Cannabis News

Based on the recent string of cannabis thefts in Portland, Oregon, the spotlight is shining even brighter on the need for enhanced security measures at cannabis dispensaries throughout the country. According to the Oregon Liquor Control Commission, the Portland metro area alone has experienced more than 120 cannabis shop burglaries since March 2020, resulting in a reported total loss of more than $500,000 in cash and products.

Robbing a cannabis dispensary is as lucrative as robbing a bank. Cash is king in the shops until the Secure and Fair Enforcement (SAFE) Banking Act is passed to prohibit federal banking regulators from penalizing depository institutions that provide banking services to legitimate cannabis businesses. Until the Act is passed, it is widely known that all transactions must be done in cash—which makes cannabis dispensaries a prime target for thieves.

While many security protocols—such as product traceability systems and security cameras—are mandated by each individual state, dispensary owners should take measures to actively secure their product, protect their employees and preserve their businesses as theft increases.

One of the quickest and most cost-effective ways to fortify shop security is by implementing rolling security doors. After determining what level of security is needed, consider these four tips to help deter criminal activity and ensure the safety of both employees and products.

Tip 1 – Defend The Storefront
Designed to prevent against looting events and burglaries, heavy-duty rolling steel doors offer cannabis business owners robust security. They can be retrofitted into existing buildings, are exterior mounted and are ideal for storefront defense—including protecting glass windows, which can be expensive to replace. Unlike more common rolling grilles, thieves can’t see merchandise when the rolling door is lowered. In addition to the door giving the building a secure look, blocking sight access is key to deterring criminals.

Heavy-duty steel doors must also be lift- and pry-resistant. Manufacturers put the doors through rigorous testing, and some security doors even meet Department of Defense forced entry standards, which can provide up to an hour of protection against violent attacks against the door to gain entry. Look for rolling security doors that can withstand heavy impact and resist pry attempts with common tools, as well as doors that are lift resistant. Some manufacturers offer doors with robust slide locks and rigid heavy-duty bottom bars, enabling the doors to withstand up to 4,500 lbs of lifting effort.

Tip 2 – Protect While Allowing Visibility and Airflow
If product visibility is desired, but more robust security is needed at the storefront—beyond a security measure such as impact glass—a heavy-duty security grille is an excellent choice. Security grilles are easy to custom order and don’t require structural modifications to fit individual spaces. They are easily installed behind storefront glass, are compact enough to remain out of sight when not in use and require little maintenance.

It’s important to work with a manufacturer to select a rolling grille that provides dependable, increased security. Choose grille curtains with rods that are spaced closer together and have heavier links. Security grilles with these features are harder to lift and pry than standard rolling grilles.

Rolling security grilles are also an ideal solution to protect counters inside the dispensary. They can be easily concealed in small headspaces where there is limited ceiling room.

Tip 3 – Fortify A Store Within A Store
For cannabis dispensaries located within high-end retail shops, it is important to consider additional security measures to separate the dispensary from the rest of the store.

A store within a store may be subject to different hours of operation as states often dictate specific operating hours for cannabis dispensaries. Altered operating hours necessitate an easy way to secure only a small section of a larger store.

If aesthetics are of concern inside retail shops, a woven metal mesh grille will provide both beauty and security without imposing looks while securing cannabis products as customers browse throughout the store. Manufacturers offer a variety of patterns and even logo designs as a way to bring more creativity to a grille’s aesthetics—making them rolling pieces of art.

Tip 4 – Secure Deliverables
Dispensary owners sometimes overlook the fact that thieves target deliveries. Deliveries that are made at the back of the store or in receiving areas may be the most at risk. It is of utmost importance to be aware of how deliveries are timed, who is present during them, and how the product is handed off.

Robust rolling service doors provide the best security for delivery entrances and are more secure than traditional rolling sectional doors. Made from slats of formed galvanized steel, aluminum or stainless steel, these rolling doors are completely customizable to meet existing building designs and are ideal for areas with limited overhead room.

Robust Protection
By closely evaluating the levels of security needed, the layout of the building and where deliveries take place, security updates and enhancements are easily implemented with the right rolling doors. Every door is made for a specific opening, so each one is custom-made for its application. Choose a knowledgeable manufacturer that will help determine which rolling closure suits the dispensary’s needs.

Democrats in the Delaware House and Gov. John Carney are on the same side of the political aisle, but whether they’re on the same side of the adult-use cannabis legalization aisle remains to be seen.

The Health and Human Development Committee cleared House Bill 150, the Delaware Marijuana Control Act, on March 24. The legislation would create adult-use legal framework, including opportunities for small businesses to be licensed. It would also ensure people living in areas disproportionately affected by prohibition have equal access to the market, according to a press release by chief sponsor Rep. Ed Osienski.

Behind the support of six other sponsors and nine co-sponsors—all Democrat—in the 41-member House, H.B. 150 also aims at shutting down the illicit market by diverting demand from illegal enterprises, and empowering law enforcement with the ability to ensure a safe, legal market for the cultivation, sale and adult-use of cannabis, Osienski said.

“Support for adult recreational marijuana has been growing for years in Delaware and across the country. We have seen other states successfully enact policies that established a safe and legal market for cannabis, and we have studied those laws to craft the best policy for Delaware,” he said. “We believe we have a solid bill that has the support of the public, and we believe we have the political will to pass this bill into law.”

A University of Delaware poll in 2018 indicated that 61% of Delaware voters support legalizing adult-use cannabis. Support for legalization has also reached 68% nationally, according to a November 2020 Gallup Poll.

Neighboring New Jersey Gov. Phil Murphy signed an adult-use cannabis legalization bill last month, following voters’ approval of a constitutional amendment in the November 2020 election. Up in New England, Massachusetts, Vermont and Maine also have legalized adult-use cannabis.

“We would be establishing a new industry that will create good-paying jobs for Delawareans while striking a blow against the marijuana illegal market,” Osienski said. “We also listened to concerns from communities that have been historically impacted by the prohibition of marijuana, and to promote equity, we have included provisions so they can participate in this new market.”

But from a governor’s standpoint, Carney isn’t entirely sold on the adult-use legalization efforts, the Democrat executive’s spokesman, Jonathan Starkey, told the Associated Press March 24.

