MJBiz Magazine August 2021

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From the Editor COVER STORY

BUSINESS UNDER FIRE

Cannabis companies save energy and water, sequester carbon and employ regenerative farming techniques to fight global warming.

10

Five Questions With Ross Haley

DEPARTMENTS

FEATURES

TABLEOFCONTENTS

12

Hemp Notebook

14

Company News

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62

Industry Developments

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Best Practices in Retail

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Industry Players

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Declaring War on Hemp Could Backfire on Marijuana What to Know Before Using Robocalls and Texts for Marketing

Business Under Fire

Cannabis Cannabis companies companies save save energy energy and and water, water, sequester sequester carbon carbon and and employ employ regenerative regenerative farming farming techniques techniques to to fight fight global global warming warming

4

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On Our Cover Climate experts warn that global warming is increasing the frequency of natural disasters. Outdoor cannabis cultivators are likely to feel the effects first, but the problem will touch every sector in time.

High temperatures, wind and drought in recent years have fueled widespread wildfires in the Western United States.

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FromtheEditor | Kate Lavin

Hot in Here

A

s some of the first states to legalize recreational cannabis, Oregon and Washington are darlings of the marijuana industry. Several of the most forwardthinking cannabis companies call those markets home.

But in late June, the news from these states was something no one predicted: Temperatures hit 113 degrees Fahrenheit in Portland, Oregon, and 108 degrees in Seattle—35 degrees above the average highs for that time of year.

Scientists have been warning about climate change for decades, but as the recent Northwest heat wave showed, global warming is no longer a mere threat. Climate change has arrived, and it’s here even sooner than we expected.

Energy Use and Climate Change Energy production is the second-largest creator of carbon emissions on Earth. The practice earns this dubious distinction because fossil fuels such as coal are used to create the majority of power available to consumers, including 60% of the energy offered by U.S. utility companies.

Studies have shown that indoor-grown marijuana is one of the most energy-intensive agricultural crops to produce.

The high-pressure sodium lights that have been common in agriculture for decades create so much heat that a domino effect of energy use is needed to keep plants and employees cool.

But it doesn’t have to be this way.

Solving the Climate Crisis Our cover story this month includes interviews with hemp and marijuana executives employing environmentally friendly tactics to produce cannabis. While some of them have adopted outdoor cultivation techniques such as dry farming and regenerative growing to save water and use little to no power from the utility grid, others have found creative ways to turn down the energy dial.

Colorado-based Terrapin Care Station is one of 12 marijuana companies that joined an energy program created by utility giant Xcel and energy consultants Resource Innovations and Cascade Energy. Representatives from the consulting firms audited the business, identified specific ways the company could use less power and recommended energy-saving equipment as well as the utility rebates to help pay for it.

Terrapin also employed Jack’s Solar Garden, a community farm that combines solar installations and agriculture in Longmont, Colorado, to furnish 25% of its energy needs.

Somerset, Massachusetts-based Solar Therapeutics went one step further and created its own power grid

8

MJBizMagazine | August 2021

after the company’s local utility said the circuit it planned to use would need a two-year, $2 million repair. Using a combination of solar panels and cogeneration units, the business was able to get its power needs met much faster and with a higher degree of efficiency.

“We’re now a registered power plant,” Ed Dow, CEO of Solar Therapeutics, told MJBizMagazine.

Action Items A sense of community and innovation have made it possible for marijuana farmers to outmaneuver parties that wished to banish the plant. By turning that entrepreneurial spirit to the creation of clean energy, the cannabis industry can make good on its promise to heal the world. Turn to page 38 to read about the tactics your peers are adopting to achieve that goal.

Sincerely,

Kate Lavin MJBizMagazine editor

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FiveQuestions | with Ross Haley

Exiting a Marijuana Startup Serial entrepreneur shares strategy and challenges when selling ancillary businesses

By John Schroyer

W

hen Ross Haley entered the cannabis industry 20 years ago, it was to sell the proverbial “picks and shovels” with Ag Natural, an ancillary company he founded to focus on gardening supplies for Northern California marijuana farmers.

Only four years after launching Ag Natural, Haley learned that a competitor wanted to acquire the business, which he wound up selling in 2005.

After the sale, Haley immediately began another ancillary marijuana business, Vermicrop Organics, which offered a line of fertilizers and soils designed specifically for cannabis growers. He later merged Vermicrop with a sister company, General Hydroponics, and ran both until they were acquired by agricultural giant Scott’s Miracle-Gro in 2015.

Haley also found time in 2010 to start The GrowBiz, another retail hydroponics company, which expanded to 12 retail locations before being purchased in 2020 by GrowGeneration Corp.

In 2016, Haley also founded Truth Enterprises, which became the parent company of his current business, LBS, a state-licensed marijuana cultivator, manufacturer and distributor based in West Sacramento.

MJBizMagazine sat down with Haley to get his advice for other cannabis entrepreneurs about how best to plan and execute an exit from a startup business.

What was the key to your success with startups and exits?

The theme of the California Gold Rush was picks and axes. It’s pretty commonly known that there were a lot of successful companies that came out of that industry that weren’t actually mining for gold.

They were servicing supplies.

10 MJBizMagazine | August 2021

Ross Haley

From a business aspect, that model works in a lot of different industries, and it worked really well for me in this industry.

Part of it was that cannabis growing and selling weren’t completely legal.

So, the tools that were needed to care for the plants, increase yields and mitigate pests, I found ways to supply those products to growers. Those businesses—the hydroponic (cultivation) stores specifically—became training grounds for knowledge.

People could come in and buy supplies and talk about genetics, methodology, things that were successful or weren’t successful.

That really became a breeding ground for my knowledge. The common thread was knowledge and technical expertise in an industry that really couldn’t share it publicly.

What were some of the obstacles when building and exiting each of those companies?

Creating processes and finding passionate people that care about the business and the product are big obstacles for us. Just learning how to do business in the trenches, not

being formally trained. I think those are probably three of the largest obstacles: people, process and learning through trial and error.

Persistence was a huge (asset). I think the biggest reason businesses fail is because people quit.

You see a lot of businesses where they start out as a cardboard manufacturer and end up being a print company.

If failure’s not an option, sometimes you have to make a left turn, sometimes you have to make a right turn, but you just keep moving until you figure stuff out.

What was the trickiest part about exiting for you?

The legal side is probably one of the most difficult things—and it’s mostly underestimated by people who haven’t experienced exiting. The cost and the resources you need to do that successfully is definitely one of the largest hurdles in exiting.

I underestimated the amount of contractual diligence that would be required to sell. It’s also really easy to not have the right contract and end up costing yourself a tremendous amount of money, even after close, because there are invocations and all these things that can be pulled back if the diligence isn’t done correctly.

How long does exiting take?

My first major deal (with Scott’s Miracle-Gro in 2015) was a year and a half from the start of “the dance” to closing that deal. That was my first major exit.

Fast forward to the GrowBiz deal, I had offers from GrowGeneration over four years and always turned them down. It wasn’t until this last interaction

(in 2020) that myself and my partners were ready. They made the right offer (and) that was probably about six to seven months to close.

Ag Natural was a much simpler deal. That was just a couple months from the time I decided to sell it. But it was somebody I knew, a private party, who already had a hydro store and understood the business very clearly. It was a friendlier and more knowledgeable, strategic deal.

At the time, it was incredibly large for me. I made seven figures. But in complexity and size, it was a speck compared to the deal (with Scott’s).

What advice do you have for others when exiting a startup?

Run your business first. Take care of your customers, your employees and your vendors. That’s first and foremost.

Without that, there’ll never be a good exit.

I think a lot of operators get distracted with trying to sell their business rather than trying to run their business, because they’re trying to sell it instead of trying to optimize. Get operating. Everything takes time, so the sooner you start, the sooner you’ll start creating value.

Don’t underestimate the value in people and team members. And really be prudent in bringing people in that fit the culture, that have desires that are similar to the mission of the business.

Build a dynamic team that will fight for the wins and never give up. That’s super important.

Clean, accurate data, that’s an area I learned quickly early on. Keep good records: contractual, financial, legal. Take the time to do it up front so you’re not taking time, looking back, to clean it up when you’re in the middle of a deal, because it’ll cost you time, energy and money.

The cleaner your financials, sales history and contracts, the easier it will be to point out your strengths while negotiating and back them up. That’s really important in a deal.

The most important is to actually have fun and enjoy the chase. Looking back, my favorite memories are from the journey, not the exit. Though the wins feel really good, it’s important to enjoy the adventure. Some of the hardest times can be some of the most fun times.

This interview has been edited for length and clarity.

John Schroyer is a reporter for MJBizDaily and MJBizMagazine. You can reach him at john.schroyer@ mjbizdaily.com.

August 2021 | mjbizdaily.com

11

HempNotebook | Kristen Nichols

Cannabis v. Cannabis Incessant marijuana-versus-hemp bickering on the West Coast is a warning for all

T

he message looked like a typical drug war-era political appeal, warning recipients in bold and capital letters that cannabinoids would find their way into the hands of children if they didn’t act now.

Only this email didn’t come from cannabis opponents. It came from legal marijuana operators in California and was sent to a colleague here at MJBiz. The senders said a state bill to allow CBD in foods and drinks amounted to “AN ASSSAULT ON THE LEGAL CANNABIS INDUSTRY.” Never mind that hemp is cannabis, just a low-THC version.

Golden State Turf War This email underscored what I see happening not just in California but across the nation: unnecessary battle lines drawn because one version of the plant is ridiculously overregulated while other varieties could use some basic health-and-safety oversight.

I’m afraid California’s infighting does not bode well for the cannabis industry at any THC level. The Golden State turf war has left this pioneering market without sensible CBD regulation for years now—and as of press time, California seemed tottering toward another year without compromise.

California is left with spotty enforcement of CBD policy while illicit sales channels meet demand. Meanwhile, consumers and legal hemp and marijuana businesses pay the price.

Not Just California It’s tempting to consider California an isolated head-scratcher.

But similar concerns are bubbling up in Washington state, an even older legal market for recreational marijuana.

Longtime marijuana farmers fear that

12 MJBizMagazine | August 2021

a glut of cheap CBD is being converted into intoxicating THC, undercutting regulated, tax-paying marijuana operators.

Some are calling for a new law banning dispensaries from selling any hemp-derived products that have been manipulated in a lab, though it’s a mystery how such a law would work.

East Coast is Next I’d wager the cannabis infighting won’t stop at the West Coast. And it might be worse in the East, where legal hemp businesses are often older than legal marijuana outfits.

Take New York: That state recently authorized recreational marijuana, more than two years after the state established a regulated hemp industry.

Understandably, many New York hemp entrepreneurs envision business plans on the high-THC side of cannabis. But those same entrepreneurs might be shocked at how high-THC cannabis is regulated and taxed.

I suspect conflicts will inevitably arise as New York hemp operators see the red tape and crushing tax burden of doing business in marijuana.

And in North Carolina, where CBDonly dispensaries flourish, hemp retailers already are talking about pivoting to sell marijuana when the law allows.

One CBD retailer told a local newspaper that he might move some business locations to account for zoning changes when recreational marijuana can be sold.

I bitterly laughed. That poor guy can only imagine the tsunami of regulations—zoning and otherwise—likely headed his way.

The Real Enemy A unified cannabis industry can solve these challenges.

Business owners need to push for regulators to stop separating low- and high-THC cannabis. It only sets up incentives to cut corners.

Let’s also push for lower taxes and an easy-to-follow regime of safety protocols for cannabinoid producers. No offense to the many fine compliance consultants in cannabis, but this plant is not so dangerous that folks growing and selling it should require legal and compliance degrees to do business.

And let’s free hemp producers working in grain and fiber products from overregulation and start treating those food producers more like potato farmers and less like pharmaceutical giants.

A unified cannabis industry across the THC spectrum can make this happen. Stop fighting each other and work instead toward a cannabis industry with less red tape while preserving essential health safeguards.

Kristen Nichols is editor of Hemp Industry Daily. She can be reached at kristen.nichols@ hempindustrydaily.com.

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CompanyNews | U.S., Canada & International

U . S . D E V E LO PM E N T S

By MJBizDaily and Hemp Industry Daily staff

Recent deals, acquisitions and other announcements from cannabis companies

Vireo Health Changes Name, Moves Into Psychedelics

Weedmaps Joins Nasdaq With $579 Million Infusion Cannabis advertising platform Weedmaps started trading on the Nasdaq on June 16 after completing its merger with special purpose acquisition company Silver Spike Acquisition Corp.

The transaction brought California-based Weedmaps, a leading but sometimes controversial online marketplace for cannabis consumers and businesses, $579 million in gross proceeds, according to a news release.

In connection with the closing of the deal, Silver Spike changed its name to WM Technology.

Cannabis SPAC Seeks to Raise $100 Million in IPO Northern Lights Acquisition Corp., a special purpose acquisition company (SPAC) focusing on the cannabis industry, is trying to raise $100 million for acquisitions and other business combinations by going public, according to a registration statement and preliminary prospectus filed with the U.S. Securities and Exchange Commission.

Northern Lights intends to issue 10 million units at $10 per unit through the IPO. Each unit includes one common share and half of a redeemable warrant. Full warrants can be exercised to purchase one common share at $11.50 per share. An over-allotment option would allow the underwriters to purchase up to 1.5 million more units.

The SPAC said it has applied to list its units, common shares and warrants on the Nasdaq Capital Market.

The Denver-based blank-check company was formed in Delaware in February.

Hydroponics Firm Buys Nutrient Business for $161M Marijuana hydroponics equipment and supplies company Hydrofarm Holdings Group struck a deal to acquire organic nutrient and grow media company Aurora Innovations for $161 million.

Fairless, Pennsylvania-based Hydrofarm said it will bankroll the deal using a combination of cash and approximately $26 million in stock.

Along with Aurora Innovations, the acquisition includes Aurora International and Gotham Properties, all based in Eugene, Oregon. The companies manufacture and supply organic hydroponic products including grow media and nutrients.

