Cannabis News

Anyone owning and operating a cannabis business should know the value of proactive compliance management to operate successfully. For consumers, the view into the world “behind the budtending counter” is limited to the cool looking packaging, test results and the overall “vibe” of products they may want to try.

In our experience, as the oldest cannabis compliance firm, we’ve audited and visited hundreds of facilities and have seen the proverbial “Wizard behind the curtain”. We know “how the sausage is made.” And, as one can expect, it’s not always as glamorous in the back of the house as it appears on the shelf.

As markets expand and people buy into existing or new cannabis businesses, amid a world of thousands of competing companies and products, consumers need to ask themselves: “What do I know about the companies and products I consume?”

More and more, the question of consistent quality keeps coming up in the cannabis industry. Recalls are still ongoing in the news as products continually fail testing for potency and contamination.

Colorado, for example, is considered the shining jewel of the US industry in terms of experience, quality and integrity. However, consumers may be shocked to learn that a majority of dispensaries in the state do not operate by stringent SOPs, nor do they verify packaging and labeling for compliance, or review test results of products coming in and going out of their shops.

Starting January 1, 2021, these retailers finally have to develop and implement recall procedures in the event of contaminated products or cannabis that is causing adverse side effects. Later this year, vape pens will finally have their vapor tested instead of just the concentrate therein.

These liabilities or lack of compliance infrastructure may very well be a ticking time bomb no consumer in their right mind would want to deal with.

Bad Product/Brand Experience

Non-compliance and inconsistency on the part of operators translates directly into negative experiences for consumers. Whether its consuming a product that tastes like chlorophyll or enjoying a product the first time only to find a completely different experience the next time around, consumers experience the cost of non-compliance the most.

Beyond products, most consumers recognize their brand experience when shopping for products. Since the invention of Weedmaps, customers have always expressed their like or dislike for particular dispensaries and delivery services. Operators know these reviews from a customer’s experience can make or break their business and brand.

We always tell cannabis operators that a brand is a double-edged sword. As easily as it can strike through competitors, it can just as easily damage one’s own business.

Examples include SweetLeaf and Kushy Punch whose brands, once well-known and popular, are now synonymous with the worst of the worst given their histories of non-compliance and shut downs.

For consumers, finding consistent, quality products at a fair price is often the most important consideration to avoid the cost of a bad experience with cannabis. For visitors or first-time consumers, this could mean the difference between trying cannabis again or deciding it’s simply not for them.

Contamination & Illness

The worst-case scenario for consumers, especially patients, is the cost of consuming contaminated products or otherwise having adverse effects from the use of cannabis. While cannabis itself is one of the least harmful substances known to man, contaminated cannabis can be dangerous or deadly.

In the early days of the industry and in many emerging markets with poor to no oversight, these lessons are learned most severely. From the use of non-commercial washing machines being used for water-based extracts that tested positive for E. coli to recalled products ladened with Eagle 20 (which contains the harmful pesticide known as Myclobutanil), the industry has been reactive to safety measures and complying with best practices.

Still, some states persist with limited to no testing and simply label products with a warning to consumers that they are using cannabis at their own risk without testing for safety or efficacy.

Most consumers may be shocked to know that most cannabis companies do not adhere to good agricultural practices or good manufacturing practices (GAP/GMP) to ensure consistent quality and safety standards in similar industries such as nutraceuticals and food manufacturing.

Patients already weakened by disease states – including auto-immune disorders – are most at risk and understand all too well the costs of hospitalization, medical bills and loss of quality of life. For the average adult user, these risks are the same and there is often little to no recourse with the dispensary or product manufacturers if the product slips through contamination testing because of the non-compliance of product validation on flower or infused products.

For companies, outdated and inaccurate SOPs as well as production batches are the only line of defense to protect the company from product liability lawsuits filed by consumers in the event of contamination and illness. Most cannabis companies do not manage this aspect of their business effectively and simply assume they are sufficiently compliant without proactively measuring such compliance and adjusting operations as necessary.

Long-Term Consequences

Consumers would do well to remember that the modern industry is infantile in its development compared to other heavily regulated industries. Cannabis companies are babies learning to crawl while major food and beverage, pharmaceutical and nutraceutical, and alcohol and tobacco industries are far ahead of the game. The US industry, is arguably, already behind the compliance curve comparative to other nations already placing stricter regulations and standards on licensees.

