Groups working to develop standards for cannabis businesses

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By Bart Schaneman

Cannabis trade groups, state officials and marijuana industry leaders are pursuing the development of standards and best practices covering organic certification, labor practices and energy use in a bid to further legitimize and professionalize the industry.

These efforts could bolster both the marijuana sector’s image among consumers and MJ companies’ bottom lines.

Organic certification, for example, could allow cannabis companies to shore up consumer confidence about the safety of their products and allow businesses to set higher prices for such items – much like organic fruit and vegetable growers.

Standards governing ethical labor and business practices could enable marijuana companies to set themselves apart from rivals.

And standards related to energy use and sustainable practices could help cannabis growers, in particular, become more efficient and thereby more profitable.

While other groups have developed standards for certain parts of the industry in the past – including guidelines on cultivation, manufacturing, labeling, testing and packaging – getting the entire industry to agree to them isn’t easy.

The fragmented cannabis industry lacks national powerhouse companies to help dictate best practices, and a variety of competing views on how standards should be developed makes implementation a steep hill to climb. Without a clear path forward, getting buy-in from industry players is a challenge, to put it mildly.

Organic standards

Recent headlines about pesticide-tainted cannabis in this country and Canada – where consumers have filed lawsuits against federally licensed growers – have underscored the push for organic standards in the marijuana industry.

“It’s critical that a clear, transparent standard is in place for the cannabis industry, because consumers expect that standard to exist,” said Ben Gelt, a board member of the Denver-based Organic Cannabis Association.

Policy makers and industry officials in states across the country, including Washington, Colorado and Maine, are looking at developing organic certification for cannabis.

It’s not an easy task. The federal government regulates standards for organic products, which has introduced a potential stumbling block for those trying to develop cannabis-related standards.

In Colorado, for example, an effort by state lawmakers to develop organic standards last year stalled in part amid concerns the U.S. Department of Agriculture would penalize state regulators for labeling a federally illegal substance as organic.

Gelt, however, said legislation is expected to emerge this year directing the Colorado Department of Agriculture to allow third-party groups to certify cannabis as organic. He’s optimistic such a measure would pass.

“The legislators agree with us that cannabis is here, it exists on the market, and consumers should be able to understand what product is organic and what product is not,” he said.

If organic standards are developed, Gelt expects a cannabis business owner will be in a position to charge more for organically grown marijuana, both at the retail and wholesale level. He likens it to the produce industry.

“If you buy an organic raspberry, it’s usually 15%-25% more expensive than the conventional raspberry,” he said.

Ethical business practices

To gain a leg up on rivals, MJ businesses must distinguish themselves in today’s competitive market, according to Ashley Preece-Sackett, executive director of the Ethical Cannabis Alliance in Portland, Oregon.

Standards governing ethical labor and business practices are one way to do so.

“Organizations and farms are looking for ways to let the consumer know that they care,” Preece-Sackett said. This would be a way for a cannabis business to show that its product is different and “better,” she added.

The ECA is looking to other industries for guidance while it develops its own standards.

“We’re not reinventing any wheel. We’re actually looking at fair trade standards and we’re ‘cannabinizing’ them so that we can have similar standards within our industry,” Preece-Sackett said.

ECA’s mission is to either create the standards for labor and business ethics on its own, or to link with other organizations for a unified voice. Those groups include the Organic Cannabis Association and the Resource Innovation Institute, a nonprofit that promotes energy and water conservation among MJ cultivators.

Linking the three organizations for such an effort could create a national approach, she said.

Preece-Sackett expects the ECA could have a “cannabinized” set of standards to market within the next three months.

“Once consumers catch up to that idea with cannabis, they’re going to be asking for those ethically grown products,” she added.

Carbon footprint

The Portland, Oregon-based Resource Innovation Institute is drafting standards for growers related to energy, water and carbon use. Derek Smith, the group’s executive director, said the standards would make the industry more competitive. 

“Resource efficiency will define the future of cannabis,” Smith said. “We’ve seen, in the more mature markets like Colorado and Washington, that price instability and price drops are significant factors in the competitiveness of a producer. We want to help producers … lower their cost structure while improving their environmental footprint.”

RII gathers data on energy and water for the three main types of producers — indoor, outdoor and greenhouse. The organization also has created a platform to share best practices and information about resource efficiency.

“The market is moving very fast, dollars are being deployed, and there’s very little objective guidance to help producers make smart decisions on technology and facility design that will put those producers in the most competitive state as prices continue to be unstable and fall,” Smith said.

RII’s goal is to create a label that designates how efficient a producer is with its resources. The label would designate if the cultivation facility is efficient with energy, water and carbon. Smith expects to finalize the standards by the end of the year.

“This is smart business,” Smith added. “Everything we are promoting aligns with the flywheel of profitability and future competitiveness.”

But, as noted earlier, it’s not an easy task to accomplish.

“One of the unique challenges to cannabis is the state-by-state, island nature of the industry,” said Gelt with the OCA.” Every state has its own regulatory environment and business challenges, so that inherently makes any national, ubiquitous standards difficult.”

Bart Schaneman can be reached at