MJBiz Magazine October 2021 by MJBiz Daily

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October TABLEOFCONTENTS

FEATURES

Volume 8 • Issue 9

COVER STORY

From the Editor

UNDERSTAND YOUR INVESTOR

Learn what venture capital firms, SPACs family offices and angel investors are looking for when making investments.

Five Questions with Jen Pike

Hemp Notebook

REPORT PREVIEW

Percentage of women and minorities in leadership positions down from 2019.

Company News

MJBIZCON 2021

Industry Developments

104

Best Practices in Retail

Official guide for the industryʼs most popular conference and trade show.

118

BATTLING BUILDING CHALLENGES

124

Industry Players

Navigate supply-chain delays and rising prices.

112

GUARD AGAINST RANSOMWARE ATTACKS

129

Our Advertisers

Training employees to spot spam can protect your business. October 2021

130

Seed to CEO Podcasst

MJBIZCON 2021 SHOW GUIDE INSIDE! SEE PAGE 35

Navigate Increased Construction Costs

MAG AZIN E VOLUME 8 • ISSUE 9 • $12.95

Guard Your Business Against Ransomware REPORT PREVIEW: Women & Minorities in Cannabis

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UNDERSTAND YOUR INVESTOR Learn what venture capital firms, family offices, angel investors and SPACs are looking for when making investments

On Our Cover Karan Wadhera, managing partner at Casa Verde Capital, shares his priorities when placing investments, starting on page 70. Photo by Evan Mulling

MJBizMagazine | September 2021

Construction workers with Grow America Builders frame a dispensary. The cost of labor and materials has been rising just as many new markets are coming online. Courtesy Photo

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ContactUs | Whoʼs Behind This Magazine? Magazine feedback We are here to help the multibillion-dollar cannabis industry prosper. Let us know how we can serve you. Email us at m agazine@mjbizdaily.com with your thoughts, suggestions and any other feedback about the magazine and the stories we cover.

On the site To get the cannabis industry′s latest news and analysis, visit us at mjbizdaily.com and hempindustrydaily.com.

Find us on social media MJBiz @MJBizDaily @MJBizDaily @MJBiz

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Chief Executive Officer

VP of Publishing

Pamela Moore Pam.Moore@MJBizDaily.com

Editorial Director

Roger Fillion Roger.Fillion@MJBizDaily.com

Magazine Editor

Senior Editor

Chris Walsh

Kate Lavin Kate.Lavin@MJBizDaily.com Kevin Huhn Kevin.Huhn@MJBizDaily.com

Staff Writers Laura Drotleff Laura.Drotleff@HempIndustryDaily.com Solomon Israel Solomon.Israel@MJBizDaily.com Matt Lamers Matt.Lamers@MJBizDaily.com Kristen Nichols Kristen.Nichols@HempIndustryDaily.com Omar Sacirbey Omar.Sacirbey@MJBizDaily.com Bart Schaneman Bart.Schaneman@MJBizDaily.com John Schroyer John.Schroyer@MJBizDaily.com Jeff Smith Jeff.Smith@MJBizDaily.com

Data and Charts

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Contributors

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Jenel Stelton-Holtmeier, Andrew Long Christa Madrid, Katie Ruland Margaret Jackson, Evan Mulling Mary Pemberton Mary.Pemberton@MJBizDaily.com

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David Braswell David.Braswell@MJBizDaily.com Savannah Brown Savannah.Brown@MJBizDaily.com Lindsay Burchfield Lindsay.Burchfield@MJBizDaily.com Andrew Gelwick Andrew.Gelwick@MJBizDaily.com Rachel Grundner Rachel.Grunder@MJBizDaily.com Molly McElwain Molly.McElwain@MJBizDaily.com Brooke Moore Brooke.Moore@MJBizDaily.com Alex Sutliff Alex.Sutliff@MJBizDaily.com Customer Service CustomerService@MJBizDaily.com (720) 213-5992, ext. 1

OCT. 19-22, 2021 LAS VEGAS + ONLINE LIVE EXPO: OCT. 20-22 Since 2011, the cannabis industry has relied on MJBizDaily for useful business news, financial numbers and connections to industry leaders through our annual event, MJBizCon. Held each fall in Las Vegas—and now online as well—MJBizCon brings together more than 30,000 cannabis industry executives, entrepreneurs and major investors. Register at mjbizcon.com. And be sure to download the official show app!

Co-Founders

Editorial Advisory Board Jessica Billingsley Jesce Horton Tyler Beuerlein Chanda Macias Liz Connors Jim Makoso Rod Elliot Roz McCarthy Mara Gordon Kristin Nevedal Robert Groesbeck Nancy Whiteman To start/change/cancel your subscription, visit MJBizMagazine.com, call us at (720) 213-5992, ext. 1, or email us at CustomerService@MJBizDaily.com. MJBizMagazine subscriptions are currently free to qualified U.S. cannabusiness professionals and investors age 21 and over only. To advertise with us, email Sales@MJBizDaily.com or call us at (720) 213-5992, ext. 2. MJBizMagazine, Volume 8, lssue 9, October 2021 lSSN 2376-7375 (print); lSSN 2376-7391 (online) MJBizMagazine is currently published 10 times per year by MJBiz™, a division of Anne Holland Ventures Inc. POSTMASTER: Please send address changes to: MJBiz, 3900 S. Wadsworth Blvd., Suite 100, Denver, CO 80235. © 2011-2021 by by MJBizDaily™, a division of Anne Holland Ventures lnc. All rights reserved. Materials may not be reproduced in whole or in part without written permission. For reprints of any article, please contact Customer Service. MJBizMagazine.com

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FromtheEditor | Kate Lavin

Let’s Make a Deal Business fundamentals are key, but investors’ preferences vary by experience and sector

hile researching what prompts investors to make a deal, MJBizMagazine reporter Omar Sacirbey cast a wide net. He contacted venture capitalists, family offices, special purpose acquisition companies (SPACs), angels and individual investors. Some of their advice followed a common theme. Every investor wants to see: • Strong leadership teams. • Solid business plans. • Meticulous financials. • Thoughtful market research. • Reasonable valuations. But the sources for our cover story on page 70 were not reading from a script. Some were eager to explore sectors such as banking and point-of-sale systems while others refused to consider them. Many decision-makers valued decades of leadership experience, and other funders believed a young but ambitious visionary could be complemented by a well-rounded board of directors. For venture capital firm Silverleaf Venture Partners, a founder opposed to ceding leadership could be a deal breaker. Managing Partner Andre Haroche said Silverleaf has identified leaders who are “great CEOs now, but their emotional intelligence isn’t going to get them to an IPO. … I think a lot of guys have an issue with stepping down or handing the reins over to somebody else.”

A Business Unlike Any Other Jen Piro, an angel investor focused on the cannabis space, cited red flags that tell her a company’s leadership team doesn’t understand challenges unique to the industry. A CEO that intends to use Instagram as its primary vehicle to reach consumers, for example, probably doesn’t realize marijuana companies are at constant risk of having their social media channels shut down. “I really like to see people who have thought through the challenges they’re going to face and how they’re going to overcome that,” she said. On the other side of the coin, Piro emphasized that the restrictions businesses face also present real opportunities. “People who are thinking about better ways to engage customers outside of these big digital players” could prove to be a solid investment, she said. To date, Piro has placed more than 25 investments in cannabis companies.

12 Marijuana Business Magazine | October 2021

“I’m personally very excited about people who are thinking about this differently because they might actually help shape the future of digital advertising.” If you run a company and are looking to raise capital, this issue of MJBizMagazine is full of examples that prove the right investor exists for every type of business. It’s all about being prepared and making the right connection.

MJBizFinance Forum Current investors in the marijuana industry and those looking to dip a toe into the space can fill gaps in their knowledge at the MJBizFinance Forum taking place at the Westgate in Las Vegas on Oct. 19, one day before the official start of MJBizCon. The forum features a full day of educational sessions on topics such as acquisitions and consolidation, innovation and disruption, SPACs and more. Plus, there will be plenty of time for networking and forging genuine business relationships. Review the agenda and register for MJBizCon at mjbizcon.com.

Kate Lavin MJBizMagazine Editor

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For hydrocarbon extraction, operators often utilize Huber CC and Unistat series to cool down solvent tanks, material columns, and various components. The target temperature range is generally -40˚C to -80˚C. Huber heating units, such as the KISS 202 and CC-315B are often used on the solvent evaporation side of these closed loop systems.

In the CO2 extraction process temperature control plays a crucial role. Columns are heated and chilled, as are feed and solvent lines, all in order to ensure extraction temperatures as well as maintain solvent pressure and flow. The Unistat T305 heating unit and Cool Smart CS Chillers are routinely paired with these units.

Ethanol Extraction In ethanol extraction, Unistats and Cool Smart CS Chillers are routinely used. Ethanol is generally brought down to temperature in a holding tank and then transferred to the process. Heat exchangers and flow through chillers can also allow for the cooling of ethanol. These applications generally call for large process volumes to be cooled quickly, requiring a high cooling capacity in the -20˚C to -80˚C range.

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FiveQuestions | with Jen Pike

Dipping Into Lessons from Tobacco Former Altria executive says fractured cannabis marketplace creates obstacles to brand recognition By Kristen Nichols

o advertising on social media. No marketing that might appeal to children. No ads on TV or radio. Sound familiar? The challenges faced by marijuana and hemp companies are old hat for the tobacco industry. In addition to legal barriers, the tobacco industry faces social stigma that is in some ways worse than that faced by today’s cannabis operators. So, when Jen Pike took charge of brand management for Skoal smokeless tobacco more than 10 years ago, she had her work cut out for her. Pike led efforts to reinvent a category that had stagnated for 100 years, rising to vice president for consumer engagement and marketing at Altria, Skoal’s parent company. Now Pike is taking the helm of Boldt Runners, a hemp company in Arcadia, California, that makes moist smokeless hemp. The company’s Cannadips brand is already in 5,000 retail locations nationwide. MJBizMagazine caught up with Pike to find out what lessons cannabis businesses can take from another highly regulated industry and why she believes there’s real potential in smokeless hemp.

What are tobacco companies doing better than the cannabis industry right now? The real difference between the tobacco industry and the cannabis industry is that the tobacco industry is mature. So you have fewer products in that space. They’re all national, and they’ve been around for a while. You have

14 MJBizMagazine | October 2021

“If you’re laserfocused on who you want to reach and what matters to those consumers, there are absolutely ways to create relationships with those consumers and be relevant.” – Jen Pike, Boldt Runners

trusted, well-developed brands that are available nearly everywhere. In the cannabis space, it’s just emerging. You have lots of companies trying things. From a consumer perspective, that makes cannabis—CBD or otherwise—really challenging to shop for and difficult for some to understand.

How is that a challenge for companies in the cannabis industry? A couple of years ago, retailers got really excited about CBD brands that were coming into convenience stores. They thought, “Oh, wow, this is great. This is the next big category.” And I don’t think they were wrong, but consumers need to know: Which products do I need for what, and when?

Because there’s so much in the market right now, consumers are still trying to figure out, “Do I want a tincture? Do I want a cream? Do I want an edible? Do I want to ingest (something) smokable, and when am I going to use these products? And for what reason?” It makes for a very fractured landscape in cannabis.

How can cannabis companies build brands given the marketing and advertising challenges? To get the scale that tobacco companies have achieved over the past 100 years or so, it’s because we know the consumer that we want to reach. You have to position your products, the context and how to use them.

Marketing has been really restricted in the tobacco space, too. If you’re laser-focused on who you want to reach and what matters to those consumers, there are absolutely ways to create relationships with those consumers and be relevant. What we’re really focused on is awareness, great trial offers and responsibly executed adult sampling. I think those are three important pillars to get the word out and allow people to give it a try, learn a little bit more about the product.

How do you find your audience? I’m old enough to remember when you’d see Marlboro in stadiums and stuff. But advertising like that in tobacco, that hasn’t been happening for quite some time.

The tobacco companies nonetheless were able to reach current adult smokers in the places where current adult smokers gather. And in those spots, once tobacco companies had verified that they were in fact talking to an adult smoker over 21, you can create great experiences— particularly at events and festivals. I think the same opportunity exists within cannabis. Mass advertising has a place and a role for some brands. But for brands that are getting started and emerging brands, building relationships with a focused consumer set is where you start.

What does the market for chewable hemp look like? Our core audience is men 21 to 40 (years old) who use MST, or moist

smokeless tobacco. That’s exactly who we’re most focused on. Our sales pitch is: We’ve got a product that is discreet, it’s smokefree, it’s easy to use, and it has fantastic, long-lasting flavor. We know that a large majority of people who use traditional tobacco products say that they would like to quit. We also know that men are looking for alternatives to traditional dip or moist smokeless tobacco. This interview has been edited for length and clarity.

Kristen Nichols is the editor of Hemp Industry Daily. You can reach her at kristen.nichols@ hempindustrydaily.com.

October 2021 | mjbizdaily.com 15

HempNotebook | Kristen Nichols

Hemp’s Honesty Problem When entrepreneurial exaggeration veers into lying, the entire sector suffers

ake it till you make it. It’s a concept that’s foundational to entrepreneurship, a mindset seen not as a necessary evil but something to celebrate and cultivate. That’s especially true in the hemp industry, where entrepreneurs sell their visions of markets that don’t yet exist (and sometimes aren’t legal) to win the investment dollars needed to realize their dreams of a cleaner, healthier (and, for themselves, more profitable) planet. But as this issue looks at opportunities in hemp and marijuana investment, we can’t ignore the potential dark side of overembellishment, which includes lawsuits, bankruptcies and broken promises. There’s hardly space in an entire magazine to discuss all the optimistic hemp agreements that turned out to be worthless.

Why the Lying? To find out more about what makes entrepreneurs inclined to fudge the truth, I looked to Yale University entrepreneurship lecturer Kyle Jensen, who has uncovered great insights into the causes of entrepreneurial lying. Jensen and his colleagues who researched the traits of entrepreneurs say it makes sense why they are inclined to braggadocio. The research points to three factors: • Entrepreneurs must always be “on,” because their success relies on sharing a business vision. • Exaggeration can be handsomely rewarded if entrepreneurs succeed. Even if most startups fail, entrepreneurs look up to companies such as Amazon, Facebook and Tesla—companies

18 MJBizMagazine | October 2021

that changed the entire economy and made their founders quite rich. • Entrepreneurs often borrow from friends and family. The temptation to bend the truth can be irresistible when a business founder feels his or her actions are justified by a desire to repay the people closest to them. These pressures are made worse by the sense that everyone exaggerates. Entrepreneurs are fighting for the same pool of capital, and the “fake-it-tillyou-make-it” mindset is all part of the game, right? After all, we tell ourselves, investors ought to expect a bit of hype around new markets and not take on risks they can’t afford to lose.

Worse in Cannabis Honest entrepreneurship is even more challenging in the hemp and marijuana sectors. That’s because laws about cannabis have been so flawed for so long that entrepreneurs can be forgiven for seeing injustice in every regulation and assuming that laws will change in their favor. Take CBD, for example: The U.S. government says the cannabinoid can’t be sold without a prescription. But when that rule goes unenforced and CBD is sold in every corner store, is it not reasonable for entrepreneurs to believe that rules will change, unlocking untold profits? Right now, countless CBD entrepreneurs are selling investors on that very belief. Investors, meanwhile, see prominent members of Congress promising reform, while the years slip by without change. It becomes a waiting game for all, frustrating to CBD operators and investors alike.

A Better Way I liked one of Jensen’s suggestions for succeeding at early-stage entrepreneurship without veering into chicanery: He said to be bold about what you don’t know. When hemp investors ask when a market will materialize or when federal law will change to allow a business to achieve its goals, hemp entrepreneurs should confidently reply, “I don’t know. But here’s what I think …” Then, use all that hemp optimism to sell your vision. Recognize uncertainty—not just in the fine print of a contract but even in your elevator pitch. Don’t make promises you can’t keep. Instead, promise to make your vision something worth investing in. Something about this young hemp industry persuaded you to dive in and try. Share your excitement and vision, and people will want to follow you. Kristen Nichols is the 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

Alberta, Canada-based SunStream is a joint venture between Canadian cannabis company Sundial Growers and Canadian investment management firm SAF Group. The new financing is expected to leave Greenrose with as much as $276 million “to fund its growth strategy,” the company said.

TerrAscend to Buy Gage in $545 Million Deal North American cannabis company TerrAscend plans to enter Michigan’s marijuana market after reaching a deal to buy local operator Gage Growth in an all-stock transaction worth $545 million. TerrAscend, which has operations in both the U.S. and Canada, said the deal will give it a leading position in Michigan. Under terms of the deal, Gage shareholders will receive 0.3001 common shares of TerrAscend in exchange for each Gage share, representing an 18% premium for Gage shares based on the companies’ closing share prices on Aug. 31. The acquisition includes three cultivation and processing facilities and 10 operating dispensaries. Detroit-based Gage had $32.8 million in cash “with minimal debt” as of June 30.

Ascend Wellness Borrows at Least $210 Million New York-based marijuana multistate operator Ascend Wellness Holdings said it secured a loan of at least $210 million at an interest rate of 9.5%. Ascend can increase the loan by up to $65 million, “subject to certain conditions.” The senior secured debt will be used to repay “substantially all” of Ascend’s outstanding debt, except for roughly “$12 million of outstanding acquisition payments with near-zero interest rates,” the company said in a news release. The money will also be used to finance Ascend’s pending investment in MedMen NY and “support (Ascend’s) future growth and acquisition initiatives.”

Marijuana SPAC Greenrose Secures up to $103 Million Marijuana industry special purpose acquisition company Greenrose Acquisition Corp. of Woodbury, New York, said it has reached agreements for up to $103 million in funding from SunStream Bancorp. “SunStream’s investment comprises $78 million in a multi-tranche senior secured loan facility and $25 million in unsecured convertible notes,” Greenrose said in a news release.

22 MJBiz Magazine | October 2021

Tilray Acquires Majority of MedMen Debt Canadian license holder Tilray acquired a majority of the debt that California-based MedMen Enterprises owes to New York hedge fund Gotham Green Partners and other funds. According to a news release, Tilray bought nearly $166 million in convertible secured notes and warrants. The move gives Tilray a shot to acquire MedMen in the future as well as entry into the U.S. marijuana market in the event of federal legalization. Under terms of the deal, a full acquisition can only follow federal U.S. marijuana legalization. The deal also gives MedMen an out if the company repays all the existing debt by 2028, before the notes mature.

Cannabis Platform Leafly Goes Public Via SPAC Merger Leafly, an online cannabis guide and news website based in Seattle, plans to go public via a merger with Merida Capital Holdings, a special purpose acquisition company (SPAC) in New York. The deal will give Leafly up to $161.5 million to expand its business in states that recently legalized marijuana, including New York. At closing, the combined company is expected to be valued at roughly $385 million with equity value of approximately $532 million, according to a news release. Existing Leafly shareholders are expected to own approximately 72% of the combined company. Merida, a so-called blank-check company, will adopt the Leafly name, and the combined company’s common stock will be listed on the Nasdaq.

Scotts Miracle-Gro Places $150 Million in RIV Capital The Scotts Miracle-Gro Co. is launching The Hawthorne Collective, a new subsidiary that will allow the Ohiobased lawn and garden giant to invest in emerging areas of the marijuana industry. The Collective announced a strategic investment in August in Toronto-based RIV Capital, which until earlier this year was a subsidiary of cannabis giant Canopy Growth. The deal makes RIV Capital the Collective’s “preferred vehicle” for cannabis-related investments that are not currently within the purview of the Hawthorne

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CompanyNews | U.S., Canada & International Gardening Co., a subsidiary that supplies hydroponics and grow supplies for the cannabis sector. The investment comes in the form of a six-year, $150 million convertible note, according to a news release. Upon conversion, Scotts Miracle-Gro, through The Collective, would own approximately 42% of RIV. The deal, which is expected to close in the fourth quarter, comes with a “top-up” option to boost that stake to a maximum of 49%. The Collective also would be able to nominate three members to RIV’s board, which will be increased to seven people.

NewLake Closes on $100M IPO Connecticut-based NewLake Capital Partners, which provides real estate capital to state-licensed marijuana operators, said it closed on an initial public stock offering of more than $101 million. The offering of 3.9 million shares of stock was priced at $26 a share, according to a news release. The company expects the shares to trade on the U.S. over-thecounter markets. Net proceeds will be used to acquire assets that fit with NewLake’s strategy.

24 MJBiz Magazine | October 2021

I Heart Jane Nets $100M of Capital Jane Technologies, a leading cannabis e-commerce platform, said it raised $100 million of equity to expand its footprint, strengthen existing software and introduce new technologies. The California-based company, which does business as I Heart Jane, said in a news release that the funding was led by Honor Ventures, with participation from Third Point Ventures, Gotham Green Partners, L2 Ventures, Delta Emerald Ventures and Artemis Growth Partners. Jane previously raised $30 million of capital, bringing the total amount of funding to roughly $130 million, according to the release.

Tilt Holdings to Partner With New York Tribe Massachusetts-based Tilt Holdings and the Shinnecock Indian Nation on Long Island, New York, are partnering to create a vertically integrated cannabis company, Little Beach Harvest. Through a joint venture with the tribe’s cannabis project-development firm, Conor Green, marijuana tech firm Tilt will finance, build and provide management

services for the operation, according to a news release. The company will be wholly owned by the Shinnecock Nation and will be built on territory in the Hamptons.

Village Farms Acquires Colorado CBD Firm Canadian greenhouse produce grower Village Farms International acquired privately held CBD company Balanced Health Botanicals (BHB) in a deal worth $75 million. Denver-based BHB focuses on hempderived CBD products and owns CBD e-commerce platform CBDistillery and CBD skin-care brand Bota. The deal will give Village Farms “immediate entry into the U.S. CBD market in a consumer products category adjacent to the high-THC cannabis market,” according to a news release. The $75 million acquisition includes $30 million in cash and $45 million in Village Farms shares.

Ayr Inks $80M Deal for Pennsylvania Dispensaries Multistate operator Ayr Wellness of New York signed a letter of intent to buy three medical cannabis

dispensaries in Pennsylvania for $80 million, deepening the company’s presence in the fast-growing market. The $80 million acquisition of PA Naturals includes $20 million in stock, $25 million in seller notes and $35 million in cash, according to a news release. In addition, Ayr will pay an earnout of up to $40 million, mostly in stock and notes, in the first quarter of 2022, based on certain 2021 financial metrics. PA Naturals, which operates under the retail brand of Nature’s Medicines, has dispensaries in Bloomsburg, Selinsgrove and State College. Ayr Wellness also agreed to purchase Bostonbased Cultivauna, which makes the Levia brand of cannabis-infused seltzers and tinctures, for $20 million, including $10 million in cash and the rest in stock. An additional $40 million will be paid in shares based on performance in 2022 and 2023.

