[vc_row][vc_column][vc_column_text]As of October 31, 2019, the USDA finally released an Interim Final Rule regarding the 2018 Farm Bill update further legalizing and standardizing the regulation of Hemp nationally. The document will remain an interim draft allowing comments until December 30, 2019 which supply the USDA with further information for their final publication which will be implemented at maximum two years from the date of this interim rule.
Hemp was previously defined by the 2014 Farm Bill as “Cannabis sativa L with only 0.3% THC potency on a dry weight basis,” which is how we have known it since. Research at higher education institutions, state departments of agriculture, and market research was permitted with the 2014 bill which led to consumer trials and releases of the wide-known term “CBD” gummies, oils, infused products, etc. With the assumption that hemp production would continue to grow and expand, the USDA released the 2018 Farm Bill as a follow up which removed hemp from the controlled substance list and left more flexibility for state and tribe programs.
The most beneficial result of decontrolling hemp is being able to transport and distribute it across state lines without penalty, which penalized many producers since 2014. The new interim regulations have clarified that producers may begin applying to produce hemp through the USDA program 30 days following the effective date of the rules (applications will be accepted starting November 30, 2019). In the meantime states and tribes are given the opportunity to implement programs in which producers would apply for a license through their specified state or tribe instead of USDA. This 30 day process time ensures producers won’t have to apply to both the USDA and their state, but just the closest overseeing program. Those that were permitted to cultivate under the 2014 bill have extended allowance to do so for the 2020 planting season (or for 12 months after the date of the 2018 bill).
The USDA stresses the utmost importance of the DEA required testing and sampling obligations to ensure potency. With cannabis still being on the controlled substance list, hemp must remain at the permitted potency level (0.3%) or within range of 0.3% with a measurement of uncertainty. The bill also discusses fluctuating potencies based on seed and agricultural location, so proper procedures and testing is very relevant to a hemp producer or someone looking to get into the industry.
With all this new information available, what should be taken away from the standardized hemp regulatory framework?
For more information regarding applications, testing procedures, bill history, and reporting requirements visit the newly drafted interim regulations on the USDA’s website.[/vc_column_text][/vc_column][/vc_row]
[vc_row][vc_column][vc_column_text]At any given time, there is a Delta9 Systems team member in California, Washington, Ohio, Michigan, and North Carolina. We travel a lot to be with our clients and customers. The cannabis business environment across the nation is dynamic, so it’s vital that we be out visiting with our customers where they are doing business. Each state is its own little microcosm of the cannabis industry, with its own unique blend of MMJ, Rec and Hemp laws. The micro-market in each state means there are unique challenges and advantages, and we need to be familiar with each one in order to serve our customers effectively.
Regardless of the market there is one constant all operators must contend with. All state governments require the cannabis producers and processors in the supply chain to keep real-time information about five main metrics: plant counts and stages, current inventory, the actions and conversions performed on that inventory, any transportation from one license to another, and records of any and all sales. When these records from cultivators are combined with the sales data from retailers, this data set is called the Seed-To-Sale record. This is the chain of custody record that will be used by regulators to ensure no diversion is taking place into the black market, tax revenue is collected, and that a recall is possible should there be any problems with contamination in the supply chain.
Some states demand up to the minute reporting, others ask for a monthly accounting. These reports are required to maintain compliance and keep the license operating in good standing.
In most states the regulating body in charge of cannabis will contract with a software service provider such as METRC, BioTrack or Leaf to handle industry data and present it in an actionable way for regulators. This reporting service is free for use by Producers and Processors, and each licensee is given a log-in to the system that is associated with their cannabis license. Reporting requirements are similar to DOR or DOL reporting obligations. While these 5 metrics are crucial, these numbers are what regulators need to track to not run afoul of federal guidelines. Cannabis entrepreneurs need to collect this data and much more to be successful…
This is where a Third-Party Integrator (TPI) is crucial. The Third-Party Integrator allows Producers and Processors to record and report the 5 mandatory data points to the state, while simultaneously capturing the incredible amount of intricate data generated by modern gardens and labs. As cultivators move through the compliance workflow, data about COGs, consumable depletion and inventory, scheduling, personnel, HR, and production processes can be collected and referenced while maintaining a compliant cannabis business.
We see the benefits becoming more apparent as time goes by in the shops that use TPI’s. The biggest benefit we see that TPI gives its users is the ability to get very specific with production scheduling and communicate that schedule efficiently. Scheduling becomes more and more important the larger an operation becomes. The gardens that always have plants ready for Mothers, Clones and Veg will always be flowering and more importantly, harvesting. Being able to use that schedule in conjunction with SOP’s means employees come to work with a list of tasks waiting on their daily dashboard. They can then mark each task, pulled from SOP’s and auto assigned to each employee, as complete and sign off on to make sure the job is done, accountability is established, and compliance is maintained.
