Cannabis News

Cannabis is still federally illegal and is included on Schedule 1 of the Controlled Substances Act (CSA), along with such other substances as heroin, fentanyl and methamphetamines.¹ It is a federal crime to grow, possess or sell cannabis.

Despite being federally illegal, 36 U.S. states and the District of Columbia have legalized the sale and use of cannabis for medical and/or adult use purposes,² and both direct and indirect cannabis-related businesses (CRBs) are growing at a rapid rate. Revenue from medical and adult use cannabis sales in the US in 2019 is estimated to have reached $10.6B-$13B and is on track to reach nearly $37B in 2024.³

Because the sale of cannabis is federally illegal, financial institutions face a dilemma when deciding to provide services to CRBs. Should they take a significant legal risk or stay out of the market and miss out on a significant revenue opportunity? So far, the vast majority of financial institutions have been unwilling to take the risk, resulting in a dearth of options for CRB’s. Until recently, cannabis business operators had few options for financial services, but times are changing.

This piece will discuss current trends in banking for cannabis-related businesses. We will cover differences in legality at state and federal levels, complexities in dealing in cash versus digital currencies, Congressional actions impacting banking and CRBs and how banking is changing. The explosion of state legalization of cannabis over the past several years has had a strong ripple effect across the US economy, touching many industries both directly and indirectly. Understanding the implications of doing business with a CRB is both challenging and necessary.

Feds Versus States

Money laundering is the process used to conceal the existence, illegal source or illegal application of funds.⁴ In 1986 Congress enacted the Money Laundering Control Act (MLCA), which makes it a federal crime to engage in certain financial and monetary transactions with the proceeds of “specified unlawful activity.”⁵ Therefore, CRB transactions are technically illegal transactions under the MLCA.

Financial institutions therefore face a risk of violating the MLCA if they choose to do business with CRBs, even in states where cannabis operations are permitted. In addition, financial institutions could also face criminal liability under the Bank Secrecy Act (BSA) for failing to identify or report financial transactions that involve the proceeds of cannabis businesses operating legally under state law.⁶

In short, because cannabis is illegal at the federal level, processing funds derived from CRBs could be considered aiding and abetting criminal activity or money laundering. States, however, began legalizing cannabis in 1996, and by 2009, thirteen states had laws allowing cannabis possession and use.⁷ Despite this legislation, federal authorities continued to aggressively enforce federal cannabis laws.⁸ That changed under the Obama administration when, shortly after being elected, President Obama stated that his administration would not target legal CRB’s who were abiding by state laws.[9] In an attempt to provide clarity in this murky environment, beginning in 2009, the Department of Justice (DOJ) issued three memos designed to guide federal prosecutors in this area. However, none of the DOJ memos issued from 2009 through 2013 addressed potential financial crime related to the legal sale or distribution of cannabis in states allowing the use of medicinal or recreational cannabis.

To assist financial institutions in navigating potential financial crime implications of banking CRBs, the Financial Crimes Enforcement Network (FinCen) issued guidance in 2014 that clarified how financial institutions could conduct business with CRBs and maintain compliance with their Bank Secrecy Act requirements (2014 Guidance).⁹ According to the 2014 Guidance, financial institutions may choose to interact with CRBs based on factors specific to each institution, including the institution’s business objectives, the evaluated risks associated with offering such services, and its ability to manage those risks effectively.

The 2014 Guidance requires those who choose to provide services to CRBs to design and implement a thorough customer due diligence review that includes, in part, analyzing the licensing of the entity, developing an understanding of the business operations of the entity, and ongoing monitoring of the entity.⁹ In addition, financial institutions are required to file a Suspicious Activity Report (SAR) for every transaction they process for a CRB, should they choose to accept the business.

Although the 2014 Guidance does outline a path for financial institutions to engage with CRBs, it does not change federal law and, therefore, does not eliminate the legal risk to financial institutions.¹⁰ By its very nature, the 2014 Guidance was a temporary fix, subject to changing views of different administrations, evidenced by the fact that all three of the DOJ guidance documents noted above were rescinded by then Attorney General Jeff Sessions on January 4, 2018.¹² The DOJ enforcement posture could change once again in a Biden administration. Biden is on record as favoring decriminalization, and Attorney General candidate Merrick Garland has stated that if confirmed he will deprioritize enforcement of low-level cannabis crimes. Garland also believes using limited government resources to pursue prosecution of cannabis crimes states where cannabis is legal does not make sense.¹²

Because of the uncertainty and high risk, most banks remain unwilling to serve CRBs. Those that do serve CRBs charge exorbitant fees (fees of $750-$1,000 or more per account per month are not uncommon), pricing many smaller operators out of the financial services market.

Cash is King – Or Is It?

Cannabis operators have discovered the old adage “cash is king” is not necessarily true when it comes to the cannabis space. Bank-less CRBs are forced to utilize cash to pay business expenses, which can be particularly difficult. Utility companies, payroll companies, and taxing authorities are just some of the providers that are difficult, if not impossible, to pay in cash. For example, cannabis operators have been turned away from IRS offices when attempting to pay large federal tax obligations in cash. Likewise, cannabis operators have been unable to utilize payroll processing companies to administer payroll and benefits for their businesses because the processors won’t take cash. CRBs can’t use Amazon or other online retailers because online providers cannot accept cash.

Because dealing in cash is so difficult, CRB operators look for workarounds such as using personal credit/debit cards to purchase business equipment and supplies. This doesn’t eliminate the cash problem, however, because the credit card holder will likely have to accept cash as reimbursement. Such transactions could be considered an attempt to hide the source of the cash, which is, by definition, money laundering.

Some bank-less CRBs try to skirt the system by obtaining bank accounts in the name of management companies or other entities one step removed from the actual business. While operators often choose this route in an effort to streamline business and operate out of the shadows, it again runs afoul of banking laws. Transferring cannabis related financial transactions to another entity is actually the very definition of money laundering – which, as noted above, is defined as the process used to conceal the existence or source of “illegal” funds.

In addition to the difficulties in making payments or purchasing business supplies, operating in a cash-heavy environment poses significant safety risks for cannabis operators. CRBs often have large sums of money onsite and transport large sums of cash when purchasing product or paying bills, making them a target for robbery. In 2017, there was a spate of dispensary robberies across the Phoenix Metro area, including one at Bloom Dispensary that took place during operating hours.¹³

Managing all that cash increases the cost of doing business as well, in the form of increased labor, insurance, and security costs. Cash must be counted and double counted, which can be time consuming for staff, not to mention the time it takes to deliver physical cash payments to hither and yon. Ironically, lack of banking significantly decreases transparency and clouds the waters of compliance, as operating strictly in cash makes it easier to manipulate reported financial results.