Planet 13 Buys Cannabis Operator in Florida Vertically integrated cannabis company Planet 13 Holdings in Las Vegas agreed to purchase a Florida medical marijuana subsidiary of multistate operator Harvest Health & Recreation for $55 million.

To learn more, visit us at MJBizCon 2021 at booth C6321

October 2021 | mjbizdaily.com 25

CompanyNews | U.S., Canada & International The new company will be called Planet 13 Florida, according to a news release, and will be licensed to cultivate, process, transport and sell medical marijuana. The company plans to build cultivation and retail in “priority metro areas,” including Miami, Orlando and other tourist destinations.

Green Dragon Expands to Florida Colorado-based marijuana company Green Dragon opened its first two dispensaries in South Florida and plans to open more than 20 locations in the state by the end of the year. The company’s initial dispensaries are in Boynton Beach and Lake Worth. Other sites currently under construction are in Jacksonville, Tampa, West Palm Beach and other locations, according to Alex Levine, Green Dragon’s co-founder and chief development officer.

Merrill Lynch to Accept More Clients With MJ-related Wealth Wealth-management firm Merrill Lynch is relaxing its approach to clients with marijuana-related business assets.

Merrill executives unveiled plans to add more “flexibility to the process of onboarding clients who own or invest in marijuana-related businesses,” AdvisorHub reported, citing an internal message from company executives to financial advisers. A Merrill spokesperson confirmed the authenticity of the message. Merrill is a subsidiary of Bank of America.

Ancillary Firm Greenlane Raises $32 Million in Equity Greenlane Holdings, a Floridabased ancillary marijuana company, said it entered into definitive agreements with institutional investors to raise $32 million from the sale of stock and warrants. A company news release didn’t specify how the money would be used, but Greenlane has said in previous regulatory filings that proceeds will be used for working capital and to fund acquisitions. Greenlane in March announced an all-stock agreement to acquire California-based KushCo Holdings, with plans for the combined company to sell vaporizers, rolling papers, child-resistant packaging and other cannabis-related supplies.

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Cannabis REIT Acquires Property in Illinois Innovative Industrial Properties (IIP) closed on the acquisition of an Illinois property valued at $50.3 million and entered a long-term lease with a subsidiary of 4Front Ventures to run the business. According to a news release, the San Diego-based real estate investment trust (REIT) bought the property for $6.5 million and plans to build about 250,000 square feet of industrial space on site. IIP agreed to reimburse the construction costs up to $43.75 million and, assuming full reimbursement, the company’s total investment in the property is expected to be $50.25 million. Arizona-based multistate marijuana operator 4Front is planning to operate a licensed cannabis cultivation and processing facility on the property.

Cresco Labs Invests $40M to Triple Ohio Production Chicago-based multistate operator Cresco Labs is investing $40 million to expand a cannabis cultivation

and processing facility in Ohio. The project, which has been approved by local authorities, will nearly triple the size of Cresco’s facility in Yellow Springs, part of the Dayton metro area. The project will consist of two buildings, including a 24,000-square-foot processing facility and a 71,000-square-foot facility used mainly for cultivation.

Harvest Closes $29.5 Million Deal With Cannabis REIT Multistate cannabis operator Harvest Health & Recreation closed a sale-leaseback transaction, selling a cultivation and processing facility in Hancock, Maryland, to Innovative Industrial Properties in a deal valued at $29.5 million. Harvest received $16.6 million for the property and anticipates completing unspecified improvements totaling $12.9 million, which will be reimbursed by the California-based real estate investment trust (REIT). Arizona-based Harvest operates medical marijuana dispensaries in the Maryland communities of Halethorpe, Lutherville-Timonium and Rockville. Those are supported by a cultivation and processing facility in Hancock.

1:1 HPS REPLACEMENT

October 2021 | mjbizdaily.com 27

CA N A DA D E V E LO PM E N T S

CompanyNews | U.S., Canada & International Separately, the Ottawa, Ontario-based marijuana producer applied to transfer its U.S. share listing from the New York Stock Exchange to the Nasdaq. In 2020, the NYSE warned Hexo that its shares did not meet the exchange’s listing standards after they fell below $1.

Valens to Acquire Citizen Stash for $43 Million Hexo Sets $140M Raise for Acquisition and Expansion Canadian cannabis grower Hexo Corp. priced a public offering to raise $140 million. The offering follows a shelf prospectus supplement that Hexo filed May 25. Proceeds from the share offering will be used to pay part of the cash component of Hexo’s acquisition of Canadian competitor Redecan as well as “for expenditures in relation to the company’s U.S. expansion plans,” which include a Colorado production facility. The underwriters of the offering agreed to purchase 47.5 million units at $2.95 per unit. Each unit includes one common Hexo share and 0.5 share purchase warrants.

28 MJBiz Magazine | October 2021

Kelowna, British Columbia-based marijuana extractor The Valens Co. announced a $43 million (CA$54.3 million) deal to acquire premium flower company Citizen Stash Cannabis Corp. The all-stock transaction will see shareholders of Mission, British Columbia-based Citizen Stash receive 0.162 Valens shares for each Citizen Stash share, representing a 35.1% premium for Citizen Stash shares based on the companies’ closing share prices on Aug. 27. The acquisition is subject to approval by courts, the stock exchange and Citizen Stash shareholders.

Aurora Farm in B.C. Evacuated Due to Wildfire Aurora Cannabis had to evacuate its outdoor marijuana farm in Westwold, British Columbia, in early

I N T E R N AT I O N A L

August because of wildfire activity in the area. The evacuation of the Aurora Valley site had no business impact, the Edmonton, Alberta-based company said in an emailed statement. “Our Valley operation is under an evacuation order, and we are taking the necessary steps to ensure the safety and well-being of our employees, as well as supporting those who have had to evacuate,” wrote

a spokesperson for the company. Thirteen Aurora employees and their families had to evacuate. The Aurora Valley property is a 200-acre outdoor cannabis farm, about 248 miles (400 kilometers) northeast of Vancouver. The nearby White Rock Lake Wildfire was described as “a catastrophic event” by Mark Healey, the incident commander, and nearly 100 fires burned in the surrounding region.

ship medical cannabis oil to its Brazilian distribution partner, XLR8. The first shipment will be used for patient trials under the compassionate care program and include a mix of medical cannabis oil SKUs. MediPharm completed commercial exports to Australia and launched an extraction facility there.

MediPharm Labs Gets Authorization to Export Medical Cannabis to Brazil MediPharm Labs Corp., a medical cannabis company in Barrie, Ontario, received approval from regulators to

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, deals, partnerships and similar developments, not product announcements.)

4 reasons why B3 Labs is the best in Britain 1. Innovation

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2. Manufacturing Standards B3 Labs is the first BRCGS certified CBD-based product manufacturer in Europe. This certification is a prerequisite for all major retailers in the UK. The first question they’re going to ask is, ‘what certification do you have?’ With BRCGS, you’re through the door. At B3 Labs, we’re ready to share this with US brands wanting to launch in the UK.

3. Regulation At B3 Labs, we have embraced the UK and EU’s Novel Foods Directive to consistently produce consumable products that come out on top in taste, quality and safety. Our US partners can enjoy our diligence and devotion toward producing compliant products every time.

4. Network With 12+ years of knowledge and experience, the B3 Labs network is unrivalled in the UK. From fulfilment and distribution to science-backed formulation to marketing, recruitment and legal specialists. Our network is your network.

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REPORT PREVIEW Women & Minorities in the Cannabis Industry

Diversity, Deferred Percentage of women and minorities in leadership positions down from 2019 By Jenel Stelton-Holtmeier

he cannabis industry has changed significantly since 2017, when the first edition of MJBizDaily’s “Women & Minorities in the Cannabis Industry” was published. The diversity landscape has changed as well. For example, preventing individuals with drug convictions, which disproportionately affect people of color, from working in or owning marijuana businesses was common practice in most early legal marijuana markets. Now, social equity is a critical component in every market, new and old. Social equity initiatives and cannabis legalization are now intertwined, but there is no single easy solution for

improving the diversity landscape. Still, it is encouraging to see new markets seeking to improve upon the programs that came before and older markets attempting to fill the gaps that still exist. However, racial and gender diversity in the marijuana industry still is lacking—especially in ownership and executive positions.

WOMEN AND REPRESENTATION

As the cannabis industry expands, more women are getting involved. But the percentage of executive positions held by women declined in 2021 after a spike in 2019.

Notably, in 2021, the percentage of women holding executive positions fell below the average recorded across the larger U.S. business landscape. Previously, the portion of executive positions held by women in the cannabis industry consistently outpaced that of mainstream businesses. This shift isn’t driven solely by the decline in women cannabis executives; the latest data from the U.S. Bureau of Labor Statistics indicates that women hold a higher percentage of these roles in the broader economy—up to nearly 30% from only 21% in 2018. It’s hard to say for sure what’s driving the change, but some industry experts

Percentage of Women Executives in the Cannabis Industry Breakdown by Year 40% C

35%

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Source: MJBizDaily reader surveys and U.S. Bureau of Labor Statistics Current Population Survey © 2021 MJBizDaily, a division of Anne Holland Ventures Inc. All rights reserved. The percentage of women executives in the cannabis industry this year trailed the national average set in 2020.

32 MJBizMagazine | October 2021

2020 National Average All U.S. Businesses

Percentage of Minority Executives in the Cannabis Industry Breakdown by Year 30%

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Source: MJBizDaily reader surveys and U.S. Bureau of Labor Statistics Current Population Survey © 2021 MJBizDaily, a division of Anne Holland Ventures Inc. All rights reserved. The share of cannabis executives who identify as minorities is on par with other industries in 2021, though down significantly from 2017 and 2019.

VISIT US AT BOOTH #C2332 OCT. 19-22 O N S H A R P. C O M

REPORT PREVIEW Women & Minorities in Cannabis

suggest that competitive markets tend to favor businesses with men in ownership and leadership positions, primarily because of their established access to capital. The money and resources companies need to survive and expand often comes from private capital markets, which are largely male-dominated, such as family investment offices and venture capital firms.

Don't miss the

Achieving Equity in Cannabis Networking Event Wednesday, Oct. 20 | 4:30-6 p.m. Las Vegas Convention Center

MINORITY LEADERSHIP

The percentage of minorities who hold executive positions at cannabis businesses stands at 13.1%, in line with the average across all U.S. businesses. The number is down from 2017, despite increased focus at the state level to improve racial diversity within the industry. Social equity programs are a critical aspect of all new regulated marijuana markets, and several of the first markets

are looking for ways to fix this gap. But several programs have fallen short of their goals. Some of the contributors to these hurdles include licensing delays, challenges to how the policies are implemented and a lack of access to

capital for economically disadvantaged communities. Visit mjbizdaily.com/books to download the latest “Women & Minorities in the Cannabis Industry” report.

Download Official Show App

Oct. 19-22, 2021

Las Vegas + Online

Official Show Guide FOR THE MOST ANTICIPATED EVENT OF THE CANNABIS BUSINESS YEAR

INSIDE: Keynote Speaker Q&A with investment mogul Daymond John

MJBizCon.com Pre-registration is required

Pre-Show Forums Expert-level content about finance, hemp and science Expo Over 1,100 suppliers, Hall of Flowers Experience, LIVE! Demo Stage & more

MJBizCon 2021 Show Guide

MJBizCon Turns 10! Join us Oct. 19-22, 2021, in Las Vegas for the most anticipated event of the cannabis business year. For the past 10 years, MJBizCon has reigned as THE must-attend event for tens of thousands of cannabis industry executives looking to start or grow a cannabis business. It’s where deals are made, career connections are forged, and new products and services are discovered. Meet over 1,100 industry suppliers, gain business advice and insights from leading speakers who are driving innovation, and be a part

Special Opening and Closing Keynotes You Don’t Want to Miss: OPENING GENERAL SESSION WEDNESDAY, OCT. 20, 9:00 a.m.

State of the Industry and Predictions Chris Walsh, CEO of MJBiz and Founding Editor of MJBizDaily

of unparalleled networking opportunities.

A lot has happened in the

Don’t miss a thing! Check out the event schedule.

cannabis industry since MJBizCon

Pre-Conference Forum Tuesday, Oct. 19 10 a.m. – 5 p.m.

Hemp Industry Daily Forum

9 a.m. – 5 p.m.

MJBizFinance Forum

10 a.m. – 5 p.m.

Science Symposium

1 – 5 p.m.

Associations Day

2020. Chris Walsh will once again entertain and educate you as he presents the current state of the cannabis industry and pulls out the crystal ball for his always popular address, ‘Predictions for 2022’.

MJBizCon Day 1

Wednesday, Oct. 20 9 a.m. – noon

MJBizCon Kick-off General Session

10 a.m. – 6 p.m.

Exhibit Floor Open

4:30 – 6 p.m.

Networking Event: Achieving Equity in Cannabis

MJBizCon Day 2

CLOSING KEYNOTE SPEAKER FRIDAY, OCT. 22, 9:00 a.m.

Daymond John

Thursday, Oct. 21 9 a.m. – 12:15 p.m.

Morning Breakout Sessions

10 a.m. – 6 p.m.

Exhibit Floor Open

2 – 4:40 p.m.

Afternoon Breakout Sessions

5 – 6:30 p.m.

Networking Event: Empowering Women in Cannabis

Co-Star ABC's Shark Tank and Founder/CEO of FUBU Daymond John will be sharing his entrepreneurial inspiration and insights. His

MJBizCon Day 3

closing keynote will send

Friday, Oct. 22 9 a.m. – 10 a.m.

Closing Keynote: Daymond John, Founder/ CEO of FUBU, Presidential Ambassador for Global Entrepreneurship, and Star of ABC’s Shark Tank and CEO of The Shark Group

10 a.m. – 3 p.m.

Expo Open

10:30 a.m. – 12:30 p.m. Breakout Sessions

36 MJBizMagazine | October 2021

you on your way to making moves in the cannabis industry.

The Event For: Cultivators Retailers Investors

Manufacturers Scientists

C-Suite Executives

October 2021 | mjbizdaily.com 37

MJBizCon 2021 Show Guide

The People’s Shark MJBizCon keynote speaker Daymond John shares what he looks for in entrepreneurs and why over-funding can be a big problem By Kate Lavin

hen Daymond John began making hats and T-shirts to sell on the streets of Queens, New York, he could not have known his clothing line, FUBU, would eventually create $6 billion in sales. Today, the founder and CEO of FUBU and co-star of ABC television show Shark Tank tells MJBizMagazine that he looks for the same ambition when vetting potential companies for investment. “I look for problem-solvers,” he said. “I look for people who are creative and scrappy and honest.” On Oct. 22, John will share his investment strategy in his keynote address to MJBizCon at the Las Vegas Convention Center. Keep reading to learn what inspires him to invest in a company—and what he considers a red flag. How do you determine whether a company is a worthwhile investment, and how could that be applied to marijuana businesses? My focus typically isn’t on the product or service or technology. In fact, I don’t really invest in the companies themselves. They call me “The People’s Shark” because I’m ultimately investing in people. The entrepreneur—that’s my focus. The first thing I’m trying to decide is if I could see myself working with the person, even if the current business doesn’t work. This may sound simplistic, but I’m trying to figure out if I want to

38 MJBizMagazine | October 2021

talk to you for the next five or so years. Problems are part of the businesscreation process, so you have to be willing to talk things through, to work things out. While somebody like Kevin O’Leary has no problem working with people he hates as long as they make money together, I’m a little different. At this stage of my life, if I don’t like your energy, if I don’t like you, it’s not going to work for me. If it’s just about parking my money somewhere, I can go to Wall Street. Amazon, Apple, Shopify. They don’t call me for anything. We don’t have to get along.

I look for problem-solvers. I look for people who are creative and scrappy and honest. I want to hear about the problems you’ve had—and, more important, what you’ve learned from them. If you pitch me and your entire experience sounds too good, I wonder if you’re naive or just not being genuine. It doesn’t matter the industry—authenticity matters. What really sells you on a company looking for capital, and what kind of tips would you offer for entrepreneurs trying to raise money? It’s always the person that sells me. Underline your resourcefulness. I like people who can make a dollar out of 15 cents. Tell me how you’ve learned to stretch what you have. A lot of people think you can just throw money at a business challenge. It doesn’t work that way. In fact, one of the biggest problems I see with start-ups is over-funding, not under-funding. People will use their funding to try to build a brick-andmortar bakery before they’ve sold a single cookie. Sometimes bigger money just lets you make bigger mistakes. So, my advice is to take in money as almost a last resort. Borrow, barter, trade, bootstrap for as long as possible. As an investor, if I see you doing a lot with a little, I’m much more inclined to invest in you. Kate Lavin is the editor of MJBizMagazine. You can reach her at kate.lavin@mjbiz.com.

The Largest Cannabis Industry Expo in the World

LOCATION: LVCC, Central and North Halls

Connect With 1,100+ Exhibitors You Need To Know With over 250,000 sq ft of expo space, MJBizCon is the largest expo floor serving the cannabis industry. That means you can get ALL your business done in one event, under one roof. You'll find exhibitors from professional grow and processing equipment to financial services and infused products—and everything in between you need to run your cannabis operation. Come ready to make deals, find new suppliers, check out new tech, compare supplier offerings and ask all your questions.

New for 2021!

Hall of Flowers @ MJBizCon Experience

MJBIZCON LIVE! STAGE

LOCATION: LVCC, North Hall Brand & Retailer Experience

New for 2021, stop

Find a curated collection of some of the

exhibitor content on

industry’s premium licensed cannabis brands that will be displaying the latest products, accessories & technologies. Appointment setting is crucial to facilitating solid brand, buyer, and industry exchanges.

by the stage for live the show floor. Find top exhibitors sharing their insights and product and service demos you need to grow your cannabis business.

BEER GARDEN Feeling thirsty or

Sponsored by:

want to play a quick game of corn hole? Make the ‘Beer Garden’ the spot to meet up with new and old friends. And bust out your camera to capture the moment at the ‘selfie’ stand. October 2021 | mjbizdaily.com 39

MJBizCon 2021 Show Guide

We’ve Come a Long Way, Baby Industry prepares to celebrate 10th MJBizCon with return to Las Vegas

ttendance at the first MJBizCon—held in 2012 and called the National Marijuana Business Conference and Expo—tipped the scales at 402 attendees and 22 exhibitors. By 2019, when the last inperson MJBizCon was held, attendance had topped 30,000 with more than 1,300 companies exhibiting. In preparation for this year’s return to the Las Vegas Convention Center, take a look at how far MJBIzCon has come and the marijuana legalization milestones that happened along the way.

2012 Location: Sherman Street Event Center—Denver Speakers: Steve DeAngelo (Harborside), Amy Poinsett (MJ Freeway) and Aaron Smith (National Cannabis Industry Association) States that legalized recreational marijuana in 2012: 2

2013 Location: Emerald Downs—Auburn, Washington Speakers: Steve DeAngelo (Harborside), Alison Holcomb (American Civil Liberties Union) and Henry Wykowski (Henry Wykowski & Associates law office) States that legalized medical marijuana in 2013: 3 2014

Location: Rio All-Suite Hotel & Casino—Las Vegas Keynote speaker: Ben Cohen (Ben and Jerry’s) States that legalized recreational marijuana in 2014: 2

‘Key-Panels’ Touch On Industry Hot-Button Topics Wednesday, Oct. 20 Reality Check: A Deep Dive Into U.S. Cannabis Legalization

Clash of the Titans: Can Cannabis

Culture and Big Business Coexist?

10:00 a.m. Welcome to 2021, where every day federal

10:45 a.m. Like any new, burgeoning industry, there

legalization seems like more of a reality than a

is excitement, hype and everyone wants a piece of

pipe dream. Is your business ready for legalization?

the profit. Enter: Big Business. So let’s just cut to

Are YOU ready for legalization? Join an insightful

the chase. Can big business and cannabis culture

discussion, and get ready for your ‘reality check’

cohesively build a solid industry? Five industry

of the good, the bad and the ugly that comes with

superstars will share the stage to discuss and find

federal legalization.

some clarity to this question.

40 MJBizMagazine | October 2021

2015

Location: Rio All-Suite Hotel & Casino—Las Vegas Keynote speaker: Ralph Nader (Political activist) States that legalized medical marijuana in 2015: 2

2016

Location: Rio All-Suite Hotel & Casino—Las Vegas Keynote: Penn Jillette (Penn & Teller) States that legalized recreational marijuana in 2016: 4

2019

Location: LVCC-North and Central Hall Keynote speaker: Mark Randolph (Netflix) Statesthat legalized recreational marijuana in 2019: 1

2017

2020

2018

2021

Location: Las Vegas Convention Center (LVCC)-North Hall Keynote speaker: George Blakenship (Tesla) States that legalized medical marijuana in 2017: 2

Location: LVCC-Central Hall Keynote speaker: Torsten Kuenzlen (Sundial Growers) States that legalized medical marijuana in 2018: 2

Location: Digital/On-demand Keynote speaker: John Mackey (Whole Foods) States that legalized recreational marijuana in 2020: 5

Location: LVCC-North and Central Hall Keynote speaker: Daymond John (FUBU, The Shark Group) States that legalized recreational marijuana (so far): 3

Networking Events at MJBizCon Give You Key Opportunities To Make Connections in the Industry Achieving Equity in Cannabis

Empowering Women in Cannabis

Reception: Wednesday, Oct. 20 • 4:30-6:00 p.m.

Reception: Thursday, Oct. 21 • 5:00-6:30 p.m.

Come together with the movers and shakers who are

Join the female power brokers in the cannabis

driving and championing the discussions that bring

industry who are making significant impacts

diversity and inclusion to the forefront of cannabis

and advancements in the industry. Open beer

industry growth. Open beer and wine bar.

and wine bar.

*Must pre-register for each reception for an additional fee.

October 2021 | mjbizdaily.com 41

MJBizCon 2021 Show Guide

From the Ground Up Your state just legalized cannabis. You made a career move into the cannabis industry. You just won a cannabis business license. You just started operating. The cannabis industry can be complicated to navigate. As more states open regulated markets, you need the right tools to be successful. Attendees of From the Ground Up sessions will hear objective, professional insights from some of the industry’s top leaders about how to get operations off the ground, how to grow their businesses and how to avoid pitfalls. These strategic and tactical sessions address the needs of new market players.

