Marijuana Business Magazine Nov-Dec 2020 by MJBiz Daily

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Insights for cannabis executives, investors & entrepreneurs

BECAUSE FINDING MORE WAYS TO FEED THE COUNTRY IS SATISFYING.

BUSINESS UNDER THE INFLUENCE OF INNOVATION Learn more

VOL 7 • ISSUE 10 • Nov-Dec 2020

Making Preorders Seamless WhiteLabeling Products Navigating Insurance Claims

AND

THRIVE

SURVIVE

From crafty marketing to quick market pivots, cannabis companies leaned on what works to get through a tumultuous 2020

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Nov-Dec FEATURES

TABLEOFCONTENTS

Marijuana Business Magazine

Nov-Dec 2020 • Volume 7 • Issue 10

62 THRIVE AND SURVIVE From crafty marketing to quick market pivots, cannabis companies leaned on what works to get through a tumultuous 2020.

MJBIZCON SHOW GUIDE

The cannabis industry's largest event is going virtual this year and adding additional days of educational, inspirational content.

STAY OUT OF THE RED WITH WHITE LABELING

Marijuana companies can forge partnerships and save money by taking control of one part of the supply chain.

104

OFFERING A SEAMLESS PREORDER EXPERIENCE The coronavirus popularized online and phone orders for cannabis—now it’s up to retailers to perfect the process.

See Inside! MJBizCon 2020 Show Guide: Page 44 $12.95

Insights for cannabis executives, investors & entrepreneurs

VOL 7 • ISSUE 10 • Nov-Dec 2020

Making Preorders Seamless

BECAUSE FINDING MORE WAYS TO FEED THE COUNTRY IS SATISFYING.

WhiteLabeling Products

BUSINESS UNDER THE INFLUENCE OF INNOVATION Learn more

Navigating Insurance Claims

AND

THRIVE

116

NAVIGATING INSURANCE CLAIMS

Tips for cannabis companies looking to get the most out of their business policy after a loss.

SURVIVE

From crafty marketing to quick market pivots, cannabis companies leaned on what works to get through a tumultuous 2020

On Our Cover Oklahomaʼs business-friendly regulations helped Denise and Christopher Minkʼs Med Pharm dispensary stay afloat despite the challenges of 2020. Photo by Sean Capshaw

Marijuana Business Magazine | November-December 2020

CANNABIS BY THE NUMBERS

In Focus

Marijuana sales show resilience during pandemic.

Advisory Board

Cannabis by the Numbers

FIVE QUESTIONS

From capital to cannabis, legalization has left minority populations behind, entrepreneur says.

HEMP NOTEBOOK

Climate change is now a business challenge, and hemp entrepreneurs must seize the opportunity.

122

Money Matters

Hemp Notebook

Trends & Hot Topics

BEST PRACTICES IN EXTRACTION

Company News

Getting the best price for extracted products.

Industry Developments

122

132

Best Practices in Extraction

QUESTION OF THE MONTH

126

How will the events of 2020 change end-of-year bonuses?

Industry Players

132

Question of the Month

MARKET AT A GLANCE Maine opened to adult-use marijuana sales in October.

Q&A With Linda Mercado Greene

134

DEPARTMENTS

From the Editor

134

Market at a Glance

136

Our Advertisers Bob Conley works in the grow room at Siren Cannabis in Portland, Oregon. Courtesy Photo

138

Notable Quotes November-December 2020 | mjbizdaily.com

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.

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To start/change/cancel your subscription, visit MJBizMagazine.com, call us at (720) 213-5992, ext. 1 or email us at CustomerService@MJBizDaily.com. Marijuana Business Magazine 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. Marijuana Business Magazine, Volume 7, lssue 10, November-December 2020 lSSN 2376-7375 (print); lSSN 2376-7391 (online) Marijuana Business Magazine is currently published 10 times per year by Marijuana Business Daily™, a division of Anne Holland Ventures Inc. POSTMASTER: Please send address changes to: Marijuana Business Daily, 3900 S. Wadsworth Blvd., Suite 100, Denver, CO 80235. Copyright 2011-2020 by Marijuana Business Daily, 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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Marijuana Business Magazine | November-December 2020

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FromtheEditor | Kate Lavin

A Sense of Place

California’s appellation law protects outdoor growers, but others in the industry will need to follow suit

inemakers use the term terroir to explain the role location plays in how a wine tastes. The word is French for “a sense of place,” but in the context of wine—or any other crop, for that matter—it refers to the soil, sunlight, humidity and other factors that affect how a finished product from one region is different from one farmed and processed under identical conditions in another location.

Farmers across the country have invested millions of dollars marketing the idea that terroir makes their crops superior and, hopefully, worthy of a higher price—think Florida oranges, Georgia peaches and Vermont maple syrup. In October, California cleared a legal path for the state’s cannabis industry to adopt an appellation system that would capitalize on the idea of terroir. The California Department of Agriculture will develop a process for legal cultivators of sun-grown cannabis to establish appellations similar to those used by wine growers around the world. This is great news for marijuana farmers who paid a premium to buy land in an area known for its extraordinary conditions and those who have spent years experimenting with strains to find the best fit for outdoor growing. But the law invites a new set of challenges as well.

The new California law prohibits license holders from labeling products with location names that could confuse consumers. Under the wine-industry model, 75% of a product must come from a designated area to use the appellation’s name on the label—even as a cultivar name. California’s new cannabis law boosts that mandate to 100%. Likewise, once marijuana is legal across the United States, we can expect regulators to reject product labels referencing outside appellations. That doesn’t mean cultivators outside Mendocino County will have to stop growing the cultivars Mendo Breath and Mendocino Purps, but they will likely have to call them something different when selling to consumers. The U.S. wine industry made a similar change during the 20th century, which is why you can no longer find an American Burgundy or Chablis but instead drink pinot noir and chardonnay. The process that respects the terroir of wine grapes is coming for cannabis. And before you cry foul, consider this: Would you buy a Chianti from Kentucky? Sincerely,

Respecting Your Region If you have ever called a sparkling wine “Champagne” without reading the label to confirm the grapes were grown in the French wine appellation, you are not alone. France began signing treaties with allies promising not to use the word Champagne on bottles filled outside of the region as far back as the 1890s. The United States didn’t sign a wine trade agreement until 2006, and the results are evident every time an American uses the word Champagne to refer to all bubbly, regardless of its origin. The U.S. agency that oversees the labeling of alcohol requires proof of provenance for wineries to include appellation names on their labels. Of course, marijuana is still federally illegal, and a government agency is unlikely to devote resources to improving the marketing potential of a Schedule 1 drug. So what’s to keep a dispensary in Louisiana from selling an ounce of Mendo Breath grown indoors under LED lights 2,200 miles from Mendocino County? At the moment, nothing. But California is taking the right steps to protect the integrity of its agricultural products.

Marijuana Business Magazine | November-December 2020

Kate Lavin Marijuana Business Magazine Editor

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InFocus | Images From the Cannabis Industry The two Mobius trimmers at Aleafia Health’s new greenhouse site are capable of processing more than 154 pounds of cannabis per hour. Courtesy Photo

Taking the Plunge First marijuana harvest is on the books at a greenhouse in Niagara, Ontario

leafia Health, a vertically integrated license holder in Ontario, Canada, harvested the first marijuana crop at its new Niagara Greenhouse Facility. The company secured a cultivation license from Health Canada in March and announced it would commence operations at the 160,000-square-foot greenhouse in June. At the perpetual-harvest site, potted cannabis sits on benches that move along a track throughout the plant life cycle. After harvest, Aleafia Health employs two stacked Mobius trimmers, pictured above, to process flower. The machines have the ability to trim more than 154 pounds of cannabis per hour. The greenhouse is equipped with climate-controlled drying chambers and automated blackout curtains. In addition to its Niagara Greenhouse Facility, Aleafia Health operates 3.7 million square feet of licensed outdoor cultivation space and has a 30,000-square-foot extraction, processing and packaging facility. – Kate Lavin

10 Marijuana Business Magazine | November-December 2020

Aleafiaʼs 160,000-square-foot greenhouse is equipped with potting benches that move on a conveyor track. Courtesy Photo

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AdvisoryBoard | Meet Our Members

arijuana Business Daily has established an advisory board made up of cannabis industry executives representing different sectors and geographic regions across the United States and Canada. The board—composed of the following individuals—advises MJBizDaily on topics and trends for the company to focus on at its industry conferences and in its editorial offerings.

JESSICA BILLINGSLEY

JESCE HORTON

Jessica Billingsley is CEO of Akerna. In June 2019, she became the first CEO of a cannabis ancillary company to be listed on the Nasdaq. In 2010, Billingsley co-founded MJ Freeway, where she was president until April 2018. She remained CEO after MTech purchased MJ Freeway to form Akerna.

Jesce Horton is an engineer by education, an energy management and automation expert through training and a horticulturalist by passion. In 2013, after moving to Portland, Oregon, Horton began growing medical cannabis for two elderly patients. He founded LOWD, an indoor, connoisseur-focused cultivation facility. He also co-founded the Minority Cannabis Business Association.

TYLER BEUERLEIN Tyler Beuerlein is Hypur’s chief revenue officer. In that role, he leverages his extensive experience building brands and managing key relationships and strategic partnerships. Beuerlein has been at the forefront of Hypur’s expansion efforts for more than five years.

LIZ CONNORS Liz Connors is the director of analytics at Headset, a cannabis data intelligence company. She and her team are responsible for everything from creating SKU-level, real-time market forecasts of adult-use cannabis sales across the North America to the creation of dashboards for the Retailer product.

MARA GORDON Mara Gordon is the co-founder of Aunt Zelda’s, Zelda Therapeutics (now Zelira Therapeutics) and Octopi Wellness. She specializes in developing datadriven cannabis treatment protocols for seriously ill patients and is dedicated to changing the health-care system.

ROBERT GROESBECK Robert Groesbeck is co-CEO of Planet 13 Holdings, a vertically integrated cannabis company. The company’s 112,000-square-foot Las Vegas dispensary is the world’s largest cannabis superstore and entertainment complex.

12 Marijuana Business Magazine | November-December 2020

CHANDA MACIAS Chanda Macias is the CEO of Ilera Holistic Healthcare, the medical marijuana cultivator and processor for the state of Louisiana, where she focuses on delivering affordable medical marijuana health-care options. She is also the owner and CEO of National Holistic Healing Center, a dispensary in Washington DC, and the board chair and CEO of Women Grow.

JIM MAKOSO Jim Makoso is a director and vice president at Lucid Lab Group and CEO of Flowe Technology. He is a business-development specialist and serial entrepreneur. After a successful career in finance based out of New York, Makoso began looking west and invested in several cannabis startups in newly legalized markets starting in 2013.

ROZ MCCARTHY Roz McCarthy is the founder and CEO of Minorities for Medical Marijuana, a national nonprofit representing the marijuana and hemp industries. She is also the CEO/president of the Genesis Group, a full-service cannabis consulting firm, and managing partner of Plant Life Co., a full-spectrum cannabis-nutrient business.

KRISTIN NEVEDAL

NANCY WHITEMAN

Kristin Nevedal is the principal consultant at The Nevedal Group, which offers cannabis permitting, licensing and compliance-support services to medical and adult-use cannabis businesses. As an appointee to California’s Cannabis Advisory Committee, Nevedal chairs subcommittees on cultivation and laboratory testing. She also is a member of subcommittees on microbusiness and annual report drafting.

Nancy Whiteman is CEO of Wana Brands. She has been instrumental in securing the company’s position as America’s best-selling edibles, according to the BDSA 2019 Brand Share Report. Whiteman directs development of partnerships and licensing agreements domestically and internationally. She leads the company’s strategic vision and has been instrumental in its growth into new and emerging markets.

ALANNA SOKIC Alanna Sokic serves as a senior consultant and national cannabis coordinator within Global Public Affairs’ Toronto office. She works at the intersection of industry and government, assisting clients such as PAX Labs, Truss Beverage Co. and the Cannabis Council of Canada.

To share story ideas and thoughts about the magazine and the stories agazine@ we cover, email us at m mjbizdaily.com.

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FiveQuestions | with Linda Mercado Greene

Lack of Access Plagues the Industry From capital to cannabis, legalization has left minority populations behind, entrepreneur says By Ivan Moreno

I can’t begin to tell you how many investor groups said they were interested and they wanted to back us and they wanted us to succeed. But I can honestly tell you that we turned them all down because they were demanding high percentages of our company. Launching Anacostia Organics in January They wanted control of the company and just 2019 was years in the making. But the three wanted us to have a small portion and be a women were faced with disparities in the figurehead. licensing process and had difficulty getting It took us a couple of years. And then, while access to capital, said Mercado, who served I was speaking to some friends one day, they Linda Mercado Greene as chief of staff to former District of Columbia said, “I think I have somebody for you.” And they Mayor Marion Barry and founded the Linda Greene Group, a introduced us to an angel investor. public relations company. The next hurdle was finding a building to lease since Mercado said she and her business partners received cannabis is still federally illegal. offers for capital, but investors wanted to run the operation And the third was gaining the support of my community, or have a big stake in the company. It was an angel investor which was difficult because of a lack of education about who finally provided funding. medical cannabis versus street drugs and their effects. “They weren’t asking for ownership,” she said of What do you see as your business’ mission? ultimately accepting the investor’s terms. My dispensary is located in the most underserved ward in Funding wasn’t the only obstacle. Mercado and her DC with residents who are riddled with health disparities. friends found that all the cultivation licenses had gone to Since I live in the community where we operate the men—some of them from outside DC—and almost none had dispensary, my primary mission is to make high-quality gone to minorities. Mercado and her partners took their cannabis medications accessible and affordable for my findings to the city, drafted emergency legislation on their neighbors. Until Anacostia Organics opened, my neighbors own and got approval for regulators to reopen the licensing had no choice but to travel all the way across the city using process and ensure parity. public transportation or car-share to obtain their medicine. Before Anacostia Organics opened, there were no Further, it is extremely hard for minorities to enter the dispensaries in Washington DC’s Wards 7 and 8, among cannabis industry. Therefore, I made a commitment to the poorest areas in the city and where 25% of medical hiring employees from my community to teach them marijuana cardholders live, Mercado said. the industry and be a gateway for them to become Mercado shared with Marijuana Business Magazine the entrepreneurs. challenges of her journey to becoming a dispensary owner. She will also be speaking about the election on In addition to running your own company, you Nov. 2 as part of MJBizCon’s passholder days; learn more belong to a number of cannabis trade associaand register at mjbizconference.com.

inda Mercado Greene, co-founder and CEO of Anacostia Organics, was already a successful businesswoman and a veteran political strategist when she decided to enter the medical marijuana industry in Washington DC with two friends, Sherri Blount and Yolanda Caraway.

What was the most difficult hurdle you overcame when you started your business?

tions, including one where you chair a task force on diversity and inclusion. Can you explain what the group does?

There were several significant and equal hurdles. Securing capital as a Black woman was my first hurdle. Black people don’t have generational wealth, and it’s been hard for us to get any capital for years. You really can’t go to your own community of color because, once again, the capital is not there. The generational wealth is not there.

Yes, I am the former chair of the DC Medical Cannabis Trade Association, which we just dissolved to form a new association, the DC Cannabis Trade Association (DCCTA), for which I am an incorporator and the chair. The DCCTA will be much more inclusive, allowing ancillary businesses and medical-referring professionals to join.

20 Marijuana Business Magazine | November-December 2020

I served on the Board of the Minority Cannabis Business Association for three years, and I served on the executive team of the Cannabis Trade Federation (CTF) until recently. I am still involved with CTF as chair of the Diversity, Equity and Inclusion Task Force, which consists of the top civil-rights and minority industry leaders in our country. The CTF Board has asked us to create platforms that the board and the members of CTF will adopt to create an industrywide policy and a diversity, inclusion and equity assessment toolkit.

What was the most important lesson you learned running a business during COVID-19? Patience, understanding, compassion and trust. The reality of me being the owner of a medical business that provides medications to patients who lost their jobs, who lost family members, who are already stressed due to economic issues, child care, racial disparities, health disparities and violence hit me hard. As contagious as this virus is, we were thankfully deemed essential by Mayor Muriel Bowser, meaning we could remain open seven days a week. The mayor allowed us to have online preordering, curbside service and home delivery.

Many of our patients still come to the dispensary because we are family and we are some of the only people they can see or have any contact with. Itâ&#x20AC;&#x2122;s been a very sobering and gratifying experience for the AO staff and me.

What cannabis industry trends do you see coming in 2021? I believe the market is going to open up with more legalization of medical and adult-use cannabis in the various states, regardless of the political party in power. Interstate commerce may also be realized. The tax revenue generated from legalizing cannabis will be phenomenal. Also, banks will be able to service us through passage of the SAFE Banking Act. Finally, I believe we will see much more minority ownership and participation in all aspects of the industry from operating licenses to contractual ancillary services.

Ivan Moreno is a reporter for Marijuana Business Magazine and Hemp Industry Daily. You can reach him at ivan.moreno@ hempindustrydaily.com.