“The governor’s position hasn’t changed,” Starkey said to the AP. “He supported decriminalization and an expansion of Delaware’s medical marijuana program. But he still has concerns about legalizing recreational marijuana.”

Carney has not directly said whether or not he’d veto H.B. 150, if it reaches his desk, according to the AP.

While Osienski said he believes H.B. 150 aims at shutting down the illicit market, critics argue the legislation will have little impact on that front, and instead will result in increased use among minors, more traffic deaths and injuries, and more people struggling with mental health and substance abuse issues, according to the AP.

Under the bill, which would allow adults 21 and older to purchase up to 1 ounce of cannabis from a licensed retail store, the Division of Alcohol and Tobacco Enforcement (DATE) would absorb cannabis enforcement and create a separate, administrative Office of Marijuana Control Commissioner within the Department of Safety and Homeland Security, according to Osienski’s release.

The legislation would allow for up to 30 retail licenses, 30 manufacturing licenses and 60 cultivation licenses to be issued within 16 months of the bill’s effective date. It also would establish a competitive licensing process through the Office of Marijuana Control Commissioner using a scoring system that rewards applicants for paying a living wage, providing employer-paid health insurance, providing a defined benefit pension plan, providing sick and paid leave to workers, hiring more full-time workers, focusing on diversity of workforce and other factors, according to Osienski’s release.

In addition, the measure includes a 15% tax, described as a cannabis control enforcement fee, that would be assessed at the point of sale, according to the bill’s text.

H.B. 150 also has companion support in the 21-member upper chamber, including sponsorship from five senators and co-sponsorship from four senators—all Democrat. Sen. Trey Paradee, the chief sponsor, offered his viewpoint in Osienski’s release.

“The time has come for us to replace an illegal market that has overwhelmed our court system and damaged lives with a legal, regulated and responsible industry that will create thousands of good-paying jobs in Delaware,” Paradee said. “We have seen the benefits of a thriving legal cannabis industry in 15 other states. We have had time to study what works and what does not. This legislation is sound economic policy, strong social justice reform and a job creator that we absolutely should pass this year.

The cannabis industry saw close to $15.5B in deals across VC, private equity, M&A and IPOs in 2020 according to PitchBook data. Early and growth stage capital has been a key enabler in deal activity as companies seek to innovate and scale, taking advantage of trends towards national legalization and consolidation. Entourage Effect Capital is one of the largest VC firms in cannabis with over $150MM deployed since its inception in 2014. Some of their notable investments include GTI, CANN, Harborside (CNQ: HBOR), Acreage Holdings, Ebbu, TerrAscend and Sunderstorm.

We spoke with Matt Hawkins, co-founder and managing partner at Entourage Effect Capital. Matt started Entourage in 2014 after exiting his previous company. He has 20+ years of private equity experience and serves on the Boards of numerous cannabis companies. Matt’s thought leadership has been on Fox Business in the past and he has also recently featured on CNBC, Bloomberg, Yahoo! Finance, Cheddar and more.

Aaron Green: How did you get involved in the cannabis industry?

Matt Hawkins: We’ve been making investments in the cannabis industry since 2014. We’ve made 65 investments to date. We have a full team of investment professionals, and we invest up and down the value chain of the industry.

I had been in private equity for 25 years and I kind of just fell into the industry after I’d had an exit. I started lending to warehouse owners in Denver that were looking to refinance their mortgages out of commercial debt into private debt, which would then give them the ability to lease their facilities to growers. I realized there would be a significant opportunity to place capital in the private equity side of the cannabis business. So, I just started raising money for that project and I haven’t looked back. It’s been a great run and we’ve built a fantastic portfolio. We look forward to continuing to deploy capital up to and through legalization.

Green: Do you consider Entourage Effect Capital a VC fund or private equity firm? How do you talk about yourself?

Hawkins: In the early stages of the industry, we were more purely venture capital because there was hardly any revenue. We’re probably still considered a venture capital firm, by definition, just because of the risk factors. As the industry has matured, the investments we make are going to be larger. The reality is that the checks we write now will go to companies that have a track record of not only 12 months of revenue, but EBITDA as well. We can calculate a multiple on those, and that makes it more like lower/middle-market private equity investing.

Green: What’s your investment mandate?

Hawkins: From here forward our mandate is to build scale in as many verticals as we can ahead of legalization. In the early days, we were focused on giving high net worth individuals and family offices access to the industry using a very diversified approach, meaning we invested up and down the value chain. We’ll continue to do that, but now we’re going to be really laser focused on combining companies and building scale within companies to where they’re going to be more attractive for exit partners upon legalization.

Green: Are there any particular segments of the industry that you focus on whether it’s cultivation, extraction or MSOs?

Hawkins: We tend to focus on everything above cultivation. We feel like cultivation by itself is a commodity, but when vertically integrated, for example with a single-state operator or multi-state operator, that makes it intrinsically more valuable. When you look at the value chain, right after cultivation is where we start to get involved.

Green: Are you also doing investments in tech and e-commerce?

Hawkins: We’ve made some investments in supply chain, management software, ERP solutions, things like that. We’re not really focused on e-commerce with the exception of the only CBD company we are invested in.

Green: How does Entourage’s investment philosophy differ from other VC and private equity firms in cannabis?

Hawkins: We really don’t pay attention to other people’s philosophies. We have co-invested with others in the past and will continue to do so. There’s not a lot of us in the industry, so it’s good that we all work together. Until legalization occurs, or institutional capital comes into play, we’re really the only game in town. So, it behooves us all to have good working relationships.

Green: Across the states, there’s a variety of markets in various stages of development. Do you tend to prefer investing in more sophisticated markets? Say California or Colorado where they’ve been legalized for longer, or are you looking more at new growth opportunities like New York and New Jersey?

Hawkins: Historically, we’ve focused on the most populous states. California is obviously where we’ve placed a lot of bets going forward. We’ll continue to build out our portfolio in California, but we will also exploit the other large population states like New Jersey, New York, Arizona, Massachusetts, Michigan, Ohio and Illinois. All of those are big targets for us. 

Green: Do you think legalization will happen this Congress?

Hawkins: My personal opinion is that it will not happen this year. It could be the latter part of next year or the year after. I think there’s just too much wood to chop. I was encouraged to see the SAFE Banking Act reappear. I think that will hopefully encourage institutional capital to take another look at the game, especially with the NASDAQ and the New York Stock Exchange open up. So that’s a positive.

