By Landra DeLoach

Spring is a time of renewal, growth and planting. While many gardeners focus on traditional crops, there is a growing community of cannabis enthusiasts who are also embracing the opportunity to cultivate their own cannabis plants.

Research from New Frontier Data reveals that approximately 3 million people worldwide grow their own cannabis at home, resulting in a staggering yield of approximately 11 million pounds of smokeable flower each year. This number is projected to reach 15 million pounds annually by 2030. Amidst all the excitement around planting and growing, it is essential not to overlook the indispensable foundation of all cannabis plants: the seeds.

The Power of Cannabis Seeds

Affordable and versatile, cannabis seeds provide growers with the ability to cultivate specific strains tailored to their health and wellness needs. These seeds are typically the size of a peppercorn, characterized by an ovular shape tapering to a pointed end. While seeds can vary in color and striation, they typically exhibit a brown hue. Unfertilized seeds, on the other hand, appear off-white and are considerably smaller in size.

Economic Impact

These tiny powerhouses enable growers to cultivate customized strains, while also contributing to the economic growth of the global seed market.

The global cannabis seeds industry was valued at $1.3 billion in 2021, according to Allied Market Research. Experts predict that this figure will surge to $6.5 billion by 2031. Notably, North America accounted for more than 80 percent of the global seed market in 2021.

Benefits for Home Growers

According to New Frontier Data, 70 percent of home growers purchase seeds and cultivate cannabis for the sheer enjoyment of the process while 52 percent find it to be a convenient option. In addition to these advantages, numerous research studies highlight the multiple health benefits of growing one’s own crops, including reduced stress levels, decreased anxiety and increased exposure to the outdoors. Some innovative chefs have even begun incorporating cannabis seeds into their culinary creations, further expanding the versatility and appeal of these seeds.

Seed Safety Considerations

Given that cannabis seeds form the foundation of the entire cannabis industry, it is crucial to understand the various options for obtaining them. One increasingly popular method is through online seed banks, such as Rocket Seeds. However, it is important for those new to purchasing seeds online to thoroughly research the legalities surrounding these transactions. Cannabis seeds are subject to legislation similar to other cannabis products such as flower, concentrates and edibles. The legality of purchasing seeds varies depending on the state in which one resides. It is vital to check local legislation before making any decisions. In states where adult use cannabis is legal, buyers only need to be 21 years or older to order seeds online. Conversely, in states where adult or medicinal use is not permitted, purchasing seeds online remains completely illegal.

Purchasing Seeds Online

Selecting a reputable online seed bank is critical. Ensure that the chosen seed bank has positive customer reviews, offers quality customer service and provides germination guarantees. Researching the available strains, payment options and shipping policies is also essential. It is advisable for beginners to start small by purchasing only a few seeds at a time. Prior to planting, conducting thorough research is necessary, as there are numerous variables to consider and a steep learning curve to navigate. Fortunately, abundant resources are available to assist in this journey. For example, we offer valuable advice on getting started. Additionally, individual seed manufacturers, as well as online resources and apps like Seedtracker, provide guidance and support.

Continued Growth

The U.S. legal cannabis market is projected to exceed $31.8 billion in annual sales by the end of 2023, according to leading cannabis research firm Brightfield Group. Furthermore, they anticipate that within five years, the market will surpass $50 billion in annual sales. Amidst this flourishing industry, it is important to recognize that seeds form the backbone of this expansive market.

As the cannabis industry continues to thrive and expand, it is crucial to acknowledge the fundamental role played by seeds. These tiny powerhouses enable growers to cultivate customized strains, while also contributing to the economic growth of the global seed market. By recognizing the benefits of growing one’s own cannabis and taking proper precautions when purchasing seeds, individuals can partake in this exciting and rapidly growing industry while savoring the rewards of their own harvests.

May 3, 2023

Facing Cybersecurity Risk? Here are 6 Ways to Minimize it.

By Brian J. Schnese

No Comments

The cannabis industry is the latest target for cybercriminals. Why? Because many cannabis operations employ less than 100 workers and few are equipped with sophisticated IT systems and knowledgeable on-staff IT personnel, so they are often easier to exploit.

Add the all-cash nature of the business, along with the large amounts of protected health data and personally identifiable information medical dispensaries may store and the industry’s shift toward operational automation to increase yields and lower labor costs and you’ve got an industry that’s extremely vulnerable and a prime target for cyber extortion.

Take the cannabis businesses in Ontario that lost millions after a local distributor was hit by a cyberattack and was incapable to process or deliver orders to local retailers. In another cyberattack, hackers stole $3.6 million that an Australian medicinal cannabis firm intended to send to an overseas contractor.

A still prevalent tactic is for hackers to target workers with email-based phishing scams that enable the installation of malware or ransomware to obtain protected health information to sell or lists of high-profile clients to extort.

While there’s a lot to fear and be on the alert for, there’s also a lot that cannabis businesses can do to both reduce their risk of an attack and proactively protect themselves.