CannabisbytheNumbers | Andrew Long

Marijuana Sales Show Resilience During Pandemic

M M

How Four States have Fared

any in the cannabis industry expected flower and The following charts illustrate how different products fared vape sales to decline during the COVID-19 outbreak in four Western states between June 2019 and August 2020 because the virus attacksAthe respiratory system. based on data fromfared Seattle-based analytics firm Headset. look at how cannabis categories have in Those fears turned out to be unfounded. Despite a global recession and pandemic, marijuana sales four western states using data provided by Headset. any in the cannabis industry expected flower and vape sales to decline during the COVID-19 outbreak because the virus attacks the Total Sales respiratory by week system. Luckily, those fears COVID-19 turned $25M out to be unfounded.

Edibles & Beverage

shutdowns

The following charts illustrate how different products fared in four Western states between June 2019 and August 2020 based on data from Seattle-based Sales by State analytics by week firm Headset. Despite a global recession and

$12M

pandemic, marijuana sales for most products managed to grow or at least stay consistent in 2020, helped in part by many states declaring MJ businesses COVID-19 â&#x20AC;&#x153;essentialâ&#x20AC;? andshutdowns allowed to continue operations.

$9M

$20M

$6M $15M $3M $10M

June 3, 2019

March 10, 2020

Aug. 24, 2020

June 3, 2019

Jan. 6, 2020

March 10, 2020

Aug. 24, 2020

Jan. 6, 2020

March 10, 2020

Aug. 24, 2020

Jan. 6, 2020

March 10, 2020

Aug. 24, 2020

Vape Sales by State

Total Sales

by week

by week $35M

$25M $20M

$30M

$15M $10M

$25M

$5M $20M

June 3, 2019

March 10, 2020

Aug. 24, 2020

June 3, 2019

Topicals Total Sales

Sales by State

by week

$2.5M

$1.0M

$2.0M

$0.8M $0.6M

$1.5M

$0.4M $1.0M $0.5M

$0.2M June 3, 2019

March 10, 2020

Aug. 24, 2020

June 3, 2019

14 Marijuana Business Magazine | November-December 2020 3 Marijuana Business Magazine | Month 2020

for most products managed to grow or at least stay consistent in 2020, helped in part by many states declaring MJ businesses â&#x20AC;&#x153;essentialâ&#x20AC;? and allowing them to continue operations.

Washington Nevada California

Colorado

Flower & Pre-rolls Total Sales

Sales by State

by week

by week COVID-19 shutdowns

$120M

COVID-19 shutdowns

$60M $50M

$100M

$40M $80M

$30M $20M

$60M

$10M $40M

June 3, 2019

March 10, 2020

Aug. 24, 2020

June 3, 2019

Jan. 6, 2020

March 10, 2020

Aug. 24, 2020

Jan. 6, 2020

March 10, 2020

Aug. 24, 2020

Jan. 6, 2020

March 10, 2020

Aug. 24, 2020

Tinctures & Sublinguals Total Sales

Sales by State

by week

$3.5M

$2.5M $2.0M

$3.0M

$1.5M

$2.5M

$1.0M $2.0M $1.5M

$0.5M June 3, 2019

March 10, 2020

Aug. 24, 2020

June 3, 2019

Concentrates Total Sales

Sales by State

by week

$20M

$6.0M $5.0M

$15M

$4.0M $3.0M

$10M

$2.0M $1.0M

$5M

June 3, 2019

March 10, 2020

Aug. 24, 2020

June 3, 2019

Month 2020 | mjbizdaily.com

MoneyMatters | Jenel Stelton-Holtmeier

How Are U.S. Companies Faring? Publicly traded cannabis firms have different levels of profits and cash on hand

ash on hand represents how much of a cushion a company has readily available to maintain operations—even in the face of losses. Companies with high cash-burn rates, such as Denver-based Schwazze (see page 18), are at higher risk of missing out when expansion opportunities arise or not being able to respond to adverse conditions. Having a high level of cash on hand doesn’t necessarily mean a company is operating well. California-based Terra Tech Corp., for example (see page 18), has a relatively low level of cash on hand, but that level has been steady over the past three reporting periods—meaning the company has been operating within its means.

Trulieve Example: Cash on Hand and Net Profit

December 2019

March 2020

June 2020

December 2019

March 2020

June 2020

When compared to the other publicly traded marijuana firms (see page 18), Florida-based Trulieve is an anomaly. In addition to being able to build its significant cash reserve over the past three reporting periods, it has maintained a profitable operation over time. The company’s net profits decreased during the first six months of 2020, primarily because of a decision not to do a spring plant, which resulted in less product inventory. Even with the declining trend, the company has remained above the crucial break-even line.

16 Marijuana Business Magazine | November-December 2020

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MoneyMatters | Jenel Stelton-Holtmeier

Cash on hand (U.S. dollars)

Cash-on-Hand Trends for Cannabis Companies Indus Holdings Mjardin Group Schwazze Terra Tech Corp. Tilt Holdings

December 2019

March 2020

June 2020

Net Profit/Loss (U.S. dollars)

Cannabis Companies’ Net Profit/Loss

Indus Holdings Mjardin Group Schwazze Terra Tech Corp. Tilt Holdings

18 Marijuana Business Magazine | November-December 2020

March 2020

June 2020

HempNotebook | Kristen Nichols

Hemp’s Time to Shine Climate change is now a business challenge, and hemp entrepreneurs must seize the opportunity

veryone knows the planet’s changing temperatures are creating dramatic swings in weather that threaten our very survival. But global warming could also be the kind of problem that provides hemp companies with opportunities that former generations couldn’t imagine.

Corporate America has finally accepted what scientists have long been saying about climate change: Not only is it real, it threatens the livelihoods of billions of people who will have to adapt to a hotter Earth, fleeing scorched coastal areas for higher ground and creating the need for new housing and sources of food and fuel. A couple of months ago, one of the most influential business groups in the United States, the Business Roundtable, made a policy change that didn’t grace a lot of front pages amid a global pandemic and terrifying natural disasters. The group endorsed putting a price on carbon, marking a seismic shift in businesses’ efforts to deal with global warming. Companies spanning every sector of the economy are shaking off decades of climate inaction and hostility and using market incentives such as a carbon tax or tradable emissions credits to fight climate change.

A move to tradable emissions credits is a win for hemp, a plant famed for taking carbon dioxide out of the atmosphere. Selling carbon credits would also offer a potential new revenue stream to hemp farmers facing falling wholesale prices for biomass and flower. The stated goal of the Business Roundtable—a reduction of U.S. carbon emissions by at least 80% before 2050—isn’t more ambitious than what many big companies are already pledging to accomplish. But it represents the significant shift taking place: Businesses are setting aside disagreements about the costs of collective climate action and realizing that the price of collective inaction will be much steeper. The last time Congress attempted to set up a national emissions trading system, in 2010, the Business Roundtable was silent while groups such as the U.S. Chamber of Commerce and the National Association of Manufacturers lobbied to kill it.

Enter Hemp This change comes just as the hemp industry is trying to establish a reliable supply chain for the very products that could help large corporations

It’s important that the hemp industry raise its voice in the conversation about climate change. The industry is both a victim of climate change and part of the solution. 22 Marijuana Business Magazine | November-December 2020

follow through on pledges to reduce carbon emissions. “Carbon farming” isn’t the only way hemp could contribute. Hemp producers are standing by for wellfinanced backers to invest in the needed infrastructure to replace cotton, wood and plastic products with hemp components that could clean up long-established supply chains. Already I see hemp pioneers flexing into this conversation. Recently, an executive from a legacy fashion brand bragged on social media about how her company was pioneering the search for more sustainable cotton.

A hemp entrepreneur jumped right into her feed and said, “Good for you. But why cotton and not hemp?” and then left his contact information to discuss how his company could help the clothing brand do even better. I love seeing ambitious hemp operators making sure this plant is front and center in conversations about climate change.

Industrial hemp grows at New West Genetics in Northern Colorado. Photo by Matt Staver

Seat at the Table Hemp isn’t just a tool to reduce carbon emissions and slow climate change—it’s also a crop that’s being threatened right now by climate change. This year’s devastating wildfires in the West and powerful hurricanes in the Gulf Coast destroyed some hemp crops just as they were nearing harvest. And hemp farmers are struggling to find CBD-rich cultivars that thrive in warmer climates without exceeding legal THC limits.

So it’s important that the hemp industry raise its voice in the conversation about climate change. The industry is both a victim of climate change and part of the solution. I can’t wait to see how this young industry asserts itself and shows older companies how the hemp plant can

help us survive this mess we’ve made of the planet.

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

November-December 2020 | mjbizdaily.com 23

Trends & HotTopics | Matt Lamers

Banking on ‘Regulatory Evolution’ Will Eventually Kill Your Business

our competitors’ mistakes can offer valuable lessons. And in the Canadian cannabis industry, there are plenty of mistakes to learn from. Some of the most common errors executives made in the early days of Canadian marijuana legalization were the strategic priorities they established. What is your business all about? Who are the customers you plan to delight—and how? What moats are going to protect your business from competition? Is there a regulatory and legal avenue to achieve your objectives? Those guiding principles might sound obvious, but many businesses were predicated on objectives for which there was no legal or regulatory pathway. That’s a major mistake.

Laws First, Then Business Many companies assumed that laws and regulations would “evolve” to suit their respective corporate strategies. That occurred in some cases, but more often, that’s not what happened. Let’s look at one example—no need to name the company. The business in question had big plans in Canada. Some of those plans were legal and within the bounds of existing regulations, and some were not.

The important parts of the business were clearly out of bounds. The company had plans for a cannabis beverage facility, a cultivation facility, a restaurant, a retail store and a hotel—all on the same site. Most of that was not and is not permissible, meaning the business wasted valuable months and capital planning to operate where it was not allowed. The company’s only real asset—its cultivation facility—is now up for sale, and it’s unclear if the business has any future at all.

Expanding Too Broadly Cannabis businesses, most of them from Canada, rushed to establish a foothold in Europe in recent years. They spent billions of dollars building cultivation and processing facilities on the continent as well as pursuing mergers and acquisitions. What’s the problem with that? The market is worth only about $290 million (250 million euros). It’s growing slowly but will not achieve the grandiose levels predicted by speculators within the next five years. The assumption by Canadian players was juvenile: They thought laws and regulations would evolve to suit corporate interests and prompt exponential market growth in Europe.

Many businesses were predicated on objectives for which there was no legal or regulatory pathway. That’s a major mistake.

24 Marijuana Business Magazine | November-December 2020

Two things have to happen for a medical cannabis market to grow legally: A law has to open the door, and—this is the important part—regulations have to make that law workable for industry. A common story in 2017-19 involved companies rushing to set up beachheads in nations where medical marijuana laws were established. Their downfall? Regulations had yet to make these actual, functional markets with customers and real sales. There is no regulatory evolution without some degree of devolution. You can bank on that. Matt Lamers is the international editor at Marijuana Business Daily. You can reach him at matt.lamers@ mjbizdaily.com.

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CompanyNews | U.S., Canada & International

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

By Omar Sacirbey

Recent deals, acquisitions and other announcements from cannabis companies

based real estate investment trust (REIT) closed a deal potentially worth $56.4 million to acquire and lease back a marijuana facility in Lakeland, Florida. IIP is acquiring the property from Atlanta-based MSO Parallel.

Trulieve Enters Pennsylvania Project for Columbia Care New York-based multistate operator Columbia Care agreed to acquire Los Angeles-based marijuana grower and retailer Project Cannabis in a deal valued at $69 million. Project Cannabis’ assets include a 32,000-square-foot cultivation facility, three adult-use retail shops in Los Angeles and another in San Francisco. The acquisition’s price tag involves a deal in which Project Cannabis’ real estate will be sold to an unspecified third party and leased back for proceeds of $12 million$17 million. Columbia Care will issue $52 million$57 million in stock to complete the transaction.

PBR Joins the Green Rush Pabst Blue Ribbon announced in October the formal launch of Pabst Labs, a new licensed marijuana business in California that will produce and sell THC-infused, nonalcoholic seltzer beverages. The line, called Pabst Blue Ribbon Cannabis Infused Seltzer, will initially be distributed in a “select” number of retail stores in California and online. Oakland, California-based Nabis, a software-enabled cannabis distributor, announced an agreement to be the productʼs exclusive distributor in California until 2021.

Holistic Raise Holistic Industries, a Maryland-based multistate cannabis operator, raised $35 million in debt financing to fund cultivation and processing build-outs as well as new licensing and distressed-asset opportunities. The funding round was led by Virginia-based specialty financing company Altmore Capital. Holistic also recently raised $6.2 million from the sale and leaseback of a marijuana cultivation, processing and retail facility in a Detroit suburb. The buyer, San Diego-based Innovative Industrial Properties, has committed up to $18.8 million to build out the 63,000-square-foot facility.

IIP Closes $56 Million Deal in Florida Innovative Industrial Properties added another cannabis property to its portfolio after the San Diego-

28 Marijuana Business Magazine | November-December 2020

Trulieve, the largest medical marijuana operator in Florida, agreed to buy two Pennsylvania MMJ companies in a $66 million deal. According to a news release, the Tallahassee, Floridabased company will acquire McKeesport cultivator and producer PurePenn as well as dispensary operator Keystone Relief Centers, which does business as Solevo Wellness in the Pittsburgh area. To acquire PurePenn, Trulieve will make an upfront payment of $46 million made up of $27 million in subordinate voting shares and $19 million in cash plus a potential earnout payment of up to approximately $60 million in Trulieve shares based on achieving certain milestones. Trulieve agreed to acquire Solevo for an upfront purchase price of $20 million. The payment is comprised of $10 million in cash and $10 million in stock, plus a potential payment of approximately $15 million in shares based on the achievement of certain milestones. The deals are expected to close in the fourth quarter of 2020.

Ayr Power Ayr Strategies, which is based in New York and has operations in Toronto, announced deals worth $39 million that will allow the multistate marijuana operator to enter the Ohio market and expand its presence in Pennsylvania. After the deals close, Ayr said its portfolio will include seven operating marijuana stores, nine other retail licenses and 160,000 square feet of cultivation capacity.

REIT’s 15-Property Acquisition Spans Nine States Subversive Real Estate Acquisition, a New York-based limited partnership, entered binding agreements to acquire 15 marijuana-related properties in nine states for $182.8 million. The names of the sellers weren’t disclosed. Subversive expects to close on the acquisitions of two additional properties for a total of $17.9 million. The partnership also announced a $40 million private placement of senior secured convertible debt.

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CompanyNews | U.S., Canada & International Massachusetts Company Nets $4.9 Million Wareham, Massachusetts-based LDE Holdings, doing business as Trade Roots, closed a $4.9 million Series A financing round. Proceeds from the financing will be used to complete the development of Trade Roots’ vertically integrated 16,000-square-foot facility.

Terrapin Rebrands Terrapin, a national cannabis company based in Boulder, Colorado, has rebranded from its operating name of Terrapin Care Station. The company has nearly 350 employees in three states—Colorado, Michigan and Pennsylvania—and has expansion plans for Missouri and New Jersey.

Ethos and 4Front Strike Maryland Deal Phoenix-based MSO 4Front Ventures, which has been shifting its focus to adult-use markets, sold three medical marijuana dispensaries in Maryland to Philadelphia-based MSO Ethos Cannabis for

$5.5 million. The transaction is part of an $18 million deal announced in May.

Acreage Raise New York-based multistate marijuana operator Acreage Holdings raised $33 million in debt financing. The three-year loan with an unidentified institutional lender is unsecured at a 7.5% annual interest rate. Acreage said part of the proceeds from the raise will be used to retire a short-term $11 million convertible note that was signed May 29 and carried a 15% interest rate and was secured by the company’s medical cannabis dispensaries in Connecticut.

New Industrial Hemp Facility Avient Biosciences in Wilson, North Carolina, launched its 200,000-square-foot industrial hemp research and extraction facility in October. Avient’s 36-acre campus includes pharmaceutical- and food-grade research and production, on-site analytical testing laboratories and climate-controlled biomass storage facilities.

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Stem-Driven Deal

Liberty Partners With Edibles Business

Florida-based marijuana grower and retailer Stem Holdings signed a deal to acquire Los Angeles-based cannabis delivery company Driven Deliveries. The all-stock transaction is worth approximately $31.1 million, according to a news release. The combined company will be called Driven by Stem and operate out of Stem’s offices in Boca Raton.

Liberty Health Sciences, a vertically integrated cannabis company operating in Florida, entered a licensing agreement with VCC Brands, aka Venice Cookie Co. The agreement will bring VCC’s edibles products to Liberty’s 30 dispensaries.

Surterra Strikes Texas Telehealth Partnership Surterra Texas, a division of Parallel and one of three medical cannabis companies licensed in Texas’ Compassionate Use Program, struck an exclusive partnership with Heally to provide online access to doctors for medical cannabis. The board-certified doctors specialize in family medicine, internal medicine, neurology and pediatrics.

