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Marijuana ads are here and largely unregulated, as the industry acts to set own guidelines

Cigarette commercials have been banned from radio and television since 1970. Liquor ads were once prohibited from TV as well. Illinois law allows marijuana advertising on the airwaves — but the federal prohibition on pot effectively limits ads to within the states where it’s legal.

Faced with conflicting regulations for a newly legal and growing industry, members of the industry are coming up with their own guidelines. They hope to promote a positive image in the public eye, as lawmakers consider whether to let legal cannabis continue its expansion nationwide.

Cresco Labs, headquartered in Chicago and one of the biggest cannabis companies in the country, is issuing a detailed set of marketing standardsit shared with the Tribune on Tuesday. Fellow industry heavyweight Green Thumb Industries has its own general principles. And the National Association of Cannabis Businesses has standards as well.

People check in before entering the Sunnyside dispensary, by Cresco Labs, in Schaumburg on Aug. 6, 2020.
People check in before entering the Sunnyside dispensary, by Cresco Labs, in Schaumburg on Aug. 6, 2020. (José M. Osorio/Chicago Tribune)

But Cresco plans to promote its guidelines with regulators, advertisers and publishers. Its 35 principles prohibit advertising or events aimed at minors, unfounded claims, or depicting getting wasted or driving while high, and not using certain medical words or symbols like “RX,” among other things.

The guidelines largely agree with Illinois law that bans false messages, ads aimed at those under 21 or those that show overconsumption. Illinois law also bans the depiction of the consumption of cannabis, precludes ads within 1,000 feet of a school, park or library, or on public transportation, and bars any health claims.

With 11 states having legalized pot, and 33 allowing medical marijuana, each state has its own regulations. Industry officials said they’d like one set of rules to create a positive, professional image for a business that used to be defined by outlaws and stoners.

“It’ll be good for this industry, the customers and stakeholders,” said Cresco’s chief commercial officer, Greg Butler.

With Illinois seeing explosive growth in sales, in June Cresco showed it can turn a profit, as the industry consolidates. Butler expects it to become one of the top 10 consumer goods in the country within a decade.

Expect to see more ads, as the industry has more money to play with during the upcoming holiday season. To introduce its new Sunnyside dispensaries, Cresco launched an “Ask us anything” ad campaign answering basic consumer questions like, what is CBD, or how many edibles should one consume?

On the national level, the federal ban on use or possession of cannabis means that most networks won’t touch cannabis ads. That helps explain why CBS kept a pot spot from running during the Super Bowl last year.

As a result, most cannabis companies keep their ads highly targeted to within the state where it’s legal, using magazines, newspapers, radio or digital media.

At this crucial time in the industry’s development, officials say they want to be on their best behavior, to help turn the legal and business framework around.

Critics of marijuana legalization, though, remain opposed to the spreading presence of cannabis ads.

Kevin Sabet, president of Smart Approaches to Marijuana, cited a recent study showing that roughly one-third of youths ages 15-19 saw marijuana ads on social media and were five times more likely to report using it in the past year.

“Simply put, the marijuana industry should not be able to advertise its highly potent and addictive products,” Sabet said. “The data is clear here that advertising further normalizes the industry, which normalizes the use of the drug, which leads to harmful consequences for health and safety.”

Despite opposition, as advertising ramps up, big brands are likely to emerge, said Timothy Calkins, marketing professor at Northwestern University’s Kellogg School of Management.

“Cannabis has a long history full of colorful characters,” Calkins said, “They’re trying to transition to a very different spot that is responsible and productive. It’s not just about making sure it’s legal, it’s about making sure media companies are comfortable with the advertising, so they really need some standards.”

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Cresco Labs Announces Approval for Tenth Illinois Dispensary in Naperville

The adult-use dispensary is located in one of the busiest shopping areas in Naperville, the third largest city in Illinois with approximately 150,000 residents.

CHICAGO – September 22, 2020 — PRESS RELEASE — Cresco Labs, one of the largest vertically integrated multistate cannabis operators in the United States, has announced the approval and the location of its tenth Illinois dispensary in Naperville. The adult-use dispensary is located in one of the busiest shopping areas in Naperville, the third largest city in Illinois with approximately 150,000 residents. 