Potential Congressional Solutions

In recent years Congress has undertaken several efforts to pass legislation designed to address the state/federal divide on cannabis, which would likely clear the way for financial institutions to provide services to CRBs, including:

• R. 1595 – Secure and Fair Enforcement Banking Act of 2019 (“SAFE Act”);
• 1028 & H.R. 2093 – Strengthening the Tenth Amendment Through Entrusting States Act (STATES Act); and
• 2227 – Marijuana Opportunity Reinvestment and Expungement Act of 2019 (MORE Act).

The climate in Washington DC, however, did not allow any of these initiatives to pass both houses of congress. Had any been sent to the White House, President Trump was unlikely to sign them into law.

The cannabis industry has new reason to believe reform is on the horizon with shift in political leadership in the White House and Senate. Newly anointed Senate Majority Leader Chuck Schumer recently committed to making federal cannabis reform a priority, and President Biden appears committed to decriminalization, reviving the hope of passage of one of these pieces of legislation.

The Changing Banking Landscape

Even though there is little in the way of formal protections for financial institutions, and with the timeline for a legislative fix unknown, an increasing number of banks are working with cannabis operators.

According to FinCen statistics, there were approximately 695 financial institutions actively involved with CRBs as of June 30, 2020. It is important to note that these statistics are based on SAR filings, which banks are required to file when an account or transaction is suspected of being affiliated with a cannabis business. However, some of these SARs may have been generated on genuine suspicious activity rather than on a transaction with a known cannabis customer.

There are arguably more banking institutions offering services to CRBs than ever before. The challenges for CRBs are (1) finding an institution that is willing to offer services; (2) building/maintaining a compliance regime that will be acceptable to that institution; and (3) cost, given the high fees associated with these types of accounts. 

How CRBs Get Accepted by Banks

The gap between CRBs’ need for banking and the financial services providers’ sparse and expensive offerings to the sector has created an opportunity for third-party firms to intervene and provide a compliance structure that will satisfy the needs of the financial institutions, making it easier for the CRB to find a bank.

These third-party firms perform extensive BSA-compliant due diligence on applicants to ensure potential customers are following FinCen guidance required to receive banking services. After the completion of due diligence, they connect the CRBs with financial institutions that are willing to do business with CRBs and provide checking/savings accounts, check writing capability, and merchant processor accounts. These firms often provide additional services such as armored car and cash vaulting services. Some of these firms also offer vendor screening, pre-approving vendors before any payments can be made.

One such firm, Safe Harbor Private Banking, started as a project implemented by the CEO of Partners Credit Union in Denver, Colorado, who set out to design a cannabis banking program that would allow Partners to do business with Colorado CRBs.¹⁵ The program was successful and has since expanded into other states who have legalized cannabis. Other operators include Dama Financial and NaturePay.

While these services offer hope for many CRBs, the downside is cost. These services perform the operations necessary to find, open, and maintain a compliant bank account; however, the costs of compliance are still high, pricing some small operators out of the market.

Is Digital Currency an Answer?

 Digital currency is also making its way into the cannabis world. Digital currency, or cryptocurrency, is a medium of exchange that utilizes a decentralized ledger to record transactions, otherwise known as a blockchain. One of the largest benefits of blockchain is that it is a secure, incorruptible digital ledger used for, among other things, financial transactions.¹⁶ Blockchain technology offers CRBs a transparent and immutable audit trail for business and financial transactions. Several cannabis-specific cryptocurrencies have sprung up in the past several years, including PotCoin, CannabisCoin, and DopeCoin, to name a few.

In July 2019, Arizona approved cryptocurrency startup ALTA to offer services to the state’s medical cannabis operators.¹⁷ ALTA describes itself as a “digital payment club where cash-intensive businesses pay each other using digital tokens instead of cash.”¹⁸ ALTA members purchase digital tokens that are used to pay other members using a proprietary blockchain based system. The tokens are redeemable for US dollars at a stable rate of 1:1, and CRBs do not need a bank account to participate in the ALTA program.

ALTA proposes to pick up members’ cash and exchanges it for tokens, which are then used to pay other members for goods and services. Tokens may be redeemed for cash at any time.¹⁸ The company has been approved by the Arizona State Attorney General, and one of the first members they hope to enlist is the Arizona Department of Revenue (ADOR). Enlisting ADOR into the program would allow dispensary members to pay state taxes digitally rather than hauling large amounts of cash to ADOR offices.

Similarly, Nevada recently contracted with Multichain Ventures to supply a digital currency solution to the Nevada cannabis industry. Nevada Assembly Bill 466 requires the state create a pilot program to design a “closed loop” system like Venmo in an effort to reduce cash transactions in the cannabis sector. Like ALTA, Nevada’s proposed system will convert cash to tokens which can then be transacted between system participants.¹⁹

While both proposals are promising for Arizona and Nevada CRBs, the timeline as to when, or if, these offerings will come online is unknown. Action on cannabis reform at the federal level may render these options moot.

Looking to the Future

Although states are legalizing cannabis in one form or another in growing numbers, the fact that cannabis is still federally illegal poses a significant barrier to accessing the financial services market for CRBs. While most banks are still reluctant to offer services to this rapidly growing industry, there are more banks than ever before willing to participate in the cannabis industry. Recent changes in leadership in Washington DC offer a positive outlook for cannabis reform at the federal level.

As the “green rush” continues to envelop the country, financial services options available to CRBs are slowly growing. Many new options are now available to help CRBs find a bank, develop compliance programs, and manage the cash related problems encountered by most CRBs. However, these solutions may be out of reach for the budget-conscious small operator. Also, there are a number of cryptocurrency solutions designed specifically for CRBs; however, when, or if, these solutions will gain significant traction is still unknown.