Measuring productivity, and eliminating inefficiencies using the historical record generated by these Enterprise Resource Planning tools, or ERP, has a cumulative effect over time. Delta9 Systems consults with many different customers, some who use TPI/ERP, and some who don’t. As the Industry gets more mature, we are seeing huge structural advantages in the businesses who are implementing TPI. The seemingly tiny savings add up and have an exponential effect. Having data to make decisions saves time and resources, which translates to money. Using historical sales data allows a better planning for each round. We expect to see these advantages increase exponentially as margins continue to shrink and competition becomes fiercer.
365 Cannabis is working with the team at Delta9 Systems to verify hardware that is plug and play. Based on the Microsoft Dynamics 365 Business Central platform, this system delivers the robust workflow support that cannabis pros need. The cultivation tracking is very simple, but the processing workflow tracks COG extremely well through each operation, and the sales tools are hard to beat. It integrates seamlessly with other Microsoft productivity programs you might already be using so the training and ramp up is simple. The scheduling tools give cultivators a great way to plan for orders months in advance, and create plants based on pre-orders. Most importantly, because it is windows based, you won’t have problems with drivers or software compatibility. Schedule a demo today!
This article was provided by Delta9 Systems[/vc_column_text][/vc_column][/vc_row]
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Hemp, cannabis, same thing, right? Not exactly.
Hemp and cannabis are like cousins and are typically hard to distinguish by first glance. The main differentiating factor between hemp and cannabis is that hemp most commonly is cannabis with less than 0.3% THC in it. Other cannabinoids such as CBD, CBG, and CBN – the pain-relieving substances – are most prevalent and is why the “Hemp Industry” is dominating the “Cannabis Industry” as of 2019.
The effects of hemp are so distant from cannabis that regulations vary all over the world. What are these distinctions specifically in the U.S. and how can you leverage your business in the CBD world instead of the THC world from a compliance standpoint?
As we all know, cannabis is on the controlled substance list in the United States, which simply means it’s an illegal drug. However, hemp is federally legal and regulated in the U.S. under the United States Department of Agriculture. In 2018, the “Farm Bill” was updated and passed allowing this regulation to continue and designating the Agricultural Marketing Service (AMS) to oversee the Hemp Production Program. The biggest change to this bill is that hemp being transferred across state borders faces less risk since hemp is federally decriminalized.
The AMS claims, the “USDA is drafting hemp regulations for publication in the Federal Register and public comment. It is USDA’s goal to have regulations in effect by the fall of 2019 to accommodate the 2020 planting season.”
As we await the final regulation release according to the 2018 Farm Bill update, the industry continues to grow. The way that the bill works is that tribal and state authorities have the power to create programs for their states regarding growing, manufacturing, distributing, and selling. Right now, about 75% of states in the US allow the growing of hemp for commercial, research, or pilot programs. The upcoming Farm Bill is expected to lead to more strict regulations and testing requirements for products in the future.
Unlike the current cannabis market, hemp is fairly unregulated with few requirements. A few requirements for cultivators in California include registering with their county, testing their product to meet the THC limit, controlling and reporting cases of pests, and following any other guidelines presented by the federal government. There are a few restrictions to note as well, such as, it’s prohibited to import plants or seeds from international sources and THC tests higher than 0.3% are grounds for destruction.
There are currently no rules or regulations surrounding the processing, manufacturing, and sale of hemp products, but as mentioned before, the Farm Bill update of 2018 is assumed to mean there may be stricter regulations in the future. Any products for ingestion such as infused food and drink should still follow the relative health jurisdiction in the location applicable to ensure the safety of products.
To read more about California’s hemp industry, please click here.
Since many regulations have not been created in general, contact your local and state governments for relevant information and any legal materials available for maximum preparation. If possible, discuss with current hemp participants near you to gather information about good practices and what to anticipate as this industry continues to expand in the regulatory environment. The good news is that hemp is legal and officially off the controlled substance list, which leaves room for innovation, expansion, and successful business planning.[/vc_column_text][/vc_column][/vc_row]
The cannabis industry is booming. As more states legalize, demand will drive unfathomable expansion for cannabis companies. Start-ups are quickly turning into large scale enterprises in a matter of months, outgrowing basic software that is unable to scale. Now, businesses need to look for solutions going beyond seed-to-sale; systems that can track business operations, not just plants.
Implementing a new ERP solution doesn’t happen overnight. It requires careful planning too. Here are a few things to consider when deciding to switch to a cannabis-specific ERP solution.
An ERP system integrates data and processes across multiple departments and locations, allowing a company to produce, move, and track cannabis and non-cannabis products alike quicker than ever.
Especially true for cannabis, no two businesses have the same operational needs. Each operation requires specific software functionality to run efficiently. ERP software is extremely flexible, customizable, and scalable, making it ideal for the cannabis industry.
For example, a company that only cultivates needs robust facility management features such as: yield forecasting, cost per gram, and automated inventory replenishment capabilities. Dispensaries on the other hand require a solution that can automate inventory replenishments, track loyalty, and manage multiple stores. Vertically integrated companies that cultivate, manufacture, distribute, and operate their own retail dispensaries need a solution that can manage every aspect of their operation and communicate between departments.