I think with the election of President Biden and with the Senate runoffs in Georgia going Democrat, the timeline to legalization has sped up, but I don’t think it’s an overnight situation. I certainly don’t think it’ll be easy to start crossing state lines immediately, either.

Green: Can you explain more about your thoughts on interstate commerce?

Hawkins: I think it’s pretty simple. The states don’t want to give up all the tax revenue that they get from their cultivation companies that are in the state. For example, if you allow Mexico and Colombia to start importing product, we can’t compete with that cost structure. States that are neighbors to California, but need to grow indoors which is more expensive, are not going to want to lose their tax revenues either. So, I just think there’s going to be a lot of butting heads at the state level.

The federal government is going to have to outline what the tax implications will be, because at the end of the day the industry is currently taxed as high as it ever will be or should be. Anything North of current tax levels will prohibit businesses from thriving further, effectively meaning not being able to tamp down the illicit market. One of the biggest goals of legalization in my opinion should be reducing the tax burden on the companies and thereby allowing them to be able to compete more directly with the illicit market, which obviously has all the benefits of reduced crime, etc.

Green: Do you foresee 280E changes coming in the future?

Hawkins: For sure. If the federal illegality veil is removed – which means there’ll be some type of rescheduling – cannabis would be removed from the 280E category. I think 280E by definition is about just illegal drugs and manufacturing and selling of that. As long as cannabis isn’t part of that, then it won’t be subject to it.

Green: What have been some of the winners in your portfolio in terms of successful exits?

Hawkins: When the CSC started allowing companies in Canada to own U.S. assets, the whole landscape changed. We were fortunate to be early investors in Acreage and companies that sold to Curaleaf and GTI before they were public. We are big investors in TerrAscend. We were early investors in Ebbu which sold to Canopy Growth. Those were huge wins for us in Fund I. We also have some interesting plays in Fund II that are on the precipice of having similar-type exits.

You read about the big ones, but at the end of the day, the ones that kind of fall under the radar – the private deals – actually have even greater multiples than what we see on some of the public M&A activity.

Green: Governor Cuomo has been hinting recently at being “very close” on a deal for opening up the cannabis market in New York. What do you think are the biggest opportunities in New York right now?

Hawkins: If it can get done, that’s great. I’m just concerned that distractions in the state house right now in New York may get in the way of progress there. But if it doesn’t, and it is able to come to fruition, then there isn’t a sector that doesn’t have a chance to thrive and thrive extremely well in the state of New York.

Green: Looking at other markets, Curaleaf recently announced a big investment in Europe. How do you look at Europe in general as an investment opportunity?

Hawkins: We have a pretty interesting play in Europe right now through a company called Relief Europe. It’s poised to be one of the first entrants to Germany. We think it could be a big win for us. But let’s face it, Europe is still a little behind, in fact, a lot behind the United States in terms of where they are as an industry. Most of the capital that we’re going to be deploying is going to be done domestically in advance of legalization.

Green: What industry trends are you seeing in the year ahead?“We’re constantly learning from other industries that are steps ahead of us to figure out how to use those lessons as we continue to invest in cannabis.”

Hawkins: Well, I think you’ll see a lot of consolidation and a lot of ramping up in advance of legalization. I think that’s going to apply in all sectors. I just don’t see a scenario wherein mom and pops or smaller players are going to be successful exit partners with some of the new capital that’s coming in. They’re going to have to get to a point where they’re either selling to somebody bigger than them right now or joining forces with companies around the same size as them and creating mass. That’s the only way you’re going to compete with companies coming in with billions of dollars to deploy.

Green: How do you see this shaking out?

Hawkins: That’s where you start to look into the crystal ball. It’s really difficult to say because I think until we get to where we truly have a national footprint of brands, which would require crossing state lines, it’s going be really difficult to tell where things go. I do know that liquor, tobacco, beer, the distribution companies, they all are standing in line. Big Pharma, big CPG, nutraceuticals, they all want access to this, too.

In some form or fashion, these bigger players will dictate how they want to go about attacking the market on their own. So, that part remains to be seen. We’ll just have to wait and see where this goes and how quickly it goes there.

Green: Are you looking at other geographies to deploy capital such as APAC or Latin America regions?

Hawkins: Not at this point. It’s not a focus at all. What recently transpired here in the elections just really makes us want to focus here and generate positive returns for investors.

Green: As cannabis goes more and more mainstream, federal legalization is maybe more likely. How do you think the institutional investor scene is evolving around that? And is it a good thing to bring in new capital to the cannabis market?

Hawkins: I don’t see a downside to it. Some people are saying that it could damage the collegial and cottage-like nature of the industry. At the end of the day, if you’ve got tens of billions of dollars that are waiting to pour into companies listed on the CSC and up-listing to the NASDAQ or New York Stock Exchange, that’s only going to increase their market caps and give them more cash to acquire other companies. The trickle-down effect of that will be so great to the industry that I just don’t know how you can look the other way and say we don’t want it. 

Green: Last question: What’s got your attention these days? What’s the thing you’re most interested in learning about?

Hawkins: We’re constantly learning about just where this industry is headed. We’re constantly learning from other industries that are steps ahead of us to figure out how to use those lessons as we continue to invest in cannabis. We all saw the correlation between cannabis and alcohol prohibition. The reality is that the industry is mature enough now where you can see similarities to industries that have gone from infancy to their adolescent years. That’s kind of where we are now and so we spend a lot of time studying industries that have been down this path before and see what lessons we can apply here.

Green: Okay, great. So that concludes the interview!

Hawkins: Thanks, Aaron.

Students at Mercer County Community College (MCCC) interested in entering the New Jersey cannabis industry after graduation can now receive industry training and education while in school.

Back by popular demand, MCCC announced on March 22, it would offer a second medical cannabis training course in May.

Sarah Trent, CEO of Valley Wellness, a medical cannabis dispensary, designed the course to educate, train and prepare individuals for entry-level positions in the cannabis industry.

“Working in the cannabis industry isn’t just about knowing how to work in a grow or knowing how to be patient-facing in a dispensary,” Trent said. “Really, the best staff members, even for entry-level positions, have a well-rounded education, and so I developed a class that is made to make that well-rounded employee.”