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References

1. Controlled Substances Act, 21 U.S.C., Subchapter I, Part B, §812.
2. “State Marijuana Laws”; National Conference of State Legislatures, February 19, 2021.
3. “Exclusive: US Retail Marijuana Sales On Pace to Rise 40% in 2020, near $37B by 2024”. Marijuana Business Daily, June 30, 2020.
4. Kaufman, Irving. “The Cash Connection: Organized Crime, Financial Institutions, and Money Laundering”. Interim Report to the President, October 1984.
5. S. Code § 1956 – Laundering of Monetary Instruments.
6. Rowe, Robert. “Compliance and the Cannabis Conundrum.” ABA Banking Journal, September 11, 2016.
7. “History of Marijuana as a Medicine – 2900 BC to Present”. ProCon.org, December 4, 2020.
8. Truble, Sarah and Kasai, Nathan. “The Past – and Future – of Federal Marijuana Enforcement”. org, May 12, 2017.
9. FIN-2014-G001, BSA Expectations Regarding Marijuana-Related Businesses.
10. Cannabis Banking Coalition Statement.
11. Sessions, Jefferson B. “Memorandum for All United States Attorneys”. January 4, 2018.
12. “Attorney General Nominee Garland Signals Friendlier Marijuana Stance”. Marijuana Business Daily, February 22, 2021.
13. Stern, Ray. “Robbers Hitting Phoenix Medical Marijuana Dispensaries: Is Bank Reform Needed?” The Phoenix New Times, April 11, 2017.
14. FinCen Marijuana Banking Update, June 30, 2020.
15. Mandelbaum, Robb. “Where Pot Entrepreneurs Go When the Banks Just Say No.” The New York Times, January 4, 2018.
16. Rosic, Ameer. “What is Blockchain Technology? A Step-by-Step Guide for Beginners.” com, 2016.
17. Emem, Mark. “Marijuana Stablecoin Asked to Play in Arizona Fintech Sandbox.” CCN.com, October 25, 2019.
18. http:\Whatisalta.com
19. Wagner, Michael, CFA. “Multichain Ventures Secures Public Sector Contract with Nevada to Supply Tokenized Financial Ecosystem for the Legal Cannabis Industry”, January 26, 2021.

It’s no secret that many of California’s legal cannabis businesses have been struggling to thrive since the state launched its first adult-use sales in 2018.

To help support the industry, the County of Humboldt launched Project Trellis in 2019 as a three-tier initiative that provides business support and resources to the industry, covering cannabis business micro-grants, local equity, and marketing and promotion.

“It was created through a resolution that provided 10% of our local cannabis cultivation taxes to be returned to the community through this project,” said Peggy Murphy, economic development specialist for the County of Humboldt. “It covers three basic programs.”

The Micro-Grant Program offers grants of up to $10,000 for cannabis and ancillary businesses—including cultivators, retailers, distributors and manufacturers—for projects approved by the Project Trellis Committee. The grants are competitive, and applications go through the committee for scoring and ranking.

In its first year, Project Trellis awarded $180,000 in microgrants, and in its second year, it awarded $519,000. The grants have funded a variety of projects, Murphy said, including business’ organic certifications, water tanks and solar panels.

The Local Equity Program is based off California Senate Bill 1294, which encouraged the state’s counties to create a Cannabis Equity Assessment, and then a local equity program, in order to apply for state funds to support local equity programs.

Humboldt County ultimately won three awards—one from the Bureau of Cannabis Control (BCC) for $1.3 million and two from the Governor’s Office of Business and Economic Development for $2.4 million and $1.05 million.

Murphy said Project Trellis initiated its Local Equity Program using the original BCC award and is in the final stages of contracting with those awardees.

Project Trellis launched an updated version of its equity program, “Version 2.0,” on Aug. 16, using the second award of $2.4 million and incorporating feedback from the community, stakeholders and funders.

Finally, the county-wide Marketing and Promotion Program aims to promote and maintain Humboldt-grown cannabis as a national and industry brand.

Qualifications for each program vary, Murphy said. Applications for the annual Micro-Grant Program were built in-house by the Project Trellis Committee and staff with oversight from the Project Trellis Board of Directors.

To qualify for a grant, a business must be operating in the cannabis industry, either as a startup or an established company.

“If your project includes finishing your establishment—like completing your permitting and licensure—then we will consider you, but it is really geared toward established cannabis businesses,” Murphy said.

Businesses must be licensed and registered to operate in Humboldt County, with at least 75% of their operations based in Humboldt County, in order to qualify for a grant.

In any given year, Murphy said Project Trellis receives approximately 70 applications for the Micro-Grant Program. During the first year, it funded 17 projects, and during the second year, it funded 16.

To qualify for the Local Equity Program, business owners must be at or below a certain income level, reside in Humboldt County, and be a shareholder or owner with at least 20% interest in a cannabis business. Once all those qualifications are met, applicants must meet a minimum of another set of criteria, including items such as minority ownership.

“A good amount of what we deal with is compliance-related, or conditional [license] approval, and that’s true for both the Micro-Grant as well as the Local Equity Program,” Murphy said. “I think overall, not just our program but the community itself, recognizes that the cost of becoming legitimate within the commercial cannabis marketplace is extreme, and with the fluctuations in the market, it’s incredibly tough even for those who have gone completely through the [licensing] process.”

Project Trellis Committee meetings are open to the public, and the program also hosts public town halls (now conducted via Zoom due to the ongoing COVID-19 pandemic) to receive feedback from the local community.

“We’re really intended to be there to help support the cannabis industry,” Murphy said. “I think that’s important to state because I think a lot of times, people assume that because we are the County of Humboldt, we aren’t necessarily looking out for their best interests. And we’re hoping to be an advocate for the community.”

It’s no secret that many of California’s legal cannabis businesses have been struggling to thrive since the state launched its first adult-use sales in 2018.

To help support the industry, the County of Humboldt launched Project Trellis in 2019 as a three-tier initiative that provides business support and resources to the industry, covering cannabis business micro-grants, local equity, and marketing and promotion.

“It was created through a resolution that provided 10% of our local cannabis cultivation taxes to be returned to the community through this project,” said Peggy Murphy, economic development specialist for the County of Humboldt. “It covers three basic programs.”

The Micro-Grant Program offers grants of up to $10,000 for cannabis and ancillary businesses—including cultivators, retailers, distributors and manufacturers—for projects approved by the Project Trellis Committee. The grants are competitive, and applications go through the committee for scoring and ranking.

In its first year, Project Trellis awarded $180,000 in microgrants, and in its second year, it awarded $519,000. The grants have funded a variety of projects, Murphy said, including business’ organic certifications, water tanks and solar panels.