“We have been consistent in choosing locations for our dispensaries in Illinois, focusing on high traffic areas in traditional retail enivronments. Sunnyside* Schaumburg, which is adjacent to Illinois’ busiest mall and our new Naperville dispensary, which shares a block with Costco, Walmart and Starbucks, are great examples of this strategy,” said Charlie Bachtell, Cresco Labs’ CEO and co-founder. “Our approach of meeting the consumer where they are and providing a normalized cannabis shopping experience is allowing our dispensaries in Illinois and all Sunnyside stores nationwide to outperform industry averages.” 

Upon final approval from the State of Illinois for the Naperville location, Cresco will operate the maximum allowed ten dispensaries in Illinois. Cresco’s dispensaries are located in some of Illinois’ biggest cities, busiest shopping areas and most strategic locations to introduce new customers to normalized and professionalized cannabis and take an outsized share of the Illinois market. Total Illinois cannabis retail sales were $95 million in August, while total sales through the first eight months of 2020 were $600 million in the state.

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Illinois gives recreational marijuana store applicants chance for a do-over

Illinois regulators are allowing some applicants for adult-use cannabis retail licenses an opportunity to correct their applications and refile before the state’s lottery for permits.

The state announced finalists for 75 retail licenses weeks ago, but only 21 total applicants scored perfectly on their applications, calling into question the state’s intended effort to advance social equity.

According to Crain’s Chicago Business, while some applicants contend they weren’t notified of problems with their applications and allowed to correct them, others were given that opportunity.

That situation has led to several lawsuits, one of which could be settled because of the state’s changes.

“We believe that these new steps will inject more equity and fairness in the first round of license awards and provide insight as we improve the process for future rounds,” Gov. JB Pritzker said, according to Chicago TV station WLS.

The governor’s office said those applicants who didn’t receive a perfect score, or 252 points, will be notified and given a score sheet detailing how they lost points.

Those applicants will then be able to respond with an amended application.

Illinois’ licensing rules initially stipulated that applicants would be made aware of deficiencies and given an opportunity to fix them before final scores were handed out.

But several applicants claimed they didn’t receive such notices and lacked a method to appeal.

No date has been set for the licensing lottery.

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Consumers’ cannabis buying patterns change markedly in wake of COVID-19 pandemic

Consumers’ purchasing patterns involving marijuana have changed noticeably over the past several months in response to the coronavirus crisis.

Marijuana shoppers are spending more money per visit to recreational retail outlets. But they are shopping less often, perhaps for safety, or scheduling, reasons.

Our heat map of weekly adult-use sales changes in four western states show sales recovering through the year, with retailers benefiting from favorable treatment by state governments that allowed them to stay open or provide curbside service.

Across the country, in fact, many states declared cannabis companies “essential” businesses.

But there have been roller-coaster weeks in adult-use sales in California, Colorado, Nevada and Washington state, according to data provided by Seattle-based analytics firm Headset.

The initial state lockdowns and shelter-in-place orders caused recreational sales to drop almost 50% in late March in the four states – at least until federal stimulus checks started hitting consumers’ bank accounts in April and sales rebounded.

In the past month, however, a downturn in weekly sales has started to emerge. But it is too early to understand the exact cause.

One possibility: The U.S. government’s temporary lifeline to tens of millions of unemployed workers – $600 a week in extra jobless benefits – expired at the end of July.

But up until now, cannabis sales have been relatively recession-resistant.

The National Bureau of Economic Research formally proclaimed the recession began in February, when the coronavirus crisis caused much of the U.S. economy to pause.

Recession or not, marijuana shopping habits have changed markedly since March because of the COVID-19 pandemic, as shown by this chart:

The average amount a consumer purchases at one time – or the average basket size – has increased in California, Colorado, Nevada and Washington state, while at the same time, the number of shopping trips, or baskets, per week have declined.

For example, Nevada’s average basket size jumped $22 after March 23, from $55 to $77.

California and Colorado experienced increases of $10 or more, while Washington state consumers boosted their average purchases by close to $8.

Meanwhile, the number of baskets purchased per week has started to improve since the record lows recorded in March.

Colorado recorded an estimated 362,000 baskets for the week of March 23, the lowest of the year.

That figure has since recovered to 603,000 baskets at the end of August, just shy of the 613,000 recorded at the first of the year.

California, Nevada and Washington state recorded similar buying patterns.