The course was initially only offered at Raritan Valley Community College (RCVV) in New Jersey but recently expanded to MCCC as enrollment and demand began to increase, Trent said.

“I ran the program three times in 2020 with about 50 students each, and after the ballot initiative passed, we saw numbers really increase,” Trent said. “So, we just started running the class at Mercer and ran the first class starting Jan. 25, 2021, where we had roughly 70 people enrolled in that class. And right now, I’m currently running a March class at Raritan Valley, and we have over 80 students.”

As New Jersey Gov. Phil Murphy signed an adult-use cannabis legalization bill last month, following voters’ approval of a constitutional amendment last fall, there has become a need for experienced individuals in the field. 

“There are so many open jobs because all of the existing operators are ramping up production,” Trent said. “Because one of the requirements under the new law says the existing operators cannot start selling to the adult-use market until they can certify to the newly formed commission that they have enough product to meet patient demand first. So, I don’t know of a single operator in New Jersey who is not hiring right now for multiple positions.”

Trent said she wanted to find a way to help employees and employers. The course creates an opportunity to make cannabis training and education more accessible to individuals to fulfill that need. 

Since the course started, Trent has offered free tuition to the first five veterans who sign up for the program; however, she wanted to find a way to expand that concept to low-income individuals who need financial assistance in the state, she said.

“We get a lot of requests like, ‘Hey, do we have to pay this all up front?’ or ‘Do you know, where can I find some scholarship assistance?’,” Trent said. 

As Trent began to look for sponsors to help create scholarships, she was introduced to the New Jersey Cannabis Trade Association (NJCTA), with whom she has partnered with to provide six scholarships for the May training course at MCCC.

Shaya Brodchandel, chair of NJCTA and CEO of Harmony Dispensary, a fully vertical alternative treatment center, said the partnership was a ‘no-brainer,’ as he believes education is essential in the cannabis industry, but accessibility to the instruction is lacking, he said

Suppose an individual wants to become a doctor, lawyer, accountant or wants to study one of the various other trades. In that case, he or she has easier access to that education as a university or school likely teaches it. Still, in the cannabis industry, there isn’t much precedent where people can go and get a proper education, he said.

“For us, [the partnership] was a natural fit from the education standpoint,” Brodchandel said. “We are also going to provide scholarships and interviews immediately after. So, within a month, the [students] will have interviews with local retail and cultivation companies. As these [jobs] become available, we will be reaching out to participants and letting them know there are job opportunities. So, it’s really connecting education with the industry and putting best practices in motion as best as we can.”

Some of the roles that the course can prepare individuals for is a variety of entry-level cultivation positions, as well as patient-facing and dispensary staff positions such as a patient care agent or a wellness associate, where individuals can help patients, fill orders, work in the packaging department and more, Trent said.

Additionally, Trent is working toward making the class applicable to entry-level jobs in a manufacturing lab, as some of those positions do not require a college degree.

The next medical cannabis training course at MCCC will begin on May 3.

The course takes around 15 hours to complete and costs $500 to enroll. It is taught in five modules over five consecutive Monday nights on Zoom from 6-9 p.m., Trent said.

“Module one is the basics of cannabis laws. Module two is the basics of cultivation, harvesting and manufactured products, where students learn what manufactured products are in New Jersey right now and how they are made. Module three is the endocannabinoid system and testing. Module four is dispensary-specific training, compliance, tracking dosing administration, and module five is industry speakers,” Trent said.

Scholarship applications for the May 3 course are now open until April 12. Students must reside in specific New Jersey zip codes, demonstrate a financial need and be 21 years or older to apply.

“I think that this is a great opportunity for the colleges and universities to help connect education with the industry,” Brodchandel said. “This is the first in New Jersey of hopefully many that we’ll be seeing happening for connecting hires. I want to continue participating in these programs, and I hope to see this growth throughout the coming months. I think the timing is now, and the opportunity is tremendous for us to make a positive impact. Now is our time to execute and to deliver on all that we’ve been working on. So just proud to be a part of this.”

Students at Mercer County Community College (MCCC) interested in entering the New Jersey cannabis industry after graduation can now receive industry training and education while in school.

Back by popular demand, MCCC announced on March 22, it would offer a second medical cannabis training course in May.

Sarah Trent, CEO of Valley Wellness, a medical cannabis dispensary, designed the course to educate, train and prepare individuals for entry-level positions in the cannabis industry.

“Working in the cannabis industry isn’t just about knowing how to work in a grow or knowing how to be patient-facing in a dispensary,” Trent said. “Really, the best staff members, even for entry-level positions, have a well-rounded education, and so I developed a class that is made to make that well-rounded employee.”

The course was initially only offered at Raritan Valley Community College (RCVV) in New Jersey but recently expanded to MCCC as enrollment and demand began to increase, Trent said.

“I ran the program three times in 2020 with about 50 students each, and after the ballot initiative passed, we saw numbers really increase,” Trent said. “So, we just started running the class at Mercer and ran the first class starting Jan. 25, 2021, where we had roughly 70 people enrolled in that class. And right now, I’m currently running a March class at Raritan Valley, and we have over 80 students.”

As New Jersey Gov. Phil Murphy signed an adult-use cannabis legalization bill last month, following voters’ approval of a constitutional amendment last fall, there has become a need for experienced individuals in the field. 

“There are so many open jobs because all of the existing operators are ramping up production,” Trent said. “Because one of the requirements under the new law says the existing operators cannot start selling to the adult-use market until they can certify to the newly formed commission that they have enough product to meet patient demand first. So, I don’t know of a single operator in New Jersey who is not hiring right now for multiple positions.”

Trent said she wanted to find a way to help employees and employers. The course creates an opportunity to make cannabis training and education more accessible to individuals to fulfill that need. 

Since the course started, Trent has offered free tuition to the first five veterans who sign up for the program; however, she wanted to find a way to expand that concept to low-income individuals who need financial assistance in the state, she said.

“We get a lot of requests like, ‘Hey, do we have to pay this all up front?’ or ‘Do you know, where can I find some scholarship assistance?’,” Trent said. 

As Trent began to look for sponsors to help create scholarships, she was introduced to the New Jersey Cannabis Trade Association (NJCTA), with whom she has partnered with to provide six scholarships for the May training course at MCCC.