The Local Equity Program is based off California Senate Bill 1294, which encouraged the state’s counties to create a Cannabis Equity Assessment, and then a local equity program, in order to apply for state funds to support local equity programs.

Humboldt County ultimately won three awards—one from the Bureau of Cannabis Control (BCC) for $1.3 million and two from the Governor’s Office of Business and Economic Development for $2.4 million and $1.05 million.

Murphy said Project Trellis initiated its Local Equity Program using the original BCC award and is in the final stages of contracting with those awardees.

Project Trellis launched an updated version of its equity program, “Version 2.0,” on Aug. 16, using the second award of $2.4 million and incorporating feedback from the community, stakeholders and funders.

Finally, the county-wide Marketing and Promotion Program aims to promote and maintain Humboldt-grown cannabis as a national and industry brand.

Qualifications for each program vary, Murphy said. Applications for the annual Micro-Grant Program were built in-house by the Project Trellis Committee and staff with oversight from the Project Trellis Board of Directors.

To qualify for a grant, a business must be operating in the cannabis industry, either as a startup or an established company.

“If your project includes finishing your establishment—like completing your permitting and licensure—then we will consider you, but it is really geared toward established cannabis businesses,” Murphy said.

Businesses must be licensed and registered to operate in Humboldt County, with at least 75% of their operations based in Humboldt County, in order to qualify for a grant.

In any given year, Murphy said Project Trellis receives approximately 70 applications for the Micro-Grant Program. During the first year, it funded 17 projects, and during the second year, it funded 16.

To qualify for the Local Equity Program, business owners must be at or below a certain income level, reside in Humboldt County, and be a shareholder or owner with at least 20% interest in a cannabis business. Once all those qualifications are met, applicants must meet a minimum of another set of criteria, including items such as minority ownership.

“A good amount of what we deal with is compliance-related, or conditional [license] approval, and that’s true for both the Micro-Grant as well as the Local Equity Program,” Murphy said. “I think overall, not just our program but the community itself, recognizes that the cost of becoming legitimate within the commercial cannabis marketplace is extreme, and with the fluctuations in the market, it’s incredibly tough even for those who have gone completely through the [licensing] process.”

Project Trellis Committee meetings are open to the public, and the program also hosts public town halls (now conducted via Zoom due to the ongoing COVID-19 pandemic) to receive feedback from the local community.

“We’re really intended to be there to help support the cannabis industry,” Murphy said. “I think that’s important to state because I think a lot of times, people assume that because we are the County of Humboldt, we aren’t necessarily looking out for their best interests. And we’re hoping to be an advocate for the community.”

The legalization of cannabis in the U.S. has been long in the making. Back in the early 1970s, states such as Oregon, Texas and Colorado began the process of decriminalizing small amounts of cannabis. Fast forward 50 years or thereabouts, and the momentum toward legalization is undeniable.

True, cannabis remains illegal at the federal level, but state after state is legalizing the substance for medical and adult use. California was the first to do so for medical usage in 1996. Since then, several others have jumped on the medical cannabis bandwagon, and a total of 19 states have legalized cannabis for adult use. It seems, then, that it’s just a matter of time before the federal government follows suit.

A Bit of Background 

There are two key federal laws concerning cannabis that criminalize its use: the Comprehensive Drug Abuse Prevention and Control Act (CDAPCA) and the Controlled Substances Act (CSA), which is part of the CDAPCA. The CSA became effective in 1971 and grouped cannabis along with heroin, LSD and cocaine as Schedule I drugs that are tightly regulated and deemed illegal by the federal government. For its part, the CDAPCA, also enacted in the 70s, was an element of the U.S. “War on Drugs,” and served to significantly restrict manufacturing and distribution of cannabis, among other substances, and amp up related security laws.

Times have certainly changed over the decades, and so has public sentiment about cannabis use. In fact, over 91% of U.S. adults say that cannabis should be legal for adult use or medical use—this according to the Pew Research Center. Clearly, more and more states are hearing this message loud and clear given the uptick in jurisdictions legalizing the substance, be it for medical or adult use purposes.

The Booming Legal Cannabis Market

The legal cannabis business is on fire, with recent estimates suggesting that the size of the global market will climb to $84 billion by 2028. This is a staggering number that spells opportunity for budding (pun intended) entrepreneurs in the U.S. and beyond, not to mention tax authorities. It gets even better when taking into account the popularity of CBD products. CBD, which is derived from the cannabis plant but does not contain THC and is legal in the U.S., has become an integral part of the wellness industry. Experts predict that the global CBD market is on its way to reaching a value of $55 billion in years to come.

What This All Means for the Future of Cannabis at the Federal Level

No doubt about it, legal cannabis is big business. But that business is being thwarted by the failure of the federal government to change course and legalize the substance. With cannabis still considered a Schedule I drug, federal banks are unable to provide access to financial services for companies selling cannabis-related products. As otherwise stated, because federal law makes cannabis illegal, banks cannot do business with cannabis companies, which is problematic for so many reasons.

But good news could be on the horizon. The SAFE Banking Act of 2021, which would provide a safe harbor for banking institutions providing services to cannabis clients, was passed in the U.S. House of Representatives and referred to committee. Whether the legislation passes in its current form is anyone’s guess, though our federal legislature does seem to be nearing the relaxation of existing cannabis restrictions.

This is evidenced as well in the U.S. Senate, where the Cannabis Administration and Opportunity Act was recently introduced and is currently pending. That legislation would, among other things, remove cannabis from the CSA, introduce regulations to tax cannabis products, expunge prior convictions, and maintain the authority of states to set their own cannabis policies.

Of course, there’s no certainty that 2021 will be the year when cannabis is finally legalized (or at the very least, decriminalized) federally. Still, we’re closer to that eventuality than ever before.

It’s no secret that many of California’s legal cannabis businesses have been struggling to thrive since the state launched its first adult-use sales in 2018.

To help support the industry, the County of Humboldt launched Project Trellis in 2019 as a three-tier initiative that provides business support and resources to the industry, covering cannabis business micro-grants, local equity, and marketing and promotion.

“It was created through a resolution that provided 10% of our local cannabis cultivation taxes to be returned to the community through this project,” said Peggy Murphy, economic development specialist for the County of Humboldt. “It covers three basic programs.”

The Micro-Grant Program offers grants of up to $10,000 for cannabis and ancillary businesses—including cultivators, retailers, distributors and manufacturers—for projects approved by the Project Trellis Committee. The grants are competitive, and applications go through the committee for scoring and ranking.