Six hallmarks of a strong cyber-defense program:

Assess the risk. One place to start building a comprehensive approach to cybersecurity is to conduct an appropriate cyber vulnerability or risk assessment of your cannabis business. This exercise can reveal gaps, but it also helps prioritize your effort and develop a vision for your goal state.
Train and test. Train employees on the importance of cybersecurity. Make sure employees undergo phishing training and conduct refresher courses at least annually. Then, test them. Are employees retaining the information shared in training? Send simulated phishing emails and track performance to determine if training hits the mark.
Secure the perimeter. Safeguard your corporate networks and internet connections by encrypting information and using a firewall. If your employees work remotely, consider use of a Virtual Private Network (VPN) to allow them to safely connect to your network from out of the office.
Engage protective tools. In addition to using antivirus software and keeping all software updated and patched, multifactor authentication (MFA) and endpoint detection and response (EDR) are crucial for maintaining a secure network. Most carriers require MFA for remote network access, on email, and to protect privileged user accounts. EDR monitoring of devices connecting to the network is also increasingly a minimum requirement for insurance coverage.
Develop a backup strategy. A solid data backup strategy makes companies less susceptible to ransomware attacks by allowing organizations to restore operations. Perform frequent backups — every day if possible — and consider leveraging cloud solutions along with storing backups in an immutable state off-site or off-network.
Build an incident response plan. Cannabis companies should have a plan for responding to an attack, a system for validating what happened and the resources to remediate the issue.

What if a breach occurs?

Even with a great incident response plan in place, the road to recovery from a cyberattack is a complex and rapidly evolving landscape. Should we communicate with the threat actor? Should we pay the ransom demand? How do we capture forensic evidence? What are the laws guiding notification of impacted employees or clients? When an organization has armed itself with a cyber insurance policy, they not only transfer much of their risk, but they often gain access to a carrier panel of specialized response providers that include breach coaches, forensic investigations firms and privacy attorneys.

In addition to leveraging the specialized post-breach expertise offered by carriers, insureds should also consider familiarizing themselves with and leveraging any pre-breach resources provided, which often include no-cost external vulnerability scans, employee awareness training and discounted technical security solutions.

March 21, 2023

The Science of Cultivating Cannabis: Tips for a Thriving Grow Operation

By Nathan Johnson, Ph.D.

No Comments

Creating a healthy cannabis growing environment based on the science behind growing top-notch, medical-grade cannabis is essential for producing consistent results, assuming you start with quality genetics. Before speaking about the environment, it is necessary to highlight that quality and consistency has to first start with quality plant material. In this article, we will explore six key factors that make for a healthy cannabis growing environment and how regular testing allows growers to achieve consistency and quality. Keep in mind, optimizing these factors to the cannabis strains and environment they are grown in is a must.

Lighting

Lighting is the most important factor in creating a good cannabis growing environment. Cannabis plants require specific types, wavelength and exposure times to grow and produce high-quality flower. The two main types of light that are essential for cannabis growth are blue and red spectrum light where blue is primarily dedicated to vegetative growing and red for flowering. The exposure time is necessary for non-autoflower cannabis to maintain a vegetative or a flowering plant.

To ensure that the plants are receiving the right type and amount of light, growers can use specialized grow lights that provide both blue and red spectrum light. They can also monitor the intensity and duration of light using light meters and timers. Regular testing of the light spectrum and intensity can help growers fine-tune their lighting setup for optimal plant growth and flower development.

Temperature

Temperature always needs to be considered when creating a strong, healthy cannabis growing environment. Cannabis plants prefer a warm, humid environment, but temperatures that are too high or too low can negatively affect plant growth and flower development. The ideal temperature range for cannabis growth is between 70-85°F (21-29°C) during the day and between 58-70°F (14-21°C) at night.

To maintain a consistent temperature in the growing environment, growers can use temperature-controlled grow rooms or HVAC systems. They can also monitor the temperature using digital thermometers and adjust the temperature as needed. Regular testing of the temperature can help growers identify and address any temperature fluctuations that may affect plant growth and flower development.

Humidity

Like other factors that require precision, humidity needs to be carefully dialed in when creating an optimal cannabis growing environment. Cannabis plants prefer a humid environment, but too much humidity can promote the growth of mold and mildew. On the other hand, low humidity can cause the plants to dry out and become stressed.

To maintain a consistent humidity level, growers can use humidifiers and dehumidifiers in the growing environment. They can also monitor the humidity level using a hygrometer and adjust the humidity as needed. Regular testing of the humidity level can help growers identify and address any issues that may affect plant growth and flower development.

Airflow and Ventilation

Proper ventilation helps regulate temperature and humidity and prevents the buildup of carbon dioxide, which can be harmful to the plants. It also helps prevent the growth of mold and mildew. To ensure proper airflow and ventilation, growers can use fans and air ducts in the growing environment. They can also use carbon filters to remove odors and other contaminants from the air. Regular testing of the air quality can help growers identify and address any issues that may affect plant growth and flower development.

Nutrients

Nutrients are a non-negotiable for cannabis growth and flower development. Cannabis plants require a balanced supply of macronutrients such as nitrogen, phosphorus and potassium, as well as micronutrients such as calcium, magnesium and iron.

To ensure that the plants receive the right amount of nutrients, growers can use nutrient-rich soils or hydroponic systems. They can also supplement with fertilizers and other nutrients. Regular testing of the nutrient levels in the soil or growing medium can help growers adjust their nutrient regimen for optimal plant growth and flower development.