For customers, this can be a confusing experience given that no two batches of flowers will taste the same let alone give a consumer exactly the same effect.

Already, customers are learning Sativa and Indica are imaginary cultural terms to describe generalized characteristics of major and minor cannabinoids and terpenes in each strain which produces a variety of effects – despite state limitations on labeling these active ingredients.

Vape pens are under increasing scrutiny as regulators discover long-term effects of vape use from the tobacco industry causing EVALI in consumers and being deemed as dangerous. As with anything new, the data and science simply aren’t there to truly tell customers what the effects may be over the long run. It has taken decades for tobacco, as an example, to go from doctor-recommended to carcinogenic.

Similarly, Big Cannabis of the future may be facing similar concerns that aren’t being warned about currently on their products and consumers could face unknown long-term consequences. In no way is this a condemnation of cannabis and early research shows cannabis is much safer than either alcohol or tobacco.

The point is to emphasize that over the long run, compliance is key to tracking the consistency and safety of products to avoid long-term liability and costs on consumers. Consumers would be wise to gravitate towards compliant brands and companies that focus on consistent quality and safety to minimize potential long-term negative impacts and costs.

Accountability & Transparency

Customers must first understand where the buck stops and who is responsible for what as it applies to cannabis and the cannabis products they consume. This can vary between states from vertically integrated models to horizontal models which allow for independent businesses to buy and sell cannabis between each other.

In the case of cannabis, the restrictions on METRC and other state “seed to sale” tracking systems make it nearly impossible for customers to return products and unclear on how to file complaints.

METRC and other seed to sale systems dictate that dispensaries must be able to track originating sources of cannabis back to another licensed facility. As such, once the consumer buys a faulty vape pen, for example, it’s gone from the dispensary inventory. Bringing it back in physically creates non-compliance issues for the dispensary as they cannot virtually account for the physical addition back into inventory.

No one ever said making sausage was a pretty or easy process. That’s why most consumers don’t want to think about how it’s done.

This example is a simple one to showcase the importance of compliance in the cannabis business and the complexities businesses must go through to operate. What is more applicable and important for consumers to understand is how non-compliance and inconsistency can affect them negatively – beyond messy fingers from leaky vape carts.

These types of unexpected issues represent significant costs for cannabis operators in recalls, fines, lawsuits and fees which is what most people think the “costs of non-compliance” mean.

However, and in addition to the literal cost mandated by regulation, there are the costs owners don’t think about: in the time and fees charged by the professionals to solve these issues, the time and stress spent on production, the increase or decrease in supply, mitigating product liability, and brand recognition and damage due to poor quality or recalls.

All of these factors simply drive up the costs of products for consumers and decrease the reliability of finding consistent, quality products and brands that customers can count on.

As we always say at iComply:

“It is always more cost-effective to be proactive, rather than reactive, when it comes to operational cannabis compliance management.”

Consumers would be wise to recognize which companies are proactive in managing their compliance. And companies would be wise to get ahead of these customer costs by being the proactively compliant companies that consumers want and need.

Cannabis-infused beverages may only represent a small portion of the overall legal market in the U.S. and Canada now, but there are several reasons to believe that may change, and quickly.

Several companies—from cannabis giants like Canopy Growth and Acreage Holdings to historic, household brands like Pabst Blue Ribbon (PBR)—have placed their bets on cannabis-infused beverages, announcing releases (or plans to) in Q4 2020.

In the case of PBR, which agreed to allow the independently operated Pabst Labs to use its brand for its new THC-based drink, the company and many others are fueling a growing niche within the cannabis beverage niche–THC-infused tonics.

And if the popularity of sparking water brands like La Croix and alcohol-based hard seltzers are any indication, these bubbling beverages may be the drink that takes this edibles segment to the next level.

Poised for Growth

The edibles market represents 15% of all cannabis sales in the U.S., according to a recent webinar hosted by industry research firm BDSA, and beverages make up just a small portion of edibles sales at 5%. In Canada, those figures are 6% and 3%, respectively, according to BDSA. But there is evidence of growing interest.