Grow Generation Makes Acquisition GrowGeneration, a chain of specialty hydroponic and organic garden centers, acquired Hydroponics Depot, Phoenix’s largest indoor and outdoor garden center. Including the new deal, GrowGen has 29 stores in 11 states.

Hypur Teams Up With Credit Union The GFA Federal Credit Union, which said in 2018 that it would serve Massachusetts marijuana companies, announced a new partnership with cannabis payment processor Hypur to bring digital payment options to MJ retailers in the state. Arizona-based Hypur earlier this year debuted contactless payment options for California retailer Caliva and online marketplace Dutchie.

November-December 2020 | mjbizdaily.com 31

I N T E R N AT I O N A L D E V E LO P M E N T S

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

CompanyNews | U.S., Canada & International Colorado. Terms of the Pleasant Valley deal weren’t disclosed, although a news release reported the cultivation facility was purchased for a nonmaterial amount of cash and common shares of Slang.

White-Label Agreement

Slang Shot Toronto-based Slang Worldwide, a cannabis consumer packaged goods company, said it entered an agreement to acquire Pleasant Valley Ranch, an outdoor and greenhouse marijuana-production facility in Carbondale,

GW Pharma Breakthrough GW Pharmaceuticals’ plantderived CBD drug Epidyolex received approval from Australia’s Therapeutic Goods Administration to be used in treating seizures related to Lennox-Gastaut syndrome and Dravet syndrome. The approval is the third major global regulatory approval for Epidyolex, GW said in a news release. United Kingdom-based GW Pharma has partnered with Chiesi Australia on Epidyolex and is working “to secure reimbursement for the medicine through a listing on (Australia’s) Pharmaceutical Benefits Scheme.” The CBD drug was approved in 2018 for use in the United States, where it is branded as Epidiolex, and in Europe in 2019. As of the most recent quarterly filing, roughly 92% of Epidiolex’s revenue came from the United States.

Aphria Completes German Shipment Aphria, a licensed producer based in Leamington, Ontario, completed its first European Union-Good Manufacturing Practice-certified shipment of dried flower from its Aphria One EU-GMP facility to its wholly owned German subsidiary, CC Pharma GmbH. The latter is a distributor of pharmaceutical products to more than 13,000 pharmacies in Germany. Aphria joins a select group of Canadian cultivators whose products have been sold in German pharmacies under their own or other brands, including Aurora Cannabis, Canopy Growth, Cronos Group, Maricann, Northern Green Canada and Tilray. Germany was the top destination for Canadianproduced medical cannabis flower in 2019, with

32 Marijuana Business Magazine | November-December 2020

Toronto-based Fire & Flower and Decibel Cannabis Co. have launched a private-label brand collaboration called Qwest. Decibel will manufacture, package and ship products to Open Fields Distribution, Fire & Flower’s wholly owned Saskatchewan distribution business. The initial product launch will include pre-rolls, and the company might look to offer other products in the future.

roughly 7,800 pounds shipped to the EU market that year. Another 208 gallons of cannabis oil products left Canada for Germany in 2019, according to data provided by Canadian regulators.

Multinational Agreement German pharmaceutical company Stada signed a medical cannabis supply agreement with Barrie, Ontario-headquartered MediPharm Labs, the Canadian company said. The exclusive partnership, announced in September, calls on MediPharm to supply EU-GMP-certified cannabis products to Stada as well as logistics, manufacturing and regulatory support. In exchange, Stada will commercialize the cannabis products, initially in Germany, according to a news release. Stada, based in Bad Vilbel, Germany, says its products are sold in approximately 120 countries.

Quebec LP Looks to Catch Up With Distribution Laval, Quebec-based Neptune Wellness Solutions, a plantbased wellness company, entered into a distribution agreement with a subsidiary of The Kraft Heinz Co. to market and distribute its products in the Caribbean, India, Latin America and Vietnam. 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-related announcements.)

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

Countries included have passed legislation at the federal level and must fulfill at least one of the following criteria: • Cultivation, manufacture or sale of medical and/or recreational cannabis allowed. • Doctors can prescribe medical cannabis. • Import and/or export of medical cannabis allowed. High: Countries at the forefront of the global industry. Frameworks are established, and adoption is well underway. Medium: Implementation has begun but is still limited or restricted; lots of room for the market to develop. Low: Legislation has been passed, but implementation is very limited or nonexistent. Decriminalization is not included.

National & International News Tilray Imports Uruguay-Grown Medical Cannabis to Europe Medical cannabis flower grown in Uruguay recently became available in the German market for the first time. The news sheds light on the final destination of large exports quietly shipped from Uruguay to Portugal at the end of 2019 and earlier this year. The shipments’ final destinations were unknown at the time, but the latest development shows the product ultimately was headed to Germany. The German subsidiary of Nanaimo, British Columbiaheadquartered cannabis producer Tilray started offering its product—cannabis flower with 22% THC—to German pharmacies on Sept. 30.

34 Marijuana Business Magazine | November-December 2020

Frank Farnel, director of government and public affairs for Tilray in Europe, confirmed to Marijuana Business Daily that the flower was grown in Uruguay, imported by Tilray’s Portuguese subsidiary, processed at the company’s facility in Cantanhede, Portugal, and then shipped to Germany.

Province Doubles Retail Authorizations The Alcohol and Gaming Commission of Ontario, Canada, has started issuing 10 Retail Store Authorizations per week, double the previous pace of five new stores weekly. The move will help alleviate the province’s shortage of legal marijuana outlets, but it will be years before Ontario catches up to other provinces. As of late September, 173 cannabis retailers were open

in Ontario, or about 1.19 stores per 100,000 people, the second-lowest ratio in the country. By comparison, Alberta leads with more than 500 store licensees serving a population roughly one-third that of Ontario’s, or about 11.5 licenses issued per 100,000 people.

Hemp Growers Get Reprieve on USDA Compliance, But Not Everyone Is Happy Farmers growing hemp in states without federally approved cultivation plans got a one-year extension to continue cultivating the crop under older, less strict rules so regulators can harmonize local and federal laws. The extension was included in a stopgap budget measure approved by Congress, giving a reprieve to

growers who said they would not be ready by Nov. 1 to switch to stricter hemp rules from the U.S. Department of Agriculture. Instead, they will continue to be grandfathered into less-restrictive 2014 regulations. But the delay has drawn the ire of businesses in roughly 20 states that drafted cultivation plans approved by the USDA under the more stringent rules set to take effect Nov. 1. They argue the delay essentially creates two standards for doing business, with those operating under 2014 rules having an advantage over states compliant with the 2018 Farm Bill because they’ll have an easier time growing highCBD hemp. Meanwhile, states operating under a USDAapproved plan will have a tougher time growing high-CBD hemp without it going over the 0.3% THC threshold.

November-December 2020 | mjbizdaily.com 35

IndustryDevelopments | International & State

WA MT

MN ID

PA IL

TN AR

SC MS

NJ DE MD

NV UT

LA FL

■ Medical ■ Recreational HI

Note: This map does not include states that have legalized only CBD-based oils. © 2020 Marijuana Business Daily, a division of Anne Holland Ventures. All rights reserved. Data is current as of Oct. 15, 2020.

State News Arizona A CBD company in Arizona is accused of bilking investors of millions of dollars and using an emergency pandemic-relief loan to buy a private jet and fund other lavish expenses. Integrated CBD got as much as $350,000 earlier this year through the U.S. Paycheck Protection Program to help with payroll for 50 employees. However, the company had laid off all its employees months before, according to the lawsuit investors filed in state court in Maricopa County. The company executives have not been accused of criminal activity, but the lawsuit represents the first legal allegation of PPP fraud levied against a cannabis-related company that received a loan.

36 Marijuana Business Magazine | November-December 2020

at wner sing ns. se

IndustryDevelopments | International & State California The state marijuana market is borrowing a page from California’s world-famous wine industry. Gov. Gavin Newsom signed a bill into law establishing that any cannabis product claiming an “appellation of origin” from a California region must have been grown in the soil and with the sun from that region—in other words, without artificial light or shelter. The designation of origin will be especially useful in the event that federal cannabis legalization allows interstate commerce. Certain regions in California—including Humboldt, Mendocino, Nevada and Trinity counties as well as Big Sur—have decades-long histories and well-established reputations for producing high-quality “sun-grown” cannabis.

Colorado State regulators adopted new rules for testing cannabis vapor to ensure consumer safety for vape products; the move also adds a cost to marijuana companies. The Colorado Marijuana Enforcement Division released new rules on Oct. 9 that require companies to test “emissions” from vape products—essentially, examining the aerosol the consumer is inhaling that’s produced from vaping cannabis oil. Until now, only the cannabis oil has been analyzed in laboratories. Another rule requires manufacturers to label cannabis vape cartridges in Colorado with an expiration date. The new regulations will take effect Jan. 1, 2022.

Florida The state Supreme Court heard additional oral arguments to decide whether Florida’s medical marijuana licensing scheme is unconstitutional. Tampabased Florigrown sued the state in 2018, and the case will decide if Florida’s vertically integrated market should be opened to stand-alone business licensing opportunities. Leon County Circuit Judge Charles Dodson ruled previously that licensing limits imposed by a 2017 law violated the medical marijuana constitutional amendment approved by Florida voters in 2016. The Florida high court did not set a time frame for a ruling.

Hawaii The state health department approved two new medical marijuana dispensaries: Hawaiian Ethos on Hawaii Island and Noa Botanical on Oahu. The two additional dispensaries are Hawaii’s 14th and 15th. The launch of Hawaiian Ethos marks the second dispensary to open on the Big Island. Noa Botanical brings the total number of medical marijuana stores on Oahu to six.

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IndustryDevelopments | International & State Illinois The state is continuing to run into major legal problems in its bid to award 75 additional marijuana retail licenses and prove the merits of its social equity plan. Three applicants who qualified for the final lottery sued the state, challenging Gov. J.B. Pritzker’s plan to allow unsuccessful applicants to get a second opportunity. Pritzker devised his plan after unsuccessful applicants complained they weren’t notified of problems with their applications while others were given an opportunity to correct their submissions. Only 21 applicants qualified for the 75 retail licenses, raising questions about how well the social equity program is working.

Indiana The state’s hemp regulations won federal approval and will be in place for the 2021 growing season. Purdue University announced the plan for Indiana, where hemp will be overseen by the Office of the Indiana State Chemist, and applications for the 2021 growing season open Nov. 1. Indiana will require interested hemp growers to submit a “crop-monitoring plan to avoid exceeding 0.3% total THC” along with their applications, which cost $1,000 per year. Indiana hemp processors also will be charged $1,000 per year.

Maine Adult-use marijuana retailers in Maine sold $94,643.38 worth of product on Oct. 9, the first day of legal sales in the state, according to the Office of Marijuana Policy (OMP). Total sales for the long weekend—Friday through Monday—were $258,411.58 across 6,430 transactions, the OMP said. Maine had eight active adult-use retail licenses when sales began; however, only six retail stores were actually open on the first day of sales. Retailers reported tight supply and high wholesale prices in the state’s adult-use market, leading at least one store to delay its opening plans.

Maryland State regulators handed out 11 cultivation and processing business permits. The state’s Medical Cannabis Commission licensed three cultivation and eight processing companies. The cultivation permits went to Herbiculture Cultivation, MAS Alliance and Viola Maryland. The processing permits went to AHI Group, Bouquet Labs, Ceres Naturals, Element MD, Greener Good, Herbiculture Manufacturing, Marileaves Extractions and Organic Remedies MD. The 11 new licensees are at least half-owned by individuals from minority or disadvantaged groups.

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IndustryDevelopments | International & State Massachusetts The state’s Cannabis Control Commission agreed on a two-license structure for delivery permits. A limited license similar to the current delivery-only permit would allow an operator to deliver only from licensed medical and recreational marijuana retail outlets. A wholesale license would allow a delivery operator to buy directly from cultivators and processors and store marijuana in a warehouse that meets security requirements. Under the draft regulations, delivery licenses would be available exclusively to social equity and certified economic-empowerment applicants for the first three years. Wholesale-delivery licensees would be allowed to put their own label on marijuana they deliver but wouldn’t be allowed to relabel vaporizers.

Michigan The state’s Marijuana Regulatory Agency will open recreational cannabis licensing opportunities to applicants who did not previously hold medical MJ permits starting in March. Licenses will be made available for Class B and C cultivators, processors, retailers, testing labs and transporters. Separately, Michigan regulators finished phasing out medical marijuana caregivers as part of the state’s retail cannabis supply chain, leaving all responsibility for MJ production in the hands of licensed growers. While caregivers will still be allowed to operate on behalf of registered patients, they will no longer be allowed to sell their excess marijuana inventory to retail stores.

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Missouri N’Bliss kicked off medical cannabis sales on Oct. 17, opening two dispensaries in St. Louis County and making Missouri the 34th state to launch a full-fledged MMJ program. The first dispensary in the Kansas City area, Fresh Green, opened two days later. Only a few Missouri cultivators have harvested so far, so it likely will take several months for product supply to catch up to demand, industry officials said. Roughly 65,000 MMJ patients have been approved and more than 10,000 patient applications are being processed, according to the Missouri Medical Cannabis Trade Association.

Montana If voters decide on Election Day to join the growing list of states with adult-use marijuana, the market will be one of a shrinking number that allow only in-state residents to comprise the industry. Montana is the only state with marijuana legalization on the ballot this year to have a residency requirement for cannabis business ownership. The ballot measure will also set aside the first 12 months of recreational sales for existing medical marijuana businesses, so any locals that are hoping to get in on the ground floor must apply for a provider license before Nov. 3.

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IndustryDevelopments | International & State New Jersey Agricultural giant Scotts Miracle-Gro is the largest contributor to efforts to legalize recreational marijuana in New Jersey, donating $800,000 of the nearly $1.3 million raised as of Oct. 2, according to state records. Conspicuously absent from New Jersey’s election finance report were large marijuana companies and the state’s existing medical cannabis operators. The New Jersey chapter of the American Civil Liberties Union had donated $323,500 to promote awareness for the Nov. 3 adultuse legalization ballot question at the time of the report.

New Mexico Santa Fe District Judge Matthew Wilson agreed with Ultra Health, the state’s leading MMJ operator, when he rescinded new state requirements that made it more difficult for certain out-of-state visitors to access the medical cannabis program through a reciprocity provision. The emergency amended rule went into effect Oct. 8 and increased the requirements such as proof of authorization for individuals from other states and tribal lands. Ultra Health noted in a news release that some reciprocity participants had been denied access to medical cannabis and that the state, per the judge’s order, would need to re-enroll those individuals.

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Ohio Fire Rock, a medical marijuana grower in Akron, sued the state Department of Commerce over its failure to issue a ruling on an application filed in February that would allow the cultivator to expand its capacity by 3,000 square feet. The agency notified Fire Rock in June that it was taking no action on the application, which led the company to sue on the grounds that the department has a clear responsibility to act one way or the other. Fire Rock alleges that government overseers have been hamstringing the MMJ program’s growth, despite clear demand for more business services.

Oklahoma Florida-based cannabis traceability company Metrc locked down the contract for Oklahoma’s medical marijuana program, bringing the firm’s total track-and-trace pacts to 14 states and the District of Columbia. All marijuana businesses in Oklahoma will be required to either integrate with or input their information into Metrc. The implementation is expected to take six months for the state’s almost 10,000 licensees. The Oklahoma Medical Marijuana Authority said the contract creates a system to track cannabis plants and products from seed to sale as part of the office’s move toward greater accountability and safety.

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IndustryDevelopments | International & State Oregon Wildfires destroyed at least seven marijuana companies in Oregon and damaged at least a dozen more, state regulators said. According to a wildfire survey issued by the Oregon Liquor Control Commission, which regulates marijuana in the state, seven companies were totally burned in the Almeda, Beachie Creek, Holiday Farm and South Obenchain fires. The companies include Blue River Grass Station in Blue River, Canyon Cannabis in Gates, EcoTest Labs in Phoenix, Emerald Consulting in Medford, Fireside Dispensary in Phoenix, Grateful Meds in Talent and Primo Farms in Jackson County.

Rhode Island The contract between labor union United Food and Commercial Workers Union and Warwick-based Ocean State Cultivation Center provides for comprehensive benefits, safe working conditions and opportunities for career advancement, according to UFCW Local 328. A union official said the two-year agreement includes language that would bring additional workers into the bargaining agreement, should Ocean State win more MMJ licenses.

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Utah The state’s 6-month-old medical cannabis program has far exceeded sales and patient-enrollment projections, sparking product shortages that are boosting business opportunities for licensed cultivators. Utah hit the milestone of 10,000 registered patients six months ahead of projections, according to state officials. The surprising demand and product shortages are prompting some cultivators to expand to their maximum growing area of 100,000 square feet. Only six dispensaries have opened; Utah allows 14 to operate.

Vermont Gov. Phil Scott allowed legislation to regulate and tax cannabis sales to become law without his signature, making Vermont the 11th state to allow adult-use marijuana and only the second to do so via the legislature, not the ballot box. Legal recreational sales are not expected to begin until October 2022. Business license types will include stand-alone permits for new market entrants, including growers, manufacturers, retailers, testing labs and wholesalers as well as vertical integration. Newcomers to the Vermont industry will be allowed only one license per category and only one location.

