but efficient budgets – everything was geared towards her, and she became emblematic of the brand. We only went into three or four markets, and we were very focused when it came to marketing spend, but they were big urban markets. And then ultimately we became national with our marketing spend, but she was just visually arresting, and she broke through all the competitive clutter. Once I launched her, SVEDKA sold like crazy, and we sold to Constellation [Brands] four years later.
MS:Is there anything else I didn’t ask you that you think is important to mention?
MH: Look at really smart brands that are suddenly household names and how they started, and try to take lessons from them versus using the conservative consumer goods company approach to building businesses. It doesn't work that way anymore. It’s all about targeting. It's important to carefully target and develop great creative, but it's also about using data strategically to deeply understand your customer. That's a very different approach than hiring 10 brand managers. [Do] not play by the bad rules of large companies [and create] layered, bureaucratic org charts. There's no need for that.
Editor’s Note: This interview has been edited for length and clarity. A version of this interview will be published in the October issue of Cannabis Business Times.
Adobe Stock
Pennsylvania House Duo Beats Senate Tandem to Adult-Use Punch
Social and criminal justice reform are at the forefront of filed legislation.
A bipartisan pair of Pennsylvania state senators touted their adult-use cannabis bill back in February. Seven months later, its formal introduction still awaits.
But a House tandem beat them to the punch Tuesday, as Democratic Reps. Jake Wheatley and Dan Frankel announced House Bill 2050, the “Cannabis Regulatory Control Act,” which aims to legalize the possession of up to 1 ounce of cannabis or 5 grams of concentrate for personal use for adults 21 years and older in the commonwealth.
The bill has evolved since Wheatley, the chair of the House Professional Licensure Committee, first introduced similar legislation in 2017. Key pillars of the current bill include: creating access and opportunity for diverse businesses, individuals and communities; enhancing social and economic equity; and providing provisions for automatic criminal justice reform.
PA House Democrats
Wheatley
Wheatley said while he’s heard his associates in the opposite chamber of the General Assembly claim to have the gold standard with their adult-use proposal, he thinks H.B. 2050 provides the “industry standard.”
“For some, it’s an economic question. For others, it’s a question around access and opportunity. But the baseline for why I’ve been harping on this for as long as I have is the social and criminal justice reform aspects,” Wheatley said during a Sept. 28 press conference. “And so, again, we really think there are components in our bill that frees up our criminal justice system so that our law enforcement and agencies, and spaces in our correctional institution, can be opened up and freed to really go after more significant, impactful crime and activity.”
The most important part of the legislation seeks to repair some of the damage caused by generations of harmful policy, such as criminalizing and mass incarcerating people of color, which has done little more than hinder people’s ability to get jobs, education and loans, Frankel said.
But the “far-reaching” bill goes a step further to ensure Pennsylvania’s cannabis policies are in the public interest, he said.
“It creates a framework to protect the public health,” he said, referencing an outbreak of lung illness connected to 2019 vape cartridges where vitamin E acetate had been added as a thickening agent or to dilute THC oil.
PA House Democrats
Frankel
The only way to make sure that cannabis is safe is to regulate it, monitor it and to take bad products off the market, Frankel said.
“Failed cannabis policies of the past have resulted in the worst of all possible worlds,” he said. “Not only did we have aggressive enforcement of laws that harm communities of color, we failed to appropriately protect the health of the public and lost out on significant revenue. Instead of making money off the sales of a product overseen for safety and quality, we have sent people to illegal sources for unsafe products and have spent money to prosecute them.”
The legislation would create a Cannabis Regulatory Control Board to serve as the primary oversight arm for the legal and regulatory framework. H.B. 2050 also aims to establish multiple grant programs that would benefit small, minority- and women-owned businesses in Pennsylvania.