14 MJBiz Magazine | August 2021

Minneapolis-based multistate marijuana operator Vireo Health made two strategic moves on June 8, announcing a name change to Goodness Growth Holdings and an expansion into psychedelics.

Vireo will remain the flagship brand of the company’s medical products, according to a news release.

Entering the psychedelics market will fall under the company’s science and intellectual property incubator, Resurgent Biosciences.

Company Chair and CEO Kyle Kingsley told MJBizDaily that psychedelics have “the potential to transform psychiatric medicine.”

Cronos Inks Deal to Buy PharmaCann Stake for $110M A subsidiary of Toronto-based Cronos Group has an option to acquire approximately 10.5% of Chicago-based PharmaCann, a privately held cannabis company in the United States, for $110.4 million.

The sum was deposited by Cronos via a third-party agent to be distributed to PharmaCann shareholders, according to a news release.

Marijuana MSO PharmaCann Completes $85M Debt Offering Multistate marijuana operator PharmaCann has completed a private debt offering of $85 million in senior secured notes at a 12% interest rate.

The company said net proceeds from the offering were approximately $79.9 million, which “will be used for strategic growth opportunities and general corporate purposes.”

PharmaCann did not identify who purchased the notes but described the buyers as “leading U.S. and Canadian lenders” in a news release. The notes are due June 30, 2025.

Australis Capital Is Now Audacious Brands Marijuana operator Australis Capital will now do business as Audacious Brands. The Las Vegas-based company, which trades on the Canadian Securities Exchange and on U.S. over-the-counter markets, will consolidate its brands under the new moniker and is planning an acquisition spree, according to a news release.

Greenrose to Delist From Nasdaq, Trade on OTC Markets Cannabis industry special purpose acquisition company Greenrose Acquisition said it will delist its shares

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The move comes nearly three months after New Yorkbased Greenrose announced deals to acquire four cannabis businesses in seven states, which will turn the blankcheck company into a multistate marijuana operator.

“The reason for the delisting is that upon closing of its previously announced business combinations, Greenrose expects to become a U.S. cannabis company with plant-touching operations and would no longer be in compliance with Nasdaq rules,” Greenrose said in a news release.

Texas MMJ Operator Raises $21 Million in Equity Funding Austin-based Texas Original Compassionate Cultivation secured $21 million in funding to boost medical marijuana production and delivery. The funding comes on the heels of a measure passed by state lawmakers that expands the state’s MMJ program by modestly raising the THC limit to 1% by weight and adding cancer and post-traumatic stress disorder (PTSD) to the list of qualifying medical conditions.

16 MJBiz Magazine | August 2021

The Series B funding comes from AFI Capital Partners, a Seattle-based equity fund focused on early-stage and next-level investments in potentially high-growth cannabis markets.

Leafly Seeks Up to $30M in Securities Offering Seattle-based Leafly, an online marijuana guide and cannabis news website, is planning to raise up to $30 million in a securities offering that includes debt, convertible debt and options to acquire securities, according to a filing with the U.S. Securities and Exchange Commission. The filing does not specify the purpose of the $30 million raise.

Nabis Completes $23 Million Funding Round California cannabis distributor Nabis said it raised $23 million in a Series B fundraising round in a quest to expand daily operations and the company’s online wholesaling platform.

The San Francisco-based company said the funds would be put toward expanding its Nabis Marketplace, a wholesale portal for retailers and brands.

Investors in the Series B funding included Artemis Growth Partners, FJ Labs, Liquid 2 Ventures, Silverleaf Venture Partners and DoorDash co-founder Stanley Tang, the company noted.

Columbia Care to Buy Medicine Man for $42 Million New York-based multistate operator Columbia Care agreed to acquire Medicine Man, a vertically integrated marijuana grower and retailer in Denver, in a cash-andstock deal worth $42 million.

According to a news release, the transaction will deliver Medicine Man’s four retail shops and a 35,000-square-foot cultivation facility for $8.4 million in cash and $33.6 million in stock.

Medicine Man is not affiliated with Medicine Man Technologies. The latter company rebranded as Schwazze in 2020 and ended its affiliation as the consulting arm of Medicine Man.

Cannabis Firms Owe for Massachusetts Settlements Marijuana companies Tilt Holdings and a subsidiary of Ayr Wellness are paying $275,000 and $295,000, respectively, to the Massachusetts Cannabis Control

Commission to settle separate allegations of regulatory infractions.

The Tilt settlement involved allegations that between 2016 and 2018 the company’s former parent, Sea Hunter Therapeutics, used subsidiaries to control five medical marijuana treatment centers when it was allowed to control only three.

The Massachusetts subsidiary of Toronto-based Ayr Wellness, Sira Naturals, was alleged to have allowed an unlicensed transport service called Stalk & Beans to deliver cannabis products for unaffiliated businesses under Sira’s license. On top of the $295,000 fine, one of Sira Naturals’ Massachusetts licenses is subject to a one-year probationary period.

Kadenwood Completes $30M Capital Raise Kadenwood, a CBD consumer packaged goods company, completed a $30 million cash Series B capital raise and will use the money to buy advertising and acquire more companies.

The privately held business in Newport Beach, California, says the raise also includes a $20 million media campaign

August 2021 | mjbizdaily.com

17

CompanyNews | U.S., Canada & International to raise brand awareness, bringing the total value to $50 million. Arcadian Capital Management and The Craftory led the Series B fundraising round.

Slang Buys Vermont Firm

CAN ADA DE V E LO PME N T S

Toronto-based cannabis company Slang Worldwide announced an agreement to acquire High Fidelity, a vertically integrated Vermont marijuana company, in a deal worth at least $17.25 million.

Pyxus International Sells Canadian Cannabis Subsidiaries U.S. tobacco company Pyxus International sold off its Canadian cannabis subsidiaries, according to court filings. Sale prices were not disclosed.

North Carolina-based Pyxus announced in January that it was divesting its Canadian assets, including Canada’s Island Garden, Figr Brands and Figr Norfolk, after filing for bankruptcy protection in June 2020.

Figr Brands and Canada’s Island Garden are being acquired by a group of Prince Edward Island investors, according to local reports. Figr Norfolk, which is located in Ontario, is being purchased by a different company and will not keep the Figr name.

TGOD to Sell Greenhouse in Quebec at a Loss

I N T ' L DE V ELO PMEN T S

Canadian cannabis company The Green Organic Dutchman Holdings (TGOD) entered into an agreement

The transaction includes $3 million in cash and $12 million in Slang shares at closing, according to a public relations representative for Slang.

A year and a half after the merger closes, Slang will pay another $250,000 worth of shares and $2 million in cash. Further, Slang shares worth as much as $8 million may be issued if certain undisclosed performance milestones are met, bringing the potential price tag of the transaction to more than $25 million.

to sell its greenhouse in Salaberry-de-Valleyfield, Quebec, for substantially less than the project’s total cost.

The Mississauga, Ontario-headquartered company agreed to sell the greenhouse for $22.2 million to Cannara Biotech, another cannabis producer. TGOD is estimated to have spent about $200 million on the property. The company plans to use the proceeds of the sale to eliminate its senior term debt.

WeedMD Cuts Back Outdoor Cannabis Output Canadian cannabis producer WeedMD has significantly reduced outdoor cultivation at its facility in Strathroy, Ontario, turning this year’s open-air production into a research crop that won’t be sold to consumers.

In a May 31 earnings conference call, WeedMD CEO George Scorsis said the decision to reduce outdoor production was in part linked to the company’s recently announced acquisition of indoor cultivator CannTx in an all-stock transaction.

“Considering the high-value, high-margin, grade-A product that we’re seeing in our greenhouses and now the indoor craft grow from CannTx, it simply does not make commercial sense for us to plant 27 acres outside,” Scorsis said on the call.

The company is “actively marketing the facility for alternative use,” according to a spokesperson. Shares of Aurora trade on the Toronto Stock Exchange and the New York Stock Exchange.

Aurora Won’t Renew Its Contract for Recreational Marijuana in Uruguay Aurora Cannabis decided not to renew a contract to produce recreational marijuana in Uruguay to refocus on higher-margin medical cannabis and CBD products.

18 MJBiz Magazine | August 2021

Have a company announcement you want us to consider? Send a news release or general information to omar.sacirbey@mjbizdaily.com.

(Note: We’re looking for news about expansions, financing, mergers and acquisitions, partnerships and similar developments, not product-related announcements.)

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IndustryDevelopments | International & State MAP LEGEND High level of medical development/implementation Medium level of medical development/implementation Low level of medical development/implementation Other - federally illegal but unique circumstances Recreational

Countries included have passed legislation at the federal level and must fulfill at least one of the following criteria: • Cultivation, manufacture or sale of medical and/or recreational cannabis allowed.

• Doctors can prescribe medical cannabis.

• Import and/or export of medical cannabis allowed.

High: Countries at the forefront of the global industry.

Frameworks are established, and adoption is well underway.

Medium: Implementation has begun but is still limited or restricted; lots of room for the market to develop.

Low: Legislation has been passed, but implementation is very limited or nonexistent. Decriminalization is not included.

National & International News Cannabis Markets Likely Grew Because of Pandemic, UN Says A new report by the United Nations Office on Drugs and Crime says the coronavirus pandemic created circumstances that likely caused cannabis markets in some parts of the world to expand faster than they otherwise would have, particularly in high-income countries.

“Large, multibillion-dollar businesses, which have a private interest in the expansion of the cannabis use market, are moving into the market in the jurisdictions where cannabis has been legalized,” according tothe report.

The U.N. body cites a global survey conducted last year that found cannabis consumption was perceived to have increased in approximately 32 countries.

22 MJBizMagazine | August 2021

The report notes that “COVID-19 may have accelerated the preexisting trends towards increased use and availability of cannabis in some high-income countries as some people have turned to the drug to alleviate stress or manage boredom brought on by stay-at-home orders.”

Cannabis Retailers Ease COVID-19 Restrictions As the United States emerges from the coronavirus pandemic, cannabis retailers are adjusting protocols for customer-mandated mask-wearing, social distancing and other requirements.

Many shops still have signage posted asking customers—particularly those who haven’t been

© 2021 MJBizDaily, a division of Anne Holland Ventures. All rights reserved.

Data is current as of July 7, 2021.

vaccinated—to wear masks or adhere to other COVID-19 protocols.

But plenty of retailers dropped such requirements as states and cities eased their coronavirus-related guidelines for businesses. Meanwhile, new variants of the coronavirus have been identified, including some that are more contagious.

Mexico Supreme Court Decriminalizes Marijuana A June 28 ruling by the Mexican Supreme Court allows adults to grow and consume marijuana. The watershed decision authorizes adult-use marijuana even before regulations for the market have been settled.

The ruling also opens immediate opportunities for ancillary cannabis operators to serve recreational marijuana users, said Adrián Cisneros Aguilar, an attorney in Mexico City and Los Angeles for the Harris Bricken firm who also teaches law and business at Universidad Anáhuac.

“Consumers can access marijuana, (but) who is going to give them seeds? Who is going to help them care for these plants? Who is going to give them supplies to consume their plants? Companies need to be ready to meet these needs, from seeds to tools to accessories,” he told Hemp Industry Daily.

Mexico’s national health agency was ordered to develop rules for granting permits to recreational cannabis users and charting a plan for them to acquire seeds and the like.

August 2021 | mjbizdaily.com 23

IndustryDevelopments | International & State WA MT

VT

ND

OR

NH

ME

MN ID

SD

MI

WY

UT

CA

AZ

MO

OK

VA

KY

DC

NC

TN AR

SC MS

TX

NJ

CT

DE MD

WV

KS

NM

OH

IN

IL

CO

RI PA

IA

NE

NV

MA

NY

WI

AL

GA

LA FL

AK

■ Medical ■ Recreational HI

Note: This map does not include states that have legalized only CBD-based oils.

State News

© 2021 MJBizDaily, a division of Anne Holland Ventures. All rights reserved.

Data is current as of July 7, 2021.

Arizona State marijuana retailers have issued a voluntary recall for eight products after the discovery by Arizona regulators that some of the merchandise might have been contaminated with salmonella or a type of mold called aspergillus. The Arizona Department of Health Services told media outlets it’s working with cannabis companies to notify consumers of the recalls and to examine how the tainted products were able to make it onto store shelves. The products had been tested by a third-party lab and cleared for sale.

California State lawmakers approved a sweeping budget bill that makes several major changes to California’s cannabis regulatory system, including an extension of the provisional licensing program. The bill: • Consolidates the three current regulatory agencies into a single agency, the new Department of Cannabis Control.

• Allows provisional permits to be renewed until Jan. 1, 2025.

• Allows for trade samples of marijuana products to be shared among businesses free of charge.

When lawmakers reconvene this month, they are expected to pass at least one more marijuana-related bill.

24 MJBizMagazine | August 2021

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IndustryDevelopments | International & State Colorado The state health department will require that edible hemp products be tested for contaminants, including 106 pesticides, by Oct. 1. Regulated marijuana, by contrast, must be tested for 13 pesticides. The changes include a new requirement that hemp products carry labels listing total cannabinoid content in the package, including THC, in milligrams. Previously, hemp product labels didn’t have to mention THC as long as the finished item was less than 0.3% THC. Separately, Colorado medical marijuana dispensaries will be required to limit patients’ purchases of cannabis concentrates and younger patients will have less access to MMJ under a new state law that goes into effect Jan. 1, 2022.

Connecticut Gov. Ned Lamont signed a bill making Connecticut the latest state to legalize recreational marijuana. Sales are expected to begin as early as May 2022. The bill contains potency caps for both flower (30% THC) and concentrates (60% THC).

The bill also provides a new landmark social equity policy that will reserve half the state’s marijuana business permits for people in communities most affected by the war on drugs.