From the Ground Up: Launching a Cannabis Cultivation Operation Thursday, Oct. 21 • 9-9:45 a.m. In-person (Las Vegas Convention Center) • Digital/On-demand Launching a cultivation business requires many crucial considerations before entrepreneurs even break ground. Understanding who your customers are and what you want to achieve in your grow is paramount to success. In this session, we’ll look at the process of launching a cannabis cultivation operation and provide attendees with the basics needed to get started. We’ll also highlight potential challenges when building a cannabis grow. From the Ground Up: Launching a Cannabis Manufacturing Operation Thursday, Oct. 21 • 10:15-11 a.m. In-person (Las Vegas Convention Center) • Digital/On-demand Entering the cannabis manufacturing and processing space requires careful planning before building out the facility. This session will look at the process of launching a cannabis processing or manufacturing company and provide attendees with the basic tools they need to get started. Speakers will also share how they recognize and avoid challenges that can cause costly delays. From the Ground Up: Launching a Cannabis Retail Store Thursday, Oct. 21 • 11:30 a.m.-12:15 p.m. In-person (Las Vegas Convention Center) • Digital/On-demand Establishing a dispensary or retail store requires intense planning, whether it’s in a new or mature market. Key considerations range from start-up costs to regulatory compliance to recruiting and training staff. Having a clear picture of what to expect during the process gives budding cannabis entrepreneurs a better chance of succeeding, no matter which market they will be operating in. This session looks at the entire process of establishing a cannabis retail store, from licensing to launch, and operational considerations owners must understand to ensure success.

42 MJBizMagazine | October 2021

QUEST IQ SERIES

YOU’LL ACTUALLY WANT ON YOUR TEAM.

MJBizCon 2021 Show Guide

Start Your MJBizCon Experience with a Pre-Show Forum

Our one-day intensive forums* on Tuesday, Oct. 19, allow you to focus on a single segment of the cannabis industry, as well as connect and network with peers with similar interests. *Separate ticketed event

FINANCE FORUM

HEMP FORUM

SCIENCE SYMPOSIUM

This one-day

The roller-

This day-long

event will be

coaster

symposium

focusing on the investing

Finance Forum

hemp

Forum

will provide

Science SYMPOSIUM

industry

a deeper

could make

look at the

aspects of the industry. In this

even seasoned cannabis

latest developments and

dynamic industry where a tax

operators blanch. But the

data that are advancing

code can break you or Wall Street

sector still offers tantalizing

the science of cannabis.

can show up at your doorstep, it

profits for operators who can

Attendees will get a chance

is important for business owners

stomach the ride. This one-

to discuss important issues

to have all the right tools to

day hemp forum will feature

and network with their peers

make informed decisions. Join

industry experts sharing

during the event.

savvy financial and investing

their inside secrets on using

professionals for networking

innovation to thrive through

and conversation.

the industry’s ups and downs.

and financing

ASSOCIATIONS DAY Associations ociat attiiio o s ons

Day

Associations Day brings together non-profits and associations driving the cannabis industry forward. This is a must-attend event for seasoned executives and new entrants in the cannabis industry who are looking to drive progress by connecting with well-respected non-profits and associations.

44 MJBizMagazine | October 2021

regular |

feminized |

auto-flower |

hemp & cbd

MJBizCon 2021 Show Guide We asked MJBizDaily’s Editorial Advisory Board:

What are you most looking forward to about MJBizCon 2021? “After a year without MJBizCon, I am eager to reconnect with the heart of the cannabis industry—the people!” Jessica Billingsley CEO, Akerna

“I’m looking forward to MJBizCon because I will get a chance to reconnect with industry friends, and I’m excited to learn from industry experts about latest updates and successes.” Roz McCarthy Founder and CEO, Minorities for Medical Marijuana

“There has been a lot of innovation that has taken place during the pandemic, and I can’t wait to see it!” Mara Gordon Co-Founder, Aunt Zelda’s

“I’m most looking forward to educating myself on the latest developments and meeting with leading stakeholders in the legal cannabis industry.” Rod Elliot Senior Vice President, Global Public Affairs

46 MJBizMagazine | October 2021

Hear from over 125 trailblazers in cannabis—sharing real-world lessons and insights you can put into action at your cannabis operation.

Joe Bayern,

Berner,

Michael Brubeck,

Kristi Kelly,

Sol Clahane,

Steven Hawkins,

Bob Grosbeck,

Shanel Lindsay,

Vivian Azer,

Chris Ball,

Curaleaf

U.S. Cannabis Council

Planet 13

Tipping the Scales

Ardent Life, Inc

Sozo

Canopy Growth Corp.

Cowen

Ball Family Farms

Last Prisoner Project

Arnaud Dumas de Rauly,

Nidhi Lucky Handa,

Anna Leah Kaplan,

Ross MacFarlane,

Meredith Mahoney,

Nancy Mertzel,

Dr. Del Potter,

Markus Roggen,

Robin Schneider,

Gracie Burger,

Lantern

The Blinc Group

Mertzel Law

LEUNE

Aya Biosciences

SugarTop Buddery

Delic Labs

Sierra Club

Michigan Cannabis Industry Association

October 2021 | mjbizdaily.com 47

MJBizCon 2021 Show Guide

Fortune Cookies Rapper and marijuana entrepreneur shares thoughts about the importance of branding for growth in the cannabis sector By Bart Schaneman

he road from an entry-level job at The Hemp Center in San Francisco to opening a marijuana retail store on the Las Vegas Strip was a long one. But Berner, a rapper and owner of the Cookies cannabis brand, is not done yet. On Oct. 20, he’ll join longtime marijuana advocates and corporate executives for the MJBizCon panel Clash of the Titans: Can Cannabis Culture and Big Business Co-Exist? MJBizMagazine spoke with Berner about how his early experience in the cannabis industry helped shape his multimillion-dollar business. Let’s talk about the growth of Cookies as a national flower brand. How did that come about? It kind of stems from the Hemp Center Days. I remember when vendors used to come in with a duffel bag with 30 pounds in it and have no name to it— or they’d have a name, and it would just be in the turkey bag. And it’d be our job to put that weed in a plastic jar and then create a sign for it on the shelf. That was one of my favorite processes: getting creative with the sign designs. Trying to draw people in to buy the product, to see if there was a logo or a vibe that would help sell that weed. So that was part of my strategy, knowing that there was nothing branded in the industry. I just felt like it was missing. I think it’s important because it’s Instagram and people see it. They want to take pictures

48 MJBizMagazine | October 2021

Berner leads the ribbon-cutting ceremony at a new Cookies-branded marijuana store. Courtesy Photo

of it. They want to show it off, and it kind of spreads. The power of packaging is so strong.

empowering the hell out of them as well. And helping them build and expand their business.

How do you keep that brand reputation and trust in what Cookies is doing? We get to go state to state before we pick a partner, see what they’re growing. Their fire, their passion. Do they have experience? How is their dry room? What are their (standard operating procedures) on trimming? The market is weird. They can grow incredible flower and they can be put on the shelf and never be recognized because people want to find brands. So, when you find someone that cultivates great flower and you put a good brand in their hand, you’re

How has your experience in the music industry helped you as a cannabis executive? I feel like the music and internet played a very big role in Cookies’ success. A lot of people now try to mimic that same model. They try to give musicians pounds for free and be like, “Hey, rap about me. Tag me.” It doesn’t quite work the way that we did it. You can’t buy it. You can try to do it, but it won’t come across.

Bart Schaneman is an editor for MJBizDaily. You can reach him at bart. schaneman@mjbizdaily.com.

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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 U.S. Vaccine Mandate Will Likely Apply to Marijuana Industry U.S. President Joe Biden announced in September that businesses with more than 100 employees must impose a coronavirus vaccine mandate or begin mandatory weekly testing for those who don’t vaccinate. The proposed rules will be implemented by the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) via an upcoming emergency order. “The cannabis industry would be subject, I expect, to the same rules other employers are,” Jonathan Keselenko, a labor lawyer and partner in the Boston office of Foley Hoag, told MJBizDaily. It’s unclear, however, how many marijuana businesses and workers will be affected. The 2021

52 MJBizMagazine | October 2021

MJBizFactbook estimates the industry employs the equivalent of 340,000 to 415,000 full-time workers nationwide. But many businesses are small and won’t meet the 100-employee threshold.

Health Canada Issues Potency Reminder After Pure Sunfarms Complaint Canadian cannabis regulator Health Canada is reminding licensed producers that their THC and CBD potency labels must reflect laboratory testing results for each individual lot of cannabis. Labeling based on past cannabinoid values for a specific cultivar or other practices “do not correspond to an accurate measurement of a specific lot’s THC and CBD content values,” according to a bulletin Health

Canada sent to cannabis license holders and obtained by MJBizDaily. The reminder comes months after British Columbia cannabis producer Pure Sunfarms filed an inquiry with Health Canada seeking clarification of cannabis labeling regulations. The letter raised questions about the stated potency of dried cannabis products from Ontario-based competitor Canopy Growth.

Will Colombia’s Regulatory Overhaul Resuscitate the Cannabis Sector? Colombian President Ivan Duque signed a decree that will expand revenue opportunities for domestic cannabis businesses inside and outside the country. The new law

lifts prohibition on the export of dried medical marijuana and potentially expands distribution locally. Industry sources are hopeful the regulations could be finalized within six to 12 months. After regulations are established, Colombian producers will be better positioned to compete in the export flower market against companies from nations such as Canada, the Netherlands and Portugal. The rules will likely result in new business opportunities for Colombian producers, some of which trade on public exchanges. “Fundamentally, this 60-page decree will be translated into hundreds of pages of regulations,” Oliver Zugel, founder and CEO of Bogota-based FoliuMed Holdings, told MJBizDaily in a phone interview.

October 2021 | mjbizdaily.com 53

IndustryDevelopments | International & State WA MT

MN ID

TN AR

SC MS

DE MD

RI PA

LA FL

■ Medical ■ Recreational HI

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

State News Alabama

The chair of the state’s Medical Cannabis Commission said the launch of an MMJ program could be delayed until 2023. A representative from the Alabama agriculture department said he didn’t expect licenses for medical marijuana cultivation to be issued before Sept. 1, 2022. Regulated MMJ in Alabama will be grown in greenhouses, which usually takes 3–4 months. Additionally, Alabama Treasurer John McMillan will take the reins of the state’s Medical Cannabis Commission to oversee the business licensing and regulation of the nascent MMJ market.

Alaska State marijuana manufacturers and retailers can start selling edibles at twice the potency. The new rule allows the sale of marijuana edibles containing up to 10 milligrams of THC per serving and packages with up to 10 individual servings. The rule will put Alaska on level ground with the rest of the industry, as other established cannabis markets typically allow 10-milligram servings of THC.

54 MJBizMagazine | October 2021

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alk into any dispensary and you will see a dizzying variety of cannabis packaging, from pre-roll pop-tops, to eye-catching edibles boxes. Distinctive product packaging can influence consumers just as much as the product itself. That’s why so many dispensaries and vendors partner with DIZPOT. We keep our eyes on the ever-changing market so that we can create thoughtful and dynamic packaging for you! From using our leverage to source the best quality products for the lowest possible price, to elevating your brand with unique designs and custom artwork, we take your project from concept to completion, ensuring your products are noticed and purchased!

IndustryDevelopments | International & State California A long-debated bill to open California markets to CBD food and drinks is winning applause from hemp activists and marijuana operators who have watched low-THC cannabis products flood store shelves with little safety regulation. The new law could open the floodgates for marijuana businesses to begin selling hemp goods as well. But not everyone is on board with the measure: a coalition of hemp farmers is already preparing a lawsuit, largely over the unclear path for smokable hemp and CBD vapes, two of the most profitable uses for hemp flower.

Colorado A ballot question going before state voters in November aims to raise taxes on recreational marijuana products. If voters approve Initiative 25—also called the Learning Enrichment and Academic Progress Program (LEAP) Initiative—a new 3% sales tax will go into effect Jan. 1 and increase to 5% by January 2024. The state already has a 15% excise tax and a 15% sales tax for adult-use marijuana products. The tax change would have no effect on medical marijuana prices.

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Florida Leafly filed a legal challenge against Florida regulators who claim the online marijuana e-commerce company violates a state law banning third-party cannabisdispensing services. Seattle-based Leafly argues that it “does not prepare, possess, purchase, transmit, distribute, sell or dispense any medical marijuana in Florida or elsewhere.” Leafly and similar third-party websites enable potential customers to view dispensary menus online and place orders. Most, if not all, medical marijuana operators in Florida quit using such services after receiving a warning from the health department in February that they would be fined up to $5,000 per violation.

Hawaii The state Department of Health enacted rules that ban CBD-infused gummies and drinks as well as smokable hemp. The interim rules limit hemp-extract sales to capsules, powders, tablets, tinctures and topicals. The state authorized hemp production in 2019 but ended its industrial hemp pilot program last year, when it had an estimated 57 growers. Hawaii is one of six states that have decided to cede hemp-cultivation oversight to the U.S. Department of Agriculture.

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IndustryDevelopments | International & State Idaho The state Supreme Court overturned a new law that would have made it harder for independent campaigns to get their own ballot measures before voters, including a potential medical marijuana legalization question. The law, signed by the governor in April, required any proposed ballot measure campaign to gather at least 6% of signatures to qualify for the ballot from each of the state’s 35 legislative districts. The previous law required signatures from only 18 districts.

Louisiana Hurricane Ida shuttered several medical marijuana dispensaries in Louisiana and put an indefinite pause on equipment and supplies passing through the Port of New Orleans. H&W Drug Store Dispensary in New Orleans lost power and closed for several days, but the store planned to reopen without electricity and allow patients to pay with cash. Plants survived the storm at Ilera Holistic Healthcare’s cultivation site outside Baton Rouge, but lack of power forced the company to close its dispensaries. Ilera CEO Chanda Macias said it could take up to four weeks for some of the dispensaries she supplies to reopen.

58 MJBizMagazine | October 2021

Maine U.S. District Judge Nancy Torresen ruled that it’s unconstitutional for Maine regulators to exclude out-of-state companies from operating medical cannabis dispensaries. Wellness Connection of Maine, which operates four of the eight dispensaries in the state, and its parent company, High Street Capital Partners, sued the state in December over the issue. The state had already backed off a similar residency requirement in the recreational marijuana program after Wellness Connection sued. Additionally, Maine regulators began the application process to open new medical marijuana dispensaries, marking the first time in 11 years that the state is making available this type of business opportunity.

Massachusetts The state’s Supreme Judicial Court ruled that a marijuana dispensary owner can operate as a for-profit business despite local restrictions. Ellen Rosenfeld started CommCan medical marijuana dispensary before the state legalized recreational cannabis sales, and changed the business structure in 2018 from a not-for-profit to a for-profit entity. A neighboring business promptly sued Rosenfeld, citing a local ordinance that required all marijuana businesses to be not-for-profit. Massachusetts’ high court ruled unanimously that state law, which allows for-profit marijuana business models, trumps the bylaws of the town of Mansfield, where Rosenfeld’s dispensary is located. The Supreme Judicial Court ruling also sided with Rosenfeld in a lawsuit Mansfield filed against her.

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IndustryDevelopments | International & State Michigan The Marijuana Regulatory Agency released a set of proposed rules for cannabis businesses, including two new license types and reduced fees. The two new licenses include an educational research permit and a newly expanded microbusiness license. The agency also announced a new social equity plan—the Joint Ventures Pathway Program—designed to partner qualified applicants with licensed recreational marijuana companies.

Missouri Residents could be asked to vote on two recreational marijuana legalization measures on the 2022 election ballot. Legal Missouri 2022 recently filed paperwork with the Secretary of State’s Office, while Fair Access Missouri continues to work on getting initiatives on the ballot to strengthen the existing medical cannabis market as well as legalize adult-use sales. Legal Missouri 2022 is proposing a 6% sales tax and a provision that would expunge the records of some marijuana-related offenses, according to media reports. Fair Access is focusing on an initiative that would provide “equitable licensing,” low barriers to entry and low taxes, according to its website.

60 MJBizMagazine | October 2021

Montana State regulators loosened the proposed rules for medical cannabis advertising after operators expressed concerns at public hearings about the initial draft regulations. The amended advertising rules: • Clarify that a provider “may promote its business and market its brand but may not advertise marijuana or marijuana products except in electronic advertising.” • No longer prohibit an MMJ provider from advertising on such social media platforms. But the proposed rules do require that the MMJ business website and social media accounts implement an appropriate process to prevent visitors younger than 21. • Remove the requirement to issue warnings about the risks of marijuana use. • Ease restrictions on outdoor signs, including size. But an operator still can’t use colloquial terms for marijuana such as pot, reefer, ganja and weed, and signage needs to abide by local ordinances and regulations. The rules apply only to MMJ businesses. State regulators are still drafting rules for Montana’s recreational marijuana market, which takes effect Jan. 1.

October 2021 | mjbizdaily.com 61

IndustryDevelopments | International & State Nevada State veterinarians will be the first in the nation to legally treat animals with cannabinoids, including CBD. A new law taking effect Oct. 1 clears vets to recommend and administer hemp and cannabidiol products below 0.3% THC without fear of sanction from the state licensing board, the American Veterinary Medical Association reported. CBD is commonly sold through veterinary channels in all states. But veterinarians could be sanctioned for administering it because the products haven’t been approved for animal use by the U.S. Food and Drug Administration.

New Jersey The number of New Jersey communities opting out of the legal marijuana industry increased to include nearly three-quarters of municipalities in the state. According to analysis by USA Today Network, only 98 municipalities have passed laws that will allow for adult-use cannabis retailers, growers, manufacturers and other business types. Most of those are in southern and central New Jersey. An additional 41 towns have approved ordinances that ban cannabis retail but allow other types of marijuana companies. And another 10 opted out of the recreational side of the cannabis industry but still allow for medical marijuana operations. Municipalities faced an Aug. 21 deadline to opt out before a five-year moratorium on such bans went into effect.

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New Mexico District Court Judge Benjamin Chavez issued a writ directing state officials to allow registered medical marijuana patients to buy up to 2 ounces of marijuana per day. That total is the legal purchase limit set by New Mexico’s new adult-use marijuana law signed by the governor in April and a significant increase over the previous limit of 8 ounces every 90 days. The state health department and the Regulation and Licensing Department now must reply in court to the judge’s order or comply with the writ. Recreational marijuana sales are not expected to begin until next year.

New York Gov. Kathy Hochul pledged to move forward with the state’s multibillion-dollar adultuse marijuana program as quickly as possible. Hochul called a special session of the Legislature partly to get her cannabis agency nominations confirmed so that the industry launch could get underway. The state Senate moved quickly to confirm the appointments: • Tremaine Wright, a former Brooklyn state assemblywoman, to chair the Cannabis Control Board and the Office of Cannabis Management. • Chris Alexander, the policy manager at Canada-based Vill, to serve as executive director of both agencies.

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IndustryDevelopments | International & State North Carolina The North Carolina Department of Agriculture and Consumer Services and the North Carolina Industrial Hemp Commission notified the U.S. Department of Agriculture that it would discontinue its pre-existing hemp oversight operation. The state’s hemp farming licenses will be valid until the end of 2021, but farmers will need to apply for licenses through the USDA after this year. Marne Coit, senior lecturer in agricultural law at North Carolina State University, said farmers will need to apply early enough to ensure there is no lapse in licensing during the transition period. North Carolina has 1,500 licensed hemp producers.

Oregon A new law directs the renamed Oregon Liquor and Cannabis Commission and the Oregon Department of Agriculture to inspect licensed hemp fields across the state to ensure that the registered hemp growers are not growing marijuana instead. State regulators started inspecting dozens of hemp farms in the southern part of the state to determine whether they are legitimate hemp businesses or rogue marijuana operators. Some marijuana business owners say illegal grows are not in direct competition with the high-quality marijuana sold by licensed Oregon retailers.

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South Dakota State lawmakers approved the majority of proposed medical marijuana industry regulations submitted by the state health department, but they rejected several proposed rules that would have restricted the MMJ program. The rules must be finalized by Oct. 29, per the state medical marijuana legalization law that voters approved last year, and the health department must be prepared by Nov. 18 to issue MMJ registration cards to patients. Among the proposed rules rejected: • A ban on advertising for medical marijuana businesses. • A mandate that all products delivered to retailers be prepackaged. • A list of eight debilitating medical conditions that would qualify patients to register for the MMJ program. • A 4-gram possession limit for MMJ patients on cannabis extracts with a potency of 60% or greater and a second proposed rule that was similar. • A limit on home cultivation of three marijuana plants per patient unless more are specifically recommended by a physician.

IndustryDevelopments | International & State Texas Judge Lora Livingston in Austin sided with several hemp companies that challenged the 2019 ban on smokable hemp passed by Texas lawmakers. The judge’s ruling throws out that law and a resulting rule from the Texas health department that sought to enforce the statute. The decision creates opportunities for hemp manufacturers in Texas. Chelsie Spencer, a Dallas-area attorney who represented hemp plaintiffs, told Hemp Industry Daily, “Consumers were freely able to purchase and consume smokable-hemp products in the state of Texas. … But our Texasbased businesses were not allowed to manufacturer, process, distribute or retail smokable hemp.”

Washington The state’s regulatory agency alerted business owners that it will transition away by the end of the year from Akerna’s Leaf Data Systems platform to one developed and maintained by regulators. The state has been paying Akerna $50,000 a month in subscription services for the traceability contract. The new system is derived from a workaround that regulators developed in 2017, when BioTrackTHC, which had the traceability contract with the state for three years, failed to reach an agreement with the Washington Liquor and Cannabis Board. The in-house Cannabis Central Reporting System is intended to reduce the complexity of traceability reporting.

Wisconsin State Sen. Melissa Agard introduced a bill to legalize adult-use marijuana. The measure would tax marijuana at similar rates as alcohol and allow for home cultivation. Agard estimated the move would create state tax revenues of $165 million per year or more. While the senator has introduced similar bills in the past, she now has an ally in Gov. Tony Evers, who proposed legalizing recreational cannabis in a state budget draft in February.

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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UNDERSTAND YOUR INVESTOR Learn what venture capital firms, family offices, angel investors and SPACs are looking for when making investments

70 MJBizMagazine | October 2021

arijuana executives seeking to raise capital are often in the dark about what investors look for in potential investments. MJBizMagazine mined the minds of some of the most prolific cannabis investors to learn what traits attract them to specific companies. Their answers reveal a lot about why some businesses succeed in landing investor capital and others don’t. The factors mentioned most often concerned: • Company leadership. • Product strength and differentiation. • Scalability. • Valuations. While these factors were the most cited, investor views weren’t uniform. But these concerns can help marijuana executives better understand their own companies—and help them hone their pitches to match investor objectives and maximize the likelihood of funding.