Of U.S. cannabis consumers, nearly a fifth consume beverages and 8% prefer them, according to BDSA.

A Brightfield Group Q2 2020 survey of 3,500 U.S. cannabis consumers showed similar trends, as ​22% reported consuming a cannabis-infused drink. That’s compared with 57% consuming flower and 41% consuming gummies, according to Brightfield. 

But, “the category has seen significant growth year over year. In Q3 2019, only 14% of cannabis consumers were using drinks,” Bethany Gomez, managing director of Brightfield Group, said in an email to Cannabis Business Times and Cannabis Dispensary. “We do expect this growth trajectory to continue year over year, but given that products are generally sold as a single serve product, the percentage of the overall market is quite low.”

That’s one problem that cannabis beverage brands are trying to solve by offering drinks in multipacks, similar to soda and beer.

The brand Cann Social Tonics, which is available in California, Nevada and Rhode Island, sells its products in six-packs and 24-can “party packs.” The idea was to make a drink that looks and feels just like any other beverage you’d take to a party and share with others, mimicking other consumer packaged goods, said Cann co-founder Luke Anderson in an interview with Cannabis Business Times and Cannabis Dispensary in September.

“I think carbonated beverages are having a moment,” Anderson said. “The sparkling water market’s evolution over the last few years is a sign of people looking for something that has a little bite to it and a little bit of texture. So we want [Cann] to integrate in the same social settings and have people think about them the same way they do a beer, a light beer, a hard seltzer or a craft cocktail in a can.”

Part of the challenge was making something that wasn’t overly sweet taste good, and not relying on “hundreds of calories to mask the taste of cannabis,” said Cann co-founder Jake Bullock. They also wanted to create a beverage that allowed people to control their dosages more easily and where they could enjoy a couple and not be overly intoxicated.

“If you think about products like other mild intoxicants—caffeine, alcohol—we consume them in a beverage, and most importantly, in that beverage, we consume them in a microdose,” Bullock said. “We’re not running around drinking eight shots of espresso or Everclear grain alcohol. When you bring the dosing way down, it becomes approachable for new consumers, it becomes social, it can integrate and behaves as the same strength as a glass of wine or a light beer.”

Cann offers flavors such as lemon lavender, grapefruit rosemary and blood orange cardamom, and each can contains 2 mg of THC and 35 calories, one of the lowest in both categories in the cannabis beverage market. According to BDSA, Cann is now the third highest-selling cannabis beverage in legal markets in the U.S. 

“That’s really our vision is just to continue to produce approachably dosed, nothing more than five milligrams, THC beverages that welcome in a whole new wave of consumers,” Anderson says.

Familiar Brands Fuel Acceptance

Combining cannabis with a familiar “form factor,” beverages are one avenue to further destigmatize cannabis use and can attract consumers who may not be comfortable with smoking, vaping or other consumption methods. When you integrate a brand that’s been around for 175 years with cannabis, that can encourage people who may be unfamiliar with cannabis or had a bad experience in the past to try again, said Austin Stevenson, chief innovation officer of Vertosa, which helped develop Lagunitas Hi-Fi Hops, a “hoppy sparkling water,” and Pabst Blue Ribbon Cannabis-Infused Seltzer. 

“PBR is over 175 years old, and so what having a brand like PBR does is it crosses generations of cannabis consumers,” Stevenson said. “We know, aside from millennials, that people over the age of 55 are one of the fastest-growing segments of cannabis consumers, and to be able to have your 20-something-year-old get a PBR and go home to their grandparents and say, ‘Look, here is the brand that you grew up consuming,’ but now with a cannabis function, it only helps to normalize and destigmatize the industry.”

Mark Faicol, brand manager of Pabst Labs, which was founded by a group of beverage experts and former PBR employees, said although one target customer is brand loyalists, he sees PBR further contributing to the wider acceptance of cannabis.

“We have a unique—call it competitive, advantage—but really a history in the market, being around for so long … as a trusted well-respected brand,” Faicol said, adding that Pabst Labs has the opportunity to leverage that.