Pest and Disease Management

Cannabis plants are susceptible to over 90+ pests and diseases, including insects, mold, mildew, viruses and viroids commonly infected through the environment by touch, air, water and nutrients. The most common are spider mites, aphids, powdery mildew, botrytis, fusarium and hop latent viroid. It is estimated by the United Nations that 20% to 40% of total global crop loss is due to improper pest and disease management. The cannabis growing environment is no different.

Damage from whiteflies, thrips and powdery mildew could be prevented with an appropriate IPM

While lighting, humidity, air flow and nutrients are key aspects for a cannabis growth environment, the most common overlooked aspect of growing is proper pest and disease management. Cannabis plants are susceptible to a variety of pests and diseases, which can have a significant impact on plant health and crop yields. To take optimizing a cannabis growing environment one step further, here are five essentials for developing an effective pest and disease management setup.

Prevention

Prevention is the first and most important step in pest and disease management. Growers should always take steps to prevent pests and diseases from entering or infesting the growing environment in the first place. This can be done by quarantining new plants or clones, using clean equipment, sterilizing the growing area, and monitoring plants for signs of pests and diseases through both visual inspection as well as testing.

Some diseases such as those caused by viruses and viroids, require molecular based testing to identify. Growers should quarantine and test any new plants or clones before introducing them to the growing area. This can help prevent the spread of pests and diseases from infected plants to healthy ones. Growers can also use biological controls, such as beneficial insects, to help prevent pests from infesting the plants. These insects can help control pest populations by preying on them or interfering with their reproduction.

Early Detection

Early detection is key to preventing an entire crop from being infected and scrapped. Growers need to regularly inspect their plants for signs of pests and diseases, including yellowing leaves, discoloration, spots and unusual growth patterns. Early detection can help prevent the spread of pests and diseases and limit the damage they cause, not to mention saving a business’s bottom line!

Integrated Pest Management

Integrated Pest Management (IPM) is an approach to pest and disease management that involves a combination of preventative measures, biological controls and chemical treatments. IPM aims to reduce the use of chemical pesticides, which can be harmful to the environment and human health.

IPM involves regular monitoring of plants for signs of pests and diseases, using biological controls to prevent and control infestations, and only using chemical treatments as a last resort. Chemical treatments should be used sparingly and only when necessary, and growers should follow all safety precautions when using them.

Sanitation

Taking the necessary precautions to ensure all equipment used throughout a cultivation is properly sterilized will save growers from countless headaches. Growers should keep the growing area clean and free of debris, which can provide a breeding ground for pests and diseases. They should also regularly sterilize equipment and growing containers to prevent the spread of pathogens.

Record Keeping

Record keeping is essential for effective pest and disease management in the growing environment. Keep detailed records of all pest and disease issues, including the type of pest or disease, the severity of the infestation, and the treatments used. Cultivators, you will thank yourselves later! This will help identify recurring issues and develop effective pest and disease management strategies.

While there are key aspects of creating a healthy cannabis growing environment, the most common overlooked aspect of growing is on proper pest and disease management, which involves prevention, early detection, integrated pest management, sanitation, quarantine, and record keeping. By taking these steps, growers can help ensure the health and vitality of their plants, produce high-quality cannabis that consumers want and preserve their business’s bottom lines.

January 30, 2023

3 Benefits of Conducting Genetic Tests on Your Plants

By Angel Fernandez

No Comments

Many growers may wonder why it’s important to get their plants genetically tested, but the truth is that genetic testing can make growing a lot easier. Genetic analysis in plants can give a wide range of results that can help scientists solve everyday problems in plant cultivation, such as detecting diseases and identifying important traits in plant species.

Currently, three of the most important benefits that genetic testing can give growers are the ability to detect diseases, identify the gender of their plants and control the quality of their crops.

Pathogen detection

Pathogen infections can be difficult to detect and by the time symptoms are obvious, it may be too late and the rest of the crop is already contaminated. This is why DNA tests are a valuable tool for the early detection of diseases in plants. Even though plants reproduce through cloning, it’s crucial to make sure the mother plant is healthy before proceeding, as 100% of the genetic material will be transferred to the clone, including any diseases the mother plant may have, such as a virus.

There are a few ways to detect pathogens in plants, including detection and symptomatology, serological techniques for viruses and microbiological techniques for fungi and bacteria. However, another effective method is detection tests using genetic material, also known as molecular methods. These tests involve screening the plant’s genetic material for any alterations, such as the presence of the pathogen’s genetic material. These tests are particularly useful as they provide accurate results when at least part of the pathogen’s genome sequence is known. This is important as many of these genomes have yet to be fully studied and there may be new unknown variants.

Tobacco Mosaic Virus symptoms can include tip curling, blotching of leaf mosaic patterning, and stunting

The reliability and effectiveness of genetic and molecular tests are due to the use of DNA as the starting material for pathogen detection. DNA is a stable molecule that can withstand adverse conditions, such as high temperatures or low humidity. Additionally, this technique can still be effective even when the samples used are very damaged or necrotic. Due to these qualities, genetic testing is considered one of the best methods for pathogen detection.