The grant programs would be funded by revenue collected from a 13% cannabis excise tax on retail sales. The legislation also calls for a 7% privilege tax on cultivators and processors, a municipal tax at a rate of no more than 2% on retail sales, and either a 1% or 2% tax on the sale or transfer of cannabis and cannabis products by a cultivator, processor or other person engaged in regulated activity to a cannabis retailer.
The revenue would also go toward creating a Communities Reimagined and Reinvestment program, which, among many opportunities, could administer legal services to address barriers to reentry, including expungement or pardons.
PA House Democrats
Littlejohn
The breadth of thought that went into drafting the legislation is evident through language addressing several barriers and sustainability for small businesses, said Amber Littlejohn, executive director for the Minority Cannabis Business Association.
“These provisions that help with access to capital, address barriers to entry and create pathways for small Pennsylvania businesses to participate in this industry [also] help those who have been most impacted by prohibition,” she said. “And they are going to help this industry in Pennsylvania—the legal cannabis industry—be built by Pennsylvanians and for Pennsylvanians.”
The legislation also goes a long way toward providing a pathway for small family farmers to participate in the industry, said Michael Kovach, vice president of the Pennsylvania Farmer’s Union. Kovach painted a picture of farmers in the commonwealth who kept food on Pennsylvanians’ tables throughout the pandemic yet often struggled to pay bills at the end of each month.
“The folks who grow things to feed us are at least as logical a choice to grow this crop, should it become legal, as the large out-of-state interests that dominated the medical market when it was rolled out,” he said. “The barriers to entry were just too great for many family farmers to avail themselves to that market. It’s a potential farm-saver. We’ve gotten a lot of eggs in a very few baskets, and anything we can do to diversify production and income on family farms is of note and very important.”
Another measure calls for a Cannabis Clean Slate program that would provide for the automatic expungement of cannabis-related offenses.
PA House Democrats
Flood
Between 2009 and 2019, roughly 57,000 Pennsylvanians were criminalized or convicted for cannabis-related offenses, said Brandon Flood, Secretary of the Pennsylvania Board of Pardons.
“The one provision that we’re most excited about is the Cannabis Clean Slate program provision,” he said. “Currently, especially if anyone has been charged with cannabis-related crimes where it’s been graded as a misdemeanor or a felony conviction, their only recourse for getting that off their record is coming through our agency. And certainly, we have a huge backlog as it is.”
The Cannabis Clean Slate program would provide a more appropriate and expedited mechanism for those seeking expungement, Flood said.
Other H.B. 2050 provisions would provide immediate release for anyone who’s been confined or serving a term of imprisonment as a result of a cannabis-related conviction, as well as ensure the reinstatement of driver licenses and other licenses and registrations.
“When we talk about the impacts of prohibition, we think first of people who are incarcerated,” Littlejohn said. “But incarceration is one piece of it. There are physical health consequences. There are economic health consequences. There are mental health [consequences]. There are consequences of family, disruption of generational wealth, disruption of communities.
“And so, that is why it’s really important that proposals like this that are covering the breadth of issues through community reinvestment, through economic empowerment and through criminal justice reform, so that we are truly touching on the breadth of harms.”
Frankel said six in 10 Pennsylvanians support full legalization.
A 2020 poll found 62% of likely voters in Pennsylvania favor legal, regulated cannabis sales for adults 21 and older. The survey was commissioned by the Pennsylvania Cannabis Coalition and conducted by Harper Polling.
When asked if there was enough support from the Republican-controlled Legislature, which is in session through the end of the year, Wheatley said he could not speak for his colleagues on the other side of the aisle.
“I will tell you that I believe we are getting closer and closer to a time where everyone in this building recognizes the fact that we need a regulated market,” he said. “I think some on the Republican side have said that we’re going to wait for Washington to decide, or some have said we want to see more evidence of some of the impacts that this might have to our youth. And some are concerned about our medical program and what this might do. But I believe we’re getting closer and closer.”
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Andriana Ruscitto
Patrick Williams
Michelle Simakis
Tony Lange