Fortunately, cannabis industry specific ERP systems like 365 Cannabis tailor the software to accommodate every operation size and type; from cultivators to retailers, startups to multi-million-dollar enterprises. Investing in a cannabis-specific ERP ensures that no matter your operation type, size, location, your business is equipped with the right tools long-term.
Software should not be seen as a cost, but an investment in the health and future of your business. So how do you ensure that this investment delivers ROI immediately and into the future? When selecting a solution that will house all your business-critical information in a highly regulated industry, consider the time, effort, and cost involved to implement and maintain your new system.
New technology is only as good as its implementation. Your ERP supplier should have the knowledge and industry experience to guide you through deployment. It is up to you to ensure you have a dedicated team to put in the time to train, practice, and pass this knowledge on to manage the system independently. Initial effort in equals long-term value out.
Maintaining the integrity of an ERP system requires knowledge of use, best practices, and standard procedures to be spread and passed along to employees. Under-utilization and miss-use due to staff churn or “forgetting” what features and functionality are available will degrade the value of your system. Select an ERP solution with the capacity to provide documentation as well as refresher training courses to ensure that your ERP is continuously used to its full potential.
True ERP systems connect various departments and processes that are currently fragmented in your company. Ditching a cluster of standalone systems will instantly drive efficiency, increase productivity, and reduce manual processes and errors. It’s time to switch to an integrated ERP system built to scale with you.
Expanding your business across state lines is a great way to increase your footprint, customer base, and of course, your sales. However, it can be difficult to begin expansion in such a young, heavily regulated industry in which each state has disparate traceability and reporting requirements. Rest assured, we have compiled a list of the 4 most important things to consider when expanding your operations across multiple states:
Of course, the most important thing to consider when expanding your business is the regulatory seed-to-sale tracking system. Expanding to a state that has a different regulatory system than the one you are currently operating in can cause dilemmas to arise. Each system has different requirements for various aspects of your operation. Seed-to-sale tracking solutions like Metrc and BioTrack are configured to meet the different regulatory requirements in each market. For example, Metrc in Colorado might not be configured the same as Metrc in Michigan and some states may require you to use certain available functions (like recording additives or recording waste prior to harvest) where other states do not.
Luckily, with the help of enterprise resource planning (ERP) software solutions, such as 365 Cannabis, the complications that could manifest as a result of these differences are alleviated. These ERP solutions will not only integrate into the different state seed-to-sale tracking solutions, but they will also help facilitate your compliance needs from state to state and allow you to consolidate your data, so that you will maintain complete visibility across every location in your organization.
Another factor to consider when expanding your operations is the legal environment of the new state. Recent legalization data from DISA Global Solutions shows that 12 states in the United States have fully legalized marijuana, 27 have limited legalization, and 11 have yet to legalize in any way. Having a solid understanding of the legalization status of each state is instrumental in procuring first-mover advantages, enabling you to secure huge profit margins and market share.
On the other hand, moving into a new state prematurely could be extremely volatile and result in significant setbacks. All too often, companies that attempt to undergo expansion into new states too soon face potential pitfalls such as insufficient capital and technological limitations due to unstable regulatory environments. This happens frequently in the cannabis industry, where laws are ever-changing, and businesses are constantly blind-sided by new legislation and struggle to meet compliance. Finding the right technology partner to help you navigate these complex regulatory environments is essential to your success. 365 Cannabis and their dedicated compliance team stay on top such regulations to provide your company with the clarity it needs to expand.
Inevitably, different tax rates will apply to different states as you expand. It is important to consider these rates when considering expansion. Each state has its own method of taxing cannabis. The most common types of taxes are placed on sales, wholesale transactions, and local government duties.
Most states tax cannabis as a percentage of the retail prices. These tax rates can range from 0% in Alaska to 37% in Washington. Some states also have a tax on the wholesale purchase of marijuana. For example, Nevada enforces a 15% excise upon growers for the wholesale sale of cannabis. Additionally, some localities can levy taxes on retail sales. With so many different layers of tax to consider, manual data entry can be a risky, time-consuming task. To avoid costly penalties, business owners would benefit greatly from an ERP solution equipped with the capabilities to handle taxes for multi-state operators. The core of 365 Cannabis, Microsoft Dynamics, has been successfully deployed globally and can handle all manners of tax for multi-state and even multi-country operators.
An honest readiness assessment of your company’s scalability can make or break your business. Attempting to expand before your operations are ready to scale could easily lead to operational inefficiencies and could lead to the loss of countless dollars and hours. In the cannabis industry, it is not unlikely to find multi-state operators using multiple systems to manage their enterprise. Typically, these systems do not fully integrate with one another and cause outages, miss-matched data, and accounting errors, especially when they are asked to handle operations in across departments and state. These errors make it difficult to forecast your profitability.
Just as you should be able to predict future performance, to scale a company you must implement a system that helps you see what your business will look like one month, one year, and even five years in the future. 365 Cannabis is a GAAP compliant ERP solution that will allow to you easily expand and evaluate your company’s cash flow forecast without having to worry about losing your financial data as you scale.