Pabst Labs launched its cannabis-infused seltzer in California with one simple, “easy to understand” flavor – lemon, which is also part of the company’s strategy to appeal to a diverse, wide audience. Each can contains 5 mg of THC, 4 grams of sugar and just 25 calories, and they come in four-packs. Although more flavors may be introduced, Faicol said the initial goal was to, “Do one thing, and do it well, and really be very simple and approachable. Lemon is [a flavor] that is very sessionable and most widely accepted, at least that’s what our data pointed toward.”

Responsible dosing was another focus for the company, Faicol said. Although many consumers still purchase based on price per milligram in an attempt to get the most value out of products, that can lead to negative experiences. He also points out that while people may have had one – or many – hangovers, they continue to drink alcohol, but one bad cannabis experience can drive a consumer away for good.

“That’s something that the brands in beverages are really kind of working together on, to educate on proper dosing,” Faicol said. “And I think it will only help the category at large.”

While more consumers may be coming on board, there are challenges in distribution logistics and placement in dispensaries, especially in legacy markets that were built to merchandise flower, edibles and other traditional products, and may not be configured to include refrigerators displaying drinks, Stevenson said.  

“They weren’t built like a 7-Eleven for beverages,” Stevenson said. “They haven’t invested in it. They don’t have the floor space either because of regulations … or those investments haven’t been there.”

However, as newer markets in the Midwest and East Coast continue to grow, Stevenson says he sees new opportunities to encourage cannabis companies to build and develop dispensaries with beverages in mind—and get the buy-in from regulators, too.

“[Vertosa] is looking at Illinois, at Michigan, Massachusetts, these big beer-drinking markets where they’re getting cannabis regulation for the first time. When we have brands like Lagunitas, like PBR, when we enter these new markets, we want to make sure that the consumer retail experience highlights these opportunities to have a more approachable type of product,” he said. “In these new markets, you’re going to build retail experiences that have cooler spaces that have displays. I work at both the state level and the local level on some regulatory policies to help promote and make consumers and business operators aware that cannabis beverage is here, but the retail channel needs to be able to support product placement like any other traditional retailer.”

Catering to Experienced Consumers

While low-dose beverages can serve as an entry point for those who are curious but hesitant to try cannabis, offering a wide variety of products is important to reach the more seasoned consumer, too, Stevenson said.

“For your introductory consumer, you’re going to go with a low-dose product, 5 milligrams of THC, and that can be had any time during the day,” Stevenson said. “Now how you differentiate is you look at the [Lagunitas] Hi-Fi Hops portfolio, and they have a THC product that is 10 milligrams, and then they also have a CBD product that’s [18 milligrams CBD]. And so the CBD product is more for the relaxation.

“And so by building a beverage portfolio, that’s how you start to address the different consumer functional needs by changing the different ratios of cannabinoids of THC versus CBD or high-dose versus low-dose.”

Brightfield Group’s Bethany Gomez said thinking about who your consumer is and how they want to experience your product is important when building a brand.

“If you are pitching [a] cannabis beverage as an alcohol substitute, it needs to be effectively positioned for the same occasions that people are using alcohol,” Gomez said in an email. “But many consumers use cannabis and alcohol quite differently, in different [times of day] or during different moments of consumption, [such as] before a workout or to inspire creativity, which makes it not as straightforward a substitute.”  

However, just because a beverage is marketed a certain way doesn’t mean that’s how it will be consumed. Take the example of Cann. Although the founders couldn’t predict the coronavirus pandemic nor the effect on sales of a drink they envisioned being a “social” tonic, it did not have a negative effect on company growth, Anderson said. 

“The toughest part of this company was the first year on market, our sales were relatively flat. Consumers loved the product, but they couldn’t really understand how to think about it because alcohol was dominating their social [lives] and bars were open,” he said. “You could have a Cann at a pregame. You could have a Cann on a weeknight, but come Friday, you’re trained to go out and you’re trained to just drink whatever is available to you on tap.”

Once states began instituting stay-at-home orders and closing bars, that’s when things changed, Anderson said. Sales increased 10 times what they were before the pandemic, he said. 

“This idea that people were buying a bunch of cannabis to ease their anxiety was the first wave of the sales spike,” Anderson said. “People were enjoying the fact they could feel a buzz and hang out and laugh and have a good time, but not feel like crap the next day.”

Paying attention to these consumer preferences and how they evolve is an important part of driving innovation and sales, Faicol said. 