Shaya Brodchandel, chair of NJCTA and CEO of Harmony Dispensary, a fully vertical alternative treatment center, said the partnership was a ‘no-brainer,’ as he believes education is essential in the cannabis industry, but accessibility to the instruction is lacking, he said

Suppose an individual wants to become a doctor, lawyer, accountant or wants to study one of the various other trades. In that case, he or she has easier access to that education as a university or school likely teaches it. Still, in the cannabis industry, there isn’t much precedent where people can go and get a proper education, he said.

“For us, [the partnership] was a natural fit from the education standpoint,” Brodchandel said. “We are also going to provide scholarships and interviews immediately after. So, within a month, the [students] will have interviews with local retail and cultivation companies. As these [jobs] become available, we will be reaching out to participants and letting them know there are job opportunities. So, it’s really connecting education with the industry and putting best practices in motion as best as we can.”

Some of the roles that the course can prepare individuals for is a variety of entry-level cultivation positions, as well as patient-facing and dispensary staff positions such as a patient care agent or a wellness associate, where individuals can help patients, fill orders, work in the packaging department and more, Trent said.

Additionally, Trent is working toward making the class applicable to entry-level jobs in a manufacturing lab, as some of those positions do not require a college degree.

The next medical cannabis training course at MCCC will begin on May 3.

The course takes around 15 hours to complete and costs $500 to enroll. It is taught in five modules over five consecutive Monday nights on Zoom from 6-9 p.m., Trent said.

“Module one is the basics of cannabis laws. Module two is the basics of cultivation, harvesting and manufactured products, where students learn what manufactured products are in New Jersey right now and how they are made. Module three is the endocannabinoid system and testing. Module four is dispensary-specific training, compliance, tracking dosing administration, and module five is industry speakers,” Trent said.

Scholarship applications for the May 3 course are now open until April 12. Students must reside in specific New Jersey zip codes, demonstrate a financial need and be 21 years or older to apply.

“I think that this is a great opportunity for the colleges and universities to help connect education with the industry,” Brodchandel said. “This is the first in New Jersey of hopefully many that we’ll be seeing happening for connecting hires. I want to continue participating in these programs, and I hope to see this growth throughout the coming months. I think the timing is now, and the opportunity is tremendous for us to make a positive impact. Now is our time to execute and to deliver on all that we’ve been working on. So just proud to be a part of this.”

Students at Mercer County Community College (MCCC) interested in entering the New Jersey cannabis industry after graduation can now receive industry training and education while in school.

Back by popular demand, MCCC announced on March 22, it would offer a second medical cannabis training course in May.

Sarah Trent, CEO of Valley Wellness, a medical cannabis dispensary, designed the course to educate, train and prepare individuals for entry-level positions in the cannabis industry.

“Working in the cannabis industry isn’t just about knowing how to work in a grow or knowing how to be patient-facing in a dispensary,” Trent said. “Really, the best staff members, even for entry-level positions, have a well-rounded education, and so I developed a class that is made to make that well-rounded employee.”

The course was initially only offered at Raritan Valley Community College (RCVV) in New Jersey but recently expanded to MCCC as enrollment and demand began to increase, Trent said.

“I ran the program three times in 2020 with about 50 students each, and after the ballot initiative passed, we saw numbers really increase,” Trent said. “So, we just started running the class at Mercer and ran the first class starting Jan. 25, 2021, where we had roughly 70 people enrolled in that class. And right now, I’m currently running a March class at Raritan Valley, and we have over 80 students.”

As New Jersey Gov. Phil Murphy signed an adult-use cannabis legalization bill last month, following voters’ approval of a constitutional amendment last fall, there has become a need for experienced individuals in the field. 

“There are so many open jobs because all of the existing operators are ramping up production,” Trent said. “Because one of the requirements under the new law says the existing operators cannot start selling to the adult-use market until they can certify to the newly formed commission that they have enough product to meet patient demand first. So, I don’t know of a single operator in New Jersey who is not hiring right now for multiple positions.”

Trent said she wanted to find a way to help employees and employers. The course creates an opportunity to make cannabis training and education more accessible to individuals to fulfill that need. 

Since the course started, Trent has offered free tuition to the first five veterans who sign up for the program; however, she wanted to find a way to expand that concept to low-income individuals who need financial assistance in the state, she said.

“We get a lot of requests like, ‘Hey, do we have to pay this all up front?’ or ‘Do you know, where can I find some scholarship assistance?’,” Trent said. 

As Trent began to look for sponsors to help create scholarships, she was introduced to the New Jersey Cannabis Trade Association (NJCTA), with whom she has partnered with to provide six scholarships for the May training course at MCCC.

Shaya Brodchandel, chair of NJCTA and CEO of Harmony Dispensary, a fully vertical alternative treatment center, said the partnership was a ‘no-brainer,’ as he believes education is essential in the cannabis industry, but accessibility to the instruction is lacking, he said

Suppose an individual wants to become a doctor, lawyer, accountant or wants to study one of the various other trades. In that case, he or she has easier access to that education as a university or school likely teaches it. Still, in the cannabis industry, there isn’t much precedent where people can go and get a proper education, he said.

“For us, [the partnership] was a natural fit from the education standpoint,” Brodchandel said. “We are also going to provide scholarships and interviews immediately after. So, within a month, the [students] will have interviews with local retail and cultivation companies. As these [jobs] become available, we will be reaching out to participants and letting them know there are job opportunities. So, it’s really connecting education with the industry and putting best practices in motion as best as we can.”

Some of the roles that the course can prepare individuals for is a variety of entry-level cultivation positions, as well as patient-facing and dispensary staff positions such as a patient care agent or a wellness associate, where individuals can help patients, fill orders, work in the packaging department and more, Trent said.

Additionally, Trent is working toward making the class applicable to entry-level jobs in a manufacturing lab, as some of those positions do not require a college degree.

The next medical cannabis training course at MCCC will begin on May 3.

The course takes around 15 hours to complete and costs $500 to enroll. It is taught in five modules over five consecutive Monday nights on Zoom from 6-9 p.m., Trent said.

“Module one is the basics of cannabis laws. Module two is the basics of cultivation, harvesting and manufactured products, where students learn what manufactured products are in New Jersey right now and how they are made. Module three is the endocannabinoid system and testing. Module four is dispensary-specific training, compliance, tracking dosing administration, and module five is industry speakers,” Trent said.