In its first year, Project Trellis awarded $180,000 in microgrants, and in its second year, it awarded $519,000. The grants have funded a variety of projects, Murphy said, including business’ organic certifications, water tanks and solar panels.

The Local Equity Program is based off California Senate Bill 1294, which encouraged the state’s counties to create a Cannabis Equity Assessment, and then a local equity program, in order to apply for state funds to support local equity programs.

Humboldt County ultimately won three awards—one from the Bureau of Cannabis Control (BCC) for $1.3 million and two from the Governor’s Office of Business and Economic Development for $2.4 million and $1.05 million.

Murphy said Project Trellis initiated its Local Equity Program using the original BCC award and is in the final stages of contracting with those awardees.

Project Trellis launched an updated version of its equity program, “Version 2.0,” on Aug. 16, using the second award of $2.4 million and incorporating feedback from the community, stakeholders and funders.

Finally, the county-wide Marketing and Promotion Program aims to promote and maintain Humboldt-grown cannabis as a national and industry brand.

Qualifications for each program vary, Murphy said. Applications for the annual Micro-Grant Program were built in-house by the Project Trellis Committee and staff with oversight from the Project Trellis Board of Directors.

To qualify for a grant, a business must be operating in the cannabis industry, either as a startup or an established company.

“If your project includes finishing your establishment—like completing your permitting and licensure—then we will consider you, but it is really geared toward established cannabis businesses,” Murphy said.

Businesses must be licensed and registered to operate in Humboldt County, with at least 75% of their operations based in Humboldt County, in order to qualify for a grant.

In any given year, Murphy said Project Trellis receives approximately 70 applications for the Micro-Grant Program. During the first year, it funded 17 projects, and during the second year, it funded 16.

To qualify for the Local Equity Program, business owners must be at or below a certain income level, reside in Humboldt County, and be a shareholder or owner with at least 20% interest in a cannabis business. Once all those qualifications are met, applicants must meet a minimum of another set of criteria, including items such as minority ownership.

“A good amount of what we deal with is compliance-related, or conditional [license] approval, and that’s true for both the Micro-Grant as well as the Local Equity Program,” Murphy said. “I think overall, not just our program but the community itself, recognizes that the cost of becoming legitimate within the commercial cannabis marketplace is extreme, and with the fluctuations in the market, it’s incredibly tough even for those who have gone completely through the [licensing] process.”

Project Trellis Committee meetings are open to the public, and the program also hosts public town halls (now conducted via Zoom due to the ongoing COVID-19 pandemic) to receive feedback from the local community.

“We’re really intended to be there to help support the cannabis industry,” Murphy said. “I think that’s important to state because I think a lot of times, people assume that because we are the County of Humboldt, we aren’t necessarily looking out for their best interests. And we’re hoping to be an advocate for the community.”

Cannabis Business Times and Cannabis Dispensary have launched the Best Cannabis Companies To Work For—2022. The awards program will identify and recognize the best employers in cannabis cultivation and dispensary markets, continuing the recognition the media brands debuted two years ago.

Registration and recognition is free. Visit bestcompaniescannabis.com to apply. The registration deadline is Oct. 8.

A ranking of the “Best Cannabis Companies To Work For – 2022” in cultivation and retail will be revealed in Cannabis Business Times and Cannabis Dispensary in early 2022.

The survey is organized and managed by the Best Companies Group (BCG), an independent research firm specializing in identifying and recognizing great places to work.

“We are thrilled to continue this project for the third year and to not only recognize great cannabis companies, but also learn more about what makes certain cannabis companies so successful in creating positive work environments,” Editorial Director Noelle Skodzinski said. “Competition for talented employees is now even more intense, due in part to the economic pressures of the past year, and this program also can help ranking companies attract great talent.”  

Read more about the cultivation and dispensary businesses that ranked in the 2021 program and were featured in Cannabis Business Times and Cannabis Dispensary.

Here’s what you need to know to get involved:

Enter as either a Cultivation Operation or a Dispensary Operation (or both) and meet the following eligibility requirements:

• Have 50% or more of the business coming from either a Cannabis Cultivation Operation; or a Cannabis Dispensary.

• Be a publicly or privately held business

• Be a for-profit or not-for-profit business

• Be based in the U.S. or Canada

• Be legally licensed to cultivate or sell cannabis for medical and/or adult-use under a state regulatory framework (or federal program if in Canada)

• Have a minimum of 15 full-time or part-time employees working in the U.S. or Canada

• Be in business a minimum of one year

• Be willing to be featured in Cannabis Business Times and/or Cannabis Dispensary, if your company ranks on the Best Cannabis Companies to Work For lists.

Assessment Description

The process includes two surveys to gather detailed data about each participating company. BCG conducts the surveys, analyzes the data and determines the winners and rankings.

Part I – Employer Benefits & Policies Questionnaire: The employer completes an online survey, detailing company policies, practices, benefits and demographics.

Part II – Employee Engagement & Satisfaction Survey: Employees complete a survey of in-depth statements using a scale of five points ranging from “Agree Strongly” to “Disagree Strongly.” (Employee responses are provided only in aggregate; no individual employee responses are shared with employers.) The survey also includes seven demographic and two open-ended questions. It can be given online or by paper, if a full company employee email list is not available.

Participation in the “Best Cannabis Companies To Work For” survey and ranking is free, but management teams may request the full employee feedback report generated by the Best Companies Group process. The cost of that report is based on the number of employees working at the company.

A list of frequently asked questions may be found at bestcompaniescannabis.com, as well.

Cannabis Business Times and Cannabis Dispensary have launched the Best Cannabis Companies To Work For—2022. The awards program will identify and recognize the best employers in cannabis cultivation and dispensary markets, continuing the recognition the media brands debuted two years ago.

Registration and recognition is free. Visit bestcompaniescannabis.com to apply. The registration deadline is Oct. 8.

A ranking of the “Best Cannabis Companies To Work For – 2022” in cultivation and retail will be revealed in Cannabis Business Times and Cannabis Dispensary in early 2022.

The survey is organized and managed by the Best Companies Group (BCG), an independent research firm specializing in identifying and recognizing great places to work.