Other mainstream industries report comparable trends as consumers adjust to pandemic shopping.

A survey of grocery shoppers conducted by the Food Industry Association found that 78% of customers changed where they shop, with 40% shopping at fewer stores and 44% spending more money per visit.

While the markets aren’t exactly comparable, the question for cannabis retailers is: Will be is this a temporary, pandemic-induced trend, or have consumers changed their shopping patterns for good?

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California Cannabis Licensing Authorities Unveil New Unified License Search Tool

The new platform provides an easy way to search through the state’s thousands of cannabis business licenses.

SACRAMENTO, CALIF. – PRESS RELEASE – California’s three cannabis licensing authorities – BCC, CDFA and CDPH announced today the launch of a unified licensing search platform, the culmination of a collaboration between the California Department of Technology, the California Health and Human Services Agency Office of Innovation, the Governor’s Office of Business and Economic Development (GO-Biz), and the licensing authorities.

The unified license search tool allows the public to search for cannabis license information from all three licensing authorities by using one search tool. The need for a unified search was identified through conversations with, and surveys of, licensed businesses, local governments, and law enforcement conducted in late 2019 and early 2020. 

“This unified license data search tool will make it easier for the public to access cannabis license information without having to inquire with each licensing authority separately,” Bureau Chief Lori Ajax said. “This will also help consumers identify licensed cannabis retailers near them.”

Some features of the new license search include an interactive map and geolocation tools. There is also a survey where users can submit usability feedback to the licensing authorities as they continue to refine the search tool. The unified license search tool can be accessed at https://search.cannabis.ca.gov/.

The unified license search will be updated every 24 hours; however, the most recent data will still be available through each licensing authority’s existing search tool on its website.

In January 2020, Gov. Newsom announced plans to consolidate the three cannabis licensing authorities into a single Department of Cannabis Control, in an effort to improve access to licensing and simplify regulatory oversight of commercial cannabis activity. Today’s announcement is part of that overall plan.

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Colorado marijuana sales blow past $200 million in July

Colorado cannabis sales set a record yet again in July, eclipsing $200 million in a single month for the first time.

Dispensaries sold $183,106,003 in recreational marijuana and $43,268,565 in medical marijuana in July, for a combined $226,374,568 in revenue, according to data from the Colorado Department of Revenue. That’s up 13.8% from June, another record-setting month when the industry raked in nearly $199 million.

So far in 2020, consumers have purchased more than $1.2 billion worth of cannabis products and the state has collected $203 million in taxes.

Colorado’s cannabis industry is poised to shatter 2019’s record of $1.75 billion in annual sales, especially since August is typically the state’s highest-grossing month. Those figures are due out in early October.

Marijuana sales have soared to new heights since spring despite the coronavirus pandemic. Dispensaries were allowed to remain open during Colorado’s statewide stay-at-home order, which forced them to adapt to new buying habits such as online ordering. In August, a contactless weed vending machine debuted in Pueblo.

An early freeze and snow in September may have jeopardized millions of dollars worth of marijuana grown outdoors and slated for harvest in October. That may also affect flower and extract prices this fall.

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US House said to delay marijuana legalization vote until after election

A bill to remove marijuana from the Controlled Substances Act and thereby legalize the plant federally won’t be voted on by the U.S. House next week or before the Nov. 3 election.

“House Dems have punted a vote on a marijuana legalization bill to the lame duck (session),” tweeted Sarah Ferris, a congressional reporter for Politico.

She wrote that “many moderates were furious that the House would vote on weed before taking up a COVID bill, though other Dems called it a social justice imperative.”

According to Politico, Congress will return after the election for a lame duck session, and lawmakers and aides have said a vote will occur on the legislation then.

In a statement, House Majority Leader Steny Hoyer confirmed such a timetable, saying: “The MORE Act remains a critical component of House Democrats’ plan for addressing systemic racism and advancing criminal justice reform, and we are committed to bringing it to the Floor for a vote before the end of the year.

“Right now, the House is focused relentlessly on securing agreement to stave off a damaging government shutdown and continuing to do its job addressing the COVID-19 pandemic.”

The MORE Act is a comprehensive measure that would have massive business implications. It also seeks to address social justice issues.

The House Judiciary Committee approved the MORE Act in a historic vote last November. But passage by the full House would be a milestone for marijuana reform.