Scholarship applications for the May 3 course are now open until April 12. Students must reside in specific New Jersey zip codes, demonstrate a financial need and be 21 years or older to apply.

“I think that this is a great opportunity for the colleges and universities to help connect education with the industry,” Brodchandel said. “This is the first in New Jersey of hopefully many that we’ll be seeing happening for connecting hires. I want to continue participating in these programs, and I hope to see this growth throughout the coming months. I think the timing is now, and the opportunity is tremendous for us to make a positive impact. Now is our time to execute and to deliver on all that we’ve been working on. So just proud to be a part of this.”

In December 2020, the Federal Trade Commission (FTC) announced proposed settlements with six CBD companies accused of making a broad range of unsubstantiated health claims, including that CBD can treat cancer, heart disease, hypertension, Alzheimer’s disease, bipolar disorder, and chronic pain, among others. Nicknamed “Operation CBDeceit,” the enforcement sweep was part of the FTC’s ongoing effort to protect consumers from false, deceptive, and misleading health claims made in advertisements on websites, through social media, and on other platforms. These settlements became final in early March 2021.

For those who have been monitoring regulatory enforcement relating to CBD claims, the types of claims listed in the FTC’s Complaints are familiar reading. Prior FTC and Food and Drug Administration (FDA) enforcement has focused on products that featured claims of treating chronic diseases and health conditions similar to the claims at issue in the “Operation CBDeceit” settlements. In that respect, these settlements do not differ from prior enforcement.

In other respects, though, these settlements are different from prior FTC enforcement on CBD claims. By including multiple companies and announcing all settlements at once, the CBDeceit announcement was coordinated to send an authoritative message to the CBD industry, broadly that the law requires companies to have robust evidence known as “competent and reliable scientific evidence” to support their health claims, a standard that applies to health claims for all consumer products.

These settlements also name not just the company as a respondent, but also individuals in their official capacity as corporate officers. Given the significant degree of entrepreneurial activity in the CBD and hemp industries, this should be understood as an indication that the FTC will look to hold individuals liable as a way of ensuring compliance with the settlement agreement, particularly where the respondent company is comprised of only a few people. In addition, five of the six settlements included monetary components ranging from $20,000 to $85,000, which will be used to provide consumer refunds, called “redress.”

The respondent companies are also required to notify consumers about the settlements per prescribed terms. For example, the Easybutter LLC settlement requires the company to provide a notice on all of their social media accounts (including any Facebook, Twitter, Instagram, or YouTube accounts) and on the first page of their websites. Such notice must link to a copy of the Consent Order (settlement agreement), along with a toll-free telephone number and an email address for the redress administrator. The notice must be posted not later than three days after the effective date of the Order and for at least one year after the redress period ends. In addition, the companies must use a form letter attached to the Consent Orders to directly notify consumers who purchased their products about the FTC’s charges. This notice requirement is different from the vast majority of FTC settlements involving health claims.

So, what does this mean? Although these settlements didn’t break new ground on the kinds of claims the regulators are targeting with regard to CBD products, they signal heightened attention on an industry that has proliferated exponentially over the last couple of years. Health claims have long been of interest to the FTC. Given this and the transition to the Biden administration, the CBD industry should expect more settlements like these in 2021.

For those who are new to the CBD industry or unfamiliar with advertising rules, this explainer provides additional context for understanding Operation CBDeceit.

Who is the FTC?

The FTC is the federal agency tasked with protecting consumers from unfair and deceptive practices in the marketplace, including via advertising.

What roles does the FTC play in the CBD/hemp market?

The FTC’s role in the CBD/hemp market is to protect consumers from unfair and deceptive acts and practices. In the CBDeceit cases, the FTC alleged that the companies made claims that their CBD products could treat or prevent a range of chronic illnesses and conditions but that the companies did not have adequate evidence to support those claims. Because of this, the FTC considered the claims deceptive. To resolve the enforcement matters, each of the companies agreed to a settlement, the basic terms of which are discussed below.

 Is this the first FTC enforcement on a CBD company?

No, but Operation CBDeceit is the most significant and coordinated FTC enforcement in the CBD space. Prior to this, the FTC had issued joint warning letters with the Food and Drug Administration (FDA) to companies whose products also featured aggressive health claims. There was also a settlement in July 2020 involving a CBD seller, Marc Ching, which related to claims that CBD products could “treat, prevent, or reduce the risks of COVID-19,” claims that the FTC also alleged lacked adequate supporting evidence.

Is the FTC’s enforcement like the FDA enforcement on CBD?

Yes and no. The FTC enforcement is like the FDA’s enforcement on CBD products in that both agencies are concerned about consumers using untested and unproven CBD products to treat or attempt to prevent serious diseases and conditions, and may forego conventional medical treatment. The FTC’s enforcement is different from the FDA’s enforcement on CBD products in that the FTC is not addressing whether the products at issue can be legally sold as dietary supplements, foods, beverages, etc., under the law. The FTC’s enforcement in Operation CBDeceit is focused on whether the product claims are deceptive under the law.

In addition, the FTC’s enforcement differs from FDA’s CBD warning letters in that the parties to the FTC settlements must comply with the settlement terms for twenty years. If they violate the terms, the FTC can charge them with a violation and seek civil financial penalties of up to $43,792 per violation.

There are lots of companies out there making similar claims. Why did the FTC target these companies?

We do not know why the FTC targeted these specific companies. It is frequently the case that there are many companies making similar claims and the FTC, like all law enforcement, will pursue some but not others. Looking at the complaints, it’s worth noting that the companies are similar in that they all made claims that their products could treat or prevent serious health conditions or diseases, including that CBD is safe for all users, treats pain better than prescription medications like OxyContin, and is able to prevent or treat a wide range of serious conditions, including cancer, diabetes, cognitive decline, autism, schizophrenia, substance abuse, and AIDS, amongst others. The FTC alleged that none of these claims had adequate substantiation.

That said, the companies differ in the range of health conditions or diseases they claimed could be treated with CBD. It’s possible that the FTC was looking to demonstrate the broad range of false claims being made in the CBD marketplace.

What were the details of the settlements these six companies agreed to with the FTC?