While every investor has individual criteria that attracts them to a company, a few common themes exist. In the following pages, seven veteran cannabis investors reveal what they look for when placing capital, including: • The leadership team is the most important factor in an investor’s decision about whether to fund a company. The team must not only be smart and hardworking but willing to sacrifice for the good of the business. • Investors aren’t seeking businesses with products and services that are simply good. They want companies that know how to build “moats” and defend those products and services in the form of intellectual-property protection, trademarks, proprietary genetics and other tools. • Businesses that conduct thorough market research and analyses can impress investors, while those that don’t, won’t. • Donʼt scare away investors with valuations that are too high, and be ready to justify your numbers.

October 2021 | mjbizdaily.com

UNDERSTAND YOUR INVESTOR VENTURE CAPITAL

ARTICULATE DREAMERS AND DURABILITY By Omar Sacirbey

Leadership teams and long-term solutions are key considerations for venture capital firms

Karan Wadhera

Managing partner, Casa Verde Capital Los Angeles

or Karan Wadhera, the strength of a company’s leadership team is the most important factor when evaluating the business. Wadhera is managing partner at Casa Verde Capital, a Los Angeles-based venture capital firm that has invested in 25 plant-touching and ancillary companies. “It’s all about the entrepreneur and the founders, because we are generally investing (in the) earlier stage. But even if we’re investing a little bit later in the process, we put a lot of emphasis on evaluating the founder or the founding team. How passionate are they about what they’re building? Do they have a strong vision for their business? The ability to be flexible and change—especially in a dynamic industry like cannabis—all those things are really important to us,” Wadhera said. He noted that founders don’t have to be veteran entrepreneurs to win Casa Verde’s confidence; they just need relevant professional experience and the ability to articulate their vision.

72 MJBizMagazine | October 2021

Karan Wadhera has led Casa Verde Capital in funding more than two-dozen companies. Photo by Evan Mulling

UNDERSTAND YOUR INVESTOR Consider George Mancheril, the founder and CEO of Los Angeles-based Bespoke Financial, which provides credit and financing for cannabis businesses. Mancheril had never founded a company, but he had a decade of financial-services experience as an analyst and executive at firms such as Goldman Sachs and Guggenheim Partners. “Since Bespoke’s inception, Casa Verde has invested over $40 million across equity and debt into the company,” Wadhera said. “He has really specific financial-services experience in the past and understands the intricacies of credit and the financial landscape and can leverage that into building a business for the cannabis space.” The vision of a company is also critical. “What we’re trying to extract as we’re evaluating an investment is not just your experience and how relevant that is … but also where do you see this business going?” Wadhera said. “If we were to sit alongside you and dream about the future, how big could this be? And what role would your business play in the industry? In instances where we haven’t invested in businesses, we’ve found the entrepreneur unable to articulate that.”

STAYING POWER

“Long-term durability” is the secondmost important factor for Wadhera. “What we mean by that is, are you solving a problem that’s going to be ubiquitous for the industry, or are you solving a very short-term, temporary problem?” Wadhera said. “Obviously, if you’re solving something that really goes away with some element of regulation, we’re not as interested. … All our businesses, even though they may be solving a temporary problem, have elements that will make them really enduring over time.” Wadhera believes “there are a number of businesses that establish a new paradigm for cannabis.” For example, because the industry is new, it’s “not

74 MJBizMagazine | October 2021

Casa Verde selects companies it believes can endure legalization such as Oregon-based software firm Dutchie. Courtesy Photo

burdened” by legacy software and technology but, rather, has to build those things from scratch. Consider Casa Verde portfolio companies Leaflink, a Denver-based wholesale platform, and Dutchie, an Oregon-based point-of-sale system that recently acquired Greenbits and LeafLogix. “Businesses like that have the ability to endure well through full-scale legalization and to be an important cornerstone to the industry. So that’s where a lot of our attention is: Can a business—even in a full post-legalization world—not only exist but thrive?”

REASONABLE VALUATIONS

As an investor seeking financial return, Casa Verde cares about the valuations companies give themselves and steers

clear if a promising company seems overpriced. “We have a fiduciary responsibility to our limited partners to get them the best return possible. So thinking about the price of the investment, that does sort of fall into our parameters as well,” Wadhera said. Because Casa Verde likes to own “meaningful portions” of each business the firm invests in, Wadhera said he and his team “pay a lot of attention to what our entry prices are for these businesses.”

TRACTION OVER FINANCIALS

Solid financials are important to many investors, but it’s not always a must, Wadhera said. Some companies that Casa Verde invests in are pre-revenue, but they do have traction such as customer traffic. “We want to see that people care about what they’re building.”

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UNDERSTAND YOUR INVESTOR VENTURE CAPITAL

By Omar Sacirbey

MOATS AND MODESTY VC partners like barriers to entry and leaders wise enough to step down

Douglas Hannah and Andre Haroche

Managing partners, Silverleaf Venture Partners Stamford, Connecticut

hen looking for a potential investment, the founders of Silverleaf Venture Partners know what they don’t like. “We don’t like commodity businesses,” said Douglas Hannah, who started the company with Andre Haroche in 2017. Hannah defined commodity businesses as those whose products or services are easy to replicate. “Products that are easy to copy lack moats; they are easy to commoditize and therefore unattractive. There’s going to be margin pressure, pricing pressure, oversupply, etc.,” Hannah said. Companies that Silverleaf finds especially vulnerable to commoditization include point-of-sale systems and certain types of growers. “We just think it’s hypercompetitive. Andre and I don’t want to beat ourselves up trying to figure out who’s going to be among the three left standing. For that reason, we’ve stayed away from point of sale,” Hannah said. “The guy that’s farming 100 acres of hemp in southern Colorado or just doing cultivation, that’s probably not going to fit in our wheelhouse.” That said, if companies “have figured out a way to differentiate themselves

76 MJBizMagazine | October 2021

Andre Haroche, left, and Douglas Hannah have invested in more than 30 companies through Silverleaf Venture Partners. Courtesy Photo

and not be commoditized ... then we get more interested,” Hannah said. “We’re really looking for companies where there’s some sort of barrier to entry, some sort of moat around the company.” Silverleaf has launched three funds and invested in more than 30 companies—both ancillary and plant-touching. What are some good differentiators or barriers to entry? Patents, trademarks, proprietary genetics or formulas all make products “defensible” from being copied.

“If it’s a tech company that can obviously scale and has a unique technology, and maybe some patents around it, Andre and I are going to take a very, very careful look,” Hannah said. Haroche added: “We like to understand companies that control their supply chain but don’t bite off more than they can chew. Maybe they have some sort of unique competitive advantage for distribution, for sales. It even could be as simple as a brand, just trademarking

UNDERSTAND YOUR INVESTOR the branding … so that when people see it on the shelf in a dispensary and there’s 30 different pre-rolls to pick from, maybe they’re attracted because of the packaging and the uniqueness of the product.”

LETTING GO

When it comes to leadership of younger marijuana companies, Silverleaf seeks the usual traits of experience and ability to pivot. “We actually like seeing people who have experience outside cannabis working with cannabis insiders,” Haroche said. But Hannah and Haroche specified other qualities as well, including being willing to cede control if it benefits the company. “We also have identified some guys that are great CEOs now, but their emotional intelligence isn’t going to get them to an IPO, and we try to have those conversations early on. … I think a lot of guys have an issue with stepping down or handing the reins over to somebody else.”

BY THE NUMBERS

How companies are valued plays a critical role in Silverleaf ’s assessments. “We see a lot of companies trying to maximize our raise at a valuation; that just doesn’t make sense. We understand that they want as little dilution as possible; they want to justify their value. … But it’s up to us to kind of look at the revenues and look at their growth and how much cash they’ve been burning through,” Hannah said. “We think a lot of CEOs and a lot of companies make the common mistake of trying to raise money at a higher valuation,” he said. “We’ve come across multiple deals that we really liked—this is a great team, it has great strategy—but we just didn’t want to overpay for it. We didn’t want to invest in a $100 million valuation where we felt it was only worth ($50 million). “We have to understand: Where’s the growth from here? We’ve seen companies like that raise money, and then a year later, they’re raising money at the same valuation as they did before their last round.”

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Silverleaf Venture Partners has invested in dozens of companies such as California-based Bloom Farms and Urbn Leaf. Courtesy Photo

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UNDERSTAND YOUR INVESTOR

Amount raised (millions USD)

Cannabis-Related Capital Raises: Top Five Sectors

INVESTMENTS

Total capital raised already up 118% over 2020 with months to spare By Jenel Stelton-Holtmeier

fter a lackluster 2020 amid the pandemic and an economic downturn, investment in the cannabis industry has reawakened, with the amount of capital raised up 118% over 2020 as of Sept. 10. Year-todate 2021 activity has equaled or even surpassed investment in 2019 in four of

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the top five sectors, according to data from New York-based Viridian Capital Advisors. Cultivation and retail, the bread-andbutter sector of the industry, remains the largest by far, with year-to-date raises topping $6 billion. The second-largest sector, investments/M&A, has seen raises

of less than $1 billion so far this year. For sectors with raises totaling less than $400 million through Sept. 10, 2021, the recovery has been a bit slower. Only one segment, biotech/pharma, has returned to 2019 levels. But since 2017, investment in that sector has declined significantly, from nearly $1 billion to

Amount raised (millions USD)

Cannabis-Related Capital Raises: Other Sectors

REIGNITED only $231 million so far in 2021, even though the number of raises has declined by only five. By percentage growth, the agriculture-technology sector has experienced a significant pickup in 2021. Year-to-date, the sector’s total capital raised has far outstripped any previous full year of activity. Before this year, the

sector’s highest total raised was just $123.1 million; in 2021, the sector raised $487.6 million with four months to go. The industry continues to get more sophisticated, with entrepreneurs looking for additional ways to improve efficiency and scale. Because of this, the agriculture-technology sector still has a long runway for additional growth.

Viridian Capital Advisors is a financial and strategic advisory firm dedicated to the cannabis market. The firm provides capital, M&A, corporate development and investor relations services to emerging growth companies and qualified investors in the cannabis sector.

October 2021 | mjbizdaily.com 81

UNDERSTAND YOUR INVESTOR ANGEL INVESTOR

ASKING THE RIGHT QUESTIONS Founder of Canna Angels favors melding legacy cannabis experience with Wall Street smarts By Omar Sacirbey

Sherri Haskell

Founder and CEO, Canna Angels San Francisco Bay Area

herri Haskell’s favorite type of leadership blends legacy expertise with a mainstream business mindset. “What I have found to be a particularly successful combination is if we can put legacy founders together with—for lack of a better term—Wall Street acumen and integrate the two cultures so they are synergistic,” said Haskell, an award-winning investor who in 2017 launched Canna Angels, an angel investor consortium that’s funded more than 50 cannabis-related businesses. “Some of my very best companies have been able to integrate the legacy people with either Wall Street or big national players that have the business acumen and the track record of education and experience to bring to the table.” Beyond that, Haskell likes to see founders who know how to surround them-

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selves with talent and investors and who show they can take the company further. “What we really want to see is who’s sitting at the table, who is working with this company to help them, who’s had exits in the past, who can bring a certain amount of value to each one of the companies,” Haskell said.

DIFFERENTIATORS

Like other investors, Haskell spoke of the importance of moats, which she defined as “protection primarily to their differentiator, their technology, their strategic advantage.” “We really need to identify what can differentiate this company from potential competitors in their space, and then we can amplify that to the capital markets,

to their potential clients,” Haskell said. “Sometimes it has to do with technologies. Sometimes it has to do with procedures. It may have to do with formulations and genetics.” She added: “I think without differentiating yourself and having something to build upon, monopolize and capitalize on, I think that you are

UNDERSTAND YOUR INVESTOR just another ‘me too,’ and we’re not very interested in those companies.”

LOOKING AHEAD

The first thing a company needs to scale is knowing what it’s going to look like a year or two ahead. Haskell asks founders about whether the company plans to scale nationally or globally and whether it has patent protection. “We really look at what are the opportunities for scalability. … It’s great if you’ve got a nice regional business, but most of our investors are looking for tremendous ROI and home runs.”

DATA AND FINANCIALS

To get familiar with potential investments, Haskell signs nondisclosure agreements so she can examine companies thoroughly, especially their data and financials. Specifically, she looks at their data, governance, technology systems they’ve integrated and preparedness for due diligence. “That gives us an idea as to how mature they are,” Haskell explained. “We not only look at what the financials are year-to-date or time-to-date, but we question them on their projections.”

SETTING PRIORITIES

Reasonable valuations are also important to Haskell, who said she often finds herself talking executives out of inflated valuations. “I did this just a week ago. I say to the CEO of the company: ‘Let me just ask you very seriously: What’s more important to you at this point in time? Is it the value or getting the money?’ It doesn’t take them long to understand that it’s more important to get the capital in the door. And if they get the capital in the door, and they are strategic and committed and dedicated to making this business grow, the valuation will come,” she said. “But if you’re ego-driven, and that valuation is so important to you, you’re shooting yourself in the foot.”

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Canna Angels invested in Colorado-based plant genetics firm Front Range Biosciences. Courtesy Photo

Sana Packaging, one of the companies in which Canna Angels invested, created cannabis packaging from plastic reclaimed from the ocean. Courtesy Photo

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UNDERSTAND YOUR INVESTOR

ANGEL INVESTOR

GREEN ANGELS

By Omar Sacirbey

Investor seeks out management teams that can show thorough research

Jen Piro

Jen Piro says retail payment is an area that gives her peace of mind as an investor. Courtesy Photo

Washington DC–Baltimore

anagement teams for capitalintensive businesses such as cultivation need to be “stellar” to get the attention of Jen Piro, an angel investor who has placed more than 25 investments in plant-touching and ancillary companies—primarily through the Cannabis Syndicate, a network of marijuana angel investors. “They’re going to need a lot of creativity about how they’re going to raise the capital that’s needed—and think about buildings and licenses and real estate, and putting all this into play to package their company, to showcase how they’ll meet those CapEx requirements, OpEx requirements, and then continue to grow and scale,” added Piro, who also has invested through the Arcview Collective Fund, a network of angel investors affiliated with The Arcview Group. Managing this long list of needs becomes difficult, Piro said, when founder-executives try to do everything themselves. “It’s all about capability and capacity,” she said. “And a lot of the trouble with solo teams is that they run out of hours of the day.”

PLANS AND RESEARCH

The proof that teams have thought about obstacles that might get in the way of

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realizing their goals usually lies in a strong business plan, Piro said. Good plans are backed by thorough market research, and investors are attracted to companies whose leaders have done their research. Many people underestimate the challenge of starting a cannabis brand, Piro noted. “When they come back with real market research data, that’s way more impressive to me and shows that they are

really thinking about how they’re going to carve out a niche,” she said. Piro offered Union Electric, a premium California flower brand, as an example of a business that impressed her with its research, prompting her to invest. “They went around to 100 different dispensaries and asked them, ‘What do you wish you had more of?’ And when those dispensary owners said premium indoor flower, they put together a

UNDERSTAND YOUR INVESTOR

Angel investor Jen Piro was impressed by the market research that went into Union Electricʼs business plan. Courtesy Photo

premium indoor flower brand and secured contracts with a lot of their friends who are growing great indoor flower,” Piro said, adding that this allowed the company to secure exclusive deals for the flower it wanted. “They were able to walk into a dispensary and say, ‘Here, I’ve got a year’s worth of contracts. … And they’re flourishing.’” “I love when people are on the ground asking the right questions, talking to both sides of the supply chain and really understanding their market segment. I

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really get excited when people can prove that they have a product market fit or role. … And those are the kind of plans I like to see,” Piro said.

TECHNOLOGY AND MARKETING

Piro believes the cannabis technology sector could not only revolutionize the cannabis space but also the way business is done in general. She cited payments and marketing as examples of unique cannabis industry challenges in need of solutions.

Even if the SAFE Banking Act or federal legalization happen soon, neither banks nor payment processors will change overnight. “That’ll take a little more time ,” Piro said. “So I’m really excited about people who are carving out that moat right now.” “I’m looking for companies that will, in three to five years, be venture bankable, that can scale, be really large and become hopefully regional and national players,” Piro said.

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UNDERSTAND YOUR INVESTOR

TAKING STOCK

By Jenel Stelton-Holtmeier

Cannabis companies that go public have a choice of where to list their shares—but the options differ markedly

hen a company goes public, it is usually to access a broader pool of capital. But not all public channels are equal—and they’re not equally accessible.

SENIOR EXCHANGES

Senior exchanges, such as the New York Stock Exchange and Toronto Stock Exchange, have the broadest reach when it comes to capital markets. They also have the highest requirements for companies that list on them. These include number of shares held, minimum trading price and valuation requirements. Companies that list on senior exchanges also must make regular, detailed filings with a federal securities oversight agency, depending on the

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country where the exchange is based. Senior exchanges will not allow companies that operate in a federally illegal industry (including plant-touching cannabis operations) to list, which gives Canadian marijuana companies more options than are available to their U.S. counterparts. Senior exchanges include: • New York Stock Exchange (U.S.) • Nasdaq (U.S.) • Toronto Stock Exchange (Canada) • NEO Exchange (Canada)

JUNIOR EXCHANGES

Companies on junior exchanges must meet the same regulatory standards as those listing on senior exchanges, but the financial and operating

requirements are lower for listing on the junior exchanges. The pool of available capital is still large—but not as large as on senior exchanges. Junior exchanges also might allow plant-touching cannabis companies to list, even if their business activity is federally illegal where the operator is based. This is why so many U.S. cannabis companies have turned to the Canadian Securities Exchange for their ventures into public trading. Junior exchanges include: • Canadian Securities Exchange (Canada) • TSX Venture (Canada)

QUOTE SYSTEMS

While often listed in news stories in the

same manner as exchanges, interdealer quotation systems have different requirements and mechanisms for publicly traded stocks. Quote systems provide information on the current value of securities for companies that list with them. This information is provided by buyers and sellers expressing the prices at which they are willing to transact. However, the system does not directly participate in any trades. In other words, an investor or broker will make a deal directly with the current securities owner, which might be the company or another investor/broker. Quote systems are also regulated differently than exchanges. In the United States, the over-the-counter (OTC) markets are overseen by the Financial Industry Regulatory Authority (FINRA) rather than the Securities and Exchange Commission. FINRA also provides an electronic quotation system for OTC stocks, known as the Over-the-Counter Bulletin Board (OTCBB). There are few filing requirements for companies listing on OTC markets, and companies can be much less transparent about their operations than on formal exchanges. Quote systems include: • Over-the-Counter Bulletin Board (OTCBB) • OTC Link • Pink New York Stock Exchange (NYSE) Market cap: $26.2 trillion*

Number of companies listed: 2,800 (on primary exchange) Allows plant-touching companies: Only if federally legal where company is headquartered Sample companies listed on NYSE: Aurora Cannabis (ACB), Pure US Cannabis ETF (MSOS), Scotts MiracleGro Co. (SMG)

Nasdaq Market cap: $19.4 trillion Number of companies listed: 4,467 Allows plant-touching companies: Only if federally legal where company is headquartered Sample companies listed on Nasdaq: Canopy Growth Corp. (CGC), GrowGeneration Corp. (GRWG), Tilray (TLRY) Toronto Stock Exchange (TSX) Market cap: $3.2 trillion (CA$4 trillion) Number of companies listed: 1,707 Allows plant-touching companies: Only if federally legal where company is headquartered Sample companies listed on TSX: Canopy Growth Corp. (WEED), Cronos Group (CRON), Organigram (OGI)

NEO Market cap: $3.3 billion (CA$4.1 billion) Number of companies listed: 1,892 Allows plant-touching companies: Yes Sample companies listed on NEO: Columbia Care (CCHW), Tilt Holdings (TILT) TSX Venture Exchange (TSXV) Market cap: $80.6 billion (CA$101 billion) Number of companies listed: 1,892 Allows plant-touching companies: Only if federally legal where company is headquartered Sample companies listed on TSX-V: Eve and Co. (EVE), The Flowr Corp. (FLWR), Khiron Life Sciences Corp. (KHRN)

Canadian Securities Exchange (CSE) Market cap: $50.1 billion (CA$63.2 billion) Number of companies listed: 706 Allows plant-touching companies: Yes Sample companies listed on CSE: Ayr Wellness (AYR), Green Thumb Industries (GTII), Trulieve Cannabis Corp. (TRUL) Market cap figures as of July 2021.

October 2021 | mjbizdaily.com 91

UNDERSTAND YOUR INVESTOR FAMILY OFFICE

MULTISKILLED MANAGEMENT Single-family office likes leaders who surround themselves with talent and experience

By Omar Sacirbey

Kevin McGovern

Chair and CEO, McGovern Capital New York City

annabis requires the same fundamentals as other investments, according to Kevin McGovern, whose single-family office specializes in making early stage investments in consumer technologies and brands. But it’s also “a little different,” he added, “because it requires a multitalented management team, probably more than any other area that we’ve been investors in.” According to McGovern, cannabis companies—especially those that are vertically integrated or partially vertically integrated—need executives with expertise in cultivation, regulatory matters and accounting, because all three of those skills are especially complicated in the cannabis realm. “Cannabis, more than any other industry that we’ve experienced, is highly complicated from an accounting standpoint. Particularly for public companies, you need a multitasking, highly sophisticated and multiskilled management team,” said McGovern, whose firm has

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invested in more than 30 plant-touching and ancillary cannabis companies in the United States and abroad. He added that he likes leaders who recognize the value in stepping down. “Good leaders are not necessarily good managers; good managers are not necessarily good leaders. We like leaders who build a team culture and, to some extent, are replaceable,” McGovern said. In addition, “Every company also needs a ‘chief passion officer,’ a crazy person who advocates for the company 24/7. They are like missionaries,” McGovern said.

“Get a sophisticated board and put them to work. And make sure that they have skin in the game,” McGovern said, adding that a board member’s investment can be writing a check or making a commitment to perform tasks for the company. “Make sure your board is vested not just in stock but in the success of your company.”

A BENEFICIAL BOARD

FOUNDATION FOR SCALING

In addition to smart leadership, McGovern looks for companies where the leaders “complement” themselves with experienced deputies and a board. Those deputies and board members are needed to provide guidance to founder-executives, especially young entrepreneurs who might not have faced certain business situations.

Scaling also ranks high on McGovern’s list of desirable company traits. He cited good infrastructure such as solid standard operating procedures and redundancies that minimize risk as solid foundations for scaling. “That’s the first important ingredient for scaling. When you scale on a faulty foundation, you crumble,” he said.