In summary, genetic testing is the most effective technique for pathogen detection as it is highly specific, requires a small sample and provides accurate results in a short period of time.

Plant gender detection

In the case of the cannabis plant, it is naturally diploid and dioecious, meaning that it has separate male and female reproductive structures, and each one contributes a chromosome during reproduction. However, there may be mutations that result in hermaphrodite plants, which have both male and female reproductive structures.

Growers who propagate their crops through seeds must wait several weeks to identify the sex of their plants, as their dioecious nature makes it difficult to recognize the plant’s sex in the early stages of growth. This can be time-consuming and resource-intensive. However, thanks to genetic testing, it is possible to determine the sex of a plant long before it reaches the flowering stage.

The sex organs on a Cannabis plant identified.

The determination of the gender of a dioecious plant is influenced by a sex chromosome system. Male plants have an XY sex chromosome system, known as heterogametic, while female plants have the XX sex chromosome system, known as homogametic.

To identify the sex of a plant through genetic studies, DNA or RNA-based molecular markers are used with a tissue sample. These markers typically look for the male trait “Y” in the plant, as the trait “X” is present in both male and female plants. In this way, the presence of the Y chromosome can be used to confirm the plant is male, and its absence can be used to confirm that it is female.

Crop quality control

The same species can often present one or more varieties, and although they may have physical features that distinguish them, it is not always possible to identify them with the naked eye. Beyond physical characteristics, genetic traits can have considerable differences.

Molecular identification is a very accurate tool for identifying varieties

Different varieties of cannabis have been widely cultivated and crossbred, making it possible for plants to have very similar physical traits, making it difficult to identify the variety being cultivated. This is why molecular identification is a very accurate tool for identifying varieties in cases where there is uncertainty about their identity.

Additionally, some plants can produce lower or higher amounts of cannabinoids due to their genetic nature or small mutations that occurred during growth. This is how there are plants with the advantage of having genes that code for high production of THC or CBD. These outstanding traits can be detected through the selection of characteristics using analysis of molecular markers that indicate the presence of these genes in the plant, or that detect the genes responsible for synthesizing these substances and determine their respective quality.

These procedures are performed using a tissue sample from the plant and using DNA as a starting material for testing, which provides information on the genetic traits of interest and validates their function.

January 24, 2023

Soapbox

Attracting Investment: How Cannabis Companies Can Best Position Themselves

By Joe Madigan

No Comments

Remember those heady days of the Green Rush a decade ago, when markets were small and it seemed everyone had a chance? Now it’s more of a mad rush to get some green in the form of investment capital.

The majority of states in the country now have some type of legal cannabis market. Businesses in those states operate in spite of regulations that are restrictive, confusing and make it very difficult to make a profit. Meanwhile, heavy tax burdens, differences in enforcement techniques and varying degrees of oversight are other factors that influence bottom lines in the cannabis industry.

Saturated markets are giving businesses trouble when it comes to their bottom line

Inflation also continues to be a prominent force across world markets. Sales of cannabis products have fallen as consumers adjust to inflation and post-COVID supply chain issues that are causing higher prices on necessary staples like food and gas. An oversaturation of cannabis flower is becoming a perennial problem in some states and another factor causing industry distress.

When cash flow slows to a trickle, companies of all sizes seek out investment funding to keep their momentum. But catching the eye of an investor group requires more than just sticking your hand out.

What Attracts Potential Investors?

A company is best positioned to attract those interested in cannabis investment opportunities when it appears serious about its growth plans. That means being well positioned with a solid upper-management foundation and so much the better if there’s an advisory board in place too. A company built with a diverse group of talent—ideally from consumer packaged goods companies—presents an attractive opportunity for investors.

Talent from the CPG space can help attract investors

Top-quality and industry savvy finance employees who maintain sound financial books and establish a solid banking arrangement are also important. If the company’s financial scenario is robust enough to provide confidence in case of an audit and the books are in good shape with auditable METRC logs investors will be far more inclined to put money on the line.

A cannabis company with full inclusion (or seed to sale) is often a smart choice for investment. The vertical integration of cultivation, processing/manufacturing and retail allows them to sell their own products while also stocking other brands’ products on the floors of their dispensaries. If their products are respected and the brand is held in high regard, even better. Similarly, a cultivation enterprise that can grow crops for multiple brands can also be very attractive. The ability to pivot and adjust production to reflect the market and consumer demands indicates a strong business foundation.

Despite the current headwinds and saturated markets, other chances for growth exist. When a local municipality finally decides to “opt-in” to adult-use cannabis sales, there’s opportunity for both established brands and startups. It’s a matter of being ready for those opportunities and having a plan to leap in whenever new licenses become available.

What Businesses Will Struggle to Attract Investment?

Culture is key here. Poor employee relations and weak cohesion across departments are indicative of deeper problems. Do people actually want to work for the business? Do they feel supported by human resources? A company with underdeveloped or non-existent workers’ compensation policies and a management team that is not respected by its employees is not going to look good in the eyes of potential investors.

Non-diversified cannabis businesses are also at a major disadvantage when seeking investors. Cultivators of one type of product or service are locked into a single operation geared to do one thing. Any changes to market whims or problems with the supply chain can wreak havoc on a business based around a single product.