“We are thrilled to continue this project for the third year and to not only recognize great cannabis companies, but also learn more about what makes certain cannabis companies so successful in creating positive work environments,” Editorial Director Noelle Skodzinski said. “Competition for talented employees is now even more intense, due in part to the economic pressures of the past year, and this program also can help ranking companies attract great talent.”  

Read more about the cultivation and dispensary businesses that ranked in the 2021 program and were featured in Cannabis Business Times and Cannabis Dispensary.

Here’s what you need to know to get involved:

Enter as either a Cultivation Operation or a Dispensary Operation (or both) and meet the following eligibility requirements:

• Have 50% or more of the business coming from either a Cannabis Cultivation Operation; or a Cannabis Dispensary.

• Be a publicly or privately held business

• Be a for-profit or not-for-profit business

• Be based in the U.S. or Canada

• Be legally licensed to cultivate or sell cannabis for medical and/or adult-use under a state regulatory framework (or federal program if in Canada)

• Have a minimum of 15 full-time or part-time employees working in the U.S. or Canada

• Be in business a minimum of one year

• Be willing to be featured in Cannabis Business Times and/or Cannabis Dispensary, if your company ranks on the Best Cannabis Companies to Work For lists.

Assessment Description

The process includes two surveys to gather detailed data about each participating company. BCG conducts the surveys, analyzes the data and determines the winners and rankings.

Part I – Employer Benefits & Policies Questionnaire: The employer completes an online survey, detailing company policies, practices, benefits and demographics.

Part II – Employee Engagement & Satisfaction Survey: Employees complete a survey of in-depth statements using a scale of five points ranging from “Agree Strongly” to “Disagree Strongly.” (Employee responses are provided only in aggregate; no individual employee responses are shared with employers.) The survey also includes seven demographic and two open-ended questions. It can be given online or by paper, if a full company employee email list is not available.

Participation in the “Best Cannabis Companies To Work For” survey and ranking is free, but management teams may request the full employee feedback report generated by the Best Companies Group process. The cost of that report is based on the number of employees working at the company.

A list of frequently asked questions may be found at bestcompaniescannabis.com, as well.

RIVERSIDE, Calif., Aug. 13, 2021 – PRESS RELEASE – The former mayor of Adelanto was arrested Aug. 13 by special agents of the FBI on a federal grand jury indictment alleging he accepted more than $57,000 in bribes and kickbacks in exchange for approving ordinances authorizing various types of commercial cannabis activity within the city, and ensuring his co-schemers obtained city licenses or permits authorizing certain commercial cannabis activities.

Richard Allen Kerr, 64, of Adelanto, was taken into federal custody without incident. He is charged with seven counts of honest services wire fraud and two counts of bribery.

Kerr, who served as Adelanto’s mayor from 2014 to 2018, was expected to make his initial appearance at the U.S. District Court in Riverside the same day of his arrest.

According to the indictment returned on Aug. 11, as part of his official duties, Kerr voted on ordinances governing zoning regulations in the city and served on Adelanto’s Cannabis Dispensary Permit Committee, which determined the number of dispensary permits that would be issued and which applicants would receive them.

As mayor, Kerr supported cannabis legalization, voted in favor of an ordinance authorizing cannabis cultivation in the city, voted in favor of an ordinance authorizing the operation of medical cannabis dispensaries, and voted to authorize the distribution, transportation and testing of medical cannabis, among other commercial cannabis activities. At the same time, Kerr secretly used his official position to enrich himself and his co-schemers by passing these same ordinances, according to the indictment.

Kerr allegedly also drafted zones for commercial cannabis activities to include locations used by his co-schemers, and he ensured they obtained the licenses and permits they sought—in exchange for bribes, kickbacks and gifts.

Kerr’s alleged co-schemers were a lawyer who specialized in plaintiffs’ tort litigation—identified in the indictment as “Person A”—and two individuals—labeled “Person C” and “Person D”— who had business interests in the city, including those involving cannabis cultivation.

The bribes and kickbacks were allegedly disguised by Kerr and his co-schemers as gifts, donations to a charitable fund, donations to Kerr’s election campaign or advance payments for the proceeds of planned litigation associated with a motorcycle accident.

In exchange for the bribes and kickbacks, Kerr allegedly provided favorable official action on behalf of the city to Person A, Person C and other co-schemers with business interests in the city by authorizing various types of commercial cannabis activities, ensuring his supporters obtained the licenses or permits they sought, and interfering with enforcement activities by city officials.

For example, on Nov. 29, 2016, the Adelanto City Council held a public discussion related to an ordinance, including discussion of “overlay zones” within which medical cannabis dispensaries would be located. The initial proposal included two zones, neither of which included a former restaurant—purchased two months earlier by Person A and his spouse.

During the discussion, Kerr requested a change in the boundaries of the second overlay zone, which expanded the zone to include Person A’s business. The plans for the business initially called for the building to be an attorney’s office, although they included items such as “elongated sales counters,” a “dispensing room,” “cashier,” and “security room,” the indictment alleges.

On Dec. 5, 2016, Kerr deposited a $5,000 check—dated Nov. 29, 2016—from Person A’s real estate trust account into his bank account, and the check’s memorandum line read, “ADV XMAS FUND.”

In May 2017, Kerr voted twice in favor of a city ordinance that included Person A’s business in the cannabis dispensary overlay zone. In February, June and August of 2017, Kerr deposited three $10,000 checks from Person A’s law firm, with the memorandum lines of each check stating, “ADVANCE.”

In total, Kerr accepted at least $57,500 in alleged bribes and kickbacks from Person A, Person C and other co-schemers.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

If convicted of all charges, Kerr would face a statutory maximum sentence of 160 years in federal prison.

The FBI investigated this matter.

Assistant U.S. Attorney Sean D. Peterson of the Riverside Branch Office is prosecuting this case.

RIVERSIDE, Calif., Aug. 13, 2021 – PRESS RELEASE – The former mayor of Adelanto was arrested Aug. 13 by special agents of the FBI on a federal grand jury indictment alleging he accepted more than $57,000 in bribes and kickbacks in exchange for approving ordinances authorizing various types of commercial cannabis activity within the city, and ensuring his co-schemers obtained city licenses or permits authorizing certain commercial cannabis activities.

Richard Allen Kerr, 64, of Adelanto, was taken into federal custody without incident. He is charged with seven counts of honest services wire fraud and two counts of bribery.

Kerr, who served as Adelanto’s mayor from 2014 to 2018, was expected to make his initial appearance at the U.S. District Court in Riverside the same day of his arrest.