“[PBR] made a conscious decision to change. We’re a beer brand through and through, but we made a decision many years back that, the consumer is going to want something else. And America is going to look very different … five years from now,” Faicol said. “But I think that’s going to be a critical driver, is the ability for brands to continue to innovate, and really keep it exciting, which we’re committed to do.”

This article has been updated from its original version to clarify that Hi-Fi Hops is a nonalcoholic, hoppy cannabis-infused sparkling water, not a nonalcoholic, cannabis-infused beer. 

When Mike Howard (Director of Cultivation, The Grove) first caught word of the record-breaking cannabis yields being harvested regularly by fellow grow teams around the country (Lume Cannabis in Michigan and Green Life Productions in Nevada) he knew the game was changing. Once Howard dug deeper into the news, he discovered a common catalyst behind the success of his peers: both facilities were actively growing under the A3i LED grow light from Fohse. After hearing firsthand from the grow teams in Michigan and Nevada how they had increased yields over HPS by 31% and 100% respectively, Howard knew he had to get Fohse lighting into The Grove … and fast!

The Grove, a vertically integrated cannabis business with dispensary, cultivation, distribution, and production licenses, has been producing, sourcing, and selling high quality edibles, cartridges, and recreational cannabis products since 2015. Their 26,600-square-foot growing and production facility is state-of-the-art and eco-friendly. They strive to recreate the conditions that cannabis would find in nature and use only all-natural growing media and inputs as well as biological measures to control any pests or diseases. It only makes sense then that they would seek out and select Fohse products – the best lighting fixtures in the business – to match The Grove’s exacting standards.

The dry Las Vegas air makes for a challenging indoor growing environment for cannabis. Fohse fixtures operate at much cooler temperatures than standard HPS fixtures. At The Grove, this means that the humidifiers and cooling systems don’t have to work as hard, and that an equilibrium between temperature and humidity level can be more easily achieved and maintained. This has led to some of the record harvests being seen regularly at The Grove. Looking at how Fohse’s A3i 1500-watt fixtures compare to standard 1000-watt DE HPS fixtures in an “apples to apples” comparison reveals just how in sync these intelligent fixtures are with cannabis. The numbers from a recent, late fall harvest tell an impressive tale:

*Strawberry Cheesecake was the highest-yielding strain at 7.2 lbs/light, while Cookies was the lowest at 5.49 lbs/light

In the now-typical example above from Fall 2020, the A3i system generated an average of 27 percent more light as compared to the HPS fixtures. This additional light led to an increase in dry yield harvest weights by a whopping 65 percent. All of this, while using 16 percent less energy than the HPS lighting it was compared to and in the same physical footprint of space with the same number of plants.

Remarkable results like those at The Grove are not a fluke or an accident and they are not restricted to Mike Howard and his team alone. Growers all over are finding results like these to be the new norm, regardless of growing media and style of growing. Lume Cannabis has been tracking results of their Fohse A3i fixtures for over 40 hydroponic growing cycles and across 8 different strains of cannabis. Without fail, the team at Lume under Kevin Kuethe’s direction, reports higher yields under the A3i than those grown under HPS. For example, with Fohse fixtures they have harvested 7,130 lbs. versus 5,241 lbs. with the same strains grown under HPS. THC levels under Fohse lights have been 3 percent higher too; 20 percent versus 17 percent on average. In other words, the cannabis that Lume grew under Fohse lighting netted more than $2.5 million more than the cannabis grown under HPS.

Steve Cantwell at Green Life Productions also reports unbelievable differences since switching over to Fohse’s A3i and F1V fixtures as well. Green Life Production’s typical harvests under their previous lighting system was 80-90 lbs. The average harvest now using Fohse fixtures is 160 to nearly 200 lbs pulled from his 4×8, no-till, living, organic soil beds. Like Mike Howard’s team at The Grove, Steve and his team have the enviable logistics problem of figuring out where to put all of the bounty from these sky-high yields. All three teams, The Grove (coco pots), Lume Cannabis (hydroponics) and Green Life Productions (live soil), are blowing harvest records out of the water time and time again across three drastically different cultivation styles. These highly regarded and experienced cannabis producers are showing that the rules have changed and that Fohse lighting fixtures enable previously unobtainable and unthinkable results.