Florida The state Supreme Court torpedoed a second attempt by activists seeking to get an initiative to legalize recreational cannabis on the state’s 2022 ballot, ruling that a proposed measure was “misleading.” The court ruled 5-2 that the summary of the measure was unclear, thus barring the initiative from consideration for the statewide ballot. The rulings—and the fact that recreational cannabis backers would have to start from scratch to get a measure before voters in 2022—mean the chances of state adult-use legalization happening anytime soon are quickly narrowing.

Kentucky A hemp and tobacco farm was sanctioned by federal authorities for shortchanging 46 temporary agricultural workers. Hemp farmer David Hunt of Campbellsville agreed to pay more than $36,000 in fines and back pay to the U.S. Department of Labor. Federal authorities say the Hunt Farm abused the H-2A temporary agricultural workers program. He is banned from participation in the H-2A program for three years. According to the Department of Labor, Hunt failed to meet legal requirements including: • Paying prevailing wages.

• Offering at least three-fourths the hours promised in the workers’ contracts.

• Reimbursing workers for travel expenses they incurred returning to their home countries.

Louisiana The state Legislature passed a measure that will allow smokable flower beginning Jan. 1, 2022. Louisiana’s roughly 5,000 medical cannabis patients will be allowed to purchase up to 2½ ounces of smokable marijuana every 14 days, according to the measure. The state has nine dispensaries, called medical marijuana pharmacies.

26 MJBizMagazine | August 2021

Massachusetts State regulators are extending curbside pickup of marijuana and telehealth consultations for medical cannabis patients until Sept. 1. To ensure safety during the pandemic, Massachusetts regulators permitted cannabis retailers to implement curbside sales, where customers could place orders via phone or online and then pick up their purchases in front of stores. Separately, dozens of delivery license applications have been submitted, the Massachusetts Cannabis Control Commission chief said.

Michigan U.S. District Judge Bernard Friedman granted an injunction to temporarily halt the processing of recreational cannabis applications in Detroit, saying the ordinance “gives an unfair, irrational and likely unconstitutional advantage to long-term Detroit residents over all other applicants.” The city intended to issue as many as 75 retail licenses, 35 consumption lounge permits and 35 microbusiness licenses, with at least 50% of the licenses earmarked for residents who have lived in the city 10-14 of the past 30 years in addition to other conditions. Additionally, the state House passed legislation to close a gap in Michigan marijuana law that has allowed untested, hemp-derived products to be sold.

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IndustryDevelopments | International & State Minnesota Federal authorities approved the state’s revised hemp regulations, giving growers new remediation options and testing flexibility. The revised plan doubles the testing window from 15 days before harvest to 30 days before harvest. It also allows changes to THC testing protocols to allow hemp producers with two years of compliant test results to shift to random sampling. Minnesota farmers will be allowed to use hot hemp as biomass, provided the shredded material doesn’t exceed 0.3% THC.

Missouri A federal judge in Missouri ruled in favor of a Pennsylvania investor who sued the state’s medical cannabis regulators over a residency requirement for MMJ business owners. The Missouri rule required that medical marijuana businesses be at least 51% owned by state residents, defined as those who had lived in Missouri for at least one year. U.S. District Judge Nanette K. Laughrey granted a preliminary injunction against the rule, saying “it was unclear how Missouri’s policies accomplished their purported goal of keeping medical cannabis from being trafficked out of state.”

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Montana A legal challenge to voter-approved adult-use marijuana legalization in Montana has been dropped in the wake of the state Legislature weakening the measure. Key business aspects of the weaker measure passed by lawmakers and signed by Gov. Greg Gianforte include: • A 35% THC potency cap for flower.

• Edibles potency caps.

• A longer, 18-month head start for existing medical cannabis operators over industry newcomers.

The market launch now is scheduled for Jan. 1, 2022, instead of Oct. 1, 2021.

Nevada Federal authorities approved Nevada’s revised plan to regulate hemp. The approved plan calls for total THC testing and for all plots to be sampled and tested at the Nevada Department of Agriculture lab, which is registered with the U.S. Drug Enforcement Administration. Farmers whose hemp tests above the limit will be allowed to follow the new, loosened guidelines for disposal, such as burning or composting.

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IndustryDevelopments | International & State New Jersey Four marijuana companies are coming under fire from the state attorney general’s office for giving away cannabis to customers who buy other items such as snacks or baked goods. Attorney General Gurbir Grewal and the Division of Consumer Affairs issued cease-and-desist orders to four businesses across the state for the practice known as “gifting.” Each misrepresentation in the sale or advertising of merchandise is a separate violation, and violators may be fined $10,000 for the first violation and $20,000 for each subsequent infraction.

Ohio The State Medical Board of Ohio added three additional illnesses to its list of qualifying conditions for medical marijuana: • Huntington’s disease.

• Terminal illness.

• Spasticity.

Would-be medical marijuana patients in Ohio must have one of the qualifying conditions and receive a recommendation from a board-certified physician. The board rejected petitions to add several other medical conditions to the list: autism spectrum disorder, restless leg syndrome, panic disorder with agoraphobia and spasms. There are now 25 qualifying conditions that can be treated with medical marijuana in Ohio.

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Oklahoma U.S. District Court Judge Stephen Friot threw out a lawsuit filed by a Washington state marijuana company seeking to challenge Oklahoma’s residency requirement.

Friot did not rule on the merits of the residency requirement, saying he wouldn’t help the plaintiff—Original Investments, doing business as Dank’s Wonder Emporium—violate federal law by enabling the company to sell more marijuana.

Separately, LaRue Bratcher is awaiting trial after he shot and killed a man who was allegedly trying to break into his cultivation facility in Oklahoma City last year.

Oklahoma has a “stand your ground” law, but authorities say it doesn’t apply to this case because Bratcher was running the grow operation with an expired permit.

Oregon We CBD, a hemp producer in Sandy, Oregon, is suing for the return of more than 3,000 pounds of hemp. U.S. Customs and Border Protection officials say the company was flying marijuana, not hemp, to Switzerland last year and that the biomass should be destroyed. Federal officials insist the company was potentially committing fraud while attempting to smuggle drugs out of the U.S. The agency filed a motion in federal court in North Carolina to dismiss We CBD’s lawsuit, arguing most of the plants tested above the federally legal THC limit.

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August 2021 | mjbizdaily.com 31

IndustryDevelopments | International & State Pennsylvania Changes to the state’s medical marijuana laws will allow patients to purchase three times more cannabis in one visit, which could boost sales for dispensaries.

Gov. Tom Wolf signed into law House Bill 1024, which also impacts producers and processors by: • Making it easier for them to remove contaminants such as yeast and mold from MMJ. • Allowing them to turn that contaminated cannabis into topicals but not inhaled or ingested products.

Rhode Island The upper chamber of the Rhode Island General Assembly approved a bill to legalize recreational cannabis. The measure must get final approval from the state House of Representatives before it can be sent to the governor. Some observers are expecting a special legislative session to be called so lawmakers can finalize legalization.

32 MJBizMagazine | August 2021

South Dakota The state health department released a preliminary list of conditions for which medical marijuana can be recommended, and several could drive significant business to the state’s dispensaries. The preliminary list includes: • Cancer associated with severe or chronic pain, nausea or severe vomiting, or cachexia or severe wasting.

• Amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig’s disease.

• Post-traumatic stress disorder (PTSD).

• Glaucoma.

• Epilepsy and seizures.

• HIV/AIDS • Multiple sclerosis.

• Crohn’s disease.

The state’s medical marijuana program took effect July 1, with market launch expected in summer 2022.

Texas Gov. Greg Abbott signed into law legislation that will slightly expand the state’s restrictive medical marijuana program to make MMJ available to additional patients and allow for marginally more THC in regulated medicinal cannabis products. House Bill 1535 will take effect Sept. 1. The new law permits the use of low-THC marijuana for patients with post-traumatic stress disorder as well as any form of cancer, instead of only terminal cancer. The law will also raise the THC cap on regulated MMJ in Texas from 0.5% to 1%. Separately, Texas officials want to enforce a ban on smokable hemp that has been on hold since September.

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IndustryDevelopments | International & State Vermont Gov. Phil Scott signed a bill into law to establish a fund to help people of color and others impacted by the war on drugs to open licensed cannabis companies.

Senate Bill 25 sets aside $500,000 from the state coffers to establish a marijuana business-development fund that is slated to provide financial assistance, loans, grants and outreach to social equity business applicants. The new law also: • Establishes regulations for how marijuana retailers can market their products.

• Gives municipalities control over whether they allow marijuana stores.

• Sets aside a portion of tax revenue for substance-abuse prevention programs.

• Requires store owners to buy 25% of their cannabis flower from licensed small cultivators.

Virginia A government watchdog group is recommending the state move up the timeline for implementing a recreational marijuana market. The Joint Legislative Audit and Review Commission issued a report suggesting that the Virginia Cannabis Control Authority, a new state agency, start accepting cannabis retail applications and implementing the program at the beginning of 2023 rather than July 2023. Adultuse marijuana sales in Virginia currently are scheduled to begin Jan. 1, 2024. The report also recommends that the regulatory agency set limits on some cannabis products such as vapes and edibles.

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34 MJBizMagazine | August 2021

Washington state Marijuana growers are concerned that, without a change to state laws, their businesses could be severely hamstrung by federally legal hemp. At issue is hempderived CBD being converted into delta-8 THC—and even delta-9 THC, the molecule more commonly found in marijuana—then sold as licensed, regulated marijuana products. But according to the Washington State Liquor and Cannabis Board, only plants defined as marijuana and grown by licensed producers can be sold in MJ retail stores, meaning hemp-derived products have been banned in Washington since the state legalized a marijuana market.

Wisconsin State lawmakers are scrambling to replace funding after a decline in hemp farming led to reduced income from registration fees. Hemp-growing registrations in Wisconsin fell by 48% for the 2021 growing season—a drop so precipitous that a fund to help cover the cost of regulating hemp producers is running a deficit. The state’s Legislative Fiscal Bureau warned that without increased funding, hemp testing could be delayed from four days to 10 to 45 days, while testing for pesticide drift and misuse could be delayed by an average of 60 to 120 days.

Note: Entries sourced from MJBizDaily, Hemp Industry Daily and other international, national and local news outlets.

These developments occurred before this magazine’s publication deadline, so some situations may have changed.

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38 MJBizMagazine | August 2021

Business Under Fire Cannabis companies save energy and water, sequester carbon and employ regenerative farming techniques to fight global warming

The cannabis industry—particularly the cultivation sector—is both a contributor to and a victim of climate change. Cannabis can also be part of the solution by acknowledging the challenge and employing a variety of tactics tailored for both outdoor and indoor cultivation. Businesses looking to lessen their environmental footprint should consider: • Indoor cannabis cultivation is a major energy user. Indoor growers can reduce their carbon footprints with combined heat and power cogeneration units, which produce cleaner and more efficient energy than power from the utility grid.

• Other ultra-efficient equipment that indoor cultivators can use to reduce their carbon footprints include solar panels, LED lights, evaporative chillers and free-fluid coolers.

• Cultivators in Western states can help guard against wildfires caused by climate change by clearing brush and combustible debris near their facilities, creating fire barriers and investing in equipment such as firehoses, shovels and boots for employees.

• Cultivators in other parts of the country increasingly face hurricanes, flooding and tornadoes, which have made it incumbent on operators to have measures to evacuate employees and plants to safety as well as protect facilities from high winds.

• Drought is a growing problem for cultivators, especially outdoor farmers. Water shortages can be averted by having water-catchment systems in place and by using growing techniques that help soil retain water more efficiently.

• Regenerative farming that seeks to develop closed-loop systems arguably creates the smallest carbon footprint of any growing system and could even reverse climate change by sequestering carbon into the soil, advocates say.

• Cannabis businesses can also join the fight against climate change by buying and selling carbon offsets.

• While there are no recent studies about whether cannabis consumers are willing to pay the premium price that sustainably grown cannabis can sometimes command, studies show there is a significant and growing demand for sustainable mainstream products.

August 2021 | mjbizdaily.com 39

Alex Pounds, cultivation manager at Lowd in Portland, Oregon, transfers rooted clones to char coir coco cubes. Courtesy Photo

Adapting

to

Extreme

Weather Cannabis cultivators detail their plans to combat the effects of climate change

By Bart Schaneman

40 MJBizMagazine | August 2021

Hava Gardens removed vegetation near its cultivation facility to combat wildfires.

Courtesy Photo

F

rom wildfires to drought to hurricanes, a changing climate means more extreme weather for cannabis companies up and down the supply chain. But no one is more directly impacted by these changes than marijuana growers.

Depending on where a grow operation is located, the challenge that climate change presents is different.

“There isn’t a single region that isn’t experiencing something,” said Ben Gelt, chair of the Cannabis Certification Council, which has a focus on sustainability efforts for marijuana businesses.

“The writing is on the wall that we’re going to have to change some of our methods.”

But one common bit of advice is true for all cultivators: Be prepared for the unexpected, including unseasonably warm weather, stronger wildfires and more powerful tropical storms.

Battling Wildfires

Outdoor growers in the American West—including California, Oregon and Washington state—are contending with a longer wildfire season.

“Folks are navigating wildfires that are starting earlier and lasting longer,” Gelt said. “It is very difficult for them to truly adapt without relocation.”

Growers in California or other legacy growing regions can’t easily move their operations to another area or start growing indoors. But there are several ways growers can protect their farms from a devastating fire. A few key areas to consider: • Use a tractor to scrape away brush and cut a fire line around the property.

• Remove any native grasses or tree limbs that could help the blaze spread.

• Employees should be prepared with proper boots, shovels and water tanks in vehicles to stop smaller burns.

• Irrigation systems should be designed to also protect the property from fire, if needed.

Blair Kralick, chief operations officer of cannabis cultivator Hava Gardens on the Western Slope of Colorado, said the farm was right in the middle of two large wildfires last year.

To adjust, the team removed vegetation around the facility during the fire season to eliminate potential fuel sources, and employees tried to mitigate any risk on the property.