Stick to Business Basics

The cannabis industry is unique, but the basics of running a business well enough for success still apply. Strictly adhering to the traditional methods that any successful organization follows is extra important in cannabis. Businesses that are active in their community and make a real effort to be involved will be held in higher regard by investors. They want to see cannabis businesses that are not just setting up shop to make a quick buck, but are dedicated to bettering their community. That indicates a relationship with customers that involves mutual respect and promotes business longevity and financial stability.

January 18, 2023

Compliance as a Revenue Center: Banking & Cannabis, More Similar Than You Think

By Kevin Hart

No Comments

Have you ever been to the DMV, only to be turned away because you didn’t have the countless forms of identification needed? Sometimes it feels like no amount of ID or proof of residence is enough, whether it’s your 2nd grade report card or an electric bill from 25 years ago.

That feeling is what it’s like for anyone working in compliance; regardless of industry. Banks are no different. They need to possess compliance documents such as Consolidated Reports of Condition and Income and other Federal Financial Institutions Examination Council (FFIEC) reports that work like the laundry list of documents you need to get a driver’s license or get your car registered.

The same can be said for newly licensed and legal cannabis companies. They often need state and local inspection documents, federal background checks and a list of other documents that make a CVS receipt look minuscule in comparison.

Historically, across all industries, the whole process of gathering and providing these sorts of documents can turn into a bit of a charade. Many companies do the bare minimum to check the compliance box and achieve certifications. Various teams and stakeholders try to skate through the compliance process by providing answers that reflect what they think the enterprise customer wants to see (vs. the reality).

In order to achieve long term growth, financial institutions (FIs) and cannabis companies alike need to start executing compliance plans. FIs are always seeking new growth and revenue opportunities, and cannabis companies are constantly under the scrutiny of regulators. Identifying new solutions that can help companies grow quickly while also maintaining compliance should be an essential part of the roadmap.

Financial Institutions and Cannabis

Many think that financial institutions and cannabis businesses would be on opposite ends of any spectrum. Banking is a mature and established industry, while legal cannabis is a new, fast moving and constantly evolving space. So, on one side, there is a risk averse fiscally conservative and traditional business model, and on the other side is an industry that is outside of the mainstream.

Let’s look at this perception from a different angle though. What is true is that both industries are highly regulated and must comply with the rules placed upon them by regulators; and if their house isn’t in order, the consequences can be disastrous (Read: Massive fines or even losing the ability to operate). CRBs and FIs deal with the security and dual control of inventory, and making sure customers are properly identified and of legal capacity to conduct business. In most cases, both are small businesses within their respective communities. ‍

Moreover, each of the industries are forced to navigate nearly-constant regulatory change, making the act of complying with applicable regulations a moving target. For most of these types of businesses, regulatory compliance is cited as one of the largest (and most expensive) challenges they face in day-to-day operations.

Compliance as Revenue Protection

When financial institutions make the decision to offer services to the cannabis industry, they naturally look at the market opportunity to determine whether the effort associated with the increased compliance obligations outweigh the potential benefits. Traditionally, compliance is viewed as a cost center, but in reality, it’s a revenue protection center. As the old saying goes; “an ounce of prevention is worth more than a pound of cure.” Compliance is that prevention.

Failing to fully comply and meet regulatory compliance standards can cost organizations billions. Having a trusted system of compliance established should not be looked at as a cost-sucking measure for businesses, when it really is negligible when the cost of getting it wrong is far more substantial. Setting up a truthful and transparent compliance program isn’t just the right thing to do, it also protects revenue.

As the cannabis industry continues to grow, navigating around pain points is becoming increasingly expensive for the companies participating in it, many of whom are still struggling to turn a profit. Specifically, an IDC forecast shows global revenue from GRC solutions growing from $11.3 billion in 2020 to nearly $16.2 billion by 2025. And the average business hires and spends upward of $50,000 to $200,000 on consultants to manage compliance. It’s not uncommon for companies to dedicate five to 10 people working on compliance every week for hours and months on end.

Many in the banking industry are worried about forging into a stigmatized stream of revenue like cannabis, but with the right compliance solutions in place, they can have peace of mind. These solutions guarantee that revenue from cannabis is done legally by analyzing where each dollar came from, and denying those that don’t meet the minimum criteria. Having visibility into cannabis-related business (CRBs) accounts that do the enhanced due diligence is the only way to operate.

By implementing purpose-built compliance management solutions, financial institutions are able to unlock new revenue streams and scale cannabis banking operations. Meaning that as cannabis continues to gain mainstream momentum, and becomes less scrutinized locally and federally, these FIs that take part will be ahead of the curve.

Looking Ahead

With recent movement towards legalization in the House, cannabis investors are optimistic about the industry’s future. So how can the cannabis market overcome these hurdles and remain highly profitable?

To start with, CRBs must have greater access to accredited financial institutions like banks and credit unions. Owning bank accounts, obtaining credit cards, and applying for small business loans is essential to growth. Providing CRBs with access to proper financial support and compliance control is crucial for the cannabis market to continue to thrive.

Federal legislation such as the SAFE Banking Act is currently thought of to be the silver bullet that will open the floodgates for CRBs and FIs to work together. But in reality, this is a myth, as the SAFE Banking Act will simply make the current compliance rules stricter.