Industry insiders said House passage of the bill would set the stage for a similar measure to pass the Senate as soon as next year – if the Senate flips to Democrats in November.

As of Thursday, the MORE Act had 111 co-sponsors in the House, up from 87 since Hoyer’s email in late August, but still just one Republican, Matt Gaetz of Florida.

The measure calls for a 5% federal tax on marijuana products that would be directed to programs that would benefit individuals and communities most impacted by the war on drugs.

Republican leadership had criticized the move to vote on the legislation as soon as it was announced in late August.

Michele Perez Exner, communications director for House GOP leader Kevin McCarthy, especially was sharp in a tweet: “In the midst of a pandemic associated with a respiratory tract infection, this is what Dem leaders have decided to make their priority.”

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Marijuana vape firms say one year after vaping crisis, customers turning to legal suppliers over illicit market

A year after the vaping health crisis upended the cannabis industry, marijuana vape companies report that sales have rebounded as consumers grasp the danger of consuming illicit-market vaporizers and switch to legal suppliers.

Arnaud Dumas de Rauly, co-founder and CEO of New York-based vape manufacturer The Blinc Group, sees this as the biggest impact of the vaping health scare.

“It made consumers realize that you can’t just buy any cannabis vaping product,” he said. “You can’t go to the black market.”

The outbreak of what the Centers for Disease Control and Prevention dubbed e-cigarette or vaping product use-associated lung injury (EVALI) in the summer of 2019 slowed the growth of some companies and stifled sales toward the end of the year.

But vape products, like other cannabis goods, seem to also be weathering not only the health crisis but the current economic downturn.

“We’ve seen tremendous bounce back from the vape crisis,” said Sammy Dorf, chief growth officer and co-founder of Verano Holdings, a vertically integrated cannabis company in Chicago. “Business is extremely strong.”

The COVID-19 pandemic hasn’t slowed business much, either, according to the vape companies, despite fresh warnings that vaping and smoking can make a person more vulnerable to the virus.

“We haven’t seen a change in the purchasing pattern of our patients or customers due to the pandemic,” Dorf added.

How it played out

The vape health crisis unfolded rapidly, beginning in the summer of 2019 with mainstream media reports seizing on the news that people were dying from allegedly vaping mainly THC products.

Some states with regulated cannabis markets such as Washington temporarily banned additives in vapes, while others, including Massachusetts, banned the sale of vape products altogether.

It took a few months for more information about the illness to surface.

Scientists identified one substance, vitamin E acetate, which is added as a cutting agent to some vape oil, as a possible culprit in the lung illness.

Many industry officials claimed that vitamin E was more commonly found in illicit market products and pointed out that legal cannabis is regulated, tested and safer than unregulated street products.

Most recently, an academic study published in August confirmed that states lacking licensed, regulated cannabis saw the highest rates of EVALI, particularly those in the northern Midwest. (See chart above.)

The report, from the Society for the Study of Addiction, noted “these results suggest that EVALI cases did not arise from e-cigarette or cannabis use per se, but rather from locally distributed e-liquids or additives most prevalent in the affected areas.”

“We believe the bigger lesson here is that the data clearly indicate that there were fewer cases of lung illnesses and injury in states where legal, regulated cannabis products were available,” said Steve Fox, strategic adviser to the Cannabis Trade Federation.

“In fact, the lowest rates of incidence were in Colorado, Washington and Alaska – three of the first four legal states – with Oregon and Nevada close behind.”

‘Very scary’

According to Seattle data-analytics company Headset, sales of adult-use vape products in three of four states with recreational markets generally have recovered, though Nevada retailers saw sales still lower than pre-health scare levels after the state enacted stricter lockdown measures for marijuana retailers during the pandemic.However, market share for vape pens is lower year-over-year, according to the Marijuana Business Factbook, as flower tends to represent a more economical choice amid COVID-19 and greater economic concerns.

Several cannabis vape business executives interviewed for this story said sales have completely rebounded.

George Sadler, president of San Diego-based Platinum Vape, which sells products into several markets, said sales plateaued right after the initial scare but started trending upward in the early winter.

“We never really saw much of anything on the level of decline that we thought,” Sadler said.

Dumas de Rauly said his sales started to recover in December as consumer confidence in the legal market returned.