UNDERSTAND YOUR INVESTOR INDIVIDUAL INVESTOR

OUTSIDE THE FAMILY

Founders work hardest when deal structure is mutually beneficial, former family office executive says

By Omar Sacirbey

Ryan Ansin

Former president of the Family Office Association, co-founder and chief strategy officer of Revolutionary Farms, a vertically integrated business Boston

nvestor Ryan Ansin estimates that only 10% of companies have the right management team in place. After starting to explore cannabis investing in 2014, he has invested in 13 planttouching and ancillary companies. “It’s no different than any other industry. Have these people worked together before? Have they been in the foxhole before?” Ansin said. As a limited partner in two cannabisfocused funds, he added that sometimes founders must make personal sacrifices for the good of the company, such as temporarily forgoing pay. “How many months or years could they go without a significant salary? A lot of people don’t think about that. They think, ‘There’s a big opportunity, I should jump in,’” Ansin said. “I get nervous when people think like that.”

DEAL STRUCTURE

How an investment is structured can also persuade or dissuade Ansin to invest. “The structure of the investment and the regulatory environment tells me whether or not you have a great likelihood of getting your principal back,” he said.

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Ansin said he looks for cultivation or manufacturing assets structured in a way that is acceptable to the entrepreneur, “because you don’t want anyone to stop working for themselves.” He also wants a transaction to be crafted in a way that covers his investment and reduces the risk of the deal heading south. With the goal of “getting our capital back within one to three years,” Ansin said he might invest in real estate, equity or warrants “in order to participate along the way and in order to kind of unlock growth opportunity at each step.”

THOROUGH OR SLOPPY?

Like other investors, Ansin visits the facilities he considers investing in, and along with interviewing management, he looks for clues about how thorough and careful the operation is. “You can look into the future of problems when you’re on-site. Do they have big rooms? Do they have small rooms? What are their ventilation systems like? What are the materials? … All of these different things tell me a lot about how thoughtful they’ve been and where their brains are as it relates to CapEx mitigating future problems and OpEx,” Ansin said.

STATES AND MARKETS

Ansin said he prefers companies in limitedlicense states in the East. He has made investments in Maryland, Massachusetts, Michigan, Ohio and Pennsylvania. “We want markets that are limitedlicense—either by the law and regulations or by the geography. Massachusetts is not a limited-license state. But it is a NIMBY (not in my backyard)-attitude state,” Ansin explained. “Where Oregon and Colorado might have had a few hundred outdoor grows,” Massachusetts has fewer than 10, and they are all 2.5 acres or less. “And while there will be more market entrants, there are still far fewer acres under cultivation here, and therefore you don’t have cannabis prices being driven down the way they are out West.”

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UNDERSTAND YOUR INVESTOR

ASSISTANCE, NOT ALCHEMY Business accelerators and incubators can provide access to capital and office space that help companies get off the ground By Omar Sacirbey

oung cannabis companies that are ready to advance but lack the capital and expertise to do so might want to consider business incubators and accelerators. Made fashionable by the tech industry a generation ago, incubators and accelerators offer resources to companies from numerous sectors, including cannabis. Both private and public institutions host incubator and accelerator programs that support new and developing businesses with access to investors, veteran entrepreneurs and material support. “They were pivotal in our success. They took a bet on us when no one else would,” said David Hua, CEO of Meadow, a point-of-sale software platform that was in the 2015 class of Y Combinator, a well-known tech incubator in Mountain View, California. Today, Meadow serves more than 180 dispensaries across California.

AN ONGOING PROCESS

While incubators and accelerators can take companies further, it’s up to executives to keep the journey going. “Just because you’ve been accepted into an incubator—even a very prestigious one—it doesn’t automatically mean you’re going to get funded and you’re off to the races,” said Jason Levin, whose company UpToke, creator of a self-lighting pipe, went through the Gateway incubator program in 2019 but ultimately never got off the ground.

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The founders of point-of-sale software firm Meadow participated in the Y Combinator business incubator in 2015. Courtesy Photo

“It’s like the very beginning of a long journey of getting to market. An incubator isn’t some magic wand that is automatically going to make investors give you the money.”

EXPERTISE AND CAPITAL

Getting into an incubator can be as competitive as vying for investments and requires businesses to study and determine if they are a good fit. Some incubators, such as Colorado-based Canopy Boulder, are cannabis-focused, while others might specialize in agriculture, technology or other sectors that accept marijuana companies.

For example, Kelly Ann Woods, founder and CEO of State B Cannabis Beverage Co. in Squamish, British Columbia, first read about The Initiative, a cannabis- and female-focused incubator in Portland, Oregon, in a Forbes magazine article in 2018. Woods speculates her company was accepted to the program in part because The Initiative was seeking businesses from diverse sectors, and her infused-drinks company filled a niche. Different programs offer varying support to participants, but they usually require the companies to give up a certain amount of ownership in return.

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For example, the Y Combinator provided Meadow with $120,000 in seed capital at the start of the program, credits with Amazon for supplies, delivery and other services as well as access to an accounting firm and marketing firm. It also sponsored talks by Y Combinator alumni where participants could ask questions. In exchange, Meadow gave 7% of the company to the Y Combinator. Levin had a similar experience at Gateway, a now inactive incubator in the San Francisco Bay area. “Every week, guest speakers came in and gave talks about raising money, IP law, marketing, financial accounting, regulatory frameworks or just different aspects of running your business. We’d do a Q&A and then keep in touch with them,” said Levin, who gave 6% equity of UpToke to the Gateway program.

REAL-WORLD EXPERIENCE

Gateway also provided UpToke with $30,000 in seed funding and office space and paid for Levin and a partner to spend six weeks in China visiting manufacturing plants around Shenzhen and Shanghai. “It was probably two factories a day, five days a week for over a month,” Levin recalled. Gateway partnered with a Chinese venture capital firm that provided office space and liaisons who met Levin and his partner at the airport. The liaisons spoke Mandarin and English and provided translation services for the visiting Americans, helped them navigate the Chinese web and make appointments. The trip provided Levin with invaluable insights into engineering and manufacturing design processes. For example, Levin enlisted pricey Silicon Valley engineers to design his pipe, but he learned their design ultimately couldn’t be mass-produced. “They can do something really beautiful that’s solid and works. But when you take it to the mechanical engineer in China, he might look at it and say, ‘This is beautiful, it’s so elegantly

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Kelly Ann Woods

designed, but there’s no way we’re going to (be able to) mass-produce it like this. So let me tweak this a little bit,’” Levin said. “Our engineer was very, very smart and did a wonderful job designing it, but they’re not an injection-molding engineer. They don’t have the hands-on experience on the manufacturing floor to know what it’s going to be like trying to mass-produce this. I found that insight to be extremely important if you’re doing a hardware product.”

VALUATION AND NETWORKING

Woods didn’t receive any capital from The Initiative, but she relinquished 6% ownership of the company to the incubator. She said her time there provided invaluable insights into how to ascertain valuations for her company. “To go out and raise money, you want to make sure that your valuation is based on something that’s reasonable. To be able to have conversations with people in the industry that know the valuations of other companies in your same stage of growth, and then be able to go apply that in real time to raising capital, was very useful,” Woods said. Woods and other executives also hailed the community atmosphere created by incubators and the networks they provide after incubation ends. “I went to a theater school, and it felt like a conservatory program or summer camp, because you’re in this environment, and you’re all working toward these common goals,” Woods said. “I think that a major component of this community is that there is a sense of other people being present for you. Even when everything felt like it was completely falling apart, people

would say, ‘You’ve got this.’ … I found it transformational.” Those relationships continue today, Woods said. “We stay in touch and share industry news, refer contractors or employees to each other. Just the experience of meeting other people in the space who were doing the same kinds of things as me was super rewarding and continues to be valuable,” she said.

PITCHING INVESTORS

At many incubators, the work not only involves positioning your company so that it’s more attractive to investors but also preparing for opportunities to pitch investors. For example, Levin hadn’t previously built a pitch deck for investors, but he knew how to after learning from Gateway speakers and alumni. “The experience of building and reworking the deck was helpful,” Levin said. At the end of the program, they pitched a room full of investors. The Y Combinator program culminates with a “Demo Day” that is essentially a chance for companies to demonstrate their products to investors—mostly angels—and pitch them. In Meadow’s case, it was a two-minute pitch to 600-700 investors at the Computer History Museum in Mountain View, California. Hua estimated that the pitch event led to $2.2 million in funding from sources including legendary quarterback Joe Montana’s fund, Liquid 2, and Slow Ventures, founded by former Facebook manager and entrepreneur David Morin. “Having the Y Combinator seal of approval is a big deal,” Hua said. Levin said that while UpToke never made it to market, the success of his next company, a cannabis home-growing system called Pot for Pot, is in part due to his Gateway experience and connections. “We’ve been on the market for a couple of years now, and I don’t know if that would have come together as smoothly if it weren’t for Gateway,” Levin said. “We didn’t raise money for Pot for Pot from a Gateway investor, but it definitely didn’t hurt.”

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UNDERSTAND YOUR INVESTOR SPAC

CULTIVATION KEY Vertical integration and the ability to grow high-end indoor flower are linchpins in one SPAC’s strategy

By Omar Sacirbey

Mickey Harley

CEO, Greenrose Acquisition Corp. Woodbury, New York

reenrose Acquisition Corp.’s investment strategy hinges on cultivation. As a special purpose acquisition company, or SPAC, Greenrose completed an initial public offering of 15 million shares in February 2020 with plans to use the $150 million in gross proceeds to acquire cannabis companies. In March, the SPAC signed contracts to buy four marijuana businesses. Between them, the companies—Connecticutbased Theraplant, The Health Center in Colorado, Arizona-based True Harvest and Oregon-headquartered multistate operator Shango—operate in seven states, four of them vertically integrated. The aim, Greenrose CEO Mickey Harley said, is to become vertically integrated in the other three states. That means adding cultivation and manufacturing in California, where Greenrose has retail operations, and adding retail in Arizona and Connecticut, where the company has cultivation and manufacturing operations.

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SEEKING TOPSHELF FLOWER

Greenrose sought out acquisition targets that excel at producing premium flower. “We wanted them to be cultivationcentered because we think great flower at reasonable prices will always have market share. And we’ve chosen the four companies because we think they are outstanding cultivators,” Harley said. Harley sees cultivation as a sector conducive to moats that allow a company to differentiate itself from potential rivals. “When we first started looking at this issue three, four years ago, we wanted to understand where you can draw a moat and, from a business perspective, entrench yourself. Low-end flower and extracted

products are commodities,” he said. “But when you look at higher-end flower, indoor flower, it’s not a commodity. “You need to be able to grow outstanding product and cure it and process it in a way that consumers find unique and are willing to pay a premium for. And I think that’s a very difficult skill to find. We focus our acquisitions around acquiring that skill. And we will also develop that skill internally,” Harley added.

Greenrose Acquisition Corp. sought out companies that grow exceptional flower, such as Theraplant, above, and Shango, below. Courtesy Photos

FREE CASH FLOW

Many investors are willing to bet on companies—especially younger ones—that aren’t profitable or even generate revenue. Not Greenrose. “We wanted to make sure that these guys are generating free cash flow, which they all do,” Harley said of the companies’ cash profit after accounting for maintenance and operations. As Greenrose adds assets, including businesses to complete its vertical integration ambitions in Arizona, California and Connecticut, Harley will continue to look for those with free cash flow.

SHARED VISION

When Greenrose examines leadership teams, a key attribute is whether they are “like-minded people that we can

work with” and “that we have a similar vision of the industry.” Cannabis experience is important, too. “We want to manage teams that have long experience in the cannabis industry and that have proven track

records. … Most of the management teams have backgrounds prior to entering cannabis in something else. That’s always helpful, but we wanted to make sure that the guys had deep cannabis track records.”

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QUANTUM BOARD ®

ADVANCED DESIGN

600 R SPEC TM

Battling By Margaret Jackson

Building Challenges How to navigate supply-chain delays and rising prices for construction materials

104 MJBizMagazine | October 2021

eep Roots Harvest has until February to complete the four dispensaries it’s building—a goal the Las Vegas-based cannabis business is finding challenging because of recent difficulties securing construction materials. Most states require cannabis businesses to begin operating within a certain time period after being granted a license. But marijuana companies are struggling to meet the imposed deadlines for new facilities because of increased costs for building materials and supply-chain challenges. Deep Roots Chief Operating Officer Jon Marshall estimates that materials costs are up as much as 20%, and the company is having to absorb the extra expense. “We can’t delay our projects, so we have to keep pushing forward,” he said. Deep Roots recently wrapped up a 6,300-square-foot retail store in Reno, and Marshall estimates that construction materials cost the company an additional 10%-15% above the budgeted amounts. On top of that, he said, the lead time to get materials has increased, which could have a negative impact on the company’s revenue. “If I don’t meet the deadline (to open), I’ll have to lobby for an extension due to unforeseen circumstances,” Marshall said.

The cost of lumber and metal has jumped significantly since 2020. Photo courtesy of Grow American Builders

WEIGHING OPTIONS

Deep Roots has been debating bulkordering materials—especially the metal studs used for framing—to be sure laborers have enough on hand to complete the remainder of the company’s projects. The challenge, Marshall said, is safely storing the materials until they are used. “We know that costs could continue to escalate or the supply chain could stall,” Marshall said. “One contractor told us there was a four-week backup on metal studs. … We’re having to juggle vendors to find backup supplies.” Even as the cost of materials rises, there are measures cannabis businesses can take to keep expenses down, said Sam Andras, principal of MJ12 Design Studio, an architectural and interior design firm in Centennial, Colorado, that’s being acquired by Lafayette, Colorado-based Urban-Gro. First, construction drawings should be complete, and the cost of the materials should be locked in as early as possible, Andras said. The project should be put out for bid within 30 days, or companies run the risk of prices going up. It’s also critical to identify a space where materials can be delivered, stored and secured, Andras said.

A number of factors have added to the skyrocketing cost of building materials, which has made it more difficult for cannabis businesses to build new facilities and renovate existing properties. But there are steps companies can take to ensure they’re able to complete projects by their state-imposed deadlines: • Order materials in bulk to be sure they’re on hand when needed. • Make sure your construction drawings are complete. • Get a contractor involved as soon as possible. • Lock in the cost of materials in your building contract. • Identify space where materials can be delivered, stored and secured. • Lock in a fixed-cost guarantee when hiring a contractor.

“Even if we can find the materials, we’re having issues with delivery,” Andras said. “We have a project where we have insulated metal panels, but we can’t find truck drivers to deliver the product to the (build) site.”

WHAT’S BEHIND DELAYS

It’s not just the global COVID-19 pandemic that’s causing the increased costs and supply shortage, said David Fettner, principal of Highwood, Illinoisbased Grow America Builders. It became more difficult to procure insulation after temperatures plummeted in February in Texas, which is among the top insulation producers and distributors nationwide. Additionally, when the Suez Canal was blocked for six days in March, it became more difficult to get all sorts of building materials, Fettner said. “A lot of construction components are a hot commodity right now,” Fettner said. “Luckily, we’ve stockpiled.” Fettner estimates that the cost of some building materials has gone up as much as 40%. Most facilities for cannabis businesses are built using metal stud

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Battling Building Challenges

construction, and the cost of metal studs has gone up 15%-20%, Fettner said. “Cost is an issue, but the availability is really what we have red-flagged,” Fettner said. “When you’re building anything in the cannabis industry, time is of the essence. When we see an item that’s typically in stock but is now eight weeks out, we stockpile.”

JUST KEEP BUILDING

Most of the cultivation facilities that St. Louis-based Arco National Construction offers are preengineered metal buildings. The cost of steel has jumped as much as 40% in the past 12 months, and the building material also is in short supply, said Drew Blaylock, Arco’s director of preconstruction. Even so, cannabis companies are not delaying construction of their facilities. “A lot of them are moving forward because they have licensure requirements,” Blaylock said of Arco’s cannabis clients. “A lot can ask for extensions, but not a lot are granted extensions.” Blaylock said Arco, a design-build firm, will pay a premium for materials to ensure it meets the established timeline. If the price of materials is pushing the

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Las Vegas-based Deep Roots Harvest is working to complete four dispensaries before February. Courtesy Photos

project’s cost beyond the budget, and a cannabis business is required to be operating by a certain time, the company can either build a smaller facility or leave some of the rooms unfinished, he said. “You’ve got to think outside the box,” Blaylock said. “You have to find more creative ways to get there—whether that’s through value engineering or changing your design. … Tell me what you must have and what you’d like to have, and we’ll come up with the best mousetrap we can design.”

To keep costs down, Blaylock recommends getting a contractor involved in the project as soon as possible so that someone who has a good sense of the process and cost of materials and labor can help guide decisions and make creative suggestions about where to save.

PAYING FOR CONSTRUCTION

With higher construction costs comes the need for a lender that can bridge the financing gap from the time construction

Battling Building Challenges

Surging Construction Costs

Cannabis companies looking to build new facilities or expand existing ones are facing soaring material costs for lumber, metal and glass. New industrial building construction

Lumber and wood products

150

Rising cost of construction material

June 2019 135.4

140

Recent changes in construction pricing as tracked by the Producer Price Index show the rising costs of construction. The PPI monitors the change in wholesale or first transaction prices received by U.S. producers for goods and services.

June 2020 139.3

June 2021 141

June 2021 359.2

400 350

June 2020 243.3

300 130

120

250

JFMAMJJASONDJFMAMJJASONDJFMAMJ

2019

2020

200

2021

Fabricated structural iron and steel

June 2019 235.9

JFMAMJJASONDJFMAMJJASONDJFMAMJ

2019

2020

2021

Flat glass

200

June 2021 148.2

150

Note: Not seasonally adjusted.

June 2021 165.8

175

140

June 2019 136.7

June 2020 139.1

150

June 2019 121.1

125 100

June 2020 121.3

130

JFMAMJJASONDJFMAMJJASONDJFMAMJ

2019

Source: U.S. Bureau of Labor Statistics’ Producer Price Index

2020

2021

120

JFMAMJJASONDJFMAMJJASONDJFMAMJ

2019

2020

2021

The cost of lumber and wood products rose 52% between June 2019 and June 2021.

starts until the marijuana business is actually generating revenue. That’s where businesses like Pelorus Equity Group come in. The Newport Beach, California-based mortgage real estate investment trust (REIT) was formed in 2010 and entered the cannabis real estate lending market in 2016. Pelorus will consider transactions in any state where cannabis is legal, said Rob Sechrist, president of the REIT. “What we’re trying to solve for is when a cannabis-use tenant wants to come into a property, but the tenant doesn’t have income coming in and doesn’t have the $1 million budget it takes to build that property out,” Sechrist said. “We’re trying to solve for making sure a tenant doesn’t have to use cash—they should be saving that gun power until they start generating revenue.” With the current cost of materials, Sechrist recommends locking in a fixed-cost guarantee when hiring a

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Long lead times for construction supplies are key to avoiding supply chain issues. Courtesy Photo

contractor—even if it means paying slightly more for the project. That way, if the cost of materials increases or there is a change order, the business is protected from paying more, Sechrist said. Otherwise, contractors will write into the budget that they have the ability to surcharge. If the price is locked in, the contractor has to eat the difference.

“When you’re trying to understand what your costs are, you want to lock down as many things as possible; a surcharge would be part of the negotiation,” Sechrist said. “You need to lock it down because you can’t afford surprises. We can’t afford for our borrowers to have that openendedness.”

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Asking Price: $6,900,000.00 Rent: $21,500 Employees: 15 Parking Spaces: 10 $150k-$200k inventory Average Ticket $60 2020 gross $4.3 approx. 2021 gross $4.3 approx.

#2 Massive Cannabis Property W/ Multiple Licenses For Sale (San Bernardino County) Asking Price: $109,000,000.00 Location Size: 45,000 Sq FtUse: Recreational & Medicinal Land Size: 4.68 Acres Year Built: 2020 Parking Spots: 118+ Lights: 1,300 LUX Lights 2021 On Pace Revenues $29M, EBITDA $20M

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Asking Price: $10,900,000.00 Space: 4,000 SqFt Rent: $8k/Month 55 Parking Spots Employees: 24 Cultivation Lights: 66 Lights Delivery isn’t being Utilized 2021: On Pace to do $6.5M from the Retail side ALONE

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Asking Price: $9,900,000.00 Total Space: 5,500 SqFt 2020 Gross Revenue: $6.2M, $1.3M YTD Rent: $13K per month Top 10 name brand Products are in almost 100 Retail Stores

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Asking Price: $1,990,000.00 Revenues: On Pace to do $2M in 2021 Total Space: 2,300/SqFt Wholesale Inventory: $80k Parking: 8 Spots plus street parking Avg ticket #: $45/Order Marketing: WM & Marketing in surrounding Wellness Resorts

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#7 Fully Operational Cannabis Dispensary Retail & Delivery Business For Sale (Long Beach, CA) Asking Price: $4,700,000.00 Retail Space: 2,200 SqFt Second Building: 4k SqFt Rent Retail Space: $10,000.00/Month Parking Spots: 40+ Option to Purchase the Real Estate MicroBusiness

#8 Cannabis Dispensary, Delivery & Distribution Business For Sale (Santa Ana, CA)

Asking Price: $3,900,000.00 Total Space: 8k SqFt Rent: $22,000/Month Lease: 8 YR w/ 8 YR Option Parking: 15+ Spaces & Street Parking Local Retail Dispensary CUP with Plans Approved Could Potentially be operational in 90 – 120 DAYS

D L O S

D L O S #1 Long Beach Retail Dispensary Sold for $3M Pre-Revenue + $2.3M for the Real Estate combined sale was $5.3M.

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#9 Fully Operational MicroBusiness Cultivation, Manufacturing Type 6 & Distribution For Sale (Adelanto, CA) Asking Price: $3,000,000.00 Space: 15,000 SqFt (8700 SqFt in Operation, 6300 SqFt Ready to Expand) Ceiling Height: 22ft Power: 800 AMPs 3 Phase 480V Parking Spots: 25+ All Fenced w/ Private Parking Lot

D L SO #3 Palm Springs Retail Dispensary Sold For $499.000 Pre-Revenue

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Guard Against Ransomware Attacks Crooks typically gain server access through email scams, but training employees can help protect your business By Margaret Jackson

ith mainstream companies such as Colonial Pipeline and JBS Foods increasingly becoming the victims of ransomware attacks, it’s only a matter of time before cyber criminals turn their attention to the cannabis industry. Ransomware is a nefarious hack that takes control of a company’s files and data and locks out the rightful owners. The attackers gain access through phishing emails that deploy malware when unsuspecting employees click on a link. Once a ransomware attacker has taken over a company’s computer system, they typically demand cryptocurrency to return control to the owner. While most high-profile mainstream companies have strong IT departments working to prevent ransomware attacks, many cannabis business haven’t taken the necessary steps to defend themselves, experts say. “The majority of cannabis companies have one or two IT folks, if that—not someone with security certification,” said Ryan Ninness, vice president of technology at Lafayette, Coloradobased Urban-Gro, an integrated architecture, engineering and cultivation systems company. “They’re not monitoring or looking at the network on a daily basis.”