To be a first mover FI in your area, businesses must start by implementing a scalable, verifiable cannabis banking program. The real customers and financial opportunities are out there, and are even greater than what you might have modeled given the growth of the industry. The ability to do this today is real.

January 4, 2023

Soapbox

Investment Strategies for Entering the European Cannabis Market

By Niklas Kouparanis

2 Comments

For U.S. venture capitalists (VCs), the burgeoning European cannabis market provides opportunities to break into the industry on the heels of adult-use legalization. Germany has set its sights on implementing a recreational market by 2024, and the country, along with several other European Union (EU) countries–Malta and Luxembourg–came together in September 2022 to draft a joint statement on why the EU needs a new approach to cannabis use for adult-use production, sale and consumption.

In October 2022, Germany took further steps to solidify its plans for legalization further when its Health Minister Karl Lauterbach presented a cornerstone paper on planned legislation to regulate the controlled distribution and consumption of cannabis among adults. Such actions have signaled to both the EU and the world at large that cannabis legalization in Germany is imminent, and the country is championing the new age of cannabis policy.

With the new German cannabis market soon to be on the horizon, both foreign and domestic VCs are considering how to best leverage investment opportunities into existing cannabis companies within the current medical-only market that will transcend into adult use. For U.S. investors, it’s important to do their due diligence to find the company that will transcend into the next progression of cannabis policy. In addition, European cannabis companies must do their own meticulous research when it comes to aligning with investors to meet both their financial and business goals.

How U.S. VCs Can Evaluate Investment-Worthy European Cannabis Companies

As with any investment, VCs benefit from researching the company and market they are planning to invest in. Regarding the company of interest, it’s important to examine which part of the cannabis market the company is serving: growers, retailers, ancillary products, service providers and biotechnology companies all exist as potential investment options within the space. An investor should look into a company’s annual revenue, evaluating whether it has increased, remained steady or decreased over time. Revenue growth is often provided on a company’s income statement.

In addition to making sure they have a thorough understanding of the business model and its value proposition, investors should also familiarize themselves with the company’s management team to make sure that they are knowledgeable and experienced in both running a company and the cannabis industry. For those interested in entering the German market, VCs should consider the businesses that are currently key players in the country’s medical cannabis industry and that plan to expand their services into the adult-use sector once legalization comes into play.

For example, Tilray, founded in 2014, was one of Canada’s first licensed medical producers. When Canada legalized adult-use cannabis several years later, in 2018, Tilray was one of the companies that successfully transitioned to expand its market share in Canada’s medical to the adult-use cannabis industry.

Another consideration for VCs is the reputation of the business and its leaders. Investors should seek out those who have become authorities within the industry and the movers and shakers who are providing key insights into the market. These business leaders should be front and center, discussing everything from current operations and compliance to cannabis policy and legislation to new endeavors and growing their businesses. With recreational cannabis legalization being a completely new endeavor for the EU, it is important for leaders within today’s European medical space to be visionaries for the next phase of cannabis legalization and be guides for creating regulations for this new market to be safe, sustainable and scalable.

In addition to executive teams, VCs should check if the business is meeting the current marketplace’s expectations and is ready to adapt and evolve as needed. This means that the company has access to a steady supply of high-quality cannabis at an affordable price and access to consumers (medical patients) and potential consumers. With adult-use legalization soon to be a reality in Germany, investors must consider which players in the medical-only market will be able to not only survive the transition but grow to become leaders in Germany’s new recreational market and within the EU as a whole.

What Do European Companies Look For in Terms of U.S. VCs

Just as VCs must find the right fit for them in terms of investments, cannabis companies must also align with investors that help them meet their financial and business goals. For cannabis companies, many seek to align themselves with VCs experienced in consumer, technology, and healthcare investments. While there are benefits to working with a VC with a cannabis background, companies should not deter investors who do not meet those specific criteria, as the cannabis market is still a fairly new and ever-transforming industry. In light of this, it’s important that investors approach opportunities with an open mind for both the industry’s current state and its potential.

european union states — The European Union

As with most investments, both VCs and companies should be prepared to agree to a term sheet, a document that outlines the relationship between the investor and the business. An ideal investor would need to be supportive, well-connected, and add value by providing relevant business knowledge. While some investors seek a more hands-on role, in most cases, the VC’s support will not be equal to the business’s micromanagement or control of its day-to-day operations. Generally, those responsibilities would remain with the company’s executive team.

As an investor, it’s important to be supportive of the business; be a cheerleader for the company when things go well, and lift up the business when challenges occur. In addition, offering a network of referrals and strategies to excel is key to being a good asset to the business. Also, having a diverse portfolio of companies with synergistic opportunities can be very beneficial to growing cannabis businesses.

A question many investors ask before entering the space is how much in assets they should have on hand to be considered an eligible investment size. Typically, this depends on the business and its financial needs. Small profitable cannabis businesses that want additional financing may be able to secure a bank loan, if possible, in their home countries or seek a seed investment-focused VC for some capital. Leaders in Germany’s current medical-only market are seeking investors, both from the U.S. and abroad, to partake in Series A/B funding, seeking financial partners that can help them reach a goal of $20-80M USD.