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IndustryDevelopments | International & State Virginia The state’s first medical cannabis dispensary opened Oct. 17, making Virginia the 33rd state to launch an MMJ program. Dharma Pharmaceuticals, one of a handful of vertically integrated businesses licensed to serve the state, opened its dispensary in Bristol by appointment only. One license is vacant after Los Angeles-based MedMen Enterprises was forced to surrender its permit. Medical marijuana products in Virginia are limited to cannabis oils, edibles such as lozenges and lollipops as well as vape cartridges with single doses capped at 10 milligrams of THC.

Washington state A legal challenge to the state’s cannabis licensing residency requirement is being sent back to state court by a federal judge. U.S. District Court Judge Benjamin Settle said that while he has jurisdiction, case law indicates federal courts should abstain until state-law questions have been resolved. The plaintiff, Idaho businessman Todd Brinkmeyer, claims that the state’s marijuana residency requirement violates the U.S. and Washington constitutions and that regulators exceeded their rulemaking authority. The AG’s office filed a brief in the federal court case saying that “no federal constitutional protections exist for a federally illegal marijuana activity.”

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West Virginia State regulators awarded 10 medical cannabis cultivation permits as one of the country’s slowest MMJ programs to launch took a major step toward a possible market start in spring 2021. The cultivation license award winners included at least three multistate operators—New York-based Columbia Care, Illinois-headquartered Verano Holdings and Massachusetts-based Holistic Industries. Other businesses that won cultivation licenses include Armory Pharmaceutical of Maryland, Blue Ridge Botanicals of Texas, Buckhannon Grow of Ohio, Harvest Care Medical of Maryland, Mountaineer Holding of West Virginia, Mountaineer Integrated Care of Pennsylvania and Tariff Labs of West Virginia. Up to 10 processor licenses and 100 dispensary licenses could be forthcoming, and state records show that the MSOs also have applied for processor and dispensary licenses.

Note: Entries sourced from Marijuana Business Daily, 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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Keynote Speaker, John Mackey CEO and Co-founder Whole Foods Co-Author Conscious Capitalism

U.S. Election Analysis........................... 2 Investor Intelligence Conference...... 2 Regional Focus Forums....................... 3 • California • Canada • Latin America • Europe Hemp Industry Daily Forum..............4 Science Symposium Forum...............4 Main Show............................................... 5 Speakers..................................................6 Product & Services Showcase........... 7 Ticket Information................................. 8

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Election Week Passholder Day Forum 2 Sessions Live Online: Monday, Nov 2 & Wednesday, Nov 4 This is the most anticipated election for many reasons, including the future of cannabis legalization. These sessions will review the ballot initiatives on legalization, how much it matters for the industry and each potential market, as well as cannabis decriminalization and social justice reform. With 35 seats up for election this year, we will explore the likelihood of federal banking reform and provide analysis for possible Election Day outcomes. After the election, join us for a live breakdown of the results and their likely impact on the cannabis industry. November 2 What’s at Stake for Cannabis? November 4 Results and the New Opportunities in Cannabis

Investor Intelligence Conference Passholder Day Forum Live Online: Thursday, Nov 12 Join us for this day of networking and learning as we discuss the outlook for 2021, an overview of the major markets, and what new regulatory updates you should be aware of when considering deploying your capital. • • • • • • •

Welcome and Investing Updates Survival of the Fittest: Lessons from the Dotcom Era Elevator Pitches The New Regulatory Implications for Investing in Cannabis US Executive Panel: Post-Election Breakdown Canadian Executive Panel: Market Trends and Opportunities Looking at the Numbers: EBITDA, Operating Profits, and What You Need to Know • Lightning Round: Market Updates for US, Canada, Latin America and Europe • Pitch Company Breakouts All Passholder Day Sessions will be available On Demand until March 2021.

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Regional Focus Passholder Day Forums This series of forums explores the unique opportunities and challenges that exist in each market, and how to position your business to thrive. Each includes breakout roundtable discussions following the presentations.

California Market Live Online: Thursday, November 5 Discover where the state industry stands today in California, what’s next and how to manage your cash within the supply chain. • California Industry Update • Expansion on the Horizon? A Look at Local MJ Ballot Measures in California • Cash is King: Managing Cashflow and the California Supply Chain

Canada Market Live Online: Wednesday, November 11 Learn about how Canadian producers and retailers have dealt with the global economic strain and the regulatory developments throughout the country. • Canada in 2020 • March of the Micros: How Small Producers Can Succeed Where Large Ones Failed • Global Cannabis: Where are the Opportunities and When Will They be Profitable?

Latin America Market Live Online: Friday, November 20 Latin America has many export opportunities, so in this forum you can learn about the ones inside the region such as Brazil and Peru, as well as those with mature regulations for production such as Uruguay and Colombia. • Latin American Market Updates • Exporting from Latin America • Developing the Internal Market: Revenue Opportunities within Latin America

European Market Live Online: Monday, November 23 Despite a global pandemic, strict quarantine, and an economic slump, the cannabis industry in Europe has continued its steady rise. In this forum, we will cover: • European Industry Update • Germany: Land of Opportunity • Deep Dive: Israel at the Forefront of the Global Import and Export Please visit MJBizCon.com for a complete list of speakers and updated agenda information.

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Hemp Industry Daily Passholder Day Forum Live Online: Monday, November 30 It has been a rollercoaster of a year across all industries, but how has the hemp industry in particular fared? This forum will provide an overview of the hemp industry over the past year and a quick glimpse as to what 2021 has in store, including the USDA and FDA updates, how the economy impacted the hemp and CBD markets in 2020, and strategies in navigating cultivation, the supply chain and finding the right partners. •• •• •• •• •• •• •• ••

Expert AMA and Networking Welcome to Hemp Industry Daily Forum with Hemp Editor, Kristen Nichols CBD and the FDA, Interim Rules and the USDA – Where We Are Today and What To Expect in 2021 Data Dive: Hemp/CBD Market Outlook and Consumer Trends Product Diversification: Beyond CBD 2021 Cultivation and Product Strategies Reality Check: Address Hemp Industry Business Challenges of Today and Tomorrow Roundtable Networking Discussions

SCIENCE SYMPOSIUM Science Symposium Passholder Day Forum Live Online: Tuesday, November 24 Join other cannabis science professionals in this one-day forum and learn about testing standards, how to keep integrity with consumers and ensure quality as well as finding consistency. You’ll also be able to network and talk about the latest issues and opportunities you're faced with in the industry. •• •• •• •• ••

The State of Cannabis Science Microbial Testing: Standard vs. PCR Maintaining Integrity in an Increasingly Competitive Landscape Finding Stability in Product Development and Formulation Nomenclature Workshop

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Join us at the main event for three days of content, community and celebration of our industry. Sessions to look out for include:

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Welcome to MJBizCon Hindsight 2020: State of the Industry Keynote: Conscious Capitalism in Cannabis Survival in Uncertain Markets Quarantine and Cannabis: How to Prepare for an Unpredictable Future Achieving Equity In Cannabis – Networking Event

Day 2 – Live Online: Thursday, December 3 • • • • •

Bringing CPG Marketing To Cannabis Being Smart with Your Dollar How the Game has Changed: Tech, Automation, and New Approaches in Plant-Touching Businesses Using Data to Optimize Business Operations Connecting Women in Cannabis – Networking Event

Day 3 – Live Online: Friday, December 4 • • • • •

5 Predictions for 2021 CBD in a Global Recession Preparing for Recovery: Lessons Learned to Move Forward Strategically Curbside Pick-up, Delivery and Drive-Thrus: The Future of Cannabis Retail Closing Networking Event

Networking at MJBizCon At MJBizCon 2020, you’ll make new connections across the global industry Peer-to-peer networking opportunities include: • Online roundtable discussions by topic and niche • 1-to-1 private meetings • AI-based business matchmaking • Q&A with expert speakers Online networking events include: • Achieving Equity in Cannabis – December 2 • Connecting Women in Cannabis – December 3

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Jackson Garth Verde Leaf

Adam Greenberg CEO at iUNU

Rick Maturo Nielsen

Alfredo Pascual Marijuana Business Daily

Gail Rand Grand Consulting

Socrates Rosenfeld I Heart Jane

Matt Schweich Marijuana Policy Project

Jennifer Snowden-McKay High Road

Benedikt Sons Cansativa

Trang Trinh TREC Brands Inc.

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Christopher and Denise Mink, owners of Med Pharm in Broken Arrow, Oklahoma, advertise their dispensary on several local billboards, including this electronic sign, which they can program with custom messages.

Photo by Sean Capshaw

62 Marijuana Business Magazine | November-December 2020

From crafty marketing to quick market pivots, cannabis companies leaned on what works to get through a tumultuous 2020

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THRIVE SURVIVE November-December 2020 | mjbizdaily.com 63

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THRIVE SURVIVE

et’s face it: 2020 has been brutal. A global pandemic. An economic recession. And a hyper-partisan presidential election. Even for the cannabis industry—with its history of federal raids, draconian regulations, counterfeiters and more—2020 posed challenges like no other. Most of the trials from the past year are attributable to the coronavirus pandemic and the lethal threat it posed to cannabis industry employees and consumers. Beyond that, executives saw supply chains from China snap almost overnight, stalling deliveries of vape parts and packaging. Meanwhile, governments in many markets mandated that cannabis retailers end in-store sales, forcing them to pivot to delivery and curbside pickup. Not everybody could hack it.

MAKING THE CUT

Coming off a difficult 2019 that included a vaping health crisis and a retreat among cannabis investors, 2020 delivered an additional punch that broadsided many companies, from multistate operators that went bankrupt or laid off scores of workers to small businesses that were forced to sell their licenses. “Throughout this, we’re adapting. We don’t know how long it’s going to go on. Years? A month? We don’t know,” said Brandon Rexroad, CEO of Portland, Oregon-based MSO Shango Premium Cannabis, which does extensive business in Las Vegas. “But you don’t want to be the guy who’s waiting. There were some retailers in Vegas that just shut their doors.” Many marijuana businesses embraced the challenges that 2020 threw at them and found they could not only survive the year but thrive. Marijuana Business Magazine has scoured a variety of data sources and

business indicators to bring readers insightful tables showing which publicly traded companies excelled this year, which ones didn’t and why. We also identified eight smaller companies that survived and often thrived in 2020. These aren’t necessarily the biggest, best or most profitable cannabis companies in the United States—coming up with a short, definitive list would be nearly impossible. But the companies highlighted in these pages demonstrated what it takes to succeed. Key measures and yardsticks included: • Top sales positions in various states, according to data from Seattle-based cannabis analytics firm Headset and LeafLink, a New York-based marijuana industry wholesale inventory and ordering platform. • The number of new patients or customers added by companies. • Unusual and/or innovative strategies that allowed companies to rebound from adversity. Some other keys to success included smart inventory management, aggressive discounting, crafty marketing, product variety, data gathering and analysis as well as increasing self-reliance. The stories and data in the following

64 Marijuana Business Magazine | November-December 2020

Cannabis companies that have succeeded in what’s been a tumultuous year did it with resourcefulness, prudence and strategies tailored to meet the unique needs of their own markets and organizations. Those strategies include: • Having a large product selection that can draw consumers to your store and increase their spending—while at the same time employing disciplined inventory management. • Sales and discounts to attract customers, including two-for-one deals and cashback discounts. • Effective marketing, especially in highly competitive markets. • Data analysis and frequent sales forecasting to help companies better plan which products and quantities to order. • Backstopping your supply chain by having your own retail outlet to move products if you’re a wholesaler—or having your own cultivation facility if you’re a product manufacturer.

pages are intended to offer insight and inspiration for marijuana businesses dealing with adversity in the years to come. —Omar Sacirbey

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Product variety helps Med Pharm attract customers but requires sharp inventory management.

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Well-placed billboards and advertising buys help Oklahoma dispensary stand apart from the competition By Omar Sacirbey COMPANY: Med Pharm | LOCATION: Broken Arrow, Oklahoma | SECTOR: Retail

enise Mink admits she and her husband knew little about the cannabis industry when they opened Med Pharm dispensary in Broken Arrow, Oklahoma, in December 2018. “What we didn’t know is shocking actually,” Mink conceded. “We had to learn the hard way. So we decided we’re just going to run this like a retail business that we would want to shop in.” In a market that boasts thousands of licensed businesses, Med Pharm found success by offering extensive product variety, generous discounts and customer service.

The couple also surrounded themselves with employees who were familiar with the marijuana industry and leveraged what they knew to build one of the busiest dispensaries in one of the country’s most competitive markets. Through early October, Med Pharm had roughly 7,500 patients—and the numbers are growing quickly. Saturated Markets Require Marketing to Help Businesses Stand Out People told Mink that her dispensary would attract patients no matter what,

66 Marijuana Business Magazine | November-December 2020

so it would be “stupid” to waste money on marketing. But in such a saturated market with so many competitors, Mink felt “there was no choice.” “To me, that’s not good business,” she said. “There are so many dispensaries, we felt like we had to market.” Mink already had three billboards to promote her real estate business. Once Med Pharm launched, she changed them to advertise the dispensary, making hers the first marijuana store in town with such signage. She also rented a double-sided electronic billboard located

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THRIVE SURVIVE on a main street lined with several of her competitors as well as a one-sided electronic billboard along a major highway near the dispensary itself. The electronic billboards can be changed at will, allowing Mink to advertise daily specials, new products or Med Pharm’s drive-thru window whenever she wants. The two electronic billboards cost $1,500 per month, while the three regular billboards cost $2,100 per month. Med Pharm also was the first dispensary in the state to run television and radio commercials, buying airtime through a local affiliate of the Cox Media Group. In March, when the coronavirus pandemic erupted in the United States, Med Pharm pulled its radio ads and sank the money into more television advertising. Mink figured that during the pandemic, more people would be home watching television than in their cars or offices listening to radio. Med Pharm also posts daily on social media, garnering about 5,000 Facebook followers and roughly 10,500 on Instagram. Including some print advertising, Mink estimated that Med Pharm spends $10,000-$11,000 per month on marketing. “That’s well worth it, because I know the money that we make,” Mink said. Product Variety Is Good But Requires Discounts and Careful Inventory Management Mink attributes Med Pharm’s success to offering a wide product selection, but she noted the company has made inventory-management “mistakes” along the way. “I cost us a lot of money in 2019, I felt, just by foolish purchases,” Mink said. Mink wasn’t immediately aware of bulk-buying options to decrease product purchase costs. When she did start buying in bulk, Mink often bought too much of some products, some of which would expire before she could sell them.

The owners of Med Pharm said no to a chance at an additional retail outlet so they could make the original storefront exceptional. Photo by Sean Capshaw

“That was a hard lesson. The first time we had to dispose of something, it was like burning money,” Mink said, adding that the risk of expiration before sale is greater with edibles than with flower and vapes. Entrepreneurs also need to make sure products are proven winners with customers before buying too many. “It was a learning process to figure out what works in my dispensary,” Mink said. Med Pharm figured out the right balance by investing in a point-of-sale system to see what products sold and also spent time on the sales floor mining customers for feedback. Offering multiple specials daily is another key to Med Pharm’s strategy of getting customers to visit its website frequently. Most specials offer about 30% off, Mink said. “We make a tiny bit of money on our specials. I don’t lose money, but if everything would have that level of profit margin built in, we wouldn’t be making it. So we have profit margins on pretty much everything else, but it is competitive,” Mink said. One Awesome Location Is Better Than Two Meh Locations The success has spawned phone calls from landlords wooing Med Pharm to open a second location—often at good

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terms. So far, the company has resisted the temptation to expand. “We are owners who are at the store every single day,” Mink said. “We are one reason why it’s been successful—because we are able to talk to our customers and they see us here and we can see what’s going on. If we had another location, we wouldn’t be here. We would be there. And then what would happen to this location?” Instead, Mink and her husband, Christopher, focused on making their current location the best dispensary it can be. They expanded the parking lot, increased drive-thru traffic from five or six cars per day to roughly 100 cars per day on weekends. And now they’re installing an on-premises “canna-kitchen” that will make and sell fresh-made infused products that customers can take home. Mink expects constructing the kitchen will cost between $40,000 and $50,000, but she said the investment will be worth it because it will attract patients. “The hope is the kitchen will draw people and get them to try and buy other products in the store,” she said.