Marijuana businesses are just as vulnerable to ransomware attacks as mainstream companies, whose data breaches have been making headlines. Cannabis companies should be aware of how high the stakes are if they get hacked and what they can do to prevent infiltration. Executives should know that: • Ransomware attacks were up 150% between 2019 and 2020. The amounts that ransomware victims paid to regain control of their computer systems rose more than 300% during the same period. • Educating employees about cybersecurity is the No. 1 step businesses can take to protect against accidental downloads of ransomware. • Hiring an employee or consultant who monitors your network daily can help stop suspicious activity in its tracks.

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Guard Against Ransomware Attacks

Training company Ninjio creates animated videos to help workers spot phishing attempts and other common security breaches. Courtesy Photo

CANNABIS COMPANIES AT RISK A recent survey of MJBizDaily readers found that 59% of respondents had not taken steps to prevent ransomware attacks. Cannabis companies are vulnerable to the attacks for several reasons, Ninness said. First, there’s the perception that marijuana businesses are flush with money. Additionally, some people find the industry distasteful and will do what they can to harm it. Finally, many hackers

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are seeking fame and fortune that would accompany a successful attack. “They know it will make big news,” Ninness said.

WHAT’S AT STAKE Ransomware attacks in 2020 were up 150% over the previous year, and the amounts victims paid attackers rose more than 300% during the same period, according to the Harvard Business Review. Efforts to detect and report ransomware payments are critical to preventing

and deterring future attacks as well as holding the attackers accountable for their crimes, according to the Financial Crimes Enforcement Network (FinCEN), a government agency. “As the past few months have demonstrated, the surge in ransomware attacks threatens our critical infrastructure, municipalities and the most vulnerable among us. (It) is increasingly impacting the lives of the American people,” said Michael Mosier, FinCEN’s acting director.

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Guard Against Ransomware Attacks TRAIN AGAINST ATTACKS Each month, Urban-Gro requires employees to watch a four-minute video produced by Westlake Village, California-based security awareness and training company Ninjio. The cartoon videos about real-world security provide information about common mistakes with catastrophic impacts. “It’s easily saved us $100,000 to $200,000 a year since we’ve launched it,” Ninness said. “Since we’ve launched (the training), we have not had a single penetration of a user.” Ninness said he’s against paying ransom to retrieve company information but admits companies that are under siege and don’t have backups are likely to feel differently. “Hospital systems pay because they have these big, huge systems and backups, but they never test anything,” he said. “Can a hospital be down for a week because it’s trying to store the data? That’s where it gets tempting to pay the ransom.” Ninness said he’s not aware of any cannabis companies that have been hacked, and that troubles him. “I’m worried that the industry looks at the fact that they haven’t been hit yet and take that as a token that they have time to wait,” he said. “They really don’t. As soon they detect that you’re a vulnerable target, you’ll get hit. It’s only going to take one (ransomware attack) to make the industry a target and vulnerable.”

WORKER TRAINING Educating employees is the No. 1 measure cannabis businesses can take to ensure their systems are secure, said a representative of a Colorado-based edibles manufacturer who asked not to be identified for fear of the company becoming a target. “The most common way to gain access is through employees,” he said. The edibles manufacturer has engaged KnowBe4, a Clearwater, Florida-based security training platform, to train and

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STEPS TO GUARD AGAINST RANSOMWARE ATTACKS ❑ Store everything on the cloud. ❑ Train all users on cybersecurity measures. ❑ Limit the value of your devices. ❑ Use two-factor authentication. ❑ Limit who has administrative access. ❑ Back up all data. test its employees by sending out fake emails that should be construed as malicious to monitor how they respond. “Everyone gets a lot of phishing emails,” he said. “But because of our training, I get people asking whether (they are) legit. The marijuana industry is heavily targeted by phishing emails. These malicious actors know that these are new companies and might not have the robust software to protect them.” As many employees worked remotely during the coronavirus pandemic, the edibles manufacturer feared its networks were open to more ransomware threats because of its inability to properly secure every network. “It was such a quick change with little time to prepare and not enough time to secure employees’ networks,” he said.

STOPPING THEFT It’s also important to educate employees about how to spot emails that might appear legitimate but actually are a scam, said Ajay Chawla, co-founder and partner in Troy, Michigan-based IT consulting firm Backcross Solutions. Chawla shared one situation a Backcross client experienced: An

employee received an email that appeared to be from the company’s CEO saying the business had just won another license. The email instructed the employee to cut a check for $15,000 and drop it off at a certain address by the end of the day. The employee cut the check, but when he got in his car, the CEO happened to call, ultimately stopping the fraudulent activity. “You see the email, and it almost looks exactly like your CEO’s, but (the address may be one) letter different, and you don’t recognize it,” Chawla said. “It’s things like that that happen all the time. Those kinds of email hacks are easy to do, and people often mistake them.” Grow operations are particularly vulnerable to cyberattacks because their irrigation, feeding and lighting systems all are connected through internet systems that aren’t difficult to breach, Chawla said. “They have tracking systems, they have seed-to-sale (programs) in their dispensary or grow, they have a ton of physical security. So, when we ask them about security, they want to show us their camera room and their big armed guard,” Chawla said. “We try to explain that the person who’s going to come in and steal from you is not across the street or in this town, they’re in Ukraine or Russia or somewhere else.” Backcross partner John Lamarche said that many cannabis companies are so focused on opening their retail locations and adhering to other compliance matters that IT and cybersecurity fall into the “nice to have” category. “They’re not focusing on cyber security, and they are absolutely vulnerable,” Lamarche said. “As we get more professional money from people who see cannabis as a business opportunity and people who have a strong business background outside of cannabis, they’re reaching out to companies like ours. As the industry matures, you’ll see more people gravitate to the more sophisticated solutions.”

BestPracticesInRetail | Solomon Israel

Digital marketing for marijuana retail may involve a range of strategies, including social media pages and listings on cannabis apps. Courtesy Photos

Getting the Message Out Social media, local news reports and email newsletters offer ways for companies to connect with potential customers

cannabis store can be welllocated, beautifully designed and staffed by experts selling the best products available, but without marketing and advertising to attract clientele, sales won’t reach their potential. “Marketing is the place where people engage with the company you’ve built,” said Thomas Winstanley, vice president of marketing with Theory Wellness, a vertically integrated cannabis company with operations in Massachusetts and Maine.

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Using advertising and marketing to build your store’s brand takes time and money, but retail stores that make the investment stand to benefit. “I believe cannabis is like any other industry: Brands are incredibly important, and building brands is incredibly important for long-term success,” said Colin Bambury, head of marketing at THC Canada, an independent retailer in Vancouver, British Columbia, and founder and editor of cannabis marketing website Adcann.

Like any business, cannabis retail relies on building public awareness to attract new customers and keep regular shoppers engaged. Veteran marijuana marketers outline a variety of overlapping strategies to reach customers and spread the word, including: • Traditional marketing methods such as print and billboard advertisements. • Free online listings, which might be worth upgrading to paid placements in certain circumstances. • Social media marketing, with the caveat that accounts could be shut down without notice. • Direct-to-consumer email and text communications. • Earning coverage in news media by building relationships with journalists.

BestPracticesInRetail | Solomon Israel “To win in the long term, you need a brand that resonates with your consumers,” Bambury said. “And to do that, you need to invest in marketing and advertising in a smart and strategic way.”

Available Marketing Channels Marketing and advertising channels open to cannabis retailers can change quickly, even in relatively established markets, observed Chris Mapson, vice president of marketing with LivWell Enlightened Health, a vertically integrated marijuana company with 21 locations in Colorado and plans to open stores in Michigan. Billboards are among a variety of traditional advertising media used by LivWell in Colorado. Others include adopt-a-highway campaigns, radio spots, newspaper advertising and digital ad placements. This year, LivWell produced television commercials to run on a local NBC affiliate station, which Mapson believes was the first-ever cannabis dispensary advertisement on a U.S. major network affiliate. He believes the 15-second ads, which showed paid spokespeople giving positive testimonials about LivWell stores without using the words “cannabis” or “marijuana,” boosted brand awareness. “This is one way we could show the industry that this can be done in a respectful, adult way,” Mapson said.

Going Digital The internet era has opened new opportunities for digital marketing, and many of them might be open to marijuana retailers. General-purpose digital business directories such as Yelp and Google offer free listings, as do some cannabis-specific listing sites including Leafly, Weedmaps and PotGuide, said Theory Wellness’ Winstanley. In the most competitive markets, he said, Theory pays for premium placements or advertisements on those sites.

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In-person community outreach can help build awareness of retail brands. Courtesy Photo

Chris Mapson

(Some mainstream online advertising platforms, such as Google’s AdWords, don’t allow cannabis ads at all.) In terms of return on investment, LivWell’s Mapson said it’s easier to measure the impact of some advertising campaigns than others. Broad-reaching TV and billboard advertisements might raise awareness, but it can be difficult to tell when they reach customers. “Digital and print are relatively easy,” he said. For instance, shoppers might bring in a coupon from a print campaign, proving the advertisement’s reach. Digital advertisements allow retailers to track clicks and sales conversions.

“We look at our performance metrics to see, ‘OK, we spent X amount of dollars on Leafly,’” Theory Wellness’ Winstanley said. “Is there any way to correlate that spend versus a return on investment? Sometimes there is, sometimes there isn’t, and that can be some of the challenge with these sites.” Winstanley said there’s no single “silver bullet” marketing channel that fits every need. “Each market is so different,” he said. “There’s no blanket solution to any of this.”

Social Media Marketing In jurisdictions with stricter controls on marijuana advertising, retailers shut out of regular marketing channels may have to get creative with their outreach. Canada’s federal cannabis law, for example, effectively excludes marijuana businesses from many forms of traditional advertising, but some cannabis companies rely on age-gated digital and social media marketing. Marketer Colin Bambury of THC Canada said creating native social media content is affordable and

BestPracticesInRetail | Solomon Israel achievable for small teams such as his. The company’s social media strategy focuses on lifestyle content with photos of people wearing THC Canadabranded clothing. “We can do giveaways with that clothing, give it to our customers, do giveaways on social media and then create a lot of content (of) people wearing those clothes,” he said. THC Canada works with a marketing agency to develop some of its social media content, but Bambury said a strong social media strategy can be developed in-house at a relatively low cost. “All you really need is a camera. A lot of people can do it from their iPhone these days,” he said. “It all depends on the size, the scale of your ambition and what you’re trying to accomplish, and, what your brand goals are.” For cannabis businesses, social media marketing often comes with the risk of having accounts deleted for posting cannabis-themed content, and Bambury said THC Canada’s accounts have been shut down and deleted in the past. “Social media networks are not owned platforms,” he said, “they’re rented platforms.” Social media is powerful but highly volatile, advised Theory Wellness’ Winstanley. His team studies each platform’s social media guidelines closely to learn what’s allowed and what isn’t. The company also monitors competitors’ pages to better understand what kind of content gets accounts shut down. “You should rely upon it knowing that if (your social media account) went away tomorrow, your business wouldn’t be hurt,” he said. “That, to me, is the most important thing: You have to be willing to lose it to use it.”

Direct Marketing In light of the fickle nature of social media, THC Canada’s Bambury recommended using those platforms to drive

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Colorado dispensary chain LivWell produced testimonial-style TV advertisements for a local NBC affiliate station this year. Courtesy Photo

Thomas Winstanley

traffic to more stable, owned platforms such as a retailer’s website or a directto-consumer email newsletter. He said at least half of THC Canada’s email subscribers come from social media. “I personally find that email marketing—especially for Canadian cannabis retailers—is probably the most important channel that you could be investing in,” he said. An effective email newsletter creates a database of customers who are open to communications “that no other platform can take away from you,” he said. THC Canada’s emails usually focus on new product updates. The emails offer a chance to communicate explicitly about specific attributes of cannabis products—an opportunity that he said is generally not available on social media—and to invite customers

to events such as Fresh Drop Friday, a monthly event offering free food, product discounts and swag giveaways as well as live music. Bambury suggested retail managers encourage budtenders to focus on signing up walk-in customers to the company’s email list. He finds that emailed newsletters tend to be particularly engaging for older customers. “I would say that individuals over the age of 45 are going through every single email, and they’re seemingly reading every word and clicking on the links as well,” he said. LivWell’s Mapson considers directto-consumer communications to be a particularly cost-effective way to communicate with customers. “We already know that, because you opted in to get this information, you’re going to read it,” he said. Winstanley also runs email campaigns at Theory Wellness, but he finds that text messaging offers a better connection to customers. “If you look at a comparison of how many emails you get a day versus how many text messages you have a day, and you compare how many unread text messages you have versus unread emails, there’s definitely a lot more of an attention-span-grabbing piece to using text messages.”

Companies must ensure customers opt-in to receiving text messages, however, to avoid the possibility of costly lawsuits. (See “Steering Clear of Spam” in the August issue of MJBizMagazine.)

Colin Bambury

reporters, reaching out to introduce yourself and inviting them to come visit your operation. Earned media can also help improve search-engine rankings, giving a boost to a company’s other marketing efforts, THC Canada’s Bambury said. LivWell’s Mapson recommends cannabis companies offer themselves as a resource to journalists for cannabis-related stories. “It always benefits us to maintain that positive relationship with media and press,” Mapson said.

Earned Media Unpaid exposure such as local news coverage, known as earned media, can be another powerful way to build awareness of your business and spread its message. “There’s no better way to get a consumer to understand your brand story than (to) let somebody else tell it for you,” Winstanley said. On top of the exposure, appearances in news media can help cannabis businesses dispel myths about the plant and contribute to positive public discourse. “We even write op-eds, if we feel

very strongly about something,” Winstanley added. “The CEO or myself will write something and send it out to a publication if we notice a piece of press that may have not told the whole story.” Winstanley advises proactively building relationships with local news

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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

A look at some recent hiring moves in the marijuana industry

Troy Datcher

By Omar Sacirbey

Clorox Exec to Lead Jay Z’s The Parent Co.

roy Datcher expected to retire from Clorox. As senior vice president and chief customer officer, he held an influential C-suite post at the CPG giant and had also recently been promoted to general manager of Kingsford, the charcoal briquette brand that is one of Clorox’s subsidiaries. Savoy magazine selected Datcher for its list of the “Top 100 Most Influential Blacks in Corporate America” in 2016, while The Modern Sale, a leading sales-industry trade publication, and the Collective[i], a sales network, chose him for their 2021 “Top 100 Global Sales Leader” list. “It was an incredibly rewarding experience to be an influencer in the C-suite for a company that’s been around for over 100 years,” Datcher told MJBizMagazine during a recent interview. “I thought there couldn’t be anything better.” But Datcher’s interest was piqued when recruiter JM Search called about leading The Parent Co.—a cannabis business formed in January, when Shawn “Jay Z” Carter and his entertainment company, Roc Nation, acquired California-based Caliva and Left Coast Ventures. “I’ve gotten a lot of these inquiries over the years. But this one stood out. The Jay-Z/Roc Nation connection kind of freezes you in your tracks,” said Datcher, who’d spent a combined 20 years over two stints with Clorox. Datcher said he was drawn to joining an “industry in its infancy, and what it has an opportunity to become,” as well as leading a “strong organization” committed to improving diversity in the cannabis industry. “The equity commitment is impressive,” Datcher said.

Massachusetts MSO Taps Beverage Vets Multistate operator MariMed hired Robert Hall as senior brand and marketing adviser. Hall joins MariMed from The Boston Beer Co., maker of Sam Adams beer, where he spent nearly 15 years and most recently served as senior director of marketing. He also spent five years with the Kellogg Co., holding various executive marketing roles. In his new role, Hall will help MariMed

124 MJBizMagazine | October 2021

“I embrace it. And it’s not a new situation I’ve been placed in. If you look at corporate America, less than 4% of C-suite executives are Black,” Datcher said, noting that he was only the second person of color to hold a C-suite post in Clorox’s 108-year history. “There’s a lot of responsibility that comes with that, but I accept it. I thrive on it.” Datcher, who starts at The Parent Co. on Oct. 1, said his business intuition, brand-building expertise and experience working across multiple teams are skills he’ll be able to leverage to make the company stronger. “Working cross-functionally is critically important in an organization as big as Clorox, with 8,800 people globally. No one function does it all. It’s important that you have really strong cross-functional relationships. And I’ve gotten the chance to work closely in developing strategy,” he said. “Building a winning culture has been part of what I’ve been able to experience over my three decades in business.” Does Datcher expect to retire from The Parent Co.? “There’s so much to do. I will set some really aggressive milestones,” he said. “My goal is to build a team that I enjoy working with every day, to create an environment where we’re having a lot of fun while we’re doing really hard work. And when you’re having fun, it doesn’t really feel like work. I can do that for a very long time. So, if we create the right environment, this will be a really long, fun run.”

establish data-supported, distinct brand strategies and brand-building techniques as the company expands. The Norwood, Massachusetts-based MSO also brought on Kevin Compagna as vice president for wholesale and licensing in North America. Compagna joins the company from Catholic Purchasing Services, a nonprofit in Newton, Massachusetts, where he was director of sales and service. The bulk of Compagna’s career has been in management posts for the

beverage industry, including eight years at the Horizon Beverage Co., four years at Diageo subsidiary Stirrings, three years at Moet Hennessy and seven years at Pepsi.

 Metrc Hires New Tech Officer Seed-to-sale giant Metrc hired a new chief technology officer, Zahid Ali, who joins after

Zahid Ali

IndustryPlayers | New Hires & Promotions 18 years with CGI, a Montreal-based IT-services company where he was head of consulting services for the past six years. During California’s implementation of Metrc, Zahid served as the primary liaison for the state, coordinating training, support and software-change requests, the company said in a news release. He began his career as a programmer and analyst at NASA’s Jet Propulsion Laboratory. Metrc’s previous CTO, Jesse Naranjo, will become the company’s first chief product officer and establish a new productJesse Naranjo management division overseeing the design, market analysis and implementation of new products.

California Lab Reorganizes After CEO Departure Aaron Riley, the CEO of CannaSafe, an ISO-accredited cannabis testing laboratory in California, left the company to pursue testing opportunities in Oregon and Florida, making way for three new members of the leadership team. Riley will help facilitate the transition at the Los Angeles lab that began in early 2021. Partners Bill Scrogins and Greg Balotin are set to become owners, while Gerry Dabkowski will assume the role of incoming CEO, CannaSafe said in a news release. Antonio Frazier and Ini Afia will be retained as president and chief science officer, respectively. Additionally, several members of CannaSafe’s original science team have returned to the company in recent months to advance its testing capabilities.

 Extraction Pioneer Appointed to Washington Social Equity Group

Jim Makoso, co-founder and CEO of Flowe Technology, a biotechnology company focused on cannabinoids, was appointed to Washington state’s Social Equity in Cannabis Task Force. Makoso is also the director of the Lucid Lab Group, vice chair of the NCIA Scientific Advisory Committee and serves on various boards and committees around the country in addition to volunteering in his community. The Social Equity in Cannabis Task Force is responsible for making recommendations to the Liquor and Cannabis Board (LCB) to establish a

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social equity program for the issuance and reissuance of existing retail cannabis licenses. The group also advises the governor and Washington state Legislature on policies that will facilitate social equity in the cannabis industry. The task force must submit a final report to the Legislature and governor by Dec. 9, 2022.

keep up with the growth in businesses as well as a program without an operating seed-to-sale tracking system. Williams, who was appointed interim director in 2020, was preceded by Travis Kirkpatrick (2019) and Adrienne Rollins (2018).

Oklahoma Regulatory Agency Welcomes New Director

Denver-based compliance software platform Simplifiya appointed Jeffrey Katz to its board of directors. Katz cofounded Mercury Payment Systems, which was sold for $1.6 billion to Vantiv and then acquired by Worldpay, a subsidiary of Fidelity National Information Services, and MassPay, a fintech company that provides the largest number of payout options. Katz also serves as CEO of MassPay, chair of Reach.ai and CardFree and is a growth investor in

The Oklahoma Medical Marijuana Authority (OMMA) chose Adria Berry as the agency’s latest director. Berry replaces Kelly Williams, who served as director for nearly a year. Berry, an attorney who advised Gov. Kevin Stitt on cannabis policy while working for the Oklahoma secretary of state, began her new role Aug. 30. Berry takes over a regulatory agency struggling to hire enough inspectors to

Fintech Pioneer Joins Simplifiya Board

companies including Simplifiya, Code Technology and Bluedot Innovation.

Papa & Barkley Hires Charlotte’s Web Marketing Alum Bo Becker, former vice president of marketing for Boulder, Coloradobased Charlotte’s Web, joined Papa & Barkley, a California cannabis company, to expand brand recognition. Based in Eureka, California, Papa & Barkley is best known for making THC topicals in its home state. The privately held company also makes hemp-derived CBD topicals, tinctures and capsules for national distribution. Hired or promoted someone for a senior-level position? Send a news release or general information to Omar Sacirbey at omar.sacirbey@ mjbizdaily.com.

October 2021 | mjbizdaily.com 127

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SeedtoCEO | Sound Bites from the MJBiz Podcast

SEED TO CEO

veryone wants to get in on the cannabis market. The new podcast “Seed to CEO” gives marijuana entrepreneurs an edge. Each week, MJBiz CEO Chris Walsh interviews a cannabis executive to learn the stories behind their successes and failures. To hear from those who have been there and done that, visit mjbizdaily.com/podcast or listen to “Seed to CEO” wherever you get your podcasts.

Tune In Today!

These “Seed to CEO” podcast guests answered:

What keeps you awake at night?

DR. PRIYANKA SHARMA

EMILY PAXHIA

KRIS KRANE

Co-founder and co-CEO Kazmira Watkins, Colorado

Co-founder and managing director Poseidon Asset Management San Francisco

Co-founder 4Front Ventures (Phoenix) Chicago

What will happen on the federal level with industrial hemp? Are we going to be able to finally show that we do care about consumers in this industry and that we do want to provide safe products? There are so many people trying to do the right thing. They just want to be given the platform for that. So that’s the first one. The second is based on what happens with the former: Are we going to be able to study and show to consumers the other cannabinoids in industrial hemp? How can we look at all these cannabinoids individually? (Are we going to be able to look at) how powerful they are in terms of product forms and other uses?