European cannabis companies are within a high-growth market, so U.S. VCs looking to enter through investment do not have to go through a private equity firm. An investor can approach companies through networking or direct outreach. It is also important to note that investors do not have to convert their assets from USD to EUR, as it is done automatically when making investments. For the first time in 20 years, the USD and EUR are about equal, so now is a great time for U.S. investors to consider making the leap into European cannabis.

December 12, 2022

2023 Dispensary Design Trends

By Melanie Coddington

No Comments

This year we have seen some awesome evolution in the design industry. Retail cannabis design is leading the way. Here are some trends to keep an eye out for as we approach the new year and look at the artistic elements that are elevating the cannabis retail experience.

Bold Color

Goodbye all white Apple store. Hello bright colors of the rainbow. Design pioneers are tired of the safety of neutrals. Pattern mixing, bold use of colors, lights and art that blur the lines between ‘wildly tacky and holy cow that’s amazing.’ We’re not talking about a few fun pops of color; we’re talking full walls of color, bold displays and fixtures. Cannabis isn’t for the meek and it’s so exciting to finally see it reflected in design.

Experiential Retail & Sensory Immersion

The new vision for cannabis dispensaries (specifically in adult use locations) is one that absolutely combines multiple sense-touching points within the space and flexes the space to include adjacent hybrid areas. This is mostly driven by the Gen Z consumer. A quick example would be if the dispensary has florals or greenery, the shopper will want to feel like they’ve been transported to the great outdoors. Feel the wind, smell the grass, hear the birds. You get the idea, a full immersion into whatever theme or vibe the brand is putting out there. Customers love being transported to a new place and interior retail design is absolutely the coolest way to do it. This ties into the recent social media trend, ASMR (autonomous sensory meridian response), where you can experience a tingly euphoric feeling triggered by a carefully created clip. We love the way our environment can sway the senses away from the everyday and into somewhere extraordinary.

The goal here is to pull customers into the store and offer them something far more than a quick and dirty sale. Experiential spaces will also have those hybrid areas that merge the brand with something other than cannabis. This is tricky due to compliance, but we are loving the mixture of yoga, spa, lounge, arcades, art gallery and even bowling within a dispensary. If you’ve shopped at Sheels, you know all about this. A full ferris wheel, restaurant, aquarium and spa inside the sporting goods store. This is definitely a trend that reshapes the standard shopping model and is unique to cannabis.

Digital Forward

Are we being bombarded with digital, phygital and AI in our everyday lives? Maybe. And cannabis customers love every drop of it. More and more we are seeing interactive, digital, full-on wall displays that make you feel like you’re at a museum exhibit. The initial investment can be spendy, but the ultimate flexibility and control (and shopper ooh’s and aah’s) make it all worth it. Imagine an incredible wall showing farm footage, where you can touch the image of the plant and an info bubble pops up describing the terpene and showing it being distilled into a tincture. Bored? Flip it to footage of your latest social event. Whatever you want your customers to see and interact with is completely up to you. More and more we are seeing the digital arts incorporated into dispensary design.

December 9, 2022

First Pharma vs Cannabis Clinical Trial Moves Forward

By Christina DiArcangelo

No Comments

Affinity Bio Partners on Working with Zelira Therapeutics to Complete Enrolment for Diabetic Nerve Pain Drug Trial

It’s an exciting time in the medical cannabis community as Zelira, a global leader in the research, development and commercialization of clinically validated cannabinoid medicines, and Affinity Bio Partners, a leading, global clinical research organization, have completed enrollment for a diabetic nerve pain drug trial. The Institutional Review Board (IRB)-approved head-to-head trial read out is expected in Q1 of 2023. Two years in the making, the study’s clinical management, clinical trial site monitoring, subject recruitment, regulatory submissions and review and query of data have brought us to a pivotal point that could pave the way for how future clinical studies are conducted in the medical cannabis community. As someone who comes from traditional pharma and biotechnology industries, heading up a clinical study in the medical cannabis realm has been a significantly different, eye-opening and informative experience that reinforces the dire need for mainstream, medical cannabis education.

Difficulties of Enrolling Subjects in a Cannabinoid-Based Clinical Study

There are a number of reasons that enrolling a cannabinoid study is very challenging. One of the biggest challenges to overcome is creating educational clinical study material that will be approved by the Institutional Review Board while educating potential subjects who are interested in enrolling. In other words, one must fully understand the regulatory landscape that they’re operating in, and we all know cannabis is a tricky one, while still educating potential subjects.

When screening subjects, it is important to be able to thoroughly share facts regarding cannabinoids, terpenes and other ingredients utilized in the study material. Also, sharing information on the endocannabinoid system is important, and a must for subjects to understand. In addition, it is integral to share and contrast between the traditional pharmaceutical products versus the cannabinoid study drug. Meaning, most subjects understand and are familiar with pills and other treatments approved in the traditional FDA regulated pharmaceutical space. Therefore, you must ensure that you create a bridge between a study’s educational materials and the lack of mainstream education about cannabinoid-based therapies.