@Keene.Media

Howard and the grow team at The Grove have achieved their amazing results by relying on the horticultural skills of their talented team, and also by utilizing two of Fohse’s premier products. They have predominantly been using the A3i model, Fohse’s workhorse grow light, to achieve their highest yields. The A3i is specifically designed to grow cannabis and that is exactly what it does. Its spectral distribution is custom-made to address the unique needs of cannabis. As evidenced in the remarkable yields outlined in the table above, the A3i’s output (of up to 4,970 µmol/s depending on configuration) can be adjusted to supply seasonably appropriate lighting depending on the growth phase of the crop. All of this while producing up to 156 percent more light per fixture and burning cooler (no hotter than dishwashing water) than traditional HPS grow lights. This means the A3i is safer to operate for both growers and their cannabis crops.

The A3i system is designed to handle the harsh extremes of a growing environment. The IP67-rated fixture will continue to operate at peak performance even with the moisture, dust, pests, and biological debris such as spores that are present in most indoor growing environments. Not many growers would expect their grow lights to still perform well after being submerged under several feet of water; the A3i can survive such a plunge and be relied on to deliver its photon payload as designed. Howard and his team at The Grove do not just rely on the A3i for their high yields. In their double-stack rooms they deploy Fohse’s lighter, more nimble F1V for its pound-for-pound power.

Just like the A3i, the F1V fixtures rely on industry-proven Samsung LEDs for their photon delivery. While almost the same dimensions as the A3i, at 38 pounds (17.2 kg) per fixture they are almost half the weight of each A3i (70 lbs./31.75kg each). Like the A3i fixtures, their power supply rating is +100,000 hours. Depending on the needs of the grower and the ability of the existing systems, Fohse offers 420W, 600W, and 800W versions of the F1V. In his own F1V rooms, Howard has reported similarly positive results as in his A3i rooms: 60%+ yield increases, increased utility efficiencies, and better labor efficiency. The team now does not have to “chase canopy” by raising and lowering the lighting fixtures to achieve late-flower PPFD intensities like they did with the old LED lights that they were using in those double-tiered systems.

Fohse lighting products outperform their competition not only at the Grove, but anywhere they have been put to the test. So why hasn’t every cannabis grower switched over to Fohse? Growers who have not yet seen the results firsthand still believe that LEDs cannot keep up with the high lighting demands of cannabis the way that HPS lighting traditionally has. The narrative had long been one of incremental change and an acceptance that two pounds of harvested yields per light fixture was the best one could expect. At the turn of the century, there was chatter that this didn’t have to be ‘good enough’. By 2015 growers both professional and amateur alike had proven that three pounds per light was achievable based on advancements up to that point, but no one thought it would ever get better than that. Until Fohse set out to prove them all wrong, and then did. They showed that higher light output does not have to mean higher heat and that Diode technology had come a long way in just a few short years. Mike Howard gives his take on this phenomenon:

“Everyone looks at LED lighting as still kind of a novelty; not something where it needs to be yet for cannabis growers. Having seen the evolution of LEDs that the Fohse team has created because of their cannabis mindset, it became obvious that we could focus on producing healthy plants.  A lot of other grow lighting companies are still looking at making and selling lights that can grow anything. Cannabis takes a lot of light and many companies and even growers don’t put enough light into commercial setups. Many cannabis growers never thought that LED technology was ever going to make it, but the power that comes out of Fohse fixtures is insane. Fohse lighting lets the grower focus on plant health and our yields show that. With Fohse LEDs, overtaking HPS, you can really push the limits of your grow.”

As Mike Howard said, Fohse fixtures are engineered with a “cannabis mindset”. HPS Light output has plateaued because the added heat load is both detrimental to the cannabis crop and uneconomical to counterbalance. With Fohse fixtures growers can focus more on the nuances of a high-intensity light environment instead of combatting heat. Ever since that first time Mike Howard oversaw production in the initial grow room where Fohse products were installed at the Grove, he immediately saw the results. He is now vowing to keep replacing The Grove’s less efficient HPS fixtures and outdated LEDs with Fohse lighting as they continue expanding. Find out how switching to Fohse fixtures will increase your cannabis production and about all of Fohse’s record-busting lighting at Fohse.com.