“Things can get out of control when it comes to wildfires,” Kralick said. “That’s our biggest concern.”

Scott Berka, owner of cannabis producer and processor Aloha Botanics in Washington state’s Okanogan County, created a 50-75-foot green barrier all around his property. He seeded that swath with cover crops. Common cover crops include clover, fescue and rye.

He can also use a tractor and a 4-inch swamp pump to pull water out of the river, if necessary, to fight a blaze. He keeps firehoses at each grow site as a precaution.

Having a generator is a must if growing in any region where the power company might shut off the electricity as a precaution. High winds during a dry spell, for example, might cause the power company to cut the juice so downed power lines don’t spark dry plant material.

Although this is more of a concern in Northern California, Chris Boucher, CEO of Farmtiva, a hempseed breeder in Santa Ysabel, California, said he’s concerned the power companies in Southern California will start shutting off power for the same reasons.

In a region such as Southern California, where most cannabis is grown indoors or in greenhouses, a few days without power

will cook the plants, Boucher said. That’s where a generator is a must.

Depending on the weather and time of year, Boucher said, “In a sense, you’re more worried about the power getting shut off than a wildfire.”

The wider-reaching effects of these megafires can also impact most cultivators in less direct ways.

Large-scale wildfires send plumes of smoke into the air that block out direct sunlight, resulting in stunted plant growth, lower yields and reduced cannabinoid and terpene production.

The smoke, along with airborne ash, can also blanket plants, ruining flower for retail sale and consumption.

To protect sun-grown cannabis from falling ash, outdoor growers can use hoop houses and pull light deprivation cloths over plants.

As a precaution, Berka surrounds his property with tin fences and green screens to help keep out ash.

Hurricanes, Flooding, Tornadoes

In the southeast United States, markets with regulated cannabis operations such as Florida and Louisiana need to brace for hurricanes, which are steadily growing stronger, and the flooding that often accompanies them.

Chanda Macias operates medical marijuana cultivation and manufacturing company Ilera Holistic Healthcare in Baker, Louisiana.

The company’s “primary climate threats have always been flooding and hurricanes,” Macias wrote in an email to MJBizMagazine.

August 2021 | mjbizdaily.com 41

Business Under Fire

To prepare for those issues, her company has developed a detailed, multiphase emergency preparedness plan to address all three potential disaster challenges.

These include: • Prestorm shutdown procedures, which involve confirming employee contact information, initiating emergency response team protocol and releasing employees to get home and find shelter.

• Poststorm reentry procedures, which involve initiating employee contact, assessing the impact of both the storm and employees’ concerns as well as addressing immediate needs.

• Initiating the reentry and emergency response teams to conduct a pointby-point inspection of the facilities to determine damage.

Once the building is found to be safe and sound, the cultivation manager inspects grow rooms for damage and plant loss. The extraction and inventory managers conduct similar inspections of their own operations.

After that’s done, the executive team meets to discuss employees’ needs, provide an overall site assessment and mitigation plan and discuss timing for recovery and return to work. It also approves a recovery budget proposal and initiates a recovery plan.

Drought and Water Usage

As much of the American West experiences drought conditions this year, some growers are looking for ways to cut down on water use and make their operations as efficient as possible.

Julia Jacobson, CEO of Aster Farms, a cannabis cultivator in Upper Lake, California, has multiple water sources to draw from, including a well, an agricultural pond and rainwater.

She had her well tested this spring and discovered it could hold about 11 million gallons of water each year. To put that in perspective, Aster Farms used only about 750,000 gallons to irrigate an acre of cannabis last year. The farm’s cannabis

42 MJBizMagazine | August 2021

California-based Aster Farms uses straw mulch to cover the soil and hold in moisture.

Courtesy Photo

cultivation space is 50,000 square feet, and there are plans to expand to 120,000 square feet by the end of the year.

“We’re in good shape for expansion,” Jacobson said.

Of the three water sources, the well holds by far the most water. The ag pond, which is filled by diverting spring water during the allowed season, holds about 400,000 gallons, and the rainwater-catchment system is insignificant compared to the other two water-collection measures.

While it might sound as if Aster Farms has a lot of water sources, Jacobson is still paying attention to the drought.

“We’re concerned because if the drought continues at this pace, the well won’t be at 11 million gallons annually,” she said.

Driving around the region, Jacobson is reminded of the severity of the drought. For example, the water level at Lake Mendocino is lower than she’s ever seen it.

Jacobson believes cannabis cultivators have a responsibility to conserve as much water as possible. Illegal water diversion was a major issue in the legacy market before legalization, and if the legal operators want to set themselves apart, they need to practice ethical water use, she said.

Aster Farms uses straw mulch to cover the soil and hold in moisture; meanwhile, drip irrigation lines also reduce evaporation. Employees water at night, when it’s cooler, to prevent evaporation as well.

“If you’re being efficient in your (water) delivery, that’s the best you can do,” Jacobson said.

Proper maintenance is also important.

Drip lines and sprinkler heads clog with nutrients; making sure they are working properly helps with water usage.

Outdoor growers aren’t the only ones working to reduce water usage.

At Smokeys Cannabis Co. in Garden City, Colorado, Lead Cultivator Cody Hitchcock promotes his indoor cannabis grow’s ability to recapture water using a dehumidification system.

Hitchcock also uses large pots that have room for cover crops—including clover, fescue and buckwheat—to reduce evaporation.

“There’s minimal runoff, and all the water is used by the plants,” he said.

Jesce Horton, CEO of cannabis grower Lowd in Portland, Oregon, sees the environmental concerns around climate change as a looming threat. To combat water waste, he uses a waterreclamation system.

His dehumidifiers and air conditioners are connected to a system that recaptures water and routes it back to the company’s cold-water storage tank.

“Water availability and quality of water is always a concern of mine because it’s so important,” Horton said.

He tries to operate his grow with minimal runoff. In contrast to Hitchcock, Horton uses small pots with larger plants, creating a limited, concentrated root zone that helps save water.

Lowd is also in the process of designing a rainwater-catchment system.

“We’re making sure we’re part of the solution,” he said. “We have to be more environmentally conscious than the rest of the industries.

“We have got to focus on being a better industry and not just another industry.”

Bart Schaneman covers cultivation and extraction for MJBizDaily and MJBizMagazine. You can reach him at bart. schaneman@mjbiz.com.

Business Under Fire

Saving Water &

Sequestering Carbon California cannabis farm utilizes permaculture and regenerative farming techniques to reduce environmental footprint

By Omar Sacirbey

T

here’s no better way to cut carbon emissions in the cannabis industry than cultivating outdoors and relying on Mother Nature for essentials such as sunlight and water.

But even outdoor growers can do more to cut carbon emissions.

In “regenerative farming,” cultivators actually take carbon out of the atmosphere and put it into the soil.

One such regenerative farm is Flowerdaze in Trinity County, California. The 3-acre operation has about a quarter-acre dedicated to premium craft cannabis, according to the husband-and-wife proprietors, Jacob Johnson and Karla Avila.

“When you’re talking about climate change and reducing our carbon footprint in regenerative agriculture, we’re really trying to harvest the carbon from the atmosphere back into the soil. Rather than releasing it, we’re trying to put it back into the ground,” Johnson said.

Regenerative farming techniques include composting, raised garden beds known as hügelkultur, water-catchment systems and gravity-powered irrigation as well as using companion plants and farm animal manure to provide nutrients to the soil and enhance bioavailability.

While these practices help fight soil depletion and climate change, they are also beneficial for growers’ budgets, yields and bottom lines, Avila said.

The couple estimated that Flowerdaze

44 MJBizMagazine | August 2021

Karla Avila, owner of Flowerdaze in Northern California, uses regenerative farming practices.

Courtesy Photo

produces 2,000-3,000 pounds of cannabis annually. The crop is sold through a distributor, typically for $1,250-$1,500 per pound. And cultivation costs are very low because they have next to no operating costs: All soil inputs come from plants and animal manure already on the farm, and the owners have enough plants to produce seeds on demand.

“These are ways to ensure the longevity of your soil but are also just better for your budget. So, while you’re taking steps to positively impact climate change, you’re also positively impacting your farm production. It’s a win-win,” Avila said.

She cautioned: “It can seem overwhelming if you are at the beginning of a process to transition to regenerative practices, but I think that they are very friendly practices where, once you start applying them, you see the benefits right away.”

Soil Building

Avila and Johnson started cultivating marijuana seven years ago with a commitment to grow only in native soil.

“The soil testing is most important at the beginning, so that you have an idea of whether you have any serious deficiencies of nutrients or anything that

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Business Under Fire

is really going to affect your garden,” Johnson said. Based on the results, you then decide what kind of companion plants and animals are best suited for your farm.

“Often, the soil that you’re starting out with could have perfectly adequate amounts of all the minerals needed throughout the season. But if they’re not in an available format to the plants, if they’re not bioavailable, then they’re essentially locked up,” Avila said.

“Cover crops help make all of what is in your soil available to your plants. Then your plant can feed itself from the soil and select exactly what it needs at the time it needs it. … So you’re feeding the soil, and the plants are feeding themselves from what you’re providing in an optimal biological soil process. That’s what our ultimate goal is.”

The companion plants Avila and Johnson like to use include vetch, peas, oats and fava beans. Legumes are especially conducive as cover crop, Johnson said, because “they have little nodules that accumulate nitrogen. So, when you’re composting that back into your soil, you’re actually accumulating more carbon and more nitrogen into the soil that becomes available for your plants.”

Natural Ingredients

Other important elements in Flowerdaze’s soil-building are farm animals, hügelkultur and compost.

Animal manure is a rich source of nitrogen, phosphorus and potassium—elements that are especially critical during the flowering phase of plant growth, Johnson said. Their preferred manures are cow, chicken, rabbit and goat.

“Essentially, you’re going to be taking the manures of those animals, which are accumulated from the biomass, the foods that they eat on your land, and then that manure is composted into soil along with other organic matter that’s accumulated from your land,” Johnson said. “We don’t have any loss of carbon from that and instead are sequestering all the carbon.

That’s the ultimate goal: to take that

46 MJBizMagazine | August 2021

Karla Avila and Jacob Johnson are committed to farming cannabis on native soil. Courtesy Photo

“It can seem overwhelming if you are at the beginning of a process to transition to regenerative practices, but I think that they are very friendly practices where, once you start applying them, you see the benefits right away.”

– Karla Avila, Flowerdaze

carbon and harvest it and put it back into the ground and build more soil with it.”

To make compost, Flowerdaze uses “pretty much anything,” Johnson said.

That includes plants the couple don’t want in the garden, animal manures, food scraps, wood chips and fallen leaves.

They also use more specific composts made from rabbit or chicken manure for different stages of plant growth.

Avila and Johnson noted that they prefer finished (broken-down) composts to unfinished composts because they bring fewer pests and fungal problems.

Therefore, they use “biodynamic composting preparations” made from various plant materials, each activating a different composting process and enhancing quality.

“When you have the final product, it’s the most nutritionally dense, bioavailable, ready-to-go thing that you could possibly add to your soil,” Avila said. They generally do a major compost application in the spring and lighter monthly applications during the growing season.

Another important element in Flowerdaze’s soil-building regimen is hügelkultur, a raised garden bed built from the bottom up with leaves and branches, woodchips, grass clippings, animal manure, food scraps and eggshells. Hügelkultur’s purpose is to make soil nutrients more bioavailable for cannabis plants to absorb by retaining moisture and creating an environment favorable to beneficial insects.

“There’s not one right way to build your own soil. But the goal is to take the waste and animal manures from the land and turn that into fertility and into soil,” Avila said.

Water Catchment and Gravity

Water management also figures into Flowerdaze’s sustainable growth and business strategy. At the same time, because of ongoing water shortages, drawing surface water in some parts of California is prohibited.

“We’re actually required to find other water sources, and rainwater catchment has been wonderful for us to be able to utilize harvested rainwater to feed ourselves all summerlong. It feels really good knowing that we are not drawing down our water table and that water is conserved for the environment,” Johnson said.

“Where you’re located is more or less a factor. We have very rainy winters but very dry summers. So we basically are harvesting our irrigation water throughout the winter and storing it for use throughout the summer.”

Flowerdaze’s rainwater-harvesting system starts with water-catchment surfaces on the roofs of the farmhouse and outbuildings, which are located at the highest elevation of the farm. From there, the water is siphoned downward through gutters with gravity, feeding it into a lined, human-made reservoir pond of about 75-by-50 square feet. The reservoir connects to tanks that also use gravity to feed water into the garden.

“There’s no power involved. It’s all rainwater add from the wintertime,” Johnson said, estimating the 3-acre farm gets about 3 million gallons of rainfall per year. “We’re able to use a siphon system to water with just gravity, and we therefore need zero pumps, mechanisms, electricity (or) motors to water.”

Avila added that relying on gravity to water cannabis requires the correct slope, but anyone can create and use a rainwater-catchment system.

Farm animal manure is a critical ingredient in the compost at Flowerdaze in Trinity County, California.

Courtesy Photo

Conserving Water in Soil

Another important strategy Flowerdaze uses is maximizing the water-storage capacity of its soil.

“The soil can conserve and hold water like a sponge, so you’re trying to really optimize that sponge effect in your soil.

And healthy soil with lots of organic matter is a much better sponge. You essentially can be more conservative in your water use, or the same amount of water can go a longer way,” Avila said.

To slow the evaporation of groundwater on hot days, Flowerdaze spaces plants so that their canopy can shade a significant portion of the soil when they’re full size. With the right spacing, farmers can increase the groundwater table rather than depleting it, she said.

“The combination of all those practices helps us get the most out of our rainwater,” Avila said of rainwater catchment and storage, hügelkultur and plant spacing. “We were really proactive about the water from the beginning, when we developed our farm. We planned out the water catchment so that we could catch as much rain as possible and end up with enough storage, even on a dry year, to fully support our irrigation needs. We engineered all of the land with permaculture design to basically

catch and hold as much water as possible throughout the rainy season.”