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

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SIREN SONG

Being mindful of workflow and energy rebates creates operating efficiencies By Omar Sacirbey

COMPANY: Siren Cannabis | LOCATION: Portland, Oregon | SECTOR: Cultivation

ou might question the wisdom of Matt and Meghan Walstatter’s decision to leave Portland’s crowded dispensary scene to start a cultivation site in Oregon’s saturated market. The husband and wife team opened Pure Green in January 2014, when there was only one other dispensary on their street. They built it into one of Portland’s most popular marijuana stores. But by 2018, they were competing against at least 10 other nearby stores. “It got to be a grind,” Matt Walstatter said. Meanwhile, the Walstatters teamed up with veteran cultivator Bob Conley, whom they’d known for 20-plus years, on Siren Cannabis, a Portland-based grow. The 8,000-square-foot facility had about 2,000 feet of canopy, and the first pounds of flower were ready for the wholesale market in December 2018. “We probably couldn’t have come out on the market at a worse time,” Matt Walstatter said, referring to what was then an oversaturated market for flower. “It was so bad. I didn’t sell a single pound. In January 2019, our price for indoor (grown flower) was $600 to $900

Bob Conley tends Siren's garden. Courtesy Photo

per pound. And I had to figure out how to stay in business,” Walstatter said. He also took a gamble. “My view was that this was going to be the peak of market saturation and that the market would ultimately work its way back up, which turned out to be right,” Walstatter said. “Now we’re getting $1,800-$2,000 per pound.” Produce a Great Product While Keeping Costs Down The fledgling company had two secret weapons that helped it stay in business: • The sale of Pure Green to Vancouver, British Columbia-based C21 Investments, which closed in January 2019 for an undisclosed sum and gave the couple money to launch Siren. • Growing great product as efficiently as possible. “I think we grow something that can sit on any shelf in any store in the state. I’m not trying to claim that mine is the best or anything like that. But I think we’re in the upper tier,” Walstatter said. “My partner, Bob Conley, who runs all cultivation operations, does more with less than anyone else I know. So our production costs are a lot lower than at other grows our size.” Siren operates 70,000 flowering lots in 2,000 square feet of canopy with Conley, one full-time grow employee, one part-time employee, five or six full-time trimmers who help elsewhere in the grow plus one administrative person and one sales manager. Design Your Facility to Improve Workflow

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The lean team operates in a facility designed to maximize efficiency through workflow. For example, the vegetation room is across the hall from the flower rooms, and the trim room is across from the drying room. Designing the building that way reduced the number of steps employees must take to get from one room to another. “One of the things that you think about is making the building fit the way the workflow is going to go. It may not seem like a big deal to have to take three more steps,” Walstatter said. “But when you multiply those three steps times three people doing the same thing 300 times a day, every week, over years, all of a sudden those three steps turn into thousands of steps.” The company also custom-built an automated irrigation and fertigation system that eliminated the need for an employee to water plants and clean water tanks. Take Advantage of Energy Rebates to Save Money To cut utility costs, Siren took advantage of rebates that Oregon awards businesses for using energy-efficiency technology. Siren’s grow rooms are mixed spectrum, using double-end bulbs and 350-watt LED lights in flower rooms and LEDs in the vegetation rooms. The company received rebates on all the LEDs it bought, plus the HVAC system, allowing Siren to recoup about 40% of its LED and HVAC expenses. Walstatter noted that the five-figure rebate check arrived when Siren just opened and was getting less than $1,000 per pound for its product.

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THRIVE SURVIVE Elev8 Elev8 opened opened two two stores stores in in two two states states this this year year and and more more are are on on the the way way in in 2021. 2021. Courtesy Photo

COMPANY: Elev8 | LOCATION: Eugene, Oregon, with operations in MA | SECTOR: Retailer

BOUNCING BACK

Retail owner who closed first storefront is on the road to becoming a multistate operator By Omar Sacirbey

hen Seun Adedeji had to close Elev8, his first marijuana store in Eugene, Oregon, after about a year in business, he didn’t quit. Instead, he took the lessons learned from that first experience and started again. Those lessons included: • Don’t do everything yourself. • Pick underserved locations for your stores. • Owning real estate is better than leasing. In May, two years after Adedeji closed the first Elev8 storefront, he reopened the business in a more central location in Eugene. In October, Adedeji opened his first Massachusetts store in the town of Athol. He plans to open two more stores in Massachusetts in 2021, has submitted applications in Illinois and is considering a Michigan location.

“Don’t take shortcuts, because it comes back to bite you,” said Adedeji, who immigrated to Chicago from Lagos, Nigeria, when he was 3. “Opening my first shop, I had to bootstrap everything. I was just 23 when my first shop opened.” Don’t Be a ‘COE’ One of the shortcuts Adedeji took was not hiring enough help, a mistake he attributed partly to being undercapitalized and partly to underestimating the demands of the business. Adedeji managed the store, made purchasing decisions, oversaw inventory, hired employees, did the accounting and all the other backend work required of a retail store owner. “I was the COE: chief of everything,” Adedeji said. So when Elev8’s landlord told Adedeji

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he couldn’t renew his lease, the young entrepreneur didn’t have a team in place to look for a new location in time to stay open. Instead, he decided to close Elev8’s doors—but only temporarily. Adedeji was able to eventually transfer his license and open the new Elev8 store in downtown Eugene. This time, he hired a payroll company, a chief financial officer and other personnel to handle needs such as human resources and accounting. “Find your strength and find people to complement your weaknesses. You don’t need to know it all,” Adedeji said. “Once I was able to find the right people with the right expertise, it made everything better.” Go Where the Competition Isn’t Adedeji’s first go-round with owning a retail store in Oregon’s oversaturated

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THRIVE SURVIVE market taught him the importance of opening stores in locations with few competitors and inexpensive real estate. While Adedeji worked on reopening his Eugene store, he also set his sights on Massachusetts, where towns in many rural parts of the state had capped the number of cannabis retail licenses at one or two. He studied the state for locations and eventually settled on Athol, a town in north-central Massachusetts about 10 miles from the New Hampshire border, which had allotted two licenses. Winning one of the two licenses in town and being one of a few retailers in the area “makes our license even more valuable,” he said. Adedeji also has licenses and retail space secured in Orange and Williamstown, Massachusetts, each about 10 miles from the New Hampshire and New York state borders, respectively. Not only are those retail locations in low-competition areas, they are in rural areas of the state where property prices are far less expensive than in the Boston metro area. He also expects to be able to attract customers from nearby New York and New Hampshire. “We strategically picked those smaller towns in the border areas of those states,” Adedeji said. Owning Instead of Leasing Real Estate Has Advantages Adedeji’s previous experience of being forced to move by a landlord also taught him it’s better to own your building than to lease it. So when he wanted to break into Massachusetts, he took the profits from his first Eugene store and in 2018 bought property for the Athol store. Owning his own real estate also made it easier to secure a loan to finance the Athol store’s launch. Adedeji was able to offer his property as collateral to secure a $1 million debt financing from Tilt Holdings, a Cambridge, Massachusetts-based cannabis company whose services include financing. The loan was

“Your real estate can determine a lot about your success or your failure.” -Seun Adedeji issued at 8% annual interest and has a 10-year term. “It gave me an asset when I needed more money,” Adedeji said of the property. It also meant he wouldn’t have to pay rent on the space while waiting for his application to wind its way through the approval process, a scenario that can sometimes take years. Indeed, many aspiring marijuana entrepreneurs

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who submitted applications in Massachusetts went out of business before they could open their doors because monthly rental payments drained their capital reserves. “If I didn’t own my property, I would have been screwed paying a landlord constantly. That’s what really affects people,” Adedeji said. “Your real estate can determine a lot about your success or your failure.”

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THRIVE SURVIVE COMPANY: Trulieve | LOCATION: Tallahassee, Florida | SECTOR: Vertically integrated MSO Tallahassee, Florida-based Trulieve is expanding to other states. Courtesy Photo

APPLYING LOCAL LESSONS NATIONALLY

Trulieve avoids reinventing the wheel by leaning on its past successes in Florida’s medical marijuana market By Omar Sacirbey

n the four years since Kim Rivers founded Trulieve, the cannabis company has gone from 10 employees who filled vape cartridges to a 4,000-employee behemoth dominating the Florida market and operating in California, Connecticut and Massachusetts. Trulieve has hired roughly 1,000 employees since the pandemic started

this spring and opened its 60th store in Florida on Oct. 9. Rivers attributes Trulieve’s success to focusing on Florida, where the company was able to hone strategies and execution, while applying lessons learned to new markets. “Having the opportunities that we had in Florida has really set the stage for who we are as a company,” Rivers said.

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Focus on One State and Apply the Lessons Learned to New Markets Trulieve considered expanding out of Florida in 2019 but didn’t find desirable acquisition targets. Meanwhile, the slowdown in capital funding that year forced the company’s competitors in Florida to “pump the brakes” on expanding in the state to conserve

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THRIVE SURVIVE capital and stay operational, Rivers said. “We saw that as an incredible opportunity for us to double down in a state where we are No. 1, (where) we had a successful foundation,” Rivers said. Doubling down meant expanding retail and investing in less visible efforts such as research-and-development and business software applications. Key to Trulieve’s expansion strategy is applying what it learned in Florida to new markets. “We can take those lessons and really apply them and shape our footprint, dependent on the market,” Rivers said. Consider Massachusetts, where the maximum cultivation canopy currently allowed is 100,000 square feet. Because Trulieve has similarly sized grow facilities in Florida, it can run tests to see what will work best in Massachusetts. Another example of a Florida lesson applied elsewhere is Trulieve’s dispensary in Palm Springs, California. Taking their experience in Florida, where stores with fewer product SKUs often do better, company officials “culled” the number of products at the Palm Springs store. “California is a market where it’s not unusual to go into a store and then be overwhelmed by choice,” Rivers said. “We cut SKUs back, and the spend per patient improved.” Be Prepared to Pivot Quickly in Response to Major Market Shifts Two areas where Trulieve has demonstrated a propensity for execution are delivery and edibles. Rivers estimated that before the pandemic, about 20% of Trulieve’s sales were through delivery and pickup while 80% were in-store. But the pandemic changed that. “Within a two-week period, that completely flipped,” said Rivers, noting that 80% of sales came through delivery and pickup and 20% via walk-in. “Because we already had some delivery, we didn’t have to create it from scratch, but just expand it.”

“The directive for the team was: As soon as these rules drop … we need to be ready to submit products within 24 hours.” - Kim Rivers Trulieve assembled several teams to focus on the new challenges caused by the pandemic, including a delivery team tasked with coming up with a plan for 100% delivery, should the state order all cannabis retailers to close. In one week, Trulieve doubled its fleet from 100 vehicles to 200. Because Florida requires two employees in a delivery car at any given time, Trulieve also hired dozens of new workers and cross-trained other employees. Employees who had been passengers in delivery cars became drivers, while other cross-trained employees became passengers. Plan Ahead to Capitalize on Big Changes in the Rules When Florida finally released rules on cannabis edibles in August, Trulieve already had a head start in the market. That’s largely because edibles were already written into Florida’s marijuana regulations three years ago. That statute stipulated that a company would have to

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build a kitchen with certain specifications, get the kitchen inspected by the state agriculture department, have Good Manufacturing Practice standards for food safety and meet other requirements. “We did all that almost immediately when the law was passed. We also had been working on licensing agreements with partners and have a number of brand partners in the edibles space,” Rivers said. Those partners include Colorado-based Binske, District Edibles, Love’s Oven and Slang as well as California-headquartered Bhang. “The directive for the team was: As soon as these rules drop … we need to be ready to submit products within 24 hours to the (state) Department of Health (for approval). And that’s what we did. Within the first 24 hours, we made the first submission and then received feedback from the department and made some tweaks” to get the products approved, Rivers said. “We were really sitting on go and ready to move.”

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Being vertically integrated worked to Shangoʼs advantage this year. Courtesy Photo

COMPANY: Shango | LOCATION: Portland, Oregon, with operations in AZ and NV | SECTOR: MSO

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hango has grown steadily since it was founded in Portland in 2014. The company has vertically integrated operations in Oregon and Nevada as well as a cultivation facility in Arizona. In Michigan, Shango has opened two of three expected retail stores and has a large grow facility under construction. Looking ahead, the company will soon have vertically integrated operations in California and Missouri. In some of the markets where it operates, Shango is a consistent top performer in the flower and pre-roll categories, according to Seattle cannabis analytics company Headset. The company also generates revenue through its own branded concentrates and edibles. Shango has reached this point by leveraging wholesale and retail strategies as well as customer-retention deals.

Owning a Retail Outlet Gives Cultivators Valuable ‘Cover’ for Moving Product Beginning in March, the COVID-19 pandemic halted an important part of Shango’s Nevada and Oregon wholesale operations. Retailers that had been reliable purchasers of Shango’s flower and other products suddenly stopped placing new orders. The store owners were worried about having to move inventory in

Having a retail outlet to sell the house brand can save the day when customers stop placing wholesale orders By Omar Sacirbey

the face of potential mandatory closures. But Shango was able to move product and avert losses by selling through its own retail stores in Las Vegas and Portland. “Having a retail store gives you some cover that someone who is just a cultivator or just a manufacturer doesn’t have,” said Brandon Rexroad, Shango’s CEO and founder. In Nevada, for example, Shango’s 75,000-square-foot cultivation facility produces 500-550 pounds of flower per month. The Las Vegas store typically absorbs about 160-180 pounds of that, while the rest is distributed wholesale. “When the wholesale market stopped, I still had 160-plus pounds that I had to push through my retail store. I didn’t have the option of shutting down my garden because I don’t buy third-party flower from anybody. Shango should sell Shango flower,” Rexroad said. Win Customers With Sales and Cash-Back Deals Before COVID-19—but even more so since the pandemic started—Rexroad said he’s seen customers looking for sales. “Everything comes down to pricing,” he said. “People look for store happy hours, two-for-one deals, any percentage off.”

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“People are educated enough to look at Weedmaps or Leafly and see they can pay $14 per gram here, but two blocks away, it’s $10 per gram,” Rexroad explained. “You’re seeing that happen a lot more. You’re seeing customers that maybe weren’t your customers, (but) because of the aggressive sales that you’re running, they’re becoming your customers.” Once you’ve converted new customers, retaining them also starts with a deal. For this, Rexroad likes cash back. “If you come into my store, I don’t care what you spend; you’re going to get 5% cash back, and you’re going to see that on your receipt,” Rexroad said. “It becomes retention at that point. Now you know you’ve got cash on that receipt. If you go somewhere and somebody highlights the bottom of the receipt and says, ‘Hey, next time you’re here, you get $12.50.’ Instead of going over there, I want to come back and use my $12.50 and take advantage of that.” Those types of tactics help gain brand loyalty—a concept that is becoming increasingly important in today’s cannabis industry, where consumers have numerous choices when it comes to products. “I’m not going to say that brand loyalty is 100% there across the board in this industry yet, but it’s gaining that traction,” Rexroad said.

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CannaCraft partnered with Lagunitas Brewing to create California THC beverage sales leader Hi-Fi Hops. Courtesy Photo

CRAFT STRATEGIES

Sales forecasting and offering items in bulk help cannabis manufacturer stay on top of inventory By Omar Sacirbey

espite leading California’s marijuana market in the vape and beverage categories—and being among the top 10 sellers of topicals, according to Headset—CannaCraft is reluctant to paint too rosy of a picture. “It’s certainly not been a hockey stick or a huge increase in growth. We are seeing good, steady growth as we go forward,” CEO Jim Hourigan said of the company, which was founded in 2014. “We feel confident about our business, but not over our skis.”

The caution isn’t surprising, given that CannaCraft laid off roughly 15% of its workforce in late 2019 and more staff in March. The company also has had to compete with counterfeiters usurping its name and stealing sales. So how did CannaCraft bounce back to become a market leader? • Data-driven consumer and market analyses. • Bundling products to give greater value to consumers while not overly compromising on margins.

• A willingness to continue investing in major initiatives. Forecasting Can Fine-Tune Your Sales and Marketing Strategies Sales forecasting represents a key strategy for CannaCraft. “Every month, we’re re-forecasting our business, trying to best understand where the markets are going to be. We can then plan our production and distribution accordingly,” Hourigan said.