One of my bigger fears is really bad federal legalization that does not contemplate the businesses, does not contemplate state-level importance of infrastructure that’s been built. That does keep me up at night, because I start to see some of the folks who are contributing money to legalization. And I’m trying to think about all the motives that exist as people get involved. What I’d like to see is an industry that does thrive with a spectrum of business—where you obviously will have corporations but you also have the opportunity for craft and small business to thrive, because otherwise it’ll get very dull. And who wants to be involved in something that got boring?

Right now, I’m sleeping very peacefully. I negotiated my exit. It happened. This is my first week of my post4Front life, although I am going to continue consulting at 4Front. It won’t keep me up at night as much as it did when it was my company and my entire net worth and my family’s livelihood depended on it. But if I’m working with people who I really care about and really believe in, which is my goal for basically everything that I do going forward, then I have to give them my all and it will personally impact me if something doesn’t work, even if it’s not directly my responsibility.

Comments have been edited for length and clarity. 130 MJBizMagazine | October 2021

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MJBizDaily Buyers Guide Cannabis Extraction

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MJBizDaily Buyers Guide Cannabis Extraction

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INTRODUCTION In cannabis, there aren’t a lot of set rules and standards, so many processors and extractors have developed their own as they’ve gone along. Because there are several different extraction methods available—both with and without solvent—extractors, along with anyone linked to the all-important extraction process, need to be keen on the terms and equipment involved and the products that result.

Laura Drotleff MJBizDaily

That’s why we have developed the MJBizDaily Cannabis Extraction Buyers Guide, part of a series of resources designed to help connect the buyers who are in the market to purchase cannabis extraction equipment and products with the sellers who offer them and provide the technical know-how and service to help their clients function at the highest level. While connecting buyers and sellers is a key objective, so is education. The Cannabis Extraction Buyers Guide also includes content from processing experts who have been immersed in the cannabis market and have firsthand knowledge of the ins and outs of the extraction process. They share insights on: • Considerations for choosing a cannabis extraction system. • Choosing between solvents and solventless extraction. • The most efficient cannabis varieties for extraction. • Extraction costs. • Safety precautions. We hope that the information you find in these pages helps you better understand the complexities of cannabis extraction and enables you to make profitable decisions for your business. Kudos and thanks to our contributor Georgie Smith for her work on this project. If you have any questions or want to provide feedback, please contact me at laura.drotleff@hempindustrydaily.com.

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MJBizDaily Buyers Guide Cannabis Extraction

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CHOOSING A CANNABIS EXTRACTION SYSTEM Part of the beauty of the cannabis plant is its versatility. There are countless ways to extract, process, press, distill and refine cannabis into wholesale and retail products. Rapid progress in innovation, scale and quality has marked the last few years of the extraction market, as more U.S. states legalize medical and recreational cannabis and the industry continues to expand. Valued at $7.3 billion in 2019, the global cannabis extraction market—including both marijuana and hemp extraction— is predicted to reach $28.5 billion by 2027, according to a market analysis by Grand View Research. As extraction technology has evolved and matured, extraction processes once relegated to small, homebased processors have scaled up, and methods once considered dangerous have become manageable with appropriate safety precautions. But versatility doesn’t simplify decision-making about which extraction equipment to choose for your business objectives, no matter the scale of your operation or your goals. The good news is there are many valid approaches to choosing an extraction methodology, according to Casey Flippo, CEO of two Arkansas-based cannabis extraction companies—Natvana LLC, a hemp extraction facility using cryogenic ethanol extraction, and Dark Horse Medicinal, a medical marijuana processor using butane hash oil (BHO) hydrocarbon extraction.

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MJBizDaily Buyers Guide Cannabis Extraction

Flippo and other cannabis extraction professionals consulted for the 2021 MJBizDaily Cannabis Extraction Buyers Guide recommend that extractors evaluate the following factors as they research extraction processes: • Types of cannabis extraction methods. • Brand goals. • Location and local regulatory constraints. • Hemp versus marijuana. • What happens post-extraction. • Consulting resources.

mjbizdaily.com

A cannabis extraction equipment buyer’s checklist What to Know and What to Ask Ask yourself: F What does my brand represent? F Does this extraction process support my brand? F Is quality or quantity more important to the brand? F What market outlet does my product have?

• Market trends.

F How much post-extraction processing is needed?

• Types of cannabis extraction processes

F After initial set-up costs, how well financed is my business?

Four principal methodologies dominate the extraction marketplace, each with pros and cons: Carbon Dioxide Extraction—A method using cooled and pressurized liquid CO2 to dissolve oils out of cannabis plant material. • Pros: A relatively safe method producing a high-quality product that retains most of the desirable compounds in cannabis with no residual contaminants. • Cons: Slow extraction requiring a lot of processing post-extraction. Requires the most expensive equipment, which is also costly to maintain. Equipment may require a specially trained technician. Hydrocarbon Extraction—A solventbased process that uses petroleumbased fuels (most commonly butane) to act as a solvent stripping desired compounds out of plant material. • Pros: Quick extraction process that produces a highly refined, potent extract suitable for many cannabis products. Less expensive than CO2 to purchase and maintain.

F Can we afford to pay higher labor costs for trained professionals? F What’s the ultimate goal for my cannabis extraction business? Ask extraction equipment manufacturers: F What safety elements are required for your equipment? F Have you set up a processing/extraction system locally? F What rules and regulations govern your equipment? F What facility design elements are recommended with your equipment? F What post-extraction equipment do you recommend and why? F What kind of maintenance is required for your equipment? F What parts most commonly break and how do you order and replace those parts? F What kind of technical and customer service do you offer with purchase? F How much energy does your system require? Don’t be afraid to: F Get multiple quotes. F Talk to fellow extractors. F Hire a consultant.

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MJBizDaily Buyers Guide Cannabis Extraction

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• Cons: The solvents used are highly flammable, making this the most dangerous process. A safe facility can be expensive to set up and maintain. Hard to scale for larger volumes because of restrictions on how many solvents can be in the facility, although advances in solvent recovery technology are changing that. Ethanol Extraction—A process that soaks cannabis material in ethanol (grain alcohol) to separate the cannabinoids from the plant material. • Pros: Quick, easily scalable process that is inexpensive to set up and maintain, and the equipment and solvents are readily available. • Cons: Destroys many of the desirable secondary compounds in the cannabis plant like terpenes and flavonoids. It is flammable, requiring appropriate safety equipment like fume hoods. Rosin Extraction—A solventless extraction method that uses high pressure and temperatures to squeeze resin out of cannabis plant material. • Pros: The safest method of extraction because it doesn’t use solvents, which is desirable to many consumers in the high-end boutique market. • Cons: Traditionally not considered scalable for volume production, although new equipment advances allow for much larger-scale rosin extraction facilities. There are a few lesser-known extraction processes in cannabis, such as cold-pressed extraction, a natural method used to make essential oils and even olive oil. But these tend to be relegated to small-scale boutique or organic markets because of low throughput efficiencies.

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MJBizDaily Buyers Guide Cannabis Extraction

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There are also multiple filtration, distillation and formulation processes used after (and in some cases before) extraction that play into decision-making and ultimately into a processing setup, as a processor moves past extraction and into making products. In many cases, the extraction method helps determine what other processes are needed or possible and, ultimately, what cannabis products can be made.

Different Cannabis Varieties for Different Extraction Systems Not all cannabis varieties are created equal when it comes to the type of extraction system used. Nick Tanem is the founder of a well-known solventless extraction company, California-based Essential Extracts. Yet he also runs a butane hash oil (BHO) extraction process in his facility along with his rosin extraction system.

UNDERSTAND YOUR BRAND GOALS WHEN PICKING AN EXTRACTION METHODOLOGY The first thing a potential processor must think about is what their brand represents and what kind of volume they hope to achieve, said Liz Geisleman, chief brand officer at 710 Spirits Extraction Products, a Colorado company providing solvents and supplies to extraction labs.

“There are some strains that just aren’t the best suited for solventless processing, but after purchasing them and doing some trial runs, I didn’t want to lose money. So now we cycle all the material that is not good for solventless into our hydrocarbon rooms,” Tanem said. Solventless products command a premium at the retail level but yields still make a difference in profitability. Tanem’s breakeven is at least 3.5% cannabinoid yield for solventless extraction.

“Are you making Smirnoff or are you making Belvedere?” Geisleman asks. Nick Tanem, the founder of Essential Extracts, a California-based solventless extraction company selling extract and consulting on new solventless extract installations, agrees that considering the extraction process in your branding is key.

The determining factors for cultivars appropriate for solventless extraction seem to be the oil-to-wax ratio within the trichome structure and what’s called the “weak neck trait,” Tanem said. In some cultivars, the trichome head and material come off easily in the agitation process. In other cultivars, they “just don’t want to release the head.”

There is room in the market for even a small, niche farmer or extractor, assuming they put work into branding and marketing, Tanem said.

A variety like Blue Dream, for instance, “doesn’t wash at all,” Tanem said. He’ll get 1% to 2% cannabinoid yields in the solventless process, but if he runs it through his BHO extractor, he sees 22% yields.

“Branding and recognition are huge. If you haven’t been working on that for the last 10 years, get on it now. You don’t have to blow up your Instagram, but start thinking about your specific technology, your specific SOPs tied into a brand that you can package.”

With other varieties, he might see as high as 7% to 8% yields in solventless extraction.

Geisleman recommends butane hash oil (BHO) or hydrocarbon extraction for smaller artisanal producers because it gives a cleaner taste profile, or rosin extraction for organic production or high-end solventless products.

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MJBizDaily Buyers Guide Cannabis Extraction

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For volume production, Geisleman suggests ethanol processing or BHO. CO2 extraction, which initially took off as a safe extraction process for creating a versatile oil useful in many product applications, is becoming less popular, Geisleman said, because of the equipment’s initial setup and maintenance costs.

WHAT ARE YOUR LOCAL REGULATORY CONSTRAINTS? If you’re processing marijuana, check to make sure marijuana is legal in your state, Geisleman said, but your second question should be, “How can I process safely and legally?” Different states and municipalities have varying regulations and familiarity with extraction methods. Most fire departments are familiar with ethanol extraction because of breweries, but may not have seen more potentially dangerous processes like hydrocarbon extraction, Geisleman said. “When you see some of these big operations, it’s pretty scary, especially from a fire department standpoint,” she said.

Solventless Versus Solvent-free Cannabis Products Rosin extraction, which uses heat and pressure, is the most commonly used solventless extraction method.

Solventless and solvent-free are not the same thing in cannabis extraction. Consumers are becoming better educated about the differences in extraction, and it is important that manufacturers communicate clearly about how their products are made, said JD Garrick, managing partner of Illuminated Extractors, a Colorado company selling hydrocarbon extraction equipment.

Solvent-free products, on the other hand, are made using extraction processes that include some sort of chemical solvent—ethanol, butane or propane are some of the more common. After extraction, the chemical solvent is distilled out. Carbon dioxide is technically a solventless product through the extraction process. But because it creates a crude oil thick with leftover plant material, which is typically winterized in ethanol as part of postextraction processing, a solvent is used on the product.

“Even if a process uses solvent, it should still be a solvent-free product once it’s sold to the consumer,” Garrick said. The 2019 vaping crisis caused dozens of deaths and over 2,600 hospitalizations that were blamed on additives in flavorless THC distillates with added artificial flavors. Since then, consumers have placed more emphasis on the chemicals used in the extraction process. This has increased demand for cannabis products made without solvents, or evidence that the final product for consumption is free of any solvents used in the manufacturing process.

CO2 extractors that market their products as solventless but went through a winterization process are lying to the consumer, Garrick said. “They’re telling the consumer this is solvent-free, but they are still winterizing in ethanol,” Garrick added.

Solventless products are extracted manually, without the use of a chemical solvent.

“If somebody wants to have a solventless product, they should have all the facts.”

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MJBizDaily Buyers Guide Cannabis Extraction

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There are countless ways to extract, process, press, distill and refine cannabis into wholesale and retail products. Courtesy Photo

Also, ask how many solvents you will be allowed to hold in your facility. Some municipalities are particular about the volume of solvent a facility can have on-site. “If you have a 500-gallon extractor, but you can have only 100 gallons (of solvent) in your facility based on local regulations, you’re already outside of that,” Geisleman said. Typically, labs in urban areas will have stricter regulations while rural, agricultural areas will be more permissive, often with fire departments that are more familiar with large-scale operations through other agricultural businesses.

EXTRACTION FOR HEMP VERSUS MARIJUANA Hemp and marijuana may come from the same plant, but extraction methods need to be considered for each individually. Because of overproduction in the hemp market after federal legalization and the subsequent price crash, hemp is a “volume business,” Flippo said. Hemp doesn’t allow the same standard of quality biomass as marijuana, which means it’s harder to get high percentages of terpenes and flavonoids, he said. Flippo recommends cryogenic ethanol extraction for hemp processing. “There is nothing else you can do that gives you a throughput and efficiency that, in this volatile market, will allow you to remain competitive,” Flippo said.

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On the other hand, marijuana has more processing options, although he prefers BHO extraction because it favors the whole plant process desirable in the medical marijuana market. “Marijuana is a more high-quality feedstock. It’s almost a shame to run it through the ethanol process,” Flippo said.

WHAT HAPPENS POST-EXTRACTION? Once extraction is finished, consider what happens next. There’s a lot involved in the “cleanup chemistry,” Geisleman said. Extractors need filtration media to remove pesticides and heavy metals if that is a concern. For some hemp products, THC must be removed. Remember to consider the costs and space requirements for all of this equipment. “What kind of filtration media are you going to need? Are you going to winterize, and what does that look like? You’ll need large freezers and all of that,” Geisleman said. “Are you going to extract just oil? What’s your next step? Where’s that space going to go?” Geisleman also recommends completing the first round of your compliance testing in-house before you go to third-party verification, to better control the timeliness of the process. “If you’re going to rely on a third-party, that could be a week —or 12 weeks —for results,” she said.

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CONSIDER HIRING A CONSULTANT The sticker price of hiring a consultant to set up the extraction process may be high, but it will more than pay for itself. “We just built on an expansion and the amount of work my chemical engineer did for it was almost a Ph.D.level thesis for our fire department,” Geiselman said. “All these organizations (that regulate extraction) when you start reading these regulations—they get real subjective, fast. The money you spend on a consultant will save you thousands, if not tens of thousands of dollars.” Consultants can help with everything from figuring out which equipment to buy and negotiating with manufacturers to dealing with regulatory agencies, to helping set up an efficient facility that meets all laws, keeps employees safe and produces a safe, quality product. Consultants shouldn’t just talk to you a few times, but really immerse themselves in your system and be there “every step of the way,” Flippo said. Geisleman recommends checking in with a consultant at least annually, even after you’re up and running. Regulations can change. Checking in helps the lab avoid becoming non-compliant and receiving an unanticipated stop-work order.

Processors need to think about what their brand represents and what kind of volume they hope to achieve when choosing an extraction method. Photo by Lindsey Bartlett

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MARKET TRENDS IN CANNABIS EXTRACTION One thing is certain: Innovation in the extraction market is happening quickly, Tanem said. Automation, higher efficiencies, better equipment and lower energy technology are all coming to the forefront. “This is an emerging market. If you’re trying to get into this space, take the initiative because there’s room for everybody right now,” Tanem said. Even for the small brands, there’s “always room for new ideas and creativity in the space.” And with equipment innovations, it is no longer true that processes like rosin extraction are challenging to scale, Tanem said. “When I’m selling quarter-million-dollar pieces of equipment that can process 90,000 grams of fresh frozen in a day, we’re scaling this process.” JD Garrick, managing partner of Illuminated Extractors, a Colorado company selling hydrocarbon extraction equipment, agrees. “There was this whole first wave of technology that came out in the industry, but it’s all about efficiency now,” Garrick said. “Operating faster with less, saving money on your electricity. You’re going to see a whole new evolution of people trying to make these products without consuming so many solvents or so much energy.” Garrick foresees large regional facilities processing plant material from multiple states for a growing export market. Even in boutique settings, efficiencies matter, Garrick said.

Starting with high-quality flower can help create a consistent product such as this distillate. Photo courtesy of The Clear

But Flippo advises caution before scaling up, pointing to what happened in the hemp industry with overproduction. Remember that just 20 pounds of biomass, once extracted, can be turned into roughly 2,000 single-dose applications. Flippo has the smallest BHO setup he could buy and “we can still run 100 pounds a day.” Quality over quantity will rule the future of cannabis extraction, according to Flippo. “You don’t have to have an industrial 100,000-square-foot warehouse to provide a quality product for a lot of different people.”

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THREE SAFETY CONSIDERATIONS IN CANNABIS EXTRACTION No matter what cannabis extraction method extractors choose, safety must be a priority. Extraction labs must understand and implement safety standards appropriate for their extraction processes, said Casey Flippo, CEO of hemp processor Natvana LLC and medical marijuana extraction company Dark Horse Medicinal Inc., in Little Rock, Arkansas.

All of the most commonly used extraction methods have safety risks. Photo by Matt Staver

Flippo told MJBizDaily he once visited a butane hash oil (BHO) hydrocarbon lab without ventilation or a Class 1, Division 1 (C1D1) room, a manufacturing space set up with zero points of ignition and live gas monitoring designed to ventilate potentially flammable gases and built with fire-suppressing materials. A C1D1 room is required in hydrocarbon extraction labs. “It was like a Molotov cocktail in the middle of the warehouse,” Flippo said. Hydrocarbon extraction is considered the most dangerous extraction method, with the potential to blow up if the highly flammable solvents used during the process leak and ignite. But while hydrocarbon extraction raises the most safety concerns, all of the most commonly used extraction methods covered in the MJBizDaily Cannabis Extraction Buyers Guide have safety risks. Carbon dioxide (CO2) extraction risks carbon monoxide poisoning if a leak occurs. Ethanol is also highly flammable and can create a flashpoint if enough vapors leak into the air. Rosin is considered the safest extraction method, although burns are possible. Additional health hazards in cannabis production include breathing of cannabis dust, hearing loss from loud equipment, and skin and eye exposure to harsh chemicals and cleaning products. But if labs are designed and built correctly—and properly run—safety risks are significantly reduced. To ensure safety in their facility, extractors should consider three points when setting up a new lab facility: • Facility design. • Employee training. • Personal Protective Equipment (PPE).

CANNABIS EXTRACTION LAB FACILITY DESIGN Proper facility design can head off accidents, said Liz Geisleman, chief brand officer at 710 Spirits Extraction Products, a Colorado company providing solvents and supplies to extraction labs. Make sure to have proper ventilation and that it’s located in the right spot, Geisleman said. Some gases are heavier than air, so they should be ventilated at the bottom. In addition, alarms to spot gas leaks, whether odorless CO2, or the butane or propane used in hydrocarbon processing, are critical.

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A good consultant well-versed in extraction should help a processor navigate fire department regulations and help come up with a safe facility design, including if the lab is required to install a safety room as required by the chosen extraction method. JD Garrick, managing partner of Illuminated Extractors, a Colorado company selling hydrocarbon extraction equipment, advises getting a third-party certified engineer to review design plans. This is especially important for hemp processors, which may not have established rules to follow that are as strict as the regulations marijuana processors must follow. Having a third-party certification assures that “somebody has signed off on it as being safe to work in these environments,” Garrick said.

PROPER EMPLOYEE TRAINING Make sure employees are trained in all products and processes, following Occupational Safety and Health Administration (OSHA) standards, Garrick said. “Anytime you’re dealing with a solvent, whether it’s flammable or not, you need to understand the SDS (safety data sheets) for what hazards are attached to that solvent,” Garrick said. Geisleman agrees. Employees should “understand whatever chemistry you’re using,” she said.

In some cases—especially for hydrocarbon and CO2 labs—it may be appropriate to have specially trained technicians to run the equipment. Following OSHA guidelines will keep facilities up to date with ongoing If you’re serious about reliable employee training and facility safety maintenance.

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DON’T FORGET THE PPE “Whether you’re talking about hydrocarbon or solventless in any lab setting, your PPE has to be on point,” Nick Tanem, founder of Essential Extracts, a California solventless extraction company, said of personal protective equipment. Even beyond the harsh chemicals used in solventbased extraction methods, employees are exposed to harsh cleaning chemicals, as well as dust and terpenes that can be dangerous. Nitrile powder-free gloves, eyewear and ear protection (when applicable) should be provided. PPE also helps keep labs clean and products safe from contamination, Tanem said.

Make sure employees are trained in all products and processes, following Occupational Safety and Health Administration (OSHA) standards. Photo courtesy of Clever Leaves

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BEYOND THE PRICE TAG: PLANNING FOR THREE IMPORTANT EXTRACTION COSTS The initial financial outlay for cannabis extraction equipment varies widely, but there are additional costs to calculate. Equipment costs vary depending on the size and complexity of the system purchased. Post-extraction distillation, refinement, facility construction and further processing will drive processing prices higher. A small-scale rosin press might run under $1,000, while a large carbon dioxide extraction system can go for more than $400,000. Justifiable equipment purchases will depend on which end products the extractor hopes to create and at what scale. There are additional costs that are important, but not always planned for in any extraction purchase, specifically: • Maintenance and repair.

Machine used to evaporate ethanol from cannabis oil. Photo courtesy of MariMed

• Solvent prices. • Energy use.

MAINTENANCE AND REPAIR COSTS When your equipment breaks down, how expensive is it to fix? That depends on the system, said JD Garrick, managing partner of Illuminated Extractors, a Colorado company selling hydrocarbon extraction equipment. “Anytime you have moving parts, you’re going to have more maintenance,” Garrick said. Things like vacuum pumps, mixers, recovery compressors, heaters and chillers are all high-maintenance items that eventually need replacement. Ask a manufacturer what happens when something breaks down: “Will you need to fly a tech in for a repair?” Garrick said. Garrick also recommends asking about third-party parts manufacturers, in case of a machinery breakdown in need of repair. Ask how easy are those parts to find and how much do they cost? How often do they break?

PLANNING FOR SOLVENT PRICES The COVID-19 supply chain breakdowns have been a reality check for solvent-based extractors, said Liz Geisleman, chief brand officer at 710 Spirits Extraction Products, a Colorado company providing solvents and supplies to extraction labs. 20 Copyright 2021, MJBizDaily, a division of Anne Holland Ventures Inc. You may NOT copy this report, or make public the data and facts contained herein, in part or in whole. For more copies or editorial permissions, contact CustomerService@MJBizDaily.com or call 720.213.5992 ext. 1.