Profitable Problem-Solving

While sustainable cultivation is often considered costly, it has helped Flowerdaze’s bottom line.

“I get a holistic perspective that making the right, ethical choices in our farming also helps us produce the best product, which, in the end, helps us make our business more profitable. That’s the way we need to be restructuring the way we look at business—especially with cannabis legalization and having that be a leading model for how we can fix some of the issues we’re dealing with on climate change,” Johnson said.

He cautioned, however, that success requires a patient, step-by-step approach.

“It’s really not that hard, it just takes one thing at a time. And once you add those things up, you can make a pretty big impact,” Johnson said. “And once you’re actually sequestering carbon, then you have a negative footprint. You’re solving the problem.”

Omar Sacirbey is a reporter for MJBizMagazine. You can reach him at omar.sacirbey@ mjbizdaily.com.

August 2021 | mjbizdaily.com 47

Business Under Fire Sustainable Market Share Index™: Price Premium Sustainability-marketed products enjoyed a sizable price premium of 39%* over conventionally marketed products, and increased +5.3 pts since 2014 Sustainability-Marketed Products’ Price Premium vs. Conventionally-Marketed Products

Sustainability Price Premium 50% 45% 40% 35%

39.46% 34.21%

30%

+ 5.3%

25% 20% 15% 10% 5% 0%

2014

2018

*Weighted by $ Sustainable Sales of categories examined; analysis excluded store brand/private label Source: 2020 Sustainable Market Share Index, New York University Stern Center for Sustainable Business

Sustainability-marketed products enjoy a price premium over conventionally marketed products. Between 2014 and 2018, that premium grew 5.3% to reach nearly 39.5%.

Will Consumers Buy Sustainable Products?

A

growing number of cannabis operators are willing to pay extra for equipment and measures to reduce their carbon footprints, such as installing LED lights and using recycled and/or recyclable packaging. But do consumers want sustainable products?

And—perhaps more importantly—will they pay extra for them?

Adopting sustainable principles in most other industries creates higher operating costs that are passed on to the consumer.

That can also happen in cannabis when, for example, cultivators switch to LED lights and other energy-saving equipment.

There haven’t been any studies specifically looking at whether consumers will pay more for sustainably produced cannabis. However, some brands that advertise themselves as sustainable are among the top sellers in their markets, such as Flow Kana and Raw Garden in California.

According to international professional services company Ernst & Young, 30% of

48 MJBizMagazine | August 2021

U.S. consumers spend more on products they consider sustainable or better for the environment.

Consumer Studies

Additionally, the 2020 Sustainable Market Share Index published by the New York University Stern Center for Sustainable Business said mainstream branded products that are sustainability-marketed enjoy a 39.5% price premium compared to conventionally marketed branded items.

The NYU study also said sustainabilitymarketed products were responsible for more than half the growth in consumer packaged goods (CPGs) from 2015 to 2019. And sustainabilitymarketed products grew 7.1 times faster than products not marketed as sustainable during the same period.

“Our analysis demonstrates that sustainability-marketed products enjoy a hefty premium, continue to grow faster than their conventional

counterparts and contribute over half of the growth to overall CPG. It’s clear that brand managers who are not pursuing sustainability strategies will be increasingly left behind,” said Randi Kronthal-Sacco, a senior scholar at NYU who led the research initiative.

Consumers identified as urban, upper-income, millennials and/or college-educated are more likely to buy sustainability-marketed products, according to the study. In addition, middle-income earners, baby boomers and Gen Xers contribute a significant percentage of sustainable-product sales.

Per capita, the top five states for purchases of sustainability-marketed products are Connecticut, Maine, Massachusetts, New Hampshire and Vermont. All of these markets have legalized adult-use marijuana, except for New Hampshire, which has a state-legal medical cannabis market.

– Omar Sacirbey

Business Under Fire

Powerful

Friends

Marijuana companies partner with utilities and solar gardens to offset electricity costs

By Omar Sacirbey

M

arijuana businesses looking to reduce their carbon footprints can get help from a growing number of diverse energy companies that range from consultancies to publicly traded utilities.

Consider Terrapin Care Station, one of Colorado’s largest vertically integrated cannabis companies. It has struck carbon-cutting partnerships with Jack’s Solar Garden, a community farm that combines solar installations and agriculture in Longmont, Colorado, as well as Xcel Energy, the utility giant based in Minneapolis.

Terrapin is one of roughly a dozen cannabis companies enrolled in an 18-month strategic energy program developed by Xcel and energy consulting firms Resource Innovations and Cascade Energy to teach businesses “strategic energy management” practices that will reduce their energy usage and costs.

The program begins with visits from California-based Resource Innovations and Oregon-based Cascade Energy representatives who conduct comprehensive energy audits of the cultivation facilities, measuring how much energy their lights, HVAC (heating, ventilation and air conditioning) and other equipment use, as well as how much humidity is in the air because of plant transpiration and other factors.

“A team comes into all of your grows and does a top-down audit,” Terrapin spokesman Peter Marcus said of cannabis businesses involved in the program.

“They have their tools to measure. And then it all goes into computer systems.

50 MJBizMagazine | August 2021

Jack's Solar Garden in Colorado combines solar installations and agriculture to help companies offset their carbon footprints. Courtesy Photo

There’s modeling that’s done to identify where you can save. And then, even better, is they work with you and literally hold your hand to get the rebates that Xcel and others can offer you for making switches (to energy-saving equipment).”

Making Changes

“In terms of the project costs, there are incentives from the utility to encourage the customer to get those projects done,” said Jake Mitchell, a senior outreach consultant with Resource Innovations who is helping Terrapin with its energysavings efforts.

The primary equipment that Mitchell sees cannabis companies implementing to create large energy savings are LED

lights, variable-frequency drives for irrigation pumps and exhaust fans. He added that companies often get rebates for building automation systems to control HVAC, dehumidification, lighting and irrigation—although rebates are specific to the projects at each individual grow.

“Not one project recommendation that we do is the same for any two grows.

We calculate savings and then Xcel does the incentives based on the energy that’s saved with that equipment or with that process,” Mitchell said.

The consulting services come at a discount and are paid for by a fund to which the cannabis businesses contribute. Mitchell said utilities such as Xcel support the program because “it’s

Environmental Impact: How Cannabis Compares

Environment Impact: How Cannabis Compares

Growing cannabis indoors uses a dizzying array of lights, air conditioning and other materials that can have a direct impact on the environment. How cannabis stacks up to other common consumer items:

Growing cannabis indoors uses a dizzying array of lights, air conditioning and other materials that can have a direct impact on the environment. How cannabis stacks up to other common consumer items:

Water use Amount of gallons needed to produce item.

Carbon emissions Amount of carbon gases created to make 1 kilogram of product.

KG of CO2e*

Gal. Cheeseburger

634

449

Bottle of wine Cup of coffee

Marijuana flower (Kg.)

Chocolate bar

Beef

27 21

5.9

Rose stem

2,900

203

46 37

NOTE: The cannabis water and carbon numbers reflect indoor marijuana cultivation production only. Storage, transportation and other activities along the supply chain will increase the environmental impact.

Small bottle of cola

Chocolate

Marijuana flower (1 oz.)

2.3

1.4

Apples

Cheese

19

Tomatoes

0.4

* Killogram of carbon dioxide or equivilant gases. © 2021 Marijuana Business Daily, a division of Anne Holland Ventures Inc. All rights reserved.

Sources: Your Water Footprint, Poore and Nemecek 2018, Greeneatz.com, Colorado State University

cheaper in the long run—and better for the grid in the long run—to incentivize energy-efficient measures than it is to, say, build a new power plant.”

Saving Money, Doing Good

Rebates vary, but they can be anywhere from 20% to 50% off the total price of equipment, observers said.

“The program is not just about the incentives in the rebates for equipment.

Our goal in a strategic energy-management program is to actually build good energy-management practices into the business itself,” Mitchell said.

He said that many utilities where there are legal marijuana markets offer similar consulting, audit and rebate programs for cannabis businesses, including, California, Illinois, New Jersey and Utah.

Another way Terrapin reduces its carbon footprint is by buying 10% of the

Terrapin Care Station in Colorado gets about 25% of its energy from Jack's Solar Garden.

Courtesy Photo

energy produced by Jack’s Solar Garden, which went online in October. Jack’s Solar Garden supplies power to municipal buildings, homes and about a half-dozen businesses, including Terrapin and one other cannabis company, In The Flow in Boulder, Colorado.

The amount of energy that Terrapin gets from Jack’s Solar Garden covers

about 25% of the company’s energy needs, Marcus said.

Boulder County incentivizes such projects with a tax of 2.16 cents per kilowatt hour on the energy consumption of local cultivators, according to Byron Kominek, owner of Jack’s Solar Garden.

Alternately, to avoid the tax, cultivators can subscribe to a community solar garden such as Jack’s.

Such options might become increasingly available to Colorado cannabis companies. Kominek estimated more than a dozen companies in Colorado are building solar gardens that other businesses will be able to plug into.

“As an industry, we’re going to be facing renewable energy and sustainability mandates. A lot of this is positioning ourselves and knowing that we’re going to have to make a difference for the Earth,” Marcus said.

August 2021 | mjbizdaily.com 51

Business Under Fire

Cannabis

By Laura Drotleff

C

& Carbon

annabis producers looking to remove carbon from the environment have a variety of options. Existing projects include producing carbon-sequestering plants, developing projects to sell emissions-offset credits to companies, using sustainable packaging and reducing waste, switching to renewable energy and participating in established forest-management projects.

Companies in the emerging cannabis industry have an opportunity to be sustainability leaders, and it’s critical that the industry commit to the principles of environmental, social and corporate governance, according to Jesse McConnell, CEO of Rubicon Organics, a Vancouver, British Columbia-based cannabis producer.

While the cannabis industry’s practices have room for improvement, it’s still a young industry, McConnell said during a marijuana sustainability event hosted by San Francisco-based Regennabis.

“We’re in the process of establishing these best practices, not having to go back and look at legacy infrastructure and reengineer things at tremendous economic costs,” he said. “We have that opportunity in front of us today to get ahead of that.”

Mainstream Carbon Offsets Nature-based solutions figure prominently in a goal set by the Paris Agreement, an international treaty on climate change to substantially reduce greenhouse gas emissions and limit global warming to 1.5-2 degrees Celsius (2.7-3.6 degrees Fahrenheit) above preindustrial levels by 2100.

Based on current policies, the Earth

52 MJBizMagazine | August 2021

Hemp and marijuana companies are committing to environmental practices as carbon-offset producers and buyers

Green Trees offers carbon credits as part of its large-scale reforestation project.

Courtesy Photo

is on track to reach 3.5 degrees Celsius global warming (6.3 degrees Fahrenheit) by 2100, according to a 2020 United Nations report. As a result, nearly 2,000 companies have made net-zero carbon commitments by 2030 or 2050.

According to Chandler Van Voorhis, co-founder and managing partner of Virginia-based Acre Investment Management and its subsidiary Green Trees, a large-scale reforestation project, there are a few ways to accomplish that goal: • Eliminate fossil fuels and buy renewable energy to reduce emissions going forward.

• Buy carbon offsets or invest in carbon removal to repair and “recalibrate” the atmosphere.

Hemp is a Carbon Story

Carbon is literally a hot commodity—and it’s become a major buzzword in agriculture and cannabis in recent months.

Hemp farmers particularly stand to benefit if the United States supports farmers sequestering carbon as a method

to battle climate change. The crop reportedly gobbles carbon at a rate of 6 tons per acre, according to the European Industrial Hemp Association, and it can play a key role in regenerative farming and soil remediation.

That prospect became more likely following the United States’ reenrollment in the Paris Agreement and President Joe Biden’s proposed carbon market to directly pay farmers.

Initially, Biden had proposed developing a carbon bank, which Agriculture Secretary Tom Vilsack explained could be formed by using $30 billion from the U.S. Department of Agriculture’s Commodity Credit Corp.

(CCC) to pay farmers to adopt practices that could remove carbon from the atmosphere and fight global warming.

The CCC fund, which was created in 1933 under a charter that specifically mentions stabilizing and creating markets, would be used to create a “carbon market” that would directly pay farmers as part of the administration’s larger Climate 21 Project.

“Right now, we’re putting about 50 gigatons of CO2 into the atmosphere,”

Business Under Fire

said Kimberly Kovacs, chief strategy officer of New Mexico hemp producer Santa Fe Farms. “We have a responsibility to look at … how we can regenerate our land, and hemp is that solution.”

A federally funded carbon bank—or support for farmers joining voluntary markets—could change the hemp industry in three ways: • Carbon payments could become an additional revenue stream for existing hemp farmers.

• Carbon payments could encourage farmers to add hemp to their crop rotations, increasing hemp production in the United States.

• Hemp farmers could be encouraged to grow varieties better suited for industrial purposes that sequester carbon over many years, rather than flower varieties that currently command higher wholesale prices but don’t have the same long-lasting climate potential.

Some hope the carbon-bank idea could bring hemp more into the forefront as a sustainable crop.

“It’s a shame that hemp—as a regenerative crop that uses less water, has better CO2 sequestration rates than trees and has more market value than a typical cover crop—is still kind of an underdog,” said Angela Dawson, founder of the 40 Acre Co-op, a network of Black and socially disadvantaged hemp farmers based in Sandstone, Minnesota.

Complicated Carbon Markets

In addition to producing commodity crops, landowners also can be paid for carbon sequestration and natural resource conservation. But it’s not a simple process, said Van Voorhis, whose Green Trees project represents 600 landowners totaling 130,000 acres.

“Not one of those landowners could go into the carbon market themselves and bear that (verification) cost,” Van Voorhis said.