COMPANY: CannaCraft | LOCATION: Santa Rosa, California | SECTOR: Manufacturing and cultivation

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THRIVE SURVIVE Looking ahead also allows CannaCraft to develop a portfolio “that includes a good, better, best type of strata,” Hourigan said. “And based on that forecast, we can either dial up or dial down some of our spending in marketing or other areas based on how we think the business is going to continue. … If there are consumers that are impacted by where the economy may be, we want to be able to provide them products in those various price ranges.” Offer Customers Better Deals on Products For example, while most vape cartridges are sold in half-gram sizes, CannaCraft began offering full-gram cartridges this year in a bid to provide more value to consumers. The company also moved from selling Hi-Fi Hops—a nonalcoholic, THC-infused beer produced through a joint venture with Lagunitas Brewing Co. in California—exclusively in single bottles to selling the product in fourpacks and 10-packs at a reduced per-item rate. The company also put coolers in dispensaries to promote the idea of customers buying a cold drink as they would any other beer or soda. “The idea of the 1-gram carts and multipack drinks was to offer these products at lower (per unit) price points for customers,” Hourigan said. “We were already planning to roll these products out, but COVID accelerated the rollout.” Beware of ‘Buyer Fatigue’ and ‘Sales Fatigue’ While product variety is typically a good thing, it can also have downsides, including what Hourigan calls “buyer fatigue” and “sales fatigue.” “You’ve got so many products that you need to talk about (when calling on customers), and if there are promotions going on, how much time does that buyer have?” Hourigan said. “On the other side, is the buyer saying, ‘I bought (CannaCraft brands)

CannaCraft uses sales data to inform production plans. Courtesy Photo

Jim Hourigan

ABX, Hi-Fi, Care By Design. I’m at my limit from a buy perspective.’ We have to balance on our side that we’re bringing relevant products, products that sell,” he said. “We have to ensure that we’re relevant … and covering all of the products that we think make sense for that particular dispensary.” Grow Your Own Cannabis to Shore Up Your Supply Chain Despite the buyer-seller fatigue concerns, CannaCraft is rolling out a new flower brand, Farmer and the Felon, inspired

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by company founders Ned Fussell and Dennis Hunter. The company used to buy biomass for its products on the spot market, Hourigan said. But it has since built an outdoor grow to bolster its supply chain of biomass. “This summer, it became extremely tight in all supply. Having our own cultivation allows us to ensure that we can continue to develop that brand,” Hourigan said of Farmer and the Felon. CannaCraft currently has a 4-acre outdoor grow with plans to expand to 8 to 10 acres next year. Invest in Events That Can Generate Sales Despite the current ban on events because of COVID-19, CannaCraft expects concerts and other events will eventually return. So the company renewed its California events license, which allows it to sell its products at larger gatherings. “We saw that not so much as a sales driver, but more as a big piece of our marketing for products like Hi-Fi, where people could buy them and test them and then go back to the dispensary to purchase them,” Hourigan said.

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WYLD THING

Owning the distribution process and making data-based decisions ensures messaging and new products are on target By Omar Sacirbey COMPANY: Wyld | LOCATION: Portland, Oregon | SECTOR: Edibles

aunched in 2016 by the founders of a craft distillery, Portland edibles maker Wyld has clawed its way to the top of Headset’s sales rankings, leading older rivals such as Kiva Confections in California and Wana Brands in Colorado. Next year, Wyld hopes to break into Arizona, Massachusetts, Michigan and Washington state. Offering quality products that people like is the No. 1 reason behind Wyld’s rise, said co-founder Rene Kaza. Also essential in getting Wyld on store shelves: mining customer feedback and investing in the company’s own distribution network to build strong relationships with retailers. “Relationships are big for us. We don’t spend a ton of money on marketing,” Kaza said. It’s more effective “for us to be able to connect with the people that are selling our products.” Build Your Own Distribution System Creating its own distribution gives Wyld control over interactions with retail personnel such as purchasing managers and budtenders. Both positions help determine what products get on store shelves and how well they sell. The do-it-yourself approach minimizes the risk a distributor will annoy or anger a retailer by delivering the wrong product, delivering late or behaving unprofessionally. “We’re not using some third-party distributor who can maybe sour a relationship,” Kaza said. “The unknown

is a scary thing in any capacity. … One bad experience with somebody can potentially ruin a relationship for good. We’re risk averse in that sense. And I wouldn’t want to put somebody out there that we don’t have our stamp of approval on.” At the same time, in-house distrubution staff are more likely to have product expertise and take the time to educate retail employees about those products. Wyld’s approach to moving its products through retailers could be boiled down to hook and educate: Hook customers with attention-grabbing packaging and then get them to direct questions to budtenders who have been educated about the products by Wyld’s distribution and sales staff. “It starts with our packaging,” Kaza said, pointing to a pyramid-shaped box emblazoned with distinctive antlers. He explained that good packaging should prompt enough curiosity for a customer to ask their budtender about it. “And if the vendor knows about it, they can give them a little bit more information to actually shape this person’s decision versus them buying any old, run-of-the-mill product. When you’ve got 30 different brands that all look the same, having something that differentiates yourself is always going to be important.” Use CustomerPurchase Data and Feedback to Pick Popular Products Wyld data analysts and sales staff,

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Wyld likes to hook customers with its snazzy packaging. Courtesy Photo

meanwhile, relay information to executives about what products are moving and what customers are asking for. In turn, that information helps Wyld decide what types of products to launch. “It’s using boots on the ground and the information they provide to make decisions,” Kaza said. For example, products with the cannabinoid CBN are “really big now,” Kaza said, so Wyld is getting ready to launch CBN-infused products, including elderberry CBN gummies in California, Nevada and Oregon. “That’s something that the market is actually asking for, and you’re seeing it in data,” Kaza said. “A lot of people talk about what consumers want, but is there really anything backing that?” Rather than loading the market with as many products as possible, Wyld has found success with a smaller number of SKUs. The company has only six gummy SKUs in California, for example, but expect to see Wyld in a growing number of markets.

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THRIVE SURVIVE COMPANY: Evermore | LOCATION: Pikesville, Maryland | SECTOR: Vertically integrated company Evermore counts communication, product variety and marketing among its keys to success. Courtesy Photo

MASTERING MARYLAND All-hands meetings keep everyone on the same page, while expanding discounts draw new customers By Omar Sacirbey

aryland is among a growing number of Eastern states that hold much promise but still face the challenges of being a medicalonly opportunity, where a relatively large number of marijuana businesses are competing for a limited patient population. Pikesville-based cultivation and production business Evermore Cannabis Co. and its affiliated dispensary, The

Living Room, have cracked the Maryland market, garnering more than 50 new patients per week and building a successful wholesale operation. What are the keys? Product diversity, inventory management, communication, aggressive discounting and creative marketing. “It’s really just constant communication and constant inventory tracking so we know when we have

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something in and how long we’ve had it for,” said Morey Zuskin, Evermore’s principal, owner and chief marketing officer. Offer a Variety of Products and Keep Tabs on Inventory Evermore attributes its success in growing patient numbers to having a wide but not overwhelming variety of

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THRIVE SURVIVE products that are more often hits than misses with clientele. Selecting winning products takes a disciplined study of sales trends and constant communication between team members to ensure inventory levels strike the right balance. “From the top down, the ownership is involved and hands-on, with meetings and calls and just constant communication,” said Evan Damareck, general manager at The Living Room. Communication includes a weekly inventory call with Evermore’s vice presidents of processing and cultivation, the marketing team, wholesale manager, dispensary manager and Damareck. “We get on the weekly call to know what’s coming, what’s out there, what’s ready now, what’s going to lab. It’s just that constant communication with each other to make sure we’re all on the same page and know what we have and what can be allotted to the dispensary and what’s going to be allotted to the wholesale market,” Damareck explained. He added that “to keep things fresh” the company orders new products weekly. “Everything is coming in and moving out right away, and that means keeping up on inventory,” Damareck said. Zuskin noted: “To manage our inventory, we keep very tight control over what we have and how much we have. We are constantly watching how fast we move through certain items and what items tend to sit for any length of time. We relay that back to our inventory team and then to Evan when we’re doing our ordering.” Give Plenty of Customer Discounts Deals on price are another important strategy in expanding Evermore’s patient numbers and getting customers to try new products. The deals are also a way for the retailer to acknowledge the impact of the 2020 recession, which might have affected patients through layoffs, pay cuts or other means. “We’re doing well, but there are other

The Living Room featured extended discounts during the recession. Courtesy Photo

Morey Zuskin

people that are not, and we have to be conscious of that,” Zuskin said. The Living Room typically offers discounts for veterans, seniors and students, but it has added other daily specials during the coronavirus pandemic to attract shoppers. The dispensary also expanded a 22% discount for veterans—22 reflecting the number

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of daily suicides by veterans—to all customers in March. The discount remains in place for now but will eventually be phased out. “Probably 95% to 99% of the menu had a 22% discount for everybody every day of the week,” Zuskin said. Pivot to Online Marketing and Hosting Social Media Events The coronavirus pandemic forced The Living Room to change its marketing strategy, which had depended on public events. With many events shifting online this year, The Living Room launched an Instagram music series: Once or twice per week the dispensary hires a DJ or band to play music for a few hours while people listen online. “Most of our efforts have been live Instagram music sessions and expanding our footprint online to make sure that we’re reaching as many eyes as we can,” Zuskin said.

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White Labeling

94 Marijuana Business Magazine | November-December 2020

Marijuana companies can forge partnerships and save money by taking control of one part of the supply chain By Margaret Jackson

November-December 2020 | mjbizdaily.com 95

White Labeling

Inanna Manufacturing creates products for cannabis companies to sell under their own labels. Courtesy Photo

he complexity and cost of obtaining cannabis licenses has many brands turning to whitelabel branding. White labeling, a practice common among mainstream businesses, is when a product is produced by one company but packaged and branded to make it appear as if another company made it. For example, many products sold at Whole Foods Market under the 365 brand were not made by Whole Foods at all. Instead, the national grocery chain has various companies that produce the items for Whole Foods to sell under its 365 label. The same is true for Costco’s Kirkland brand and Walmart’s Great Value brand.

‘AREAS OF EXPERTISE’ Daniel Yi, managing partner and chief strategy officer of Bellflower, California-based product maker Inanna Manufacturing, said opportunities for white-labeling in the cannabis space are great because few companies are doing it.

Obtaining licenses to operate a cannabis company can be costly and time consuming, so many brands turn to white-label companies to manufacture and package their products. If you want to use a whitelabel company to build your brand, here are a few tips to ensure you get the most out of the relationship with your partners: Daniel Yi

Many entrepreneurs have ideas for brands and would like to get into the cannabis industry, but they are unable to do so because they can’t get a license, according to Yi, who got his start in the cannabis industry four years ago with Los Angeles-based multistate operator MedMen Enterprises. “There are a lot of product ideas,” he told Marijuana Business Magazine. Inanna holds one of California’s Type 6 cannabis-manufacturing licenses,

96 Marijuana Business Magazine | November-December 2020

• Make sure the idea for your products is fleshed out before enlisting help. • Have packaging and branding approved by authorities and ready to go. • Use multiple suppliers to ensure you always have ample inventory. • If you’re manufacturing edibles, consider using a white-label company to extract the distillate for your products. • Vet the growers that work with your white-label company to ensure you are getting a quality product.

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White Labeling which allows the company to make everything from gummies and topicals to baked goods. The company does not provide extraction services, nor does it grow cannabis. “There are a ton of people who are super good at cultivating cannabis efficiently,” Yi said. “Why spend a lot on that if you have a great retail concept? It’s more about segmenting into areas of expertise. Coca-Cola doesn’t bottle its own soda. The same thing will happen with cannabis.”

UPTICK IN DEMAND Boulder, Colorado-based WHT LBL takes a different approach. The company handles everything from making distillate for edibles products to brand management and manufacturing at its 15,000-square-foot facility, said Jill Lamoureux, WHT LBL’s co-founder and chief creative officer. WHT LBL has a small indoor cultivation facility and one large outdoor grow. The company buys most of the trim it uses for extraction from Los Sueños Farms, a 36-acre outdoor cultivation facility in Pueblo County, Colorado. WHT LBL plans to expand its cultivation facility to keep up with growing demand for its mini joints, Lamoureux said. She had been considering enlarging the company’s outdoor grow, but after an early freeze and snowfall in September, she’s now leaning toward greenhouses. “We were barely able to meet demand on our own this year, and we don’t see it stopping,” she said. “I’m a little nervous about supply for the coming year.” WHT LBL prefers to work with cannabis businesses that already are in the market and looking for a new manufacturing partner. They should have provable sales, packaging and labeling as well as an understanding of the unique universal stamp and warning language. Next, the company likes to work with clients who want to expand to Colorado from other markets and enlist WHT LBL to produce their brands. Those clients

Wana Brands contracts with an outside company to create the distillate for its infused products. Courtesy Photo

should have packaging, even if it does need a little tweaking. “Even if they don’t understand Colorado specifics, they understand the ideas around the regulations,” Lamoureux said of the type of businesses that employ white labelers. If you’re considering going the whitelabel route to get into the marijuana industry, make sure you have the idea for your brand and product fleshed out and that your packaging and label design is finalized. It’s also important to select a product category where there’s room for growth, Lamoureux said. “Vape is the most saturated category,” she said. “Unless you’re coming in as a super-low-cost producer, that product is on the market 10 times over.”

AVOIDING LICENSING PITFALLS California-based Old Pal has avoided licensing challenges by going the whitelabel route.

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Old Pal contracts with about 100 cultivators licensed to grow or manufacture marijuana in the markets where the company operates. Old Pal gives its producers packaging for flower and vape cartridges and then promotes its brands through marijuana retailers. The company’s products are available in about 350 cannabis stores. Because the company doesn’t handle marijuana, it doesn’t need to have a license. That enables Old Pal to keep overhead low; it has just 29 employees and one office. “If we had gone vertically integrated, we’d need a team of 20 drivers, 40 cultivators and a compliance department,” said Rusty Wilenkin, chief executive of Old Pal. In the company’s early days, it took a more hands-on approach with its partners. Now that trust has been built, Old Pal gives its partners product specifications for them to follow. Old

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White Labeling Partnerships Can Help Weather Storms Whether you’re relying on white-labeling companies to grow flower, extract distillate or create cannabis-infused edibles, having a stable of reliable production partners will ensure consumers always have access to your products. This year, Mother Nature has dealt a particularly hard blow to marijuana cultivators. Wildfires have ravaged cannabis crops in Oregon and threatened even more in California and Washington state. Meanwhile, an early freeze and snowstorm delivered a surprise blow to Colorado’s outdoor growers. To combat disruptions in the supply chain, California-based flower and vape brand Old Pal contracts with about 100 cultivators licensed to grow or manufacture marijuana in markets where the company operates.

Old Pal partners with cultivators for its marijuana flower brand. Courtesy Photo

Pal’s distributor is responsible for quality assurance and control. Old Pal teamed up with Austin, Texasbased creative agency Land to develop the brand. In turn, Land has an ownership stake in the company. “That really helped us think about brand and marketing from the get-go,” Wilenkin said.

FOCUSING ON CORE BUSINESS Another company that uses white-label manufacturers is Boulder, Coloradobased edibles maker Wana Brands. While Wana manufactures its own gummies, it contracts out for extracting the distillate used in its infused products, which saves on the cost of equipment, the workers to operate that machinery and the space it takes up in the company’s 19,000-square-foot manufacturing facility. “We used to do our own extraction, but as we’ve grown, we realized it’s more efficient to focus on the actual edibles manufacturing and become more specialized there,” said Logan Craven, Wana’s chief financial officer. “What we decided was, if we were to move away from extraction, we’d have additional edibles manufacturing capacity in our facility. We wanted to keep all the manufacturing within our control and

“For us, being a flower brand, we rely on having amazing relationships with great cultivators and distributors,” said Rusty Wilenkin, CEO of Old Pal, which sells cannabis in California, Nevada and Washington state. “This allowed us to go to so many states so quickly. If we had to build a mini-factory in each state, our expansion would take so long.” The multiple relationships with cultivators ensure that Old Pal can get its products—even when natural disaster strikes. So far, Old Pal’s flower supply has not been affected by the West Coast wildfires, though several growers did report close calls. “We’ve had supply shortages in the past,” Wilenkin said. “This year, wholesale prices for cannabis skyrocketed, and a number of brands had trouble keeping up with demand. Luckily, our partners stepped up to make sure we had enough product to keep our brand growing.” – Margaret Jackson

not white label and outsource the actual edibles manufacturing. Extraction is a relatively easier process to standardize.” Wana encourages its extractors to use multiple cultivators so that if one crop fails, there are still others that can be relied upon. “We want to make sure it’s a grow source we’ve vetted and that we feel comfortable with their practices and procedures,” Craven said. “It makes us less dependent on an individual crop or production runs. We’re able to mitigate risk and work off of what the industry as a whole is doing as opposed to what we have in our own grow.” Another measure Wana takes to ensure continuous production is keeping three to four months worth of THC distillate on hand.

100 Marijuana Business Magazine | November-December 2020

“Our growers or the extractor would have to have long-term supply issues in order for it to impact us,” Craven said. “Luckily, we haven’t seen that.” Because Colorado requires a certificate of analysis before cannabis products can be legally transferred to another business or consumer, quality control is built into the regulatory process. Wana takes it a step further by retesting the distillate it receives to ensure the vendors are sending what they say they’re sending. “A big part of the brand has always been quality and consistency and trying to innovate in terms of the product itself,” said Craven, who has been with the company since January 2019. “We’ve always tried to present ourselves as very professional and clean. The product has always been the focus here.”