The Impact This Will Have on Future Cannabinoid-Based Clinical Studies

There is a lot of hope that by working on a study of this magnitude, that we will pave the way for many more companies to bravely enter the clinical trial space as it pertains to medical cannabis. Everything that is being performed in this Zelira clinical study is in accordance with all applicable laws and regulations. The team is utilizing an electronic patient reported outcomes and electronic data capture system to receive data directly from the clinical trial sites as they are seeing the patients. As more patients, groups, communities and organizations learn about this, we hope that other large players in the cannabis industry invest their money wisely and perform clinical studies on their formulated products. Companies are unable to make claims of product safety and efficacy legally without these clinical studies. As we approach 2023, it is time for us as an industry to begin forecasting future clinical studies that will help power the therapeutic benefits this plant has to offer in responsible, controlled settings.

November 29, 2022

Addressing Cannabis Price Compression With Science

By Mark Doherty

1 Comment

Cannabis cultivators across the U.S. are confronting plummeting wholesale prices and tighter profit margins. Operators in Pennsylvania say flower prices have fallen from around $4,000 a pound to around $3,000, on average, and prices in the more mature markets of California, Oregon and Colorado have experienced extreme volatility. Prices in those states are averaging around $700 per pound but of course, that’s an average. There are whispers that prices are as low as $150, revealing how bad the situation really is.

Oversaturation of legal cannabis affects commercial growers everywhere. For example, when Oklahoma opened its free-wheeling medical cannabis program with unlimited business licenses, the pipeline of cannabis from legacy markets in California was disrupted and a glut of flower from the gray market began to influence pricing within the state’s legal market. Although cannabis is not federally legal and interstate commerce is banned, what happens in one state definitely affects what happens in another.

Competition in legal markets has also increased dramatically in recent years as multistate operators expand their footprint and consolidation proliferates. Vertically integrated cultivation, manufacturing and retail is becoming unsustainable for many mom-and-pop businesses, while MSOs can leverage their cash and resources to weather the current storm.

Economic Viability Meets High Quality Production

All of this news is not necessarily negative, but it’s a definite cautionary tale: Being complacent opens opportunities for others. Growing cannabis is complex. It is working with a living and breathing machine. Some businesses fail because operators are not able to find the perfect blend of horticulture, plant science and manufacturing efficiency necessary for success. Some see it simply as a manufacturing concern, others a scientific endeavor, and still others as an artform. An understanding of growing cannabis as a blend of all three is paramount.

Just like the LED evolution, other new cultivation technology is here to stay and should not be brushed off as just experimental

Squeezing more high-quality product out of existing facilities is essential. Costs for labor and electricity are relatively fixed, so operators must turn to technology to improve yield, quality, consistency and plant health without increasing operating expenses.

Over the years, growers have often resisted change surrounding what they view as “the way” or “the best,” but with the industry in such distress, the time is now to address facility inefficiencies.

Much like the evolution of LED use, there might be an initial skepticism at the cost and real value of new cultivation technology, but the economics are too compelling to ignore. The majority of all indoor grows now use LED. The progression from single-ended bulbs, to double-ended HPS, to LED is analogous to plants on the floor of a grow facility, to rolltop benches, and now to vertical farming using racks.

Vertical Cultivation Science

Crop steering applies plant science directly to commercial production. The methodology is based on the idea that plants can be manipulated to grow and perform a certain way. For cannabis plants, the science really comes into play with inter-canopy airflow.

When airflow occurs under the surface of the leaf of the plant, the stomata opens and gas exchange increases as water vapor and oxygen are released and carbon dioxide is absorbed. The micro-barrier of air trapped against the leaves is broken and the exchange of gasses and energy in the cultivation environment is improved, enabling the entire grow to increase its yield. And while CO2 supplementation is widely used and has been for years with positive effect, the under-canopy airflow provides greater efficiency relative to the operating expense of pumping CO2 into the grow room. Money can be saved by applying science to encourage the plant to uptake the extra CO2 that has been naturally released.

Proper Drainage Is Also Key

Controlling the space with proper drainage will keep a host of problems at bay

Drainage issues like the puddling of water in vertical farming are detrimental to the efficiency of a cultivation facility. Even when growers use precision irrigation techniques to give the plants pinpointed irrigation volumes over different time periods, rack systems can still suffer from drainage issues. That means that affected plants are not receiving the precision irrigation strategy and the entire purpose of the scientific application is defeated.

Precise drainage is critical because standing water opens the door to root born disease, pests, and microbial issues. Spray regimes can address this problem, but they cost money. The key is to reduce dependency on mitigation efforts by better controlling the agricultural space and improving outcomes with a scientifically approached plan.

Greenhouses, warehouses and vertical farming facilities all have potential environmental issues that reduce their economic viability, but with proper vertical air movement, drainage equipment and an understanding of microclimates and how to address them scientifically, efficiency and product quality are enhanced.

Time to Embrace Change

As with any industry, there is resistance to adopting new technology in cannabis cultivation. The original and legacy players will always claim they know how to best grow their plants, but the reality is that the business needs must be addressed.

As canopies increase within a facility, advancements like robotics, LEDs and advanced airflow technology define how the industry operates and continues to improve. Efficiency keeps business alive—cannabis growers must continually assess their operations and make the capital investments that will pay off as wholesale prices continue to decline.