Working with a project administrator helps offset the cost of working with carbon registries. The three main voluntary carbon

54 MJBizMagazine | August 2021

The Green Trees reforestation project currently includes 600 landowners with 130,000 acres and sells carbon offsets to buyers such as Duke Energy, Shell, Microsoft and Bank of America.

Courtesy Photo

registries are the American Carbon Registry, Climate Action Reserve and Verra.

An administrator also helps landowners manage their resources, layering in value points so they can be paid for their crops, plus the carbon being stored in their soil. They can identify tax credits, conservation programs and water payments for using regenerative practices to improve water retention on the property.

“The key is to optimize multiple points of income, not maximize one and sacrifice another,” Van Voorhis said.

Producers can find and compare voluntary carbon-offset projects and programs by searching the registries and referencing the Carbon Offset Research and Education program.

By aggregating land through partnerships with landowners, project administrators catch the attention of big buyers such as Duke Energy, Shell, Microsoft and Bank of America.

“Markets happen through partnerships,” Van Voorhis said. “Buyers are looking for millions of metric tons, so a landowner with 100 acres generating 200 tons of carbon per year—that’s (going to be) hard to get buyers’ attention.

Offsetting Emissions

On the other side of the spectrum, cannabis firms are becoming carbon-offset buyers themselves in their quest for carbon neutrality.

Hexo Corp., a publicly traded company in Ottawa, Ontario, announced an ambitious goal in early June to offset its operational carbon

emissions and the personal emissions of roughly 1,200 employees to become carbon neutral by September.

CEO and co-founder Sebastian St-Louis said now that his company is on a path toward profitability, it is committing to environmental leadership and challenging other cannabis companies to follow suit.

The company’s actions are “just the start” of its challenge to do better, said St-Louis, who declined to reveal the amount Hexo is spending on the carbonneutrality effort, though he estimated that offsetting employee carbon would cost the company just under $802,065 (CA$1 million) per year.

Hexo is working with Offsetters, a Vancouver, British Columbia, sustainability and carbon-management provider, to support the Great Bear Forest Project, a 25-year improved forestmanagement project designed to protect forests previously designated, sanctioned or approved for commercial logging.

“The tree grows, absorbs carbon from the air … then that carbon actually goes into the root system. So 25% of the carbon of the tree stays in the Earth, and that’s the actual carbon going into the ground.”

Hexo validated its emissions with the province of British Columbia.

Hexo also is working to reduce emissions by minimizing waste across the supply chain, including reducing plastic in its packaging and exploring sustainable alternatives, implementing green energy solutions and converting to a virtual workplace where possible.

“We’ll always be able to get better,” St-Louis said. “The best way to offset carbon … you want to not generate it in the first place.”

Kristen Nichols contributed to this story.

Laura Drotleff covers hemp for Hemp Industry Daily and MJBizMagazine and can be reached at laura.drotleff@ hempindustrydaily.com.

Business Under Fire

Building Your Own

POWER GRID

By Omar Sacirbey

Solar Therapeutics turned to cogeneration after a utility’s energy service proved unworkable

I

n early 2018, about six months into the multimillion-dollar renovation and build-out of his planned cultivation, manufacturing and retail space in Somerset, Massachusetts, Ed Dow, CEO of Solar Therapeutics, hit a major problem. The utility circuit that Dow planned to rely on for 5,000 amps of power was old and couldn’t handle the projected energy load.

National Grid, the utility with a nearby power station, told Dow that replacing the aged circuit with an updated one capable of generating enough power for his operation would cost Solar about $2 million up front. Worse still, the project would take two years.

Dow and his partners already had invested several million dollars in the project—a 70,000-plus-square-foot manufacturing building that came with 70,000 square feet of solar panels on the roof, plus another 5 acres of solar panels on property behind the facility. Combined, the solar panels can generate more than 1 megawatt of power, which is enough to power 300-400 homes for an hour, according to conservative estimates.

Dow’s plan was to generate the maximum amount of clean power with the panels, while the grid would provide whatever else Solar needed. It also would serve as a stable source of energy when the sun didn’t shine.

After consulting with energy and design specialists, Dow decided that rather than paying National Grid $2 million for an upgrade that would take two years, he

56 MJBizMagazine | August 2021

would spend the money to create Solar’s own clean-power source.

He found two highly efficient, combined heat and power (CHP) cogeneration units: one from Caterpillar and the other from MTU, a Rolls-Royce subsidiary based in Germany. Dow estimated the cost at “around $3 million.” To pay for it, Dow and his partners had to get a loan at an interest rate he called “north of 20%.”

“That’s really the backbone. They’re ultra-high efficiency (natural) gas generators,” Dow said of the two cogeneration units, commonly referred to as “cogens.”

Each generator produces about 1.5 megawatts of power.

The decision to buy the cogens not only saved Solar from an expensive delay but turned out to be an environmentally friendly cost-saver that reduced the company’s spending as well as its carbon footprint. Cogens are far more efficient than getting power from the grid, Dow said.

“Because you’re producing DC power on-site (with cogens), you’re already producing at a much higher efficiency rate than, say, a big power plant would down the road,” Dow said. “At a power plant, you’d lose maybe 30% plus in the transmission lines. We don’t lose any; there’s no transmission loss.”

Creating its own microgrid also cemented Solar’s business and brand strategy, one based on sustainability.

“It’s our core ethos to build sustainably any way we can. It’s a major upfront expenditure, but I think it will pay divi-

dends with the way that general consumer behavior is trending,” Dow said.

A Registered Power Plant

Many casinos, hospitals, pharmaceutical companies and factories have used cogens for years.

To get its own cogens up and running, Solar had to meet federal Environmental Protection Agency and Massachusetts Department of Environmental Protection standards, such as for emissions and noise.

While Solar researched many companies purporting to have both cannabis industry experience and generator-installation experience, the company ultimately opted for one without cannabis experience but steeped in industrial experience installing cogens in remote places such as oil rigs and mining operations.

“We’re now a registered power plant,” Dow told MJBizMagazine.

In addition to the cogens—each producing about 1.5 megawatts—and the solar panels, which produce 1-plus megawatt of energy, Solar has a backup diesel generator capable of producing another 1.5 megawatts. Dow said the company tries to avoid using the diesel generator, but having backup power is critical when you go off-grid.

Under Solar’s current microgrid scheme, the cogens generate more than enough energy to power the 42,500 square feet of the facility already built out and in use. Meanwhile, the power gen-

erated by Solar’s solar panels goes back into National Grid’s network, earning Solar hundreds of thousands of dollars in energy credits, Dow said.

Solar is building out the remaining 30,000-plus square feet of the facility, which the cogens will also be able to power once the build-out is complete.

Solar’s contract to sell solar energy back into the grid expires at the end of the year, but Dow hopes to renew it.

He cautioned that having one’s own microgrid comes with headaches, most notably being responsible for the grid when it goes down because of parts and mechanical issues. Complicating the challenge, parts sometimes must be ordered from abroad, while workers with the expertise to service the cogens must come from outside the state.

Issues such as worn or broken parts can arise a few times per year, Dow said.

“Be it the solar, any of the generators, whatever, you’re going to have maintenance,” he added.

Heat Feat

Beyond reducing energy spending and carbon emissions, the cogens offer other cost and environmental savings opportunities.

Traditionally, heat generated by microgrids and other factory and production equipment gets expelled into the atmosphere. But Solar captures and recycles that heat, using it for processes such as powering its HVAC equipment including evaporative chillers. The evaporative chillers convert water into vapor used to cool hot grow rooms.

“We have a very significant heat load. We can take all our waste heat from those cogens and pump it right back into our main facility. And that can optimize your carbon footprint,” Dow said. “Let’s say they operate at 60% efficiency prior, which is still great. You can tweak it to north of 80% efficiency out of those cogens once you start taking the heat back.”

Solar has a central heating and cooling loop that flows through the facility, and

Solar Therapeutics uses a combination of solar panels and cogeneration units to power its cannabis facility in Somerset, Massachusetts.

Courtesy Photo

equipment in different parts of that facility are connected to the loop.

While New England weather might not always be conducive to solar panels, it is conducive to another energy-saving investment, free-fluid coolers, which work when the outside temperature drops below a certain level. (Dow estimated 45 degrees Fahrenheit.)

Free-fluid coolers are placed outside the facility and draw cool air, which is piped back into the facility to cool it down. Dow said the free-fluid coolers, which Solar purchased from Cancoil in Ontario, Canada, eliminate the need for the company to run evaporative coolers.

Another way Solar reduces its energy consumption and heat emissions is using LED lights. The benefits of less heat load include reduced need for HVAC cooling as well as less plant transpiration, which reduces how much you need to water the plants.

Solar also uses recycled water. Up to 90% of the company’s water is either recycled or comes from humidity (thanks to plant transpiration) that Solar recaptures with heat-recovery units that convert the humidity into condensate.

That condensate then falls into sump pumps that transfer it back into Solar’s fertigation room.

A Model for the Future

While Solar’s environmental efforts are most extensive in cultivation, they’re also present in manufacturing, where the company uses CO2 instead of solvents such as butane and ethanol for extraction.

On the retail side, Solar uses LED lights and recycled ocean plastic from Los Angeles-based Ocean Works for packaging. The TV monitors that display menus and specials demand very little electrical current to operate. Solar is transitioning to tin packaging because tin is more likely to be recycled than plastic, Dow said.

But the cogens continue to be the main focus. And as Solar’s relationship with National Grid has evolved, the company has returned to the idea of replacing the old circuit with an upgraded one so that it can reconnect with the grid.

While the idea is very much in its earliest stages, Dow said National Grid would pay for the upgrade in rebates.

And although Solar would be connected to the grid, it wouldn’t draw power from it but serve as an emergency backup.

If Solar does strike such a deal with National Grid, the upgrade would take about two years to complete, Dow said.

“Then we’d have the best of both worlds: We’d have electric grid on-site, and we’d have a grid power utility provider on-site,” Dow said. “We’ve today already gotten over $1 million in rebates from them. And this one would be double or triple that.”

Having proved that Solar’s model works in Massachusetts, Dow is looking to take it elsewhere. The best market candidates, he said, are regions and states with aging electrical infrastructure such as the Northeast and Midwest as well as Texas.

“Those are the type of markets where our model absolutely makes perfect sense,” Dow said.

August 2021 | mjbizdaily.com 57

Business Under Fire

Sunshine Cereceda has been dry farming at California-based Sunboldt Grown since 2016. Courtesy Photo

Dry Farming

From the Bottom Up

By Omar Sacirbey

The right location and soil structure make dry farming cannabis possible, cultivator says

C

onserving water has become increasingly important for cannabis farmers, particularly those in regions facing drought, water shortages and/or municipal restrictions.

Many farmers have succeeded in reducing their water usage with rainwater-catchment programs and water-recapture and recycling systems.

But a small number of cannabis farmers are going a step further by not watering

58 MJBizMagazine | August 2021

their plants at all using a practice called dry farming.

Native Americans have used dry-farming practices for thousands of years, and more-modern dry farming dates to the 19th century. But with most of the Western United States experiencing a historic drought, dry farming is becoming less of a novelty in the 21st century and more of a necessity.

Necessities From Below

On the surface, not watering your marijuana plants seems like a death sentence. But lack of irrigation is only one part of dry farming. The far more important part is making sure there is enough groundwater in the soil for your plants to feed on.

“With dry farming, the water is down below. And you want to bring the water up the soil profile to the

surface,” explained Sunshine Cereceda, the owner of Sunboldt Grown, who has been dry farming since 2016 on about 10,000 square feet along the Eel River in Humboldt County, California.

Cereceda grows about five strains and currently sells to two dispensaries. She is working on getting two more clients for next year.

Proponents of dry farming understand the skepticism it faces.

But having mastered the practice, they say it’s not only possible but yields a superior product—one that is at least as potent and more flavorful because the plants can access soil nutrients that haven’t been watered down.

“At harvest, I don’t have excess water in my bud. It just dries and cures really nicely,” Cereceda said, adding that water dilutes cannabis flower. “The idea (of dry farming) is that by having less interference with the growing of the plant, you’re going to just get more terroir. You’re going to get more taste of the place and the genetics.”

dug the hole (while considering dry farming), I felt that it wasn’t wet, but it was moist.”

Location Is Paramount

Water Through the Soil

Dry farming is not for everyone, nor is it possible everywhere. And Cereceda credits part of her success to the location of her farm.

“I’m in a unique region where it’s most likely a combination of geology and soil texture,” Cereceda said. “The water table can actually be quite deep.”

Sunboldt Grown Farms sits on a floodplain near the Eel River atop a clay silt loam—soil containing at least 70% silt and clay and at least 20% sand—a composition that is especially conducive for allowing water to flow. Because Sunboldt is on a floodplain close to the Eel River, there is already a significant amount of groundwater.

In addition, the Eel River floodplain where Sunboldt is located sits on flat ground at the bottom of a hill, so rainwater and snowmelt naturally flow down into the farmland, infusing the soil with even more water.

“We’re like a big rain catchment on the flat,” Cereceda said. “And when I

Having a location with a high water table and silt loam will encourage successful dry farming, but dry farmers should take other steps to stretch out the water available to their plants, most notably using a compost-based fertilizer, which helps the plants absorb nutrients.

Dry Downside

Packaging for some Sunboldt Grown products contain references to dry farming. Courtesy Photo

One advantage of dry farming, Cereceda said, is that it’s easy to begin a crop.

“I can take clone cuttings right out of the clone tray and put them right into the ground and water them once or twice and then just go to dry farming.

It’s really efficient to be able to do that,” she said.

Cereceda likes to plant in June, after she’s had an opportunity to till the soil.

Tilling the surface—she goes well over a foot deep—opens up “the soil capillaries” and allows groundwater to reach where cannabis roots can absorb it, she said.

“You scrape the soil, and then it wicks the water up to the surface on the hottest days,” Cereceda explained. “When the ground is getting the hottest, there’s more moisture in the soil. It’s a little counterintuitive. It’s not a top-down thing. It’s a bottom-up thing.