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Offering a Seamless Preorder Experience The coronavirus popularized online and phone orders for cannabisâ&#x20AC;&#x201D;now itâ&#x20AC;&#x2122;s up to retailers to perfect the process By Solomon Israel

A customer retrieves an order at the curbside pickup location outside Planet 13 in Las Vegas. Courtesy Photo

104 Marijuana Business Magazine | November-December 2020

November-December 2020 | mjbizdaily.com 105

Offering A Seamless Preorder Experience

Planet 13 says a solid preordering and delivery system helped it gain new business from local customers during the pandemic. Courtesy Photo

his spring, the coronavirus pandemic turned the traditional retail model on its head—and marijuana retailers and dispensaries were no exception. Across North America, public health guidelines prompted retail stores to offer online preordering to be fulfilled via in-store pickup, curbside pickup or home delivery. For many marijuana retailers, the rapid shift meant upgrading existing preorder programs or rushing to create new operating procedures from scratch. Cannabis retailers interviewed by Marijuana Business Magazine say a welldesigned preordering system can bring rewards, including: • An opportunity to capture new clients in search of pandemicfriendly shopping experiences. • Boosting sales of certain products that might have been overlooked previously. • A new way to manage customer queues in busy markets. Achieving those goals requires rethinking customer service and paying extra attention to ensure a seamless experience for shoppers of all technological comfort levels.

David Farris

IMPLEMENTING PROCESSES IN LAS VEGAS Planet 13 in Las Vegas already had an inhouse delivery and order-pickup system in place when COVID-19 reached the United States earlier this year. “We saw a huge spike in our online orders, and we had to convert a massive part of our team to the delivery department,” said David Farris, Planet 13’s vice president of sales and marketing. Farris said the spike in preorders demonstrated the importance of rethinking customer service when shoppers aren’t interacting face-to-face with store staff. In addition to offering customer service by phone, Planet 13 added a chat

106 Marijuana Business Magazine | November-December 2020

When the coronavirus pandemic prompted regulators to restrict the number of customers who could be in cannabis stores—and, in some markets, closed stores altogether—marijuana retailers had to act quickly to serve their clientele. Offering preorder services online and by phone was one way for businesses to keep customers happy and money flowing in. To offer a pleasant preorder experience, retailers should consider: • Offering an online chat option so consumers can ask questions about the products for sale. • Giving accurate times when pickups will be available or deliveries will be made. A staff member can confirm these times while verifying orders. • Asking local regulators to continue offering curbside and delivery services after social-distancing regulations have been relaxed. • Using preorders as a way to cut down on lines forming outside a retail outlet, which can upset neighbors. • Making sure customers can add to their order when they arrive to pick up purchases.

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Offering A Seamless Preorder Experience

Vermontʼs Champlain Valley Dispensary found that online preorders helped boost sales of some less popular items. Photo by Keilani Lime

feature on its website, letting shoppers consult the customer-service team in real time as they browsed the retailer’s lengthy menu. “We wanted to make sure there was somebody they could talk to—or ask questions, if needed—at all times, at any hour of the day,” Farris said. A trained budtender verifies each order with the customer before it goes out for delivery. If a shopper’s first choice isn’t available, budtenders suggest similar items to substitute. Farris said it took a week or two for Planet 13 to nail down accurate delivery times at the start of the pandemic. If deliveries were late, Planet 13 offered

customers a free pack of gummies for their trouble. “We always try to take care of people,” he said. While Planet 13’s pre-pandemic clientele was largely tourists, the retailer’s pivot to preordering might have helped it win the long-term business of locals. “We grabbed a much larger percentage of market share among the local customers because of the services that we provided,” Farris said.

GOING REMOTE IN VERMONT At Champlain Valley Dispensary’s four medical marijuana outlets in Vermont, the proportion of online preorders increased

108 Marijuana Business Magazine | November-December 2020

John Sikes

to roughly 65% from pre-pandemic levels of about 20%-25%, according to John Sikes, assistant director of retail operations at the dispensary. At this magazine’s press time, the remaining 35% of orders were processed

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by phone, as the dispensary was closed to in-store shopping to protect staff and patients. Sikes said Champlain Valley added a new customer-service associate and allocated more staff to phone lines to help process phone orders and conduct initial consultations. “It’s actually working really well with patients,” he said of the preordering system. “Patients appreciate the precautions.” Sikes said that posting menus online gives patients an opportunity to consider new products, which has boosted sales of some items that previously went overlooked, such as teas, coffees and transdermal patches. “Now that they’re scrolling through the menus, most of those products are selling a lot better,” he said. Sikes said he expects preorders will continue to play a large role in the dispensary’s business even after the coronavirus subsides and customers can shop in stores again. “A lot of these people are homebound,” he said of the dispensary’s clientele. “They love coming in and seeing us, but at the same time, I think the majority of the patient base is going to opt into the online ordering feature. They can see everything that’s available, they can place (an order), they can come in, they can still have conversation, but it’s just a quick and easy pickup.”

In Ontario, Canada, retailers such as Superette had a temporary opportunity to offer curbside pickup and home delivery. Courtesy Photo

STARTING FROM SCRATCH IN CANADA In Ontario, Canada’s largest adultuse marijuana market, private-sector cannabis retailers such as Ottawabased Superette faced a bind when their stores were suddenly deemed nonessential and ordered to shut down in early April. A subsequent emergency order allowed marijuana stores to temporarily offer curbside pickup and home delivery for the first time, leaving Superette co-founder and CEO Mimi Lam and her competitors scrambling to build preorder infrastructure.

Mimi Lam

Like Planet 13’s Farris and Champlain Valley Dispensary’s Sikes, Lam said walking customers through the new preorder system was critical to its adoption.

110 Marijuana Business Magazine | November-December 2020

“Being patient and really understanding what those customers want—and what their pain points are—(is) really important,” she said. Lam’s best advice to other retailers looking to implement preorders is to make sure the process works seamlessly before launching, guaranteeing customers get their expectations met during their very first preorder experience. “(The) last thing you would want is for someone to have one bad interaction with your brand or with your store and then … (they) go to someone else,” she said. “It has to be a seamless experience, end-to-end, for it to be a successful launch.”

Offering A Seamless Preorder Experience

Verilife retailers in Illinois used a reservations system to manage long lines. Courtesy Photo

As of press time, Ontario retailers such as Superette can no longer offer home delivery or curbside pickup, although preorders for in-store pickups are still permitted. “Some customers are still not comfortable … going in-store,” said Lam, who’s optimistic that Ontario’s government might tweak its regulations to permit home delivery from private-sector operators yet again.

TAKING RESERVATIONS IN ILLINOIS PharmaCann’s four Verilife retail outlets in Illinois offered preorders even before the COVID-19 pandemic to help address long lines that were common after the state legalized adult-use marijuana on Jan. 1. Verilife’s system allows shoppers to simultaneously reserve the products they want and choose a time slot for pickup. “You can view our menu, make your selections, and those selections will be there for you for 48 hours,” PharmaCann Chief Growth Officer Bill McMenamy told Marijuana Business Magazine.

Bill McMenamy

“We’ve removed the urgency to run to the store and get in line, so that way, you have a shot at getting the product that you really covet,” he said. McMenamy said the reservation system helps Verilife manage customer throughput in light of social-distancing regulations, while also diminishing outdoor lines that caused friction with the stores’ local communities. He said certain customers appreciate convenient, quick transactions that respect their time, but the system also leaves room for staff to spend more time with customers who need to ask questions.

112 Marijuana Business Magazine | November-December 2020

Verilife says its Illinois customers must pay for marijuana purchases on-site, in line with state regulations. But McMenamy said the situation actually benefits the stores, because customers can add items to their orders at the point of sale. “Someone builds a basket (online), and they might have three or four items in there. But when they arrive in-store, there might be one item that they forgot to put in their basket,” he said. Overall, McMenamy describes online preorders as a growing retail trend that’s been accelerated by the pandemic. “Any business that’s going to be competitive—and not just in this COVID environment but competitive post-COVID—really needs to embrace technology,” he said. “You have to meet the customer where they are—and where they are … is on their handheld device. You really need to embrace and evolve with the customer.” Solomon Israel is a reporter for Marijuana Business Magazine. You can reach him at solomon.israel@ mjbizdaily.com.

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years has ever disappointed.

The creative and planning team at Fohse did not want to participate in the race to the bottom for making the cheapest fixture out there. They knew that by focusing on increasing cannabis yields per square foot, their value would be in reducing the costs of production, not by reducing the cost of fixtures. Fohse makes the best lighting products in the industry, because they can help growers double their cannabis production without Giant colas grown under a system of Fohse A3i expanding their physical footprint or luminaires at Lume Cannabis Co. in Michigan. The facility is undergoing a 500,000 plant expansion adding any other inputs. Choosing Fohse fixtures is an investment in your cannabis business. It takes fewer fixtures to deliver the needed amount of lighting for your crops. HVAC costs will be significantly less as their fixtures operate at a much cooler temperature. The photon footprint of a Fohse fixture is superior to any other comparable grow light. Simply put, you will get much higher and more uniform delivery of PPFD (photosynthetic photon flux density) with a Fohse fixture.

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Wildfires and looting plagued marijuana companies in 2020. In the early days of state cannabis legalization, many marijuana companies had difficulty securing insurance policies. But a number of insurance companies have started offering coverage to cultivators, retailers and other businesses in the cannabis sector. Courtesy Photos

116 Marijuana Business Magazine | November-December 2020

By John Schroyer

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INSURANCE

CLAIMS Tips for cannabis companies looking to get the most out of their business policy after a loss

• Don’t take no for an answer. If you’re confident your coverage requires that a claim be paid, don’t merely accept an initial denial from the insurance company. If necessary, consult with an attorney. • Document everything, including every loss related to the incident, and review your policy to make sure you don’t miss any details. Adding to your claim later is seen as a red flag by insurance companies.

he coronavirus pandemic brought many businesses to a halt this spring. Then, in May and June, a rash of robberies and lootings targeted marijuana companies. In late summer, wildfires began destroying cannabis farms across the West Coast. All that activity has caused a major uptick in insurance claims by marijuana businesses, but the process of getting paid by an insurance company isn’t always easy or straightforward. There are often surprises or fights with insurance carriers who don’t want to pay. And the industry’s federally illegal status only makes the situation murkier. “Most days, as an insurance-coverage lawyer, life is pretty boring. Nobody wants to talk to you. In 2020, I’ve become a lot more popular,” quipped Michael Sampson, a Pittsburgh-based attorney who specializes in insurance issues for both marijuana companies and mainstream businesses. Marijuana Business Magazine queried several insurance experts—including brokers, agents and attorneys who have fought insurance carriers in court—to learn how cannabis businesses can get the most out of their insurance policies when disaster strikes.

Filing an insurance claim can be a lengthy process for cannabis businesses. But experts say following through with a claim is often worth the paperwork and delays for businesses that have endured disasters and major losses. Here are some tips for getting paid:

• Ask your insurance broker or an attorney for help if you’re unsure about how to proceed. They should be able to guide you through the claims process. • Be ready to negotiate with the insurance company. The carrier might try to pay less than the value of some lost inventory or equipment, depending on going market rates. Michael Sampson

‘DON’T TAKE NO FOR AN ANSWER’ The first rule of thumb when dealing with insurance carriers, experts say, is to remember that insurance companies are for-profit businesses designed to make money by collecting more in premiums than they pay out in claims. That means it’s in insurance companies’ interest to look for reasons to deny a claim—even if the claim is valid. “You’re working against the backdrop of an industry that’s disincentivized to pay claims,” said Sampson, who has represented both marijuana companies and mainstream businesses against insurance carriers in court.

Experts say business owners who find themselves in this situation should push back—with a lawyer, if necessary. “Don’t take no for an answer,” said Robert Finkle, a California-based attorney who has dealt with several marijuana businesses’ insurance claims Robert Finkle in court. Finkle pointed out that unnecessary delays in getting insurance claims paid can occasionally be the basis for a bad-faith lawsuit. He and other experts also noted, however, that the claims process can be a

November-December 2020 | mjbizdaily.com 117

NAVIGATING

INSURANCE

CLAIMS

Mission Dispensary in Chicago sends a message to potential looters after being hit May 31. Courtesy Photo

lengthy one—anywhere from months to a year or longer, depending on the size of the claim in question.

DOCUMENT EVERYTHING Two steps should take priority after disaster hits a business: • Document every possible loss. • Immediately review insurance coverage to determine whether a claim is supported by the policy. A good insurance broker—the person who sold you the policy, not the company you are asking to pay your claim—should be able to assist with these steps, said Stephanie Bozzuto, a cofounder of Cannabis Connect Insurance Services in California. “Ask your insurance broker for help if you need help,” she said. “Don’t give

up, and don’t quit. I know it’s lengthy. It’s not a quick turnaround time on big theft claims.” Bozzuto, who chairs the National Cannabis Industry Association’s Risk Management Committee, said she knows the process can be discouraging, particularly for small-business owners. However, she noted insurance carriers are increasingly paying out on marijuana businesses’ insurance policies as the industry matures and as coverage becomes more airtight. The other immediate step is to document as much as possible, which should bolster the strength of your claim when it comes time to justify payment. For instance, any retailer that was robbed should have a log of inventory that was on hand. And if a cultivator is

118 Marijuana Business Magazine | November-December 2020

filing a claim that includes inventory theft, records from the state trackand-trace system can be used as documentation, Bozzuto said. Photos and other documentation also make valuable records, said Patrick McManamon, director at Ohio-based Cannasure Insurance Services. “When you submit a claim, take pictures. Take short video clips and narrate,” McManamon advised, adding that it’s up to the insured business to prove that the insurance carrier should pay the claim. “Understand that the burden is somewhat on you to prove that you had a loss.” To that end, he added, precision helps a lot. “All too often” companies adjust their claims upward after the fact because

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Ask your insurance broker for help if you need help. Don’t give up, and don’t quit. I know it’s lengthy. It’s not a quick turnaround time on big theft claims. -Stephanie Bozzuto

Cannabis Connect Insurance Services

they didn’t do a full accounting of their losses before starting the claims process, McManamon said. Adjusting a claim makes it more dubious in the eyes of the insurance company and can create delays. The documentation and details are linked, he said. “If you send in a half-hearted narrative, you’re not always going to get the best response,” McManamon said. “If you send in an organized and professional narrative, you’re going to get a better look, because they’re going to want to work that one through and see what’s going on.”

BE READY TO NEGOTIATE Another good way to make sure the claims process goes as smoothly as possible is to provide the insurance carrier with solid, verifiable information about the value of the items lost,

said Doug Esposito, a principal with California-based Owen-Dunn Insurance Services. That includes accurate market prices for lost or stolen inventory, he said, because the claims process can rightly be viewed as a business negotiation. “No one is just going to roll over and cut you a check. They’re going to check the market to say, ‘What are those Gavita lights going for today? What’s a wholesale pound (of outdoor-grown marijuana) going for? What is a vape pen with that amount of concentrate going for?’” Esposito said. “This is a business transaction, and there’s going to be a negotiation.” And because it’s a negotiation, companies often have to be patient—even when the claims process can seem mindnumbingly slow. “Take a deep breath and realize this is not going to be a fast process,” Esposito said.

120 Marijuana Business Magazine | November-December 2020

Several insurance experts said there’s no average time frame for how long a claim can take, but Bozzuto and Esposito estimated that fairly straightforward theft claims in the range of five figures might take only a few months. If there’s physical injury involved in the claim, however, or if the insured amount is worth six-figures or more, then the process can drag out for at least a year. “I’ve got a $250,000 claim right now on a basic fire that’s been going on for a year,” Esposito said. “It’s been a slugfest just to keep the thing moving.”

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

BestPracticesInExtraction | Bart Schaneman Experts say discerning cannabis consumers are looking for more than just potency in their extracted products. Courtesy Photo

Getting the Best Price for Extracted Products Educating budtenders, nailing retail prices and being selective about store placement are components to netting the most value

nce extraction is complete and finished products are made, there’s still one important step for cannabis-extraction companies to execute: Selling their manufactured goods to consumers. Marijuana firms looking to sell their concentrates and infused products for top dollar should consider: • Getting samples into the hands of the right budtenders and making sure they understand what they’re selling. • Pricing cannabis extracts and infused products correctly. • Placing products with the best stores—not every store—and in creative ways. “The X-factor is getting creative,” said Case Mandel, founder of Humboldt,

California-based Cannadips, which makes tobaccofree, CBD-infused pouches. “You have to create something authentic, and you have to be dynamic.”

Case Mandel

Budtender Strategies The first point of contact between product manufacturers and the consumer is often the budtender. Getting sales associates to recommend one brand over another requires a belief in the product—and maybe some incentives. “Getting to those people and educating them is key,” Mandel said.

122 Marijuana Business Magazine | November-December 2020

Extraction equipment is expensive. In order to recoup costs, companies need to sell their products for the best possible price. Businesses looking to achieve that goal might want to consider: • Offering samples to budtenders and considering sales rewards to those who promote the brand. • Understanding pricing trends in the market and adjusting costs accordingly. • Finding the right stores to sell products and offering decorations or other materials to make the displays attractive.