Each of the consent orders requires the companies to have competent and reliable scientific evidence when making any other health-related product claims, and prohibits them from making several of the claims at issue without human clinical testing to substantiate the claims. As noted above, these settlements name not just the company as a respondent, but also individuals in their official capacity as corporate offers. Five of the six settlements included monetary relief ranging from $20,000 to $85,000. In addition, the companies are required to notify consumers about the settlements. While the terms of that notice vary, most require the companies to provide notice of the settlement on both their websites and social media accounts, as well as use a form letter to notify consumers who purchased their products about the FTC’s allegations.

What’s the main lesson CBD, hemp and cannabis companies should take from these enforcement actions?

The main takeaway is that health claims require robust substantiation to be properly supported. The law requires companies to have competent and reliable scientific evidence when making any health-related claims. In plain terms, this is a quantity and quality of evidence sufficient for experts in the field to agree that it is enough to support the claim, which is a very high bar. For health claims, this is commonly clinical testing on the ingredients or the finished product. Given the investment required to conduct product clinical testing, many companies opt to try to market using only testimonials to convey their product benefits. However, testimonials alone are not considered reliable claim substantiation.

In addition, companies should expect to see more enforcement like this in the coming year. The FTC has long prioritized enforcement on deceptive health claims and is likely to continue to do so.

Kristi Wolff is a partner at Kelley Drye & Warren and chairs the firm’s cannabis law practice group. Her legal practice focuses on advertising of food, drugs, dietary supplements, and consumer health products. Having served as in-house counsel, Ms. Wolff is particularly attuned to balancing business objectives with legal considerations.

Reliable heating, ventilation and air conditioning (HVAC) equipment can cost upward of $300,000 or more for a 5,000-square-foot growing facility in the cannabis space. Proper lighting might cost just as much.

But those environmental controls become less effective for an ideal harvest if they are not complemented by the intelligent application of air distribution through engineered ductwork, which isn’t overly complicated nor expensive in the grand scheme of a productive room, according to Geoff Brown, vice president of technical solutions for Quest.

Often an afterthought, airflow is currently the biggest hump for growers in relation to environmental controls, but it doesn’t have to be, Brown said. Through Quest’s partnership with Hawthorne Gardening Company, growers now have access to the Airflow Mapping service, a computer-aided analysis that calculates or predicts where a diffuser’s air will travel. In turn, growers have access to custom solutions to their specific facilities without making major changes to those facilities.

Featured here, Brown shares more about Airflow Mapping, the importance of intelligent air distribution, working with manufacturers, return on investment and other pertinent knowledge to help avoid oversights associated with environment controls.

Q: Why is airflow so important in cannabis cultivation?

A: Ultimately it just comes down to building productive plants. TIP 1 Good air circulation at the leaf is what allows the leaf to breathe, to get rid of the oxygen around the leaf and to absorb more CO₂ to make sure that the transpiration is happening and that you don’t have a locally deficient vapor pressure deficit (VPD). It’s really how the system needs to work. In my opinion, airflow is the single most overlooked thing in cannabis right now, or at least it is the next hump to get over.

The hump 10 years ago was, “Oh, shoot, we’re going to put cooling units in these rooms and hopefully they’ll do enough for dehumidification.” And then there was a dehumidification problem. Now there’s a notion, “We’re putting cooling units and dehumidifiers in, so we don’t have to think about airflow.”

So, how has that been addressed? Well, people have thrown in rotation fans in the space to move air around, but there’s no real concerted effort at managing airflow, or at least thinking intelligently about how airflow works in your room. It’s an afterthought at best.

TIP 2 Proper engineered ductwork is relatively inexpensive in the grand scheme of indoor grow rooms. A 5,000-square-foot, which is a big room, and a productive room, might cost $20,000 in ductwork. And properly designed ductwork reduces the need for air-rotation fans in the space.

TIP 3 Air-rotation fans, although they’ve been used successfully, are actually a really bad thing for an efficient growth. For one, every watt they consume is an additional watt that needs to be removed from the space by a cooling system. So, you pay to run the fan and then you pay to cool off the fan. And most of those fans are also relatively inexpensive, open-pole motors. They can’t be cleaned properly between grows. So, you end up with either a vector for infection in your space or a fan that’s a pain to clean. The bottom line is it’s not a good use of resources, it’s not sustainable, and there’s a better way to manage it.

Q: What exactly is the Airflow Mapping service that Quest and Hawthorne have partnered to offer indoor operators?

A: Airflow Mapping is basically using computer-aided design to calculate or to predict where each airflow stream, or where each diffuser’s air will go. It uses things like internal duct pressure and velocities and volumes to predict or map out very accurately what the airflow in the space is going to look like. It truly creates an airflow map in the space. Typically, those are presented as velocity maps.

TIP 4 Roughly 5 feet per second is the ideal speed through the canopy, and Airflow Mapping shows very easily what your duct concept is going to give you in terms of overall rotation in the space. It’s a relatively inexpensive way to do your duct design and to test your duct design without needing to sacrifice a million-dollar room.

Q: Is Airflow Mapping a one-time analysis, or are there certain components installed that provide continual, live readings?

A: Airflow Mapping is a completely computerized analysis. The Quest IQ systems are designed as constant velocity and volume systems. So, Airflow Mapping day one versus day 50 versus harvest day, the only change is the height of the canopy. TIP 5 There are only a couple of different models that need to be done to accurately reflect what’s happening in any given room.

Typically, you’ve got an engineer who has designed ductwork systems, who has laid out his or her best estimate or best experience of what that ought to look like. We run it through the Airflow Mapping tool and then are able to either tweak the engineer’s design or strategically apply air-rotation fans to hit trouble spots instead of relying on them for the entire room.

TIP 6 That’s typically what we’re doing, is we’re looking at that design and saying, “Yes, this is reasonable. It’s not going to cost too much money to fix that particular corner. So, let’s apply in our rotation fan, but let’s de-stratify that one particular problem area and move on with our lives.” It allows us to do that without sacrificing a plant, or having a bad harvest, or having powdery mildew developed in the corner because it’s a stratified air mass. These are the kinds of things that we can determine in the computer, and map out in the computer, prior to a grower running the facility.

Q: The Airflow Mapping modeling software is the same software used by NASA engineers to design space shuttles—is that what makes the service groundbreaking to the industry?