“It’s probably done by evaporation. The ground gets hot and there’s water evaporating (and moving toward the surface).

As it evaporates, it cools more,” she said.

Dry farming also has its negative aspects, Cereceda said. One is that there is nothing growing in between the rows of marijuana plants, meaning that soil is bare and more susceptible to erosion. Also, the tilling—especially rototilling—required to open up the soil capillaries destroys the soil structure and soil biome, Cereceda said.

“There are some issues with dry farming. Yes, it’s great not to use water.

But are we compromising our soil?

What’s more important, not using water or conserving soil? I’m kind of leaning towards preserving soil,” she said. “So I’m looking for ways to dry farm where I won’t have so much bare soil and I also can be lighter on the tilling and yet still have water and move up the soil profile.”

One change she’s made that’s offering promise is switching from a rototiller to a roto-spader. The difference is that a rototiller “pulverizes” the soil, damaging the soil structure, Cereceda said, while a roto-spader does a better job of “maintaining the soil aggregates,” which are “the glue that holds the soil together.”

She also is considering spreading woodchips over the barren areas between rows with the hope that it will combat soil erosion while keeping the soil capillaries open.

Despite dry farming’s challenges, Cereceda believes she can make adjustments that will help her maintain soil quality while continuing to dry farm.

“Traditionally, cannabis growing takes so much water. It takes a lot of water to grow big plants. And so, for me, I’m making a choice to grow lower yields and use less water. Cannabis being grown with really intensive agriculture, I think, is just not necessary,” she said.

August 2021 | mjbizdaily.com 59

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Steering

Clear Spam of

Consumer consent is key when using robocalls and text messages to advertise

By John Schroyer

62 MJBizMagazine | August 2021

N

ew marijuana retailers looking to connect with consumers might inadvertently violate federal law by using robocalls or text messages if they don’t first ask for recipients’ permission.

The 1991 Telephone Consumer Protection Act—or TCPA, as the law is commonly known—prohibits private companies from using unsolicited text messages or calls to advertise to consumers. Companies that break the law can be fined up to $1,500 per violation. That amount can easily skyrocket if a company is sending text messages to hundreds of consumers.

BACKBREAKER FOR BUSINESS

The amount of money to be made has created a cottage industry of lawyers who are willing to file lawsuits on the chance they’ll be able to profit by forcing a quick settlement agreement.

Overlooking the TCPA has been extremely costly for many cannabis companies, often to the tune of tens of thousands of dollars, if not more, said two attorneys consulted by MJBizMagazine.

“To defend a case like this (can cost) tens of thousands of dollars into the six figures, depending on how far the case gets,” said Marc Roth, a former Federal Trade Commission attorney and partner at Cobalt Law in Berkeley, California.

“It’s astounding how companies that are in the cannabis space continue to just not be aware of the TCPA and how dangerous it is.”

Roth and Pennsylvania-based attorney Michael Sampson, a partner at Leech Tishman, both have been watching closely as TCPA cases involving marijuana businesses have proliferated since 2018, when California-based delivery business Eaze became one of the first large marijuana companies hit with such a suit.

Although Eaze was ultimately able to force the plaintiffs in its case into arbitration (the company had the foresight to include such a provision in its terms of service), many other

Texting regular consumers about sales has become an increasingly popular sales tactic in recent years.

But a federal law prohibits companies from contacting customers via text or robocalls without permission.

Businesses that send such messages without documented permission could find themselves faced with large fines. Before sending that text, companies should know: • Businesses that break the law can be fined up to $1,500 per violation.

• Some lawyers are willing to file lawsuits on the chance they’ll be able to profit by forcing a quick settlement agreement.

• The key to adhering to the TCPA is ensuring consumers have opted to receive text messages or robocalls.

Buying lists of consumers’ phone numbers is a major misstep.

• Including an arbitration clause in your company’s terms of service can help avoid a full court battle.

• Attorneys advise companies that have violated the law to settle the case quickly and obtain a nondisclosure agreement.

Mark Roth

Michael Sampson

cannabis businesses haven’t been as fortunate. That ignorance about the TCPA has cost an untold number of companies a sizable chunk of change.

MJBizMagazine asked Roth and Sampson for their best advice on how to avoid a TCPA suit and what companies should do if they are faced with one.

‘CONSENT, CONSENT, CONSENT’ The key to adhering to the TCPA is ensuring consumers have opted to receive text messages or robocalls, Roth and Sampson said. If that critical step is skipped, and a company utilizes these forms of communication, the business will be vulnerable to a lawsuit.

One common way this happens is when companies purchase lists of potential consumers’ names and telephone numbers, which are commodities in the marketing world.

“Consent, content, consent. That is the ultimate defense. Otherwise, you have no other defenses,” Roth said.

Consent can be achieved through direct contact with consumers, either when they visit a retailer’s store, website or some other direct interaction.

This means that buying lists of consumers’ phone numbers is a major misstep, Roth said.

“That’s the biggest no-no, because they don’t have consent” from consumers to be added to contact lists, Roth said. If you’re “texting someone who you don’t know, you’re dead in the water. And there’s a cottage industry of plaintiffs out there who will just sue based on any kind of unauthorized text. So the real watchword is: Don’t buy lists.”

Sampson even advocated setting up a “double opt-in” system that requests consent from consumers more than once, providing extra insurance against a TCPA lawsuit.

“When they’ve opted in, the first text message basically (requires them) to optin again, which is considered by many to be kind of state-of-the-art now in the industry,” Sampson said.

He also suggested having written

August 2021 | mjbizdaily.com 63

Steering Clear of Spam policies for employees to outline precise text messaging and robocalling procedures, careful examination of third-party practices if a contractor is being used and checking company insurance policies to see if they contain TCPA-related coverage in case of a lawsuit.

Above all, cannabis businesses should educate themselves on TCPA parameters so they know how far they can reach in electronic marketing, Sampson said.

Digital marketing firms are worth using, he said, although it’s still wise to keep a close eye on any contractor’s practices. Sampson said he’s seen cases in which a marketing contractor violated the TCPA while working for a marijuana business, which landed both companies on the hook for TCPA fines.

Another way for businesses to protect themselves is to follow Eaze’s lead and include clear provisions in their terms of service stating that any dispute between the customer and the company must be taken to arbitration as opposed to a full court battle.

“That is also what I call a ‘silver bullet’ or get-out-of-jail-free card,” Roth said.

“That assumes, though, that that person has interacted with you directly—either on your website or in some other form—in which case, they have to opt in.

And then they also agree to your terms of use. That right there means you have a relationship somehow with the customer.”

SETTLE QUICKLY

One of the reasons it’s unknown just how many TCPA cases have been hashed out is because many, if not most, happen out of the public eye and with no record of a settlement, Roth said.

That’s in part because it’s usually much cheaper to pay a smaller sum to a potential plaintiff to make the threat of a TCPA lawsuit disappear instead of shelling out tens of thousands of dollars to pay for lawyer’s fees or an expensive trial, he said.

“Very often, these are handled individually,” Roth said, explaining that companies often will receive a letter

64 MJBizMagazine | August 2021

from a possible plaintiff who received an unsolicited text message from a marijuana business.

That business may then call him for advice, and his immediate suggestion is to settle the case quickly and quietly, along with obtaining a clear nondisclosure agreement that doesn’t admit any liability by the marijuana business.

“If they call me, I tell them: ‘Just write a check. Get rid of this, and then stop doing this,’” Roth said. “There’ve been a lot of lawsuits filed. But more often than not, there’s a threat of litigation.

Someone’s demanded, say, $2,500, and that ends it privately.”

Though the idea of paying off a nuisance lawsuit instead of proving a company’s innocence might leave a sour taste in the mouth of some executives, Roth and Sampson agreed it’s a cheaper option than going to trial, especially if the company is legitimately in the wrong.

IF YOU DO GET SUED

The most immediate step for any marijuana business that receives notification of a TCPA violation should be to hire an expert attorney, both Roth and Sampson said.

“Your time to respond to a legal complaint starts to run when it’s served.

And you might only have 20 or 30 days in which to respond. Get legal counsel involved immediately,” Sampson said.

“Work with your counsel to craft a mitigation strategy. That can be anything from motion to dismiss, to an answer, to getting started with discovery.”

If a company does get sued for running afoul of the TCPA, one of the first legal strategies should be to defeat the possible class certification, since a class action suit would allow plaintiffs to join forces against a company over the unwanted texts or calls.

If a company can successfully defeat class certification in a TCPA case, Sampson said. “You’ve taken a case that’s worth millions and reduced it to a case that’s worth dollars. Once that happens,

In addition to having a double opt-in system for text messages, offering consumers a way to opt-out from future communications is a good marketing practice.

it becomes a lot less interesting for the plaintiffs’ (lawyers).”

And in any settlement, Roth said, it’s key to have a nondisclosure agreement included, in part so that the same plaintiff can’t go around telling others that your business is an easy mark.

Still, paying off one plaintiff at a time is risky if a company has made a habit of violating the TCPA, Roth noted. One settlement would likely leave executives holding their breath to see if more plaintiffs come out of the woodwork.

The easiest way to avoid TCPA lawsuits, Roth reiterated, is “don’t send unsolicited text messages.”

John Schroyer is a reporter for MJBizDaily. You can reach him at john.schroyer@mjbizdaily.com.

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BestPracticesInRetail | Solomon Israel The Source uses promotions to draw consumers to its cannabis retail locations in Nevada.

Courtesy Photo

Setting $ale for Success How promotions, discounts and markdowns add flexibility to retail pricing strategy

R

etail cannabis pricing with agility to modify the isn’t a “set-it-andperceived value of forget-it” exercise. their goods.

“A pricing strategy must Boost Traffic, Basket Size be agile because nobody The purpose of a promotion has a crystal ball,” said is to keep customers coming Leandra Reid, co-founder back “and to keep things of Toronto-based cannabis fresh,” Reid said. “When you retail consultancy Vetrina Leandra Reid think about a promotion, Group. “We can’t know it’s something exciting, it’s what the customer is willing adding value.” to pay for a product until we put the Promotions can be planned around product in and do some trials.” events such as 4/20 celebrations and Reid outlined three store anniversaries, or they can touch tactics—promotions, discounts and on a seasonal theme. markdowns—that provide retailers

66 MJBizMagazine | August 2021

Like other consumer packaged goods, pricing for marijuana products should never be static. Successful cannabis retailers will take advantage of in-store promotions, at-the-register discounts and inventory-clearing markdowns to accomplish a variety of goals: • Promotions don’t have to involve price cuts. Instead, they can add value via bundling, seasonal connections or lifestyle associations to boost store traffic and basket sizes.

• Discretionary discounts can be used to reward preferred customer groups or to smooth over a customer’s less-than-perfect retail experience.

• Markdowns of underselling products might be expensive, but they can free up cash for new inventory. Sometimes, the cost of markdowns can be mitigated by asking suppliers to share the risk of an unproven new product.

“An easy way to start is looking at your calendar and seeing what holidays are available,” Reid said.

She added that promotions can also be based around a new-product launch or an in-store brand activation with a supplier’s sales representative.

Promotions don’t need to rely on price cuts. Instead, they could involve product bundling to add value—for example, bundling certain products in a visual merchandising display.

Like markdowns, Reid said promotions can also be used to level out a retailer’s inventory, such as offering a two-for-one special.

“If you have extra product or something and it’s not selling through, if we can bundle it with a product that is selling, or we can display it through visual merchandising so that it looks like it’s a pair of products, then we can level the inventory that way through a promotion.”

Promotions are important for driving store traffic, said Jeff Yapp, CEO of Chalice Brands, which operates seven Chalice Farms marijuana retail outlets in and around Portland, Oregon, and recently acquired five more stores.

“We actually do a lot of lifestyle associations,” he said. “We give people recipes, we give people situational usage (ideas)—that’s an element of promotion. But at the same time, it has nothing to do with price.”

Yapp said cannabis brands help fund most Chalice Farms promotions, covering up to 50% of the cost of promotional pricing.

On top of driving traffic, promotions are also useful for boosting basket sizes and getting customers to spend more, according to Candice Beten, director of merchandise planning and allocation at The Source, which operates four dispensaries in Nevada.

“At the end of the day, those two pieces are what drives your top-line sales,” she said.

Beten said The Source analyzes its promotions to see how they perform

Promotions can be used to bundle products, creating larger basket sizes.

Courtesy Photo

across different stores.

“Did we have the inventory to maximize the promotion? How is the margin? Did it hurt or erode other product categories? Because sometimes, when you offer a strong promotion, Jeff Yapp the customer gravitates to that promotion instead of something else—so it almost trades them down,” she said.

Customer Retention In contrast to promotions or markdowns, discounts take place at the cash register and may involve discretion on the part of store management, Toronto retail consultant Reid said.

She gave the example of a customer who buys a bong that has been on display, meaning the box has already been opened and the bong is no longer brand new.

“We might decide to discount that product when the customer is in the store, because they’re buying the display item instead of a boxed and sealed item.”

Discounts might be applied to cannabis products that are no longer fresh. They can also be offered to preferred customer groups such as seniors, veterans or students, if allowed by local regulations.

Reid said discounts of 10%, 15% or even 20% are the norm. Higher discounts might be offered only to the most preferred customers.

“We don’t want to liquidate the product and not get the profit margin off of it,” she said. “It’s really to support customer experience and say, ‘Hey, you’re special, and because you’re special, we’re going to provide you with a token of our appreciation.’”

August 2021 | mjbizdaily.com 67

BestPracticesInRetail | Solomon Israel In Nevada, The Source offers a 10% discount to medical marijuana patients, military veterans and seniors.

Beten said those discounts are worth the cost because they help retain customers.

“Getting these customers to come back consistently, I don’t think anything can take that place,” she said. “We want to make sure that we’re taking care of them. At the end of the day, 10% is not a big impact to our margin.”

The Source store managers also have the discretion to offer discounts to atone for errors in customer service or problems with a product, although Beten said that’s rare.