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BestPracticesInExtraction | Bart Schaneman “They’ll become beacons handing out educational for what you’re trying materials. to do.” “Doing that education In California, after they’ve had an budtenders are often opportunity to sample our mature and well-versed in product resonates more,” the products available, so he said. quality often wins out, he Barsoom also believes Derek Cumings added. in sales incentives. For But Mandel says one contest, the three it’s important to go budtenders who sold a step further: For the most 1906 products example, he suggests received cash rewards. taking the region’s top Price Accordingly 20 budtenders to the While some budtenders company’s facility for a will push a product getaway once a year. A that’s cheap but high in site visit and a weekend Peter Barsoom potency, Barsoom said away will show the sales cannabis consumers are associates how products more discerning, especially in mature are created and serves as a reward markets. for recommending the brand. “People will pay for quality if they At Denver-based Clear Creek Extracts, a subsidiary of edibles, vapes perceive it’s giving them high-quality ingredients from brands they trust,” he and concentrates producer Medically added. Correct, co-founder Derek Cumings Mandel agrees that the extract market believes in persistence when it comes isn’t a war where the lowest price always to giving out samples to budtenders. wins, but he also believes consumers “Sometimes you give away a lot of are price sensitive to a degree. products, then you catch a whale,” he In California, for example, he sees said of getting samples into the right some lower-quality products still hands. “Good product and a good garnering market share. Therefore, his value are the most important things.” goal is to make high-quality products Peter Barsoom, CEO of Denveras affordable as possible. A tin of based edibles company 1906, floods Cannadips retails for around $18. budtenders with samples before Cumings said prices for marijuana extracts and infused products can be fluid, so he recommends staying current on pricing trends by spending time in retail stores and asking for reports from the sales team. “You don’t want to be outpriced, and you also don’t want to give your product away,” he said.

The founder of Cannadips says budtender education is key to sales. Courtesy Photo

Bart Schaneman covers cultivation and extraction for Marijuana Business Magazine. You can reach him at bart.schaneman@ mjbizdaily.com.

124 Marijuana Business Magazine | November-December 2020

Find the Right Store Denver-based edibles company 1906 is selective in deciding which stores to sell to. Many dispensaries haven’t modernized and still look too much like head shops, according to 1906 CEO Peter Barsoom. To spruce things up and help direct dialogue to 1906 products, his team provides retailers with posters and other decorations. “It makes the customer more engaged with the products on the shelves,” he said. Barsoom said it’s important in a large marijuana market such as Denver’s not to oversaturate by selling products in every store. Instead, the stores that sell 1906 products have been vetted and take “serving customers and patients seriously.” Derek Cumings, CEO of Denver-based Clear Creek extracts, agrees brands should be “very selective” in choosing which stores to sell his products. “You don’t want to be sold in 20 stores if you can be a constant force at seven or eight stores,” he added. Cumings advocates for making the right relationship within a store—be that with the purchasing manager, store manager or owner. “They have the power to sway all their employees,” Cumings said. — Bart Schaneman

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IndustryPlayers | New Hires & Promotions

Layke Martin

By Omar Sacirbey

Dual Degrees

hen Layke Martin attorney Riana Durrett departed her post after five years as executive director of the Nevada Dispensary Association, the group sought a replacement who had the legal and educational expertise to navigate ongoing regulatory changes to the state’s cannabis industry and help members better understand the market’s compliance rules. An NDA board member contacted Layke Martin, a practicing attorney and the assistant dean for external affairs at the University of Nevada, Las Vegas, law school. At the university, Martin oversaw alumni relations, communications, events and fundraising. She taught courses at the law school and at UNLV’s School of Public Policy and Leadership. Martin, who practiced business litigation for nearly five years with local law firm Marquis Aurbach Coffing, saw NDA as a good fit for her skill set and accepted an offer to become the groupʼs new executive director. Since she started Sept. 8, Martin has been busy working with a new state Cannabis Compliance Board that is soliciting comments on proposed rules about employee training and public companies. As a professor and former dean of external relations, Martin is well-versed in drafting and disseminating educational and informational resources as well as building relationships and organizational infrastructure. She’s now applying those skills at NDA. “My past experience comes in with really strengthening the infrastructure of the organization,” said Martin, who was awarded Young Lawyer of the Year by the State Bar of Nevada in 2015 and recognized in Vegas Inc.’s “40 Under 40” in 2016. “There’s a lot of member demand for compliance topics—everything from inventory control to recordkeeping to packaging and labeling to employment law and HR to security. … Our effort is to promote best practices.”

126 Marijuana Business Magazine | November-December 2020

A look at some recent hiring moves in the marijuana industry

NorCal Tag Team Douglas Cortina stepped down as CEO of San Francisco-based NorCal Cannabis Co., a vertically integrated operator he co-founded in 2014. Cortina will remain with the company as board member and strategic director. Jigar Patel, co-founder and president, and David Hofflich, who most recently served as chief financial officer, were appointed co-CEOs of NorCal. Earlier in his career, Hofflich was a controller Jigar Patel with financial services giant UBS and an auditor at Arthur Andersen. In addition to co-founding NorCal, Patel is president of Jigar Patel Wines, which he founded in 2008.

Connecticut Grow COO Now Also President Rino Ferrarese, co-founder and chief operating officer of CTPharma, one of four licensed medical marijuana cultivators in Connecticut, now also holds the title of president. He succeeds Tom Schultz, who was killed in a bicycle accident in August. Ferrarese and Schultz co-founded CTPharma in 2014.

Baltimore Marijuana Firm Gets Retail Specialist Culta, a vertically integrated cannabis firm based in Baltimore, hired Jonathan Lassiter as its vice president of retail sales. In this role, he will be responsible for direct-to-consumer sales at the company’s flagship dispensary in Baltimore. Before Culta, Lassiter was a sales veteran at Guitar Center for 17 years, rising through the ranks from store manager to district manager at increasingly high-volume stores. In his previous post as district manager, he oversaw 12 music retail locations valued at more than $50 million in Maryland, Virginia and Washington DC. He developed core skills in store design, planograms, inventory assortment, logistics and supply chains.

Cronos CEO Out Cronos Group, an international cannabis company based in Toronto, replaced former CEO Mike Gorenstein with Kurt Schmidt, an experienced consumer packaged goods executive. Schmidt’s appointment was the result of a yearlong search for a “consumer-focused executive who shares the company’s values and can help take us to the next level,” Gorenstein said in a news release. Gorenstein was appointed executive chair of Cronos’ board of directors.

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IndustryPlayers | New Hires & Promotions Schmidt’s resume includes the positions of board member at Campbell Soup Co., CEO of pet food giant the Blue Buffalo Co., global business head of Nestle Nutrition and CEO of Gerber Products Co.

 Shake-ups at the Top at Aurora Miguel Martin was appointed CEO of Edmonton-based Aurora Cannabis. Michael Singer, Miguel Martin who served as interim chief executive since February 2020, stepped down from his temporary role and will remain executive chair. Martin joined Aurora from Reliva, a CBD retail brand headquartered in Natick, Massachusetts, where he was CEO. Martin became chief commercial officer of Aurora in July 2020.

Before Reliva, Martin was the president of Logic Technology, one of the largest manufacturers of electronic cigarettes. He also held the position of senior vice president and general manager of Altria Sales & Distribution. Separately, Aurora and billionaire investor Nelson Peltz parted ways. Peltz signed on as a strategic adviser in March 2019 to help Aurora lock in partnerships and expand internationally, but the company lost more than $2.6 billion (CA$3.5 billion) during the time Peltz served as an adviser. Peltz co-founded New York-based multibillion-dollar asset management firm Trian Fund Management. He is also director of fast-food holding firm Wendy’s Co. and Procter & Gamble.

Another Zenabis CEO Consumer packaged goods veteran Shai Altman in September became

the fourth CEO in two years for Zenabis, a marijuana producer and retailer based in Vancouver, British Columbia. Altman previously served as president of McCain Foods, a Canadian multinational frozen food company. He replaced Kevin Coft, who was interim CEO from December 2019 to August 2020.

New Leadership for Ontario Cannabis Store The Ontario Cannabis Store, the only legal online marijuana retailer for the Canadian province of Ontario, appointed Thomas Haig as interim chief executive officer Haig is the OCS’ second leader to hold the role in one year, following the sudden departure of CEO Cal Bricker in late September. Haig, who recently served as president of Ottawa-based discount

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retailer Giant Tiger, is the third person to sit in OCS’ chief executive office since Canada legalized cannabis two years ago. The OCS declined to answer questions from Marijuana Business Daily about Bricker’s departure or to say whether it is recruiting a permanent CEO. Bricker was appointed interim CEO one year ago while OCS conducted a search to replace his predecessor, Patrick Ford. Change is also afoot at the board level. Kam Va Philip Leong was appointed to a three-year term on the OCS board in August, according to Public Appointments Secretariat records. Leong served on the board of the Alcohol and Gaming Commission of Ontario until this summer. Rajesh Uttamchandani, a former senior leader for Deloitte, was appointed to the OCS board in June.

 California Dispensary Gets New CEO From The Earth, a dispensary company with three locations in California and one in Michigan, hired Courtney Dorne as its new CEO. Dorne joins FTE from Vertical Cos., a Southern California-based cannabis company where she was the president of brands responsible for new business development and edibles product development. Before Vertical, she spent 20 years as president of Fresh and Ready Foods of Nevada, a Las Vegas-based catering company.

Hoban Joins Aurelius Advisory Board Aurelius Data, a Missoula, Montanabased patient data company with a medicinal plant focus, appointed

cannabis attorney Bob Hoban, founder of the Hoban Law Group, to its advisory board. Hoban, whose accolades include being recently chosen as a “Cannabis Law Trailblazer” by the National Law Journal, founded the law firm in Denver in 2008. The firm now has more than 50 attorneys in 17 states and 10 countries.

 CFO Goes From One Phoenix MJ Firm to Another Copperstate Farms Management, a vertically integrated cannabis company based in Phoenix, appointed Brad Kotansky its chief financial officer. Kotansky most recently served as chief financial officer at 4Front Ventures, a publicly

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IndustryPlayers | New Hires & Promotions traded, multistate cannabis operator in Phoenix. Before joining the cannabis industry, Kotansky founded Onist Technologies, a financial technology software firm headquartered in Toronto, and worked as a portfolio manager at GCore Capital and Stratix Asset Management, both New York City hedge funds. Yvonne Brown

 New Director for MJ Tourism Group The California Cannabis Tourism Association appointed Yvonne Brown as executive director. She succeeds founder Brian Applegarth, who becomes board chair. Brown joined the CCTA in 2019 as director of events before moving into the role of assistant director. Brown began her career with the National Black Chamber of Commerce in Washington DC, where she worked with membership, travel and events. She later joined product manufacturer Eufora International, where she spent 15 years managing new product launches and working in the education department. Brown entered the cannabis tourism space as travel and event director for Glowing Goddess Getaway, a women’s cannabis retreat company. In 2018, she launched her own travel and events consulting firm, LCA Travel & Events.

Ag Tech Firm Gets Legal Eagle Agrify, a Burlington, Massachusettsbased developer of advanced and

proprietary precision hardware and software grow solutions for the indoor agriculture marketplace, appointed Richard Stamm as general counsel and corporate secretary. Stamm was most recently vice president of co-op development, general counsel and secretary at Ocean Spray Cranberries. Before Ocean Spray, he was an associate at Dechert, a Boston-based law firm.

Compliance Tech Firm Hires Three Executives Fyllo, a Chicago-based data and compliance company for highly regulated industries, announced three new hires. Joining Fyllo as strategic advisers are Tony Weisman, former chief marketing officer of Dunkin Brands and CEO of international marketing firm Digitas, and Steve Katelman, executive vice president of strategic partnerships at Omnicom Media Group. Fyllo also tapped Craig Robinson, former global head of Powered by We for WeWork and CEO of global corporate services at Newmark Grubb Knight Frank, for its board of directors.

MJ Media Company Lands Editor Seattle-based Jage Media appointed Felisa Rogers as managing editor of MJ Brand Insights, a new digital content platform. Rogers has been published in The Guardian and Salon and has been working in the cannabis industry since 2009.

Leadership Changes at Australis Scott Dowty left his post as executive chair of Australis Capital and resigned from the firm’s board of directors. Australis appointed Harry DeMott as CEO and Rick Cutler as an independent member of the board of directors. DeMott, a board member since April 2019, takes over for Cleve Tzung, who is becoming chief operations officer.

130 Marijuana Business Magazine | November-December 2020

DeMott is a veteran investor and executive chair of Proper, a data-driven cannabis platform. He serves on the advisory board of California-focused consulting firm KinState and is the co-founder of venture capital fund Raptor Ventures I. DeMott also serves as founder and managing partner for Hamerle Investments. Cutler is the vice president of corporate development and portfolio analysis at Helen of Troy, a $1.6 billion global consumer packaged goods company. Australis also appointed cannabis industry veteran Sameer Kumar as an independent member of its board of directors. Kumar was previously president and chief operating officer of Viola Brands, a cannabis MSO.

 Jushi Promotion Jushi Holdings, a vertically integrated multistate operator based in Boca Raton, Florida, promoted Trent Woloveck from executive vice president and co-head of business development to chief commercial director. In his new role, Woloveck will be responsible for growing Jushi’s commercial business strategies and will report to co-president and board member Erich Mauff. In his most recent role, Woloveck focused on wholesale sales in Nevada and product purchasing for Illinois and Pennsylvania retail operations. Woloveck joined Jushi in 2018 from TGS National Holdings, a Denver MSO where he was president. He also served as chief operating officer at American Cannabis Co., another Denver MSO. Hired or promoted someone for a senior-level position? Send a news release or general information to omar.sacirbey@mjbizdaily.com.

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QuestionoftheMonth | End-of-year bonuses By Omar Sacirbey

ach month, we survey a group of marijuana industry executives and ask them an important industry question. We welcome your suggestions for topics. Email us at magazine@mjbizdaily.com. Since we’re approaching the end of the year—and what a year it’s been—we asked cannabis-focused recruiting executives whether companies will cut, maintain or increase end-of-year bonuses.

How wil l the even ts of 2020 ch ang end-of-y e ear bonuses ?

Liesl Bernard

CEO and Founder, CannabizTeam, San Diego With the cannabis industry still in its relative infancy, we don’t see many cannabis businesses pay what would be considered traditional “year-end” bonuses in other, more mature industries. What we are starting to see with increasing frequency for senior staff and management are targeted bonuses agreed upon during hiring that link to preestablished KPIs. For example, we had a recent placement for a VP of operations for a multistate operator focused in the manufacturing sector, where the candidate’s base compensation was in the $200,000 range. The bonus component was 30% of the base salary if the manufacturing division produced a defined amount of oil in a specified period of time and the company achieved target revenue results.

Karson Humiston

CEO and founder, Vangst, Denver While cannabis sales have continued to hold strong throughout the pandemic, access to capital is still very challenging. Many of our clients are being very cautious with their capital right now and therefore decreasing or eliminating end-of-year bonuses in an attempt to preserve cash. That said, many of our clients are offering additional stock options instead of year-end bonuses.

Kara Bradford

CEO and founder, Viridian Staffing, Seattle We have clients who have fared quite well in the current environment and ones who have struggled. So it really comes down to how well the company has performed in the past year, how much money they have in the bank and their performance forecast for the coming year. Firms that are doing well, are well-capitalized and/or expect to continue doing well are wisely incentivizing their best talent to stay by paying bonuses. Those who are faring poorly, have a less optimistic view of the coming year or are simply undercapitalized are more reluctant to pay bonuses this year, putting them at greater risk of losing talent to companies that can promise better incentives.

132 Marijuana Business Magazine | November-December 2020

MarketAtAGlance | Maine After the COVID-19 pandemic delayed the launch of adult-use marijuana in Maine, the state finally opened its doors to cannabis sales in October. Sales neared $100,000 on Day One, even as the new market was beset by supply issuesâ&#x20AC;&#x201D;a common problem when recreational programs have launched in other markets. Marijuana Business Daily projects that adult-use sales in Maine could reach $315 million by 2024. Maine had eight active adult-use retail licenses when sales began, but only six retail stores were open on launch day. â&#x20AC;&#x201C; Jenel Stelton-Holtmeier

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NotableQuotes | Insightful Industry Observations

The thought is that the Northeast is the new frontier right now. Companies are looking for locations, putting together teams. The barrier to entry (in Vermont) is low. Real estate prices are cheap. – Andrew Subin

Co-founder of Vermont Cannabis Solutions in Burlington, on the potential business opportunities that will be available in the state’s newly approved recreational marijuana market. Source: Marijuana Business Daily

There’s already a flower shortage in the state as far as (medical marijuana) goes. With adult use … it’s going to take quite some time. I think we’re looking at, who knows, six to 18 months of having supply issues when it comes to flower.

– Matt Bayliss

(Don’t expect to recoup the full expense of real estate improvements) unless you find a company with the same business model as you. … You’ve spent money on improvements, but those are yours. It might not be what a buyer would choose to put in there. So it’s not worth a 1:1 ratio on a cost basis.

– Bianca Gilbert

Founder and cultivation director at licensed cultivator Gele in South Portland, on the supply issues encountered by Maine’s cannabis businesses when recreational sales began Oct. 9.

A real estate agent with Colliers International in Vancouver, British Columbia, on the disconnect between what cannabis businesses would like to sell their greenhouses for and a realistic price point.

Source: Marijuana Business Daily

Source: Marijuana Business Daily International

138 Marijuana Business Magazine | November-December 2020

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