According to the indictment returned on Aug. 11, as part of his official duties, Kerr voted on ordinances governing zoning regulations in the city and served on Adelanto’s Cannabis Dispensary Permit Committee, which determined the number of dispensary permits that would be issued and which applicants would receive them.

As mayor, Kerr supported cannabis legalization, voted in favor of an ordinance authorizing cannabis cultivation in the city, voted in favor of an ordinance authorizing the operation of medical cannabis dispensaries, and voted to authorize the distribution, transportation and testing of medical cannabis, among other commercial cannabis activities. At the same time, Kerr secretly used his official position to enrich himself and his co-schemers by passing these same ordinances, according to the indictment.

Kerr allegedly also drafted zones for commercial cannabis activities to include locations used by his co-schemers, and he ensured they obtained the licenses and permits they sought—in exchange for bribes, kickbacks and gifts.

Kerr’s alleged co-schemers were a lawyer who specialized in plaintiffs’ tort litigation—identified in the indictment as “Person A”—and two individuals—labeled “Person C” and “Person D”— who had business interests in the city, including those involving cannabis cultivation.

The bribes and kickbacks were allegedly disguised by Kerr and his co-schemers as gifts, donations to a charitable fund, donations to Kerr’s election campaign or advance payments for the proceeds of planned litigation associated with a motorcycle accident.

In exchange for the bribes and kickbacks, Kerr allegedly provided favorable official action on behalf of the city to Person A, Person C and other co-schemers with business interests in the city by authorizing various types of commercial cannabis activities, ensuring his supporters obtained the licenses or permits they sought, and interfering with enforcement activities by city officials.

For example, on Nov. 29, 2016, the Adelanto City Council held a public discussion related to an ordinance, including discussion of “overlay zones” within which medical cannabis dispensaries would be located. The initial proposal included two zones, neither of which included a former restaurant—purchased two months earlier by Person A and his spouse.

During the discussion, Kerr requested a change in the boundaries of the second overlay zone, which expanded the zone to include Person A’s business. The plans for the business initially called for the building to be an attorney’s office, although they included items such as “elongated sales counters,” a “dispensing room,” “cashier,” and “security room,” the indictment alleges.

On Dec. 5, 2016, Kerr deposited a $5,000 check—dated Nov. 29, 2016—from Person A’s real estate trust account into his bank account, and the check’s memorandum line read, “ADV XMAS FUND.”

In May 2017, Kerr voted twice in favor of a city ordinance that included Person A’s business in the cannabis dispensary overlay zone. In February, June and August of 2017, Kerr deposited three $10,000 checks from Person A’s law firm, with the memorandum lines of each check stating, “ADVANCE.”

In total, Kerr accepted at least $57,500 in alleged bribes and kickbacks from Person A, Person C and other co-schemers.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

If convicted of all charges, Kerr would face a statutory maximum sentence of 160 years in federal prison.

The FBI investigated this matter.

Assistant U.S. Attorney Sean D. Peterson of the Riverside Branch Office is prosecuting this case.

Most months, Cannabis Business Times brings readers the feature “Cultivation Matters,” a recurring series focusing on plant cultivation by researchers from North Carolina State University that can steer growers toward successful operations.

Understanding micro- and macronutrients, for example, and their roles in helping plants grow properly to complete their lifecycles, equips cultivators with the knowledge to produce healthy plants with optimal yields.

Biological controls, plant oddities, plant physiology, nutrient lockout, fertility management, water quality and the like are explored and explained in this series. Well-versed cultivators who just need a refresher as well as less experienced growers who are just getting going can both benefit from findings to reduce their trial-and-error growing pains.

For in-depth analysis, findings and best practices, read the following “Cultivation Matters” articles previously published in Cannabis Business Times:

 

What To Do When Micronutrients Become Macro Problems (August 2021)

Plants require certain micro and macronutrients to thrive. Although plants do not need micronutrients in the same concentration as the meat-and-potatoes macronutrients, they are just as important for plant growth, development and biomass production.

Micronutrients iron (Fe), boron (B), manganese (Mn), zinc (Zn), copper (Cu), and molybdenum (Mo) are all essential to produce healthy plants. With the recommended rates of micronutrients being smaller in comparison to macronutrients (nitrogen (N), phosphorus (P), potassium (K), calcium (Ca), magnesium (Mg), and sulfur (S)), it is easy for growers to overapply them. But just because plants require these essential elements in lesser amounts doesn’t mean an imbalance won’t have an outsize impact on crop health and yield.

Excess application of micronutrients can cause nutrient antagonism and imbalance, which limits nutrient concentration and uptake, meaning key elements are unavailable to plants. There is a specific range where micronutrient fertility is optimized, but not overapplied.

The entire article can be read here.

 

How Biological Controls Can Help You Tackle Aphid Issues (July 2021)

Biological control is a plant protection strategy used in different horticultural cropping systems that minimizes plant damage so that plants are marketable and/or there are no effects on yield.

Biological control involves releasing parasitoids, which will regulate insect and/or mite pest populations. The primary parasitoids and predators used in controlled environments are associated with aphid parasitoids and predatory mites.

Commercially available parasitoids can be purchased from biological control suppliers and then released to regulate insect or mite pest populations of cannabis crops.

The entire article can be read here.

 

How to Fight Cannabis Pests With Bugs (August 2021)

The following article is the second of a two-part series (first part is above) that describes commercially available parasitoids and predators, which can be purchased from biological control suppliers and then released to regulate insect or mite pest populations on cannabis crops. Here, we examine the predatory mites that attack fungus gnats, mites, thrips, and whiteflies. 

Predatory mite behavior needs to be understood before release because their ability to regulate specific insect or mite pests is primarily dependent on feeding habit, though plant volatiles (i.e. odors emitted by plants when fed upon by herbivores that may attract certain predatory mites such as Phytoseiulus persimilis) and dispersal can also affect regulation. Predatory mites are classified into three categories: Type I, II, and III, based on their food preferences and dispersal capabilities among and within plants.

The entire article can be read here.

 

Funky Stems: What Does Fasciation Mean for Your Cannabis Grow? (June 2021)

As plant scientists, we observe how plants grow and develop over time, and we are intrigued by variations or oddities that occur in growth. Recently, a seed-born cannabis plant in our greenhouse developed abnormal shoot growth with a flattened apical stem. Other cannabis growers have posted images online when they too discover an odd, flat stem.