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Remember, solvent-based extraction is all based on “commodity-priced chemistry,” Geisleman said. Extractors that invested in less common hydrocarbon solvents—like pentene—depend on global supplies that haven’t been easy to get during the pandemic. But even common solvents like ethanol have been subjected to wild price swings over the past two years. “In solvents, it’s been all over the map, with the hand sanitizer crisis and all the ethanol used there,” Geisleman said. She recommends understanding and planning for solvent costs in about the middle of their typical price range. Extractors must make sure to understand “operationally what those consumables are and what they are really going to cost.”

CONSIDER ENERGY USE Another significant consideration is how much energy your system will use, Garrick said. “Anytime you have a distillation process, it’s going to be energy-intensive,” he said. Some chemicals, like CO2 and propane, have low boiling points. Others, like ethanol, take a lot of energy to evaporate. Look for extraction systems designed to recycle and reduce energy costs, Garrick recommends. “Using less energy is not only better for the environment, it’s better in the real-world application,” he said. “Your operating expenses are less because you’re not consuming so much power.”

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UNDERSTANDING CANNABIS EXTRACTION A glossary of common terms Methodology and innovation are exploding in cannabis extraction and along with it so is the language. The terminology surrounding cannabis extraction is a combination of the product and process names common in the days of the legacy market, plus the science, chemistry and innovations of an evolving and highly technical licensed market. Cannabis processors interested in pursuing their own extraction methodology should have a solid grasp of the most commonly used terms they will likely run across, including product or derivative names, and terms used to describe extraction equipment or methods.

CANNABIS EXTRACTION GLOSSARY OF TERMS Broad spectrum —A category of extract used for CBD products, similar to full-spectrum CBD but with the THC removed. Broad-spectrum and full-spectrum products take a “whole plant” approach to extraction, using extraction techniques that preserve many components of the cannabis plant, including additional cannabinoids, terpenes and flavonoids.

Budder—A creamy, yellowish, THC-rich, dabbable cannabis concentrate that looks like butter (hence the name). Budder is produced using a carbon dioxide or butane extraction process. It is highly concentrated in THC (over 80%) with high levels of terpenes that give concentrate product a favorable reputation. Butane —A flammable gas used in hydrocarbon extraction to make butane hash oil (BHO). Butane is a petroleum derivative and is used in cannabis extraction because of its high purity and low boiling point.

BHO —Butane hash oil or butane honey oil, a concentrated cannabis extraction of up to 90% THC concentration that, when used, is typically referred to as “dabbing.” BHO is made using butane in a hydrocarbon extraction process and offers a wide range of consistency, potency and representation of the chemical compounds in the original cannabis variety that was processed. Because butane is highly flammable, BHO can be dangerous to make when not done so with proper safety standards.

Bubble hash—Named for the way it bubbles when smoked. The extract is made by adding bags of cannabis flower to ice water, agitating and freezing. This process breaks off the resin glands from the flower, which are then passed through screens several times until an unpressed, almost crumbly material is left. This is then subjected to heat and pressure. Bubble hash is made from frozen (not dried) flower material, making it a “live” product similar to live resin, but without the use of solvents. Cannabinoid distillation —Also known as fractional distillation, occurs after the extraction process. Intended to isolate desired cannabinoids from other chemical components in the cannabis oil. Cannabinoid distillation employs heat and vapor distillation and can be implemented at a small or large scale.

Chromatography—Another post-extraction process used to isolate individual cannabinoids or take distillate to a 99% purity level. The extract is dissolved in a fluid and then passed through a secondary media. Because different components of the cannabis plant travel at different speeds, this creates separations between chemical components such as terpenes, cannabinoids and other plant materials. Chromatography is often used to remove THC yet retain a broad-spectrum CBD product.

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Closed-loop extraction system—An extraction system that seals in the air, preventing gases of flammable solvents from escaping and greatly reducing the risk of explosion. Prior to closed-loop extraction systems, extractors used open-loop systems, which allowed gases to escape and also left a solvent residue on the final product. CO2 extraction— Also known as supercritical CO2 extraction, CO2cannabis extraction uses pressurized carbon dioxide. Unlike butane and ethanol processes, CO2 extraction works by subjecting the gas to extremely low temperatures, turning it into a liquid. Then it is heated and pressurized, creating supercritical CO2 fluid, which in turn is passed through a chamber containing raw cannabis, dissolving the oils out of the plant matter while capturing active compounds. Cold-pressed extraction—The same process used for cold-pressing essential oils, cold-pressed extraction is made by crushing the plant material to extract usable oil. The process is done at low temperatures. Cold-pressing typically results in smaller amounts of oil produced than other extraction methods, but it is considered a natural, solventless process for creating full-spectrum cannabis extract.

Concentrates —Extracts that contain extra-high amounts of cannabinoids, terpenes and other cannabis compounds. Concentrates can regularly reach THC levels of over 60%, with some—such as distillate—much higher. Concentrates are several times more potent than cannabis flower. Concentrates can be produced both through solvent-based and solventless extraction methods, with the end result including products such as shatter, wax, budder, rosin, crystalline and distillate.

Crude oil—The first oil, typically dark brown or black in color, that is produced during the cannabis extraction process, which needs additional steps to be ready for sale. It is more often discussed in ethanol and CO2 extraction processes as the high amount of refinement in butane or propane extraction product doesn’t require additional refinement.

Crumble —An extracted form of cannabis concentrate made via a butane or CO2 process. It is typically dry, with the consistency of crumbs, but can have a honeycomb-like structure. Because it is made from dried or frozen-fresh flowers, it is considered a type of live resin with a high proportion of terpenes and other original compounds. Crystalline —Also called diamonds or isolates, crystalline is a cannabis isolate with over 99% cannabinoids, with a high degree of purity that forms a crystalline-type solid. It is made using a supersaturation process that purifies active materials in the extract, concentrating it and hence increasing its stability. Dabbable concentrate —Also known as dabs, a type of cannabis derivative that comes in a concentrate form. Dabbable concentrates may be crystallized or not and come in many different forms including shatter, budder, wax and crumble.

Decarboxylation —Heating plant extract or cannabis oil to 105 degrees Fahrenheight to convert inactive cannabinoids such as CBD-A and THC-A into their active compounds. Decarboxylation can occur before the plant is extracted or after. BHO concentrates require decarboxylation because raw BHO doesn’t contain any activated compounds.

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Derivatives —Another way to describe extracts from the cannabis plant. Derivatives can come in many forms and are typically further defined as primary derivatives (terpenes and crude oil) secondary derivatives (refined oil or dabbable concentrates), tertiary derivatives (distillate), and secondary or recombined derivates (isolate). Distillate —A pure and extremely potent form of cannabis that does not contain any terpenes, making it tasteless. Distillate is made from a vacuum distillation process and has varied applications in edibles, topicals and beverages.

Distillation —A post-extraction process that isolates specific compounds from the cannabis plant. The process is done by boiling extracted oil at various temperatures to vaporize compounds at their boiling points, and then separating the compounds into their liquid forms on condensing coils.

CBD isolate is a product of distillation. Courtesy Photo

Emulsion—Cannabis extracts that have gone through an emulsification process to reduce the cannabinoid oils into tiny droplets that will disperse in water. Emulsions can be of the nano, micro or macro size, depending on the particle size. Manufactures use emulsions to incorporate cannabis extracts into products such as drinks, creams and edibles.

Ethanol extraction—Also known as cryogenic ethanol or cold ethanol extraction, which involves soaking the cannabis plant in ethanol held at a very low temperature to separate the trichomes from the plant. Ethanol, or grain alcohol, is also used to produce many other products including perfumes, food coloring, flavorings and essential oils. Extraction—The process of converting cannabis biomass into a derivative using solvent or non-solvent technologies.

Extracts —Another name for cannabinoid derivatives. Filtration—An essential step to create stable cannabinoid products. It involves using vacuums, pumps or paper filters to remove lipids that come to the surface of a cannabis extract such as waxes, fats and oils during the winterization process. Full-spectrum extract—A whole-plant extraction process undergoing minimal refinement similar to broad spectrum; however, THC is not removed from full-spectrum extract.

Hash—A cannabinoid concentrate derived from trichomes, the resin-rich, ripe glands on the surface of cannabis flower heads. Hash can come in various types, such as dry sift hash and ice water hash.

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Hydrocarbon extraction—A solvent-based extraction technology that typically uses butane or propane as its solvent. Hydrocarbon extraction uses a non-polarized method (unlike ethanol extraction), which captures desired cannabinoids and terpenes while not capturing undesirable compounds like chlorophyll and plant metabolites, which require further refinement. Hydrocarbon extraction creates a highly refined cannabis oil, which can then be further processed into many products. However, because it uses solvents that are highly flammable, hydrocarbon extraction is considered the most dangerous extraction method.

Ice water hash—See “Bubble hash.” Isolate —A purified individual cannabinoid in a crystalline solid or powder that is created through the chromatography process. Isolate contains only pure isolated cannabinoids.

Kief—The dried resin glands coating the outside of a cannabis plant. Kief is a decompressed precursor of hash.

Live resin—A cannabis concentrate made from fresh plant material that has not been dried or cured then extracted with a solvent. Live resin can be made from cannabis biomass that has been flash frozen, retaining desirable compounds and flavors. Live resin is considered a high-quality, connoisseur-level product

Nano emulsion—Using ultrasonic waves to shatter cannabinoid molecules into tiny nanoparticles that can then be used in an emulsification. Nano emulsion also involves an emulsifier, which allows the cannabinoid molecules to dissolve and be mixed into water without separating. Open-loop extraction system—See closed-loop extraction system. PHO —Propane hash oil. Sometimes called PHO wax. PHO uses the same hydrocarbon extraction process as BHO but with propane as the solvent instead of butane. PHO cannabinoid concentrates have a budder-like consistency and are high-potency extracts. PHO extraction can preserve even more terpenes than BHO so it may taste better than BHO, but it is not as versatile for creating products. Refined extract—Also known as refined oil, cannabinoid-rich oil that has undergone additional winterization and clarification processes. Refined oil is processed from crude oil. Extraction processes like BHO are highly refined in the extraction itself, so they produce a highly refined oil without further processing. Remediation: Removing THC from cannabis distillate, usually through a chromatography process. Resin—The dark brown, sticky substance found on a cannabis plant’s trichomes producing all the plant’s medical and psychoactive effects. Resin is considered the most valuable part of the cannabis plant and products containing resin are called concentrates. Rick Simpson Oil—Developed by Canadian Rick Simpson as a highly potent cannabis extract purported to cure cancer, hence named for him. RSO is a full-spectrum oil typically taken orally or applied topically. It is an unrefined cannabis oil made by crushing cannabis into ethanol, letting it steep, and then boiling off the alcohol. It can be made at small or large scale.

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Rosin—Solventless cannabis concentrate made using high pressure and temperatures, resulting in a THCrich resin that is typically dabbed. Rosin is a simple technique that can be done on a small scale, though new equipment innovation is allowing for larger-scale rosin manufacturing. Rosin is considered one of the safest methods for extraction.

Shatter—A refined cannabis extract with high concentrations of acid-forming cannabinoids, typically crystalline in appearance and usually used for dabbing or vaporizing.

Solvent—A substance with properties that allow the dissolution of cannabis plant material into a solute that is further refined into extract. Commonly used solvents in the cannabis industry include butane, CO2, ethanol and propane.

Solvent recovery—The recovery and recycling of solvents used in the cannabis extraction system. Solvent recovery can make extraction processes more efficient and allow for larger facilities because less solvent is needed if solvents can be recovered and reused.

Shatter by Seed & Smith, a marijuana grow and dispensary in Denver. Photo by Kate Lavin

Solute —The substance that is desirable to be removed from the plant material. In the cannabis industry, the desirable solutes are the cannabinoids, terpenes, flavonoids, etc. Terpene juice —A typically liquid or sap extract used for dabbing or vaporizing. It contains large volumes of terpenes and low concentrations of cannabinoids.

Terpsolates —A product made post-extraction through the recombination of hemp-CBD isolates to terpenes in order to enhance flavor and terpene-related effects. Tincture —A cannabis-infused oil typically consumed sublingually or mixed into food and drinks. Wax extract—Also known as crude extract derived in the CO2 extraction process. It is the first product in the extraction process and contains all the solutes extracted from the plant material. Water-based extraction—A cold-water method that causes resin glands to break off of flower heads by agitating them in a freezing, cold-water bath. Not technically an extraction process, as it separates (versus extracts) cannabinoids from the plant material. See “Bubble hash.” Winterization—A process of dissolving crude extract in ethanol at warm temperatures, and then cooling the liquid to allow for removal of fats, waxes and lipids left over from the extraction process. Winterization is typically needed following CO2 extraction and turns crude oil into a refined oil that can be sold or further processed.

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MJBizDaily Buyers Guide Cannabis Extraction

mjbizdaily.com

COMPANY NAME

WEBSITE

MJBIZCON BOOTH

Access Rosin

www.accessrosin.com

C5616

ACME Engineering

www.acmefan.com

C8832

AI Vacuum a Division of Across International

www.acrossinternational.com

C4322

Anion

www.anion-usa.com

C5612

Azoth Solutions

Azoth.Solutions

C2727

B/R Instrument Corp.

www.brinstrument.com

C3135

BHOgart

www.Bhogart.com

C9108

Bio Hazard Inc

biohazardinc.com

N2939

Chart Inc.

www.chartindustries.com

C6617

CO2Meter, Inc.

www.co2meter.com

C6525

Colorado Extraction Systems

www.coloradoextraction.com

C4308

PURE5 Extraction

www.pure5extraction.com

C2358

Cool Clean Technologies, LLC

www.coolclean.com/hemp-extraction

C2820

Delta Separations

www.deltaseparations.com

Deutsche Process

www.deutscheprocess.com

C5430

Eberbach

www.eberbachlabtools.com

C2629

Ecodyst, Inc.

www.ecodyst.com

C5609

ErtelAlsop

ertelalsop.com

C4625

Exergy

www.exergyllc.com

C4828

ExtractionTek Stainless

extractiontek.com

C4522

EZ Grow Systems

www.ezgrowsystems.com

C6116

Gilson, Inc.

www.gilson.com

C1947

Green Mill Supercritical

greenmillsupercritical.com

C7749

Pharmco by Greenfield Global

go.pharmco.com/extraction

C6230

HAL Extraction

www.halextraction.com

C7438

Hardware Factory Store

www.shophfs.com

C2415

Cannabis Centrifuges

www.cannabiscentrifuges.com

C4335

29 Copyright 2021, MJBizDaily, a division of Anne Holland Ventures Inc. You may NOT copy this report, or make public the data and facts contained herein, in part or in whole. For more copies or editorial permissions, contact CustomerService@MJBizDaily.com or call 720.213.5992 ext. 1.

MJBizDaily Buyers Guide Cannabis Extraction

mjbizdaily.com

COMPANY NAME

WEBSITE

MJBIZCON BOOTH

HUBER USA Inc

www.huber-usa.com

C3919

Isolate Extraction Systems Inc.

www.isolatesystems.com

C4331

JWC Environmental

www.jwce.com

C1920

Kaeser Compressors

www.us.kaeser.com

KNF Neuberger, Inc.

www.knf.com

C7016

Komline-Sanderson

www.komline.com

C6228

Kyte Centrifuge, LLC

www.kytecentrifuge.com

C5140

Lab Society

labsociety.com

C2615

Luna Technologies

lunatechequipment.com

C5211

Maratek

www.maratek.com

C5221

Master Vapor Pumps LLC

MasterVaporPumps.com

C7149

MRX Technologies

www.mrxtechnologies.com

C6732

MUNCH Machine

www.munchmachine.com

C7010

PodTronix

PodTronix.com

C6046

Pope Scientific, Inc.

www.popecannabisdistillation.com

C2838

Pro Chiller Systems

www.prochiller.com

C5230

PurePressure

gopurepressure.com

C5011

Purge Labs

www.PURGELABS.com

C8513

Precision Extraction Solutions

www.precisionextraction.com

C4121

Sambo Creeck Filtration

www.sambocreeck.com

C4132

710 Spirits

710spirits.com

C2627

Root Sciences

www.rootsciences.com

C7619

RotaChrom Technologies LLC.

www.rotachrom.com

C4818

STM Canna

stmcanna.com

C3160, C3260

Supercritical Fluid Technologies, Inc.

www.supercriticalfluids.com/ products/supercritical-fluidextraction-products/cannabissfe

C7341

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MJBizDaily Buyers Guide Cannabis Extraction

mjbizdaily.com

COMPANY NAME

WEBSITE

MJBIZCON BOOTH

Thar Process

www.tharprocess.com

C5025

The Original Resinator

www.theoriginalresinator.com

C5042

TruSteel

trusteel.com

C2212

Plant Works Group by Vincent Corporation

www.vincentcorp.com

C4238

Vitalis Extraction Technology Inc.

www.vitaliset.com

C2012

Kaplan Industries Inc.

www.KaplanIndustries.com

C6446

Bepex International

www.bepex.com

C5832

Aptia Engineering

www.aptiaengineering.com

C4337

G&D Chillers, Inc.

www.gdchillers.com

C5820

HK Technologies

www.hksieve.com

C1246

LAUDA BRINKMANN

lauda-brinkmann.com

N2729

Puren Solutions

purensolutions.com

C4527

Navac INC

industrial.navacglobal.com

C1846

Federal Equipment Company

fedequip.com

C6831

MTA-USA, LLC.

mta-usa.com

C4637

Pall Corporation

pall.com/cannabis

C5321, N3136

Witte Pumps and Technology

www.witte-pumps.us

C4449

Novasep Process SAS

www.novasep.com

C2434

LAB NORDIC US LLC

www.LabNordic.com

C9228

Aaron Equipment Company

www.aaronequipment.com

C7613

Scientific Systems LLC

www.scientificsystem.com

C1928

InCon Process Systems LLC.

www.ips-gigk.com

C6932

Evonik Corporation

www.membrane-separation.com

Fluid Chillers

www.fluidchillers.com

C7549

Cat Pumps

www.catpumps.com

C4437

Filtrox

www.filtrox.com

C6328

Pulsafeeder, Inc.

www.pulsa.com

31 Copyright 2021, MJBizDaily, a division of Anne Holland Ventures Inc. You may NOT copy this report, or make public the data and facts contained herein, in part or in whole. For more copies or editorial permissions, contact CustomerService@MJBizDaily.com or call 720.213.5992 ext. 1.

MJBizDaily Buyers Guide Cannabis Extraction

mjbizdaily.com

COMPANY NAME

WEBSITE

MJBIZCON BOOTH

DL Wholesale Inc.

www.dlwholesale.com

C3816

Thermaline, Inc.

www.Thermaline.com

C8207

ClearSolv

clearsolv.com

C7841

Telemark Cryogenics

www.telemark.com

C3849

Dimplex Thermal Solutions

www.dimplexthermal.com

C4108

Thermo Energy Solutions

thermoenergy.ca

Tetra Indoor Grow

tetraindoor.com

Ecolab, Inc.

www.ecolab.com

Rough Brothers, Inc.

www.roughbros.com

HighTech Extracts LLC

hightechextracts.com

C8748

Mach Technologies

machtechnologies.com

C4516

Absolute Filtration Systems

afsfilter.com

C5712

Busch Vacuum Solutions

www.buschusa.com

C3217

ABM Equipment

abmequipment.com/hempprocessing

C5227

Tarr LLC

tarrllc.com

C2224

Essential Extraction Corp

essentialextractioncorp.com

C7238

Thermal Care

thermalcare.com

C3038

Worthington Industries

WorthingtonIndustries.com

C1753

Intest Thermal Solutions

www.intestthermal.com/thermonicschillers

C3246

PIC Solution Inc

www.pic-sfc.com

C7436

Loxley Systems

www.goloxley.com

C3916

Media Bros LLC

www.mediabros.store

C6646

Entexs Corporation

www.entexs.com

C9211

Prospiant

www.prospiant.com

C4325

Baker Co Inc

bakerco.com

C7611

KECO PUMP

www.pumpahead.com

C2241

Hashatron

hashatron-usa.com

C7646

C3220

32 Copyright 2021, MJBizDaily, a division of Anne Holland Ventures Inc. You may NOT copy this report, or make public the data and facts contained herein, in part or in whole. For more copies or editorial permissions, contact CustomerService@MJBizDaily.com or call 720.213.5992 ext. 1.

MJBizDaily Buyers Guide Cannabis Extraction

mjbizdaily.com

COMPANY NAME

WEBSITE

MJBIZCON BOOTH

Advanced Extraction Labs

www.advancedextractionlabs.com

C2428

Highvac Corp.

www.shophighvac.com

C8323

Mydax

mydax.com/liquid-chillerapplications/extraction-chillers

C7340

MoreBeer! Pro

morebeerpro.com

C8916

SciPhy Systems

www.sciphysystems.com

C8419

VORTI-SIV / MM Industries

www.vorti-siv.com

C8120

Milestone

milestonesci.com

C7121

Omega

www.omegastore.com

C2550

Omni International

www.omni-inc.com

C8709

Cannafuge

www.rousselet-robatel.com

C8639

Arometrix

www.arometrix.com

C7937

HIS Innovations Group

www.hisoregon.com

C7148

The DigiVac Company

www.digivac.com

C7938

Sample Automation LLC

sampleautomation.com

C6348

Apache Stainless

apachestainless.com

C7737

ApolloXstill, LLC

www.apolloxstill.com

C6448

Kinggreen Extraction Equipment inc.

www.kinggreenus.com

C8637

Boulder Creek Technologies, LLC

www.bouldercreektechnologies.com

C8449

Placer Process Systems, Inc.

www.placerprocesssystems.com

C7738

ChemTek

www.gochemtek.com

C9242

Drake Refrigeration Inc

www.drakechillers.com

C8941

C1D1 Labs

C1D1Labs.org

C9217

Accudyne Systems Inc

www.accudyne.com

C1551

GrowLight Heaven

www.growlightheaven.com

N2336

WestAir Gas Equipment

westairgases.com

N2829

Apical Consultations

www.apical.info

N2234

Max Yield Bins

maxyieldbins.com

C1047

Kinematica

www.kinematicausa.com

N2233

33 Copyright 2021, MJBizDaily, a division of Anne Holland Ventures Inc. You may NOT copy this report, or make public the data and facts contained herein, in part or in whole. For more copies or editorial permissions, contact CustomerService@MJBizDaily.com or call 720.213.5992 ext. 1.