“The customer is the most important piece of our business, and we want to make things right. So, if there’s ever a situation where the customer is unhappy with a product or a service, we absolutely will do what we need to do to correct it.”

Chalice Brands’ Yapp said at-theregister discounts might sometimes be constrained by local cannabis retail regulations, but within those regulations, “we want to do everything we can to make something right by a customer, and our stores are empowered to do that.”

“When there’s an issue, you should probably overreact to that issue,” he said. “When you fix a problem for someone, they will tell 10 friends. ... If you don’t fix that problem, they will tell 100 friends.”

Markdowns Help Free Up Cash Unlike discounts or promotions, Leandra Reid said markdowns aren’t about improving customer experience.

Markdowns are “specifically to manage your inventory, to manage your cash flow,” she said. Underperforming inventory can be marked down aggressively to get it out the door, freeing up cash to purchase new products.

“When product is sitting there, it’s depreciating,” Reid said. “And you can’t sell it at regular price because it’s not

68 MJBizMagazine | August 2021

Chalice Farms uses signage to promote its Flower Friday discount. Courtesy Photo

worth regular price anymore.”

Rectifying purchasing mistakes with markdowns can be a significant hit to a store’s Candice Beten profit margin, but Reid said retailers can plan for that by allocating a certain proportion of revenue on their profit and loss statement to allow for markdowns.

“Accidents and purchasing errors happen,” she said. “There has to be a remedy in place for those, and that’s what markdowns achieve.”

On the other hand, Chalice Brands’ Yapp suggested that promotions can take the place of markdowns. It’s better to focus on improving inventory selection or finding other ways to reduce the risk of uncertain product choices.

“What you’re trying to do as a leader of a business is to continue to improve your ability to pick winners and avoid

mistakes,” he said. “If you say, ‘I’m going to budget for mistakes,’ what that says is, ‘My mistake rate’s going to stay the same.’

“So we set a target that says, ‘We’re going to continue to improve how we buy,’ or ‘We’re going to continue to evaluate opportunities to share the risk,’” he continued.

“For example, if a partner comes to us and says, ‘Hey, I’ve got this new product,’ and we’re not sure about it, but they want us to take a position on it ... the understanding is that (if) it doesn’t work, (the partner is) going to either pick it up, or (they’re) going to take care of it.”

At The Source, Beten said markdowns can sometimes be avoided entirely.

“Thankfully, we don’t have to mark too much stuff down,” she said.

“Because usually we can move through inventory, either on a promo or it just sells at regular price.”

Beten said The Source focuses on fast inventory turnover, keeping three to five weeks of supply on hand.

Sometimes, she said, promotions can take the place of markdowns.

“A lot of times, we’ll put something on promo before we take it to markdowns and see what that does.

And usually that solves our inventory issue,” she said.

Promotions, discounts and markdowns are best used in concert with each other, retail consultant Reid suggested.

“Inventory is one of the biggest assets that you’ll have, or the biggest asset that you’ll have as a retailer in cannabis,” she said. “I think that using all the strategies is really important.”

Solomon Israel is a reporter for MJBizDaily and MJBizMagazine.

You can reach him at solomon.israel@ mjbizdaily.com.

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IndustryPlayers | New Hires & Promotions

Karla Rodriguez

By Omar Sacirbey

A look at some recent hiring moves in the marijuana industry

Social Responsibility Vet Finds a LinkedIn Unicorn

N

ot all executive appointments require behind-the-scenes connections. Just ask Karla Rodriguez, who found her job as corporate social responsibility director for Wana Brands on LinkedIn. In her new role, Rodriguez will focus Wana’s corporate social responsibility efforts on social equity, including working with the Last Prisoner Project, which fights for the release of people incarcerated because of marijuana charges, and the Color of Cannabis, a Colorado company aiming to increase minority representation in cannabis.

“I found a unicorn,” Rodriguez said. The corporate social responsibility veteran said writing a compelling cover letter illustrating how her experience, skills and values matched Wana’s needs helped her land an interview. Adding to the excitement, the interview happened five days after the birth of her second child in January.

Rodriguez previously was national culture and community manager at movie theater chain Alamo

Andrea SmallHoward

Drafthouse Cinema and led the company’s diversity, equity and inclusion efforts, including distributing more than $1 million to company employees in need during the COVID-19 pandemic. She also oversaw distribution of 328 grants totaling $1.9 million, working with partners such as the Elton John AIDS Foundation, PBS, St. Jude Children’s Research Hospital and the League of Women Voters.

Rodriguez was the film programming and community partnerships manager at the Denver Film Society from 2005 until 2013, working on the Denver Film Festival and coordinating community partnerships with the Clyfford Still Museum, the Denver Museum of Nature & Science and other organizations.

The entertainment industry taught Rodriguez the importance of working with the communities where your business operates.

“You learn the importance of being a strong community member and of forging strong community partnerships,” she said.

Small-Howard has incubated a biotech company inside an operating cannabis company and co-invented a novel, AI-enabled drug-discovery platform. She also created a drugdevelopment pipeline for plant-inspired therapeutic mixtures and has worked on more than 50 patent applications.

Charlotte’s Web Recruits CFO From Molson Coors  GB Sciences Appoints President Andrea Small-Howard will be president at GB Sciences, a pharmaceutical cannabis company in Las Vegas. She will continue her role as chief science officer and founding member of the company’s board of directors.

70 MJBizMagazine | August 2021

Wessel Booysen, former chief financial officer for Molson Coors, joined Boulder, Colorado-based Charlotte’s Web Holdings as its new CFO. He replaces retiring CFO Russ Hammer.

Booysen led the beverage company’s efforts in Australia and Asia and is well positioned to help guide Charlotte Web’s global ambitions, CEO Deanie Elsner said in a statement, adding that

his “background in the internationally regulated alcoholic beverage business is highly applicable to our sector.”

Separately, Charlotte’s Web Holdings added Tim Saunders, former chief financial officer at Canopy Growth Corp., to its board of directors.

Saunders steered Canopy’s public uplisting to the Toronto Stock Exchange and subsequently to the New York Stock Exchange.

Canopy Growth Names Martha Stewart Official Strategic Adviser Canadian cannabis producer Canopy Growth Corp. is appointing consumerpackaged goods and CBD brand leader Martha Stewart as the company’s official strategic adviser.

Stewart is the founder of Martha Stewart Living Omnimedia, and her

branded products can be found in more than 70 million U.S. households, according to Canopy Growth.

In the advisory role, Stewart will leverage her business knowledge and expertise to assist Canopy Growth with product innovation, format development, strategic partnerships and other initiatives.

Blake Schroeder

 CBD Firm Medical Marijuana Inc. Hires New CEO Medical Marijuana Inc., a publicly traded CBD holdings company based in San Diego, appointed Blake Schroeder as chair of the board and CEO and president. He replaces Stuart Titus, who will continue in a consulting role under a multiyear contract.

Schroeder joined Medical Marijuana Inc. in March 2016. His contributions include international market development, financial performance management, product development, rebranding efforts and operational development. He has extensive experience in the nutrition industry.

advancements. He will also oversee an organization-wide innovation plan.

Before 2018, Hollingshead founded companies in the digital advertising and software development industries.

Chief Strategy Officer Joins Santa Fe Farms Santa Fe Farms, a hemp and hempderived products company in New Mexico, appointed Kimberly Kovacs to the role of chief strategy officer. Kovacs previously was CEO and chair of the Arcview Group, a cannabis industry research and investment company.

Kovacs will drive acquisitions, global expansion and impact investment opportunities within the Santa Fe Farms portfolio. She will remain on the board of directors of the Arcview Group.

Decibel Installs Paul Wilson as CEO Decibel Cannabis of Calgary, Alberta, appointed Paul Wilson as its chief executive officer. He brings executivelevel experience from some of Canada’s top consumer brands and is a member of Decibel’s board of directors.

Previously, Wilson served as CEO, president and other executive positions for consumer businesses including Canadian Tire, Mark’s, Princess Auto, Spence Diamonds and Alcanna Nova Cannabis.

Hifyre President to Innovate at Fire & Flower

Ascend Wellness Appoints Debiase Chief People Officer

Edmonton, Alberta-based Fire & Flower Holdings appointed Matthew Hollingshead to the role of chief innovation officer. He will continue to serve as president of the company’s indirect subsidiary, Hifyre.

Hollingshead joined the company in 2018, when Hifyre was acquirexd as part of Fire & Flower’s focus as a technology-enabled retailer. In his new role, he will continue to work closely with CEO Trevor Fencott and co-lead the company’s technological

Ascend Wellness Holdings, a multistate, vertically integrated cannabis operator, selected Robin Debiase as its first chief people officer.

She will oversee the company’s talent acquisition and development program, diversity and inclusion initiatives and human capital strategy.

Debiase is a seasoned human resources executive with more than 24 years of multinational leadership experience. Most recently, she was vice president of HR at WW (formerly

Weight Watchers), responsible for managing more than 12,000 employees throughout North America and Brazil.

 Simplifya Welcomes General Counsel and Chief Banking Officer Simplifya, a provider of Katrina regulatory and Skinner operational compliance software for the cannabis industry, appointed financial services and cannabis banking industry expert Katrina Skinner to the role of general counsel and chief banking officer.

Skinner will provide legal expertise to guide Simplifya’s entry into the payment-processing space and will drive relationship-building and product development.

Before joining Simplifya, Skinner was a partner in the Cannabis Business and Law Advisory Group at Burns & Levinson, where she represented institutions that provide financial services to cannabis-related businesses and licensed marijuana operators.

Skinner previously served as general counsel and later president of Safe Harbor Services.

Columbia Care Adds New Director to Board New York-based multistate cannabis company Columbia Care appointed Julie Hill to its group of directors, expanding the board to eight members.

Hill has served for more than two decades on a range of private and public corporate boards. She is currently a member of the board of directors for the Lord Abbett Family of Funds, a $225 billion mutual fund management firm, and has recently been a member of the board of directors for health insurance giant Anthem, a Fortune 500 company.

August 2021 | mjbizdaily.com

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IndustryPlayers | New Hires & Promotions Hill has founded and run multiple companies, mostly in the real estate investment and development industry, and has been a senior executive at numerous publicly traded companies including Mobil Land, a division of Mobil Oil, and U.K.-based Costain Group.

recently, he was the president of Juul Labs Canada, overseeing all functions of the business. Nederhoff currently sits on the boards of Psyched Wellness and PharmAla Biotech.

Annabelle Manalo-Morgan

Aleafia Health Appoints CFO Canadian cannabis producer Aleafia Health appointed Matt Sale to chief financial officer.

Previously, Sale worked in the investment banking groups of Raymond James and BMO Capital Markets, helping execute growth strategy as well as mergers and acquisitions for many large Canadian companies.

Lisa Gee Promoted at Lightshade Lightshade, a Colorado-based dispensary brand, promoted Lisa Gee to vice president of marketing and corporate social responsibility.

Gee will provide ongoing leadership for Lightshade’s market strategy development, event campaigns and dispensary design. Since Gee joined Lightshade in 2019, the company has added several new Colorado locations and achieved notable sales growth. The promotion comes as Lightshade prepares to enter New Jersey’s medical cannabis market, establishing the company’s first location outside of Colorado.

Before joining Lightshade, Gee was vice president of sales and marketing for a cannabis banking startup located in Denver.

Shelter Cannabis Appoints Michael Nederhoff as CEO Shelter Cannabis, a product maker for Canada’s medical and adult-use markets, appointed Michael Nederhoff as chief executive officer.

Nederhoff has more than 25 years of management experience in the retail and manufacturing sectors. Most

72 MJBizMagazine | August 2021

 Cannabis Researcher Joins Flora Growth Cannabis company Flora Growth announced that Annabelle ManaloMorgan would head up the company’s new Science Advisory Team as its lead scientific adviser. In this position, she will examine the therapeutic application of cannabinoids on specific disease conditions.

Manalo-Morgan’s background includes a Ph.D. in cell and developmental biology. She will advise Flora Growth on how cannabis can help patients suffering from neurological and systemic diseases, including multiple sclerosis, Parkinson’s and epilepsy.

Jushi Holdings Announces Management and Board Changes Jushi Holdings, a vertically integrated, multistate cannabis operator, announced the appointment of Leonardo “Leo” Garcia-Berg, a former global supply chain executive, as the company’s chief operations officer.

In his new role, Garcia-Berg will be responsible for driving growth strategies and efficiencies and for coaching and developing team members across the company’s grower-processor facilities.

Before joining Jushi, Garcia-Berg served in numerous roles at AB InBev,

the world’s largest multinational brewing company.

As the global director of valuecreation programs, he led strategies focused on improving manufacturing, logistics, sourcing and operations across the company’s third-party vendors. Garcia-Berg also served as director of brewery operations for AB InBev in Mexico.

Jushi also announced that Erich Mauff would step down from his role as co-president and board director. The company has no immediate plans to fill the co-president position.

HIA Chooses President, Fills Board Posts Sustainable agriculture specialist Mike Lewis is taking over as president of the Hemp Industries Association, as former president Rick Trojan moves to vice president and head of a new Cannabinoids Council.

Based in Livingston, Kentucky, Lewis works for the National Center for Appropriate Technology. He said he hopes to use his HIA position to promote the crop’s potential to mitigate climate change.

HIA also appointed Zev Paiss to represent hemp fiber on the board and Jeffrey Kostiuk to the board’s new position dedicated to hempseed and grain.

Accounting Firm Selects Lead for Cannabis Services Group Crowe, an international accounting, consulting and technology firm, appointed Nadine Pietrowski managing partner of the cannabis services group. She is a CPA and earned the CGMA designation.

In this role, Pietrowski oversees delivery of the firm’s full range of services to the cannabis industry.

Hired or promoted someone for a senior-level position? Send a news release or general information to Omar Sacirbey at omar.sacirbey@ mjbizdaily.com.

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