We grew the plant for two months to observe the advancement of growth patterns. Over time, the shoot tip developed a mass of leaves growing out of the top. As the plant continued to grow, the deformed portion of the stem, which measured more than 3 centimeters across, enlarged and flattened.

This phenomenon is referred to as fasciation. So, what causes this fascinating, distorted growth?

The entire article can be read here.

 

Can Cannabis Benefit from Silicon? (May 2021)

Silicon (Si) has been touted as a miracle chemical by many. It is the second-most abundant element of the Earth’s crust, at 25.7% by weight. Much of the Si on Earth is tied up in silicate forms, such as quartz, that are unavailable for plant uptake.

Nevertheless, with natural weathering, abundant Si becomes available in the soil for plants. With Si being prevalent on Earth, it has become an important element for some plant species and can improve plant growth and prevent disease. That said, Si is classified as a beneficial element, not an essential one, because it is not required for the plant to complete its lifecycle.

The entire article can be read here.

Ideal Rates of Iron in Cannabis Cultivation Vary Depending on End Goal (April 2021)

When most people think of iron, it’s in the context of construction and manufacturing, and considerations focus more on quality and stress ratings. But iron plays a crucial role in both human and plant physiology. (The metallic taste in blood is from its iron content, as anyone who has bit their tongue will attest.) In the plant world, iron (Fe) is an important part of protein synthesis, chloroplast development, and the photosynthetic process of energy storage in cannabis.

In plants, Fe is an immobile element, meaning it cannot be moved (translocated) within the plant from older portions of the plant to satisfy the demand in newer developing plant portions. This is important information given that nutrient deficiency symptoms will be seen on the new and expanding leaves.

The entire article can be read here.

RELATED: Read our “Nutrient Matters” ebook, a collection of similar articles by these authors from North Carolina State University

 

What Are the Optimal Rates for Magnesium in Cannabis? (March 2021)

Macro- and micronutrients help plants grow properly, obtain optimal yields, and complete their lifecycle. Substantial quantities of the essential macronutrient magnesium (Mg) are necessary for proper plant growth and development.

In plants, Mg is a mobile element that is used in photosynthesis and protein synthesis. Therefore, Mg is often moved (translocated) in the plant from the older leaves to satisfy the demand in newer developing leaves that are often more photosynthetically active. Given Mg is the central atom of the chlorophyll molecule, which converts light energy into essential carbohydrates, Mg is directly related to optimal plant growth.

Cannabis is a determinate plant, which means that once flowering begins, the terminal growing tips develop into floral material. Mg will directly impact the size, quality, and yield of a plant, which will directly impact the grower’s bottom line.

The entire article can be read here.

 

How to Optimize Phosphorus Fertility for Cannabis (February 2021)

Plants, much like humans, require certain nutrients and minerals to thrive. These macro- and micronutrients help plants grow properly, obtain optimal yields and complete their lifecycle. Aside from nitrogen (N), phosphorus is perhaps the most important of the macronutrients. Phosphorus (P) is essential for energy storage and utilization, root development and growth, flower formation, and metabolic activities in cannabis.

In plants, P is a mobile element that is necessary for many key metabolic processes, in addition to cell elongation and root growth and development. Therefore, P can be moved (translocated) from older growth segments of plants to satisfy demand in newer, developing plant portions. This is important to note, given that nutrient deficiency symptoms will appear in older leaves as the plant moves P resources into the new and developing leaves and other sinks such as developing flower buds.

The entire article can be read here.

 

3 Tips to Avoid Nutrient Lockout in Cannabis (January 2021)

One of the primary goals for cannabis cultivators is to optimize plant growth for stronger, healthier yields. To optimize plant growth, monitoring and managing nutrient levels is essential; however, numerous factors can affect nutrient availability and uptake for cannabis plants.

As growers know, cultivation is a balancing act of providing adequate nutrient levels in proper ratios, and, most importantly, ensuring that the substrate pH is within the recommended range. Each of these factors properly applied together optimize plant growth, but if one factor is out of balance, the plant will suffer.

Nutrient “lockup” or “lockout” is when a particular nutrient is unavailable for the plant to uptake. This is usually caused by an elevated substrate pH, a situation that has plagued cannabis growers for many years.

A second problem is improperly balanced nutrient levels. This is referred to as an antagonism. In addition, one must ensure that adequate levels of fertility are provided. While these can all limit nutrient availability, their fundamental causes are different. And perhaps the most important factor is substrate pH.

The entire article can be read here.

 

How to Establish a Cannabis Nutrient Monitoring Program (November 2020)

Fertility management can be challenging for many crops. To ensure your plants are receiving the fertility they require, a stepwise nutrient monitoring program that examines both systems and plants should be implemented.

When setting up a holistic greenhouse or indoor monitoring program, it is important to monitor and test each step along the supply chain, examining the irrigation pipes and flow of water and nutrients. The main steps include:

• the water source
• the mixing tank and injector
• the drip emitters or delivery system
• the substrate
• the plant.

At each step, complications and challenges can arise. By taking a “pipe-to-plant” approach, you can determine where along the supply chain problems arise and identify them early to prevent costly ramifications to plant growth and development.

The entire article can be read here.

 

How Does Your Cannabis Fertilizer Recipe Compare? (October 2020)

Fertilization management can be considered both a science of what plants require and an art of how nutrients are supplied. The major nutrients taken up by plants are nitrogen (N), phosphorus (P), and potassium (K). With these three elements being the heavy lifters, most fertilizer programs focus on delivering NPK to the plant.

The other elements included in fertilizers are still essential but generally are provided at constant levels. We evaluated two commercial cannabis fertilizer programs developed by suppliers who were willing to share their recipes and compared each program to our cannabis fertility research program at North Carolina State University (NCSU).

The entire article can be read here.

How to Monitor Irrigation Water Quality and Correct Imbalances in Container-Grown Cannabis (September 2020)

Water is the single largest input for growing cannabis and therefore an essential resource for growing healthy plants. Plants, by weight, are comprised of 90% to 95% water.

Elements in irrigation water can affect plant growth, especially in container-grown plants, due to those plants’ restricted root masses and the high potential for change within the soilless substrate because of its relatively low buffering capacity, or the ability to regulate pH changes. Because of this, it is important to regularly monitor your irrigation water to be sure it is not creating nutrient imbalances and inhibiting plant growth.

The entire article can be read here.