A: Absolutely. Software like that has existed for a long time, but it has typically been reserved to agencies like NASA using it to determine the heating of individual tiles on a space shuttle at reentry, or velocities over individual parts of the ship. So, the technology itself is not new, but its application in anything other than specialized military projects or NASA is new and has become more of a commonplace in the past few years among high-performing organizations that have brought the software to the prosumer market.

Q: The Airflow Mapping basically helps indoor growers with custom solutions to their specific facilities without making major changes to those facilities, correct?

A: Exactly. TIP 7 Airflow Mapping is able to quickly identify potential problem areas that are much easier to change in the design phase than after everything is installed and after you’re stepping on the master grower to make ductwork changes in a space.

Q: What’s the importance of good ductwork to achieve an ideal airflow?

A: It’s not just a matter of putting up whatever ductwork happens to be cheaper or fell off your sheet metal guy’s truck. TIP 8 Real ductwork with good diffusers, getting the right flow, and getting the right throw out of your diffusers and out of your duct design is crucially important. So, it really does need to be an engineered system to do that properly.

Right now, there’s a lot of interest in things like fabric ducts because they’re quick and easy to put up. They’re quick and easy to take down and launder between grows, if you ever need to. TIP 9 But even something like that duct, you can get real air devices in it. You can get real diffusers with long-throw devices or high-velocity patterns that get air in the right spot. That is very important.

TIP 10 That’s only useful if you have enough airflow out of your HVAC system to make it work. That’s where with Quest IQ handling the entire needs of the space, the heating, cooling and dehumidification of the space in one unit, we run a higher than typical airflow than you would out of a rooftop package cooling unit, for instance. The extra airflow plus good duct design means that we’re able to get the canopy movement and get the penetration into canopy to get the real leaf movement that we’re looking for without requiring the use of some of the band-aids that have been put in previously, like air-rotation fans.

Q: When it comes to tracking the canopy velocity, is it ideal for airflow to be moving horizontally, vertically or both?

A: Like anything, it depends. TIP 11 It’s going to depend on the type of grow, the type of lights and the tiering of it. We’re seeing a lot more multi-tiered rows—two, three, four levels sometimes—particularly with LED lights being more common and not dealing with quite as many heat issues as the market has previously. That’s going to affect where air distribution is effective.

Also, getting the air in the right spot is important. It can be difficult sometimes with a typical grow room, 14 feet tall, and you’ve got a supply grill on the roof and your return is up top, because your equipment is on the roof. It can be hard sometimes to get the air down low. TIP 12 That’s where a good air device with the right amount of throw to get the air to the canopy matters.

In my perfect world, TIP 13 I would love to see supply and return happen opposite each other. So, if you’re going to supply high and pull air down through the canopy, your return would be low to help that, to not have as much opportunity for stratification, or vice versa, right? If you’re going to supply low, which some people do, they supply into the under-table ductwork or something like that, and then pull or draw air up through the canopy to have a high return, that’s going to be situational. Sometimes it’s just growers get shoehorned into things because they’re retrofitting an existing building. They’re not building a facility from scratch; it’s what is available to them.

Regardless of what is available to them, the Airflow Mapping can help them determine the best way to lay out that airflow pattern. Whether it’s a high supply, low return, or whether they’re forced to do a high supply, high return and would naturally have some stratification problems, we can help mitigate that through the Airflow Mapping.

I’m not sure that I’m comfortable putting my hat in the horizontal versus vertical versus both. TIP 14 I think all of them can be applied properly with some intelligent thought.

Q: What other oversights do cultivation facilities make when it comes to airflow?

A: One is that example of high return, high supply. If you were to look over your head right now, if you’re in your office, you’d probably see one of those four-way supply grills. They have no throw and they’re not designed to, because they’re designed to get air from a 9-foot ceiling down to a 6-foot breathing space.

We often see rooms that have those same style of diffuser in a 14-to-16-foot-high room and high supply. TIP 15 Issues like that are going to naturally cause stratification, where you’ve got a high supply, you’ve got high return. You don’t have a good air device. You’ve got your lights that sort of naturally create a bit of an umbrella or barrier to the air dropping down low. You may have horizontal air-rotation fans giving you a bit of an air curtain. And you’ve got a space that’s always going to be stratified as a result.

TIP 16 Reducing air-rotation fans can reduce your overall HVAC demand costs by something like 8% to 10% a year. So, if you’re talking about a typical room that would easily spend $50,000 a year in energy, you’re going to save $5,000 a year by doing ductwork properly. It pays for itself very quickly.

Q: Do taller or bushier plants play a factor in dead-zone considerations for facilities?

A: They absolutely can, as well as moving racking. Between the two we can often end up with situations with a bit of an aisle effect, where air doesn’t penetrate well into the canopy and will naturally go where there’s less air resistance. TIP 17 If you’ve got moving racking where you’re no longer working in the room and your rack home position changes on a daily basis, or changes versus where the ductwork was designed, you can end up with a situation where the air isn’t going into the canopy the way it ought to and instead is finding the easy path.

That can happen as well with bigger or bushier cultivars, or cultivars with thicker canopies. It absolutely can be harder to get air into the canopy. TIP 18 That’s where an intelligent application of under-canopy ductwork may make more sense, where you draw air up through the canopy in a vertical way instead of trying to push it from the side on an angle. But that’s quite application-specific. It’s really going to depend on the cultivar that you’re trying to grow.

Q: How can a grower with movable racking avoid airflow problems?

A: Movable racking is becoming very common, of course, TIP 19 but home positions for that racking are not always well-respected and can absolutely cause problems if you’ve got an engineered system and then you change some aspect of the system, like where the plants are. You can certainly have a negative impact on your airflow there.

There is an education piece in ensuring that the person in the room who’s working on the plants understands the impact of maybe not quite following standard operating procedure and not returning the rack to the right spot because, “Who cares if it’s a rack in the same room; what does it matter?”

I’m a big proponent of process improvement overall, TIP 20 but a big part of process improvement is knowing the why and having everybody know and understand why something is being done, not just, “Those are the rules, so do it.” Understanding why the racks need to be in the right spot when you leave the room matters.

Again, I just think air distribution generally is the biggest problem facing this industry. It’s the one that’s most ripe for some good education right now.