“We have doubled our revenue in terms of vaping hardware since the vaping crisis,” Dumas de Rauly said.

But he added that his business likely lost a year of growth because of the earlier drop in sales.

In Denver, Dan Gardenswartz, chief operating officer at Spherex, said his company’s sales never took a “meaningful hit,” but the end of 2019 was “a little bit of a roller coaster.”

“It was a very strange time,” he said. “The vape crisis was a very scary thing for people in the industry.”

Seth Wiggins, chief revenue officer for Clear Cannabis, also in Denver, saw a decline in sales for about 60-90 days before the trend began to reverse.

The health crisis “was very painful initially,” he added.

However, Wiggins said his company has posted record sales in recent months.

Illicit to licit

Wiggins attributes that lift in sales to customers who are shifting from illicit suppliers to legal providers.

“The compliant market allows for more regulations and safety,” he added. “It’s breaching the tipping point where the cost basis is not worth the risk” to buy off the street.

Morgan Fox, spokesman for the National Cannabis Industry Association, also identified that trend.

“Across the board, we’ve seen a lot of people moving away from the unregulated market largely because of public-health concerns,” he said.

Gardenswartz said he saw more people transition from the illicit to the legal market in California than in Colorado, which has imposed tighter controls on illegal dispensaries peddling products.

Sadler agreed. He believes there has been some decline in vape sales on the unlicensed market, and he noted that some of his consumers have made the shift from the illicit market to licensed businesses.

He cited Weedmaps’ decision to curtail advertising for unlicensed dispensaries as helping consumers find legal, tested vape products.

Consumers are more aware that they’re going to a licensed dispensary, and stores in California have even displayed QR codes on storefronts so customers know they’re buying from a legal shop.

“People are more diligent about asking the questions,” he said.

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Cresco Labs Bolsters Leadership Team With Three Senior Promotions

David Gacom, Melissa Wagamon and Sean McAlister, who move into Regional President roles, will lead the business across the platform while strengthening the company’s geographic footprint

CHICAGO–(BUSINESS WIRE)– Cresco Labs (CSE:CL) (OTCQX:CRLBF) (“Cresco” or “the Company”), one of the largest vertically integrated multistate cannabis operators in the United States, announced today it has expanded its leadership team with the promotions of David Gacom, Melissa Wagamon and Sean McAlister to regionally focused president positions. These dynamic individuals, who bring a depth of experience in operations, marketing and sales through previous leadership roles at top CPG companies like MillerCoors, PepsiCo and The Kraft Heinz Company, will be focused on accelerating growth across the Company’s geographic footprint. As the organization continues to scale, they will be accountable for driving the Company’s strategic agenda across its nine states, delivering top-line growth and finding new ways to drive cost synergies in regional operations. In addition, these individuals will serve as the face of Cresco Labs amongst key state and local community leaders to ensure the Company is investing in what matters most to its stakeholders.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20200917005307/en/Cresco Labs promotes David Gacom, Melissa Wagamon and Sean McAlister to Regional President positions. (Photo: Business Wire)

Cresco Labs promotes David Gacom, Melissa Wagamon and Sean McAlister to Regional President positions. (Photo: Business Wire)

“Coming off of a record-setting second quarter of growth and seeing the massive growth potential across all of our markets, we are excited to have these exceptionally talented individuals help lead our efforts at a regional level and identify opportunities to further accelerate and diversify our growth,” said Charlie Bachtell, CEO & Co-founder of Cresco Labs. “In continuation of our stated organizational redesign developed to drive growth and scalable operations across the platform, we continue to enhance and strengthen our leadership team and put the right people, with the right experience, in the right roles to drive results and long-term value for our stakeholders. David, Melissa and Sean have the knowledge, skills and expertise to be our leaders on the ground in markets, constantly focusing on operational execution, creating efficiencies, solving the needs of our customers and launching our brands in markets the right way.”

  • David Gacom has been appointed Regional President, West Region (California and Arizona). His leadership of the California market to date resulted in 41% sequential growth in Q2 and Cresco Labs taking market share in the largest, most competitive cannabis market in the world. Mr. Gacom brings more than 20 years of experience in leadership roles across B2B and B2C channels to the Company, serving most recently as the Chief Commercial & Optimization Officer of Grecian Delight Foods after 13 years in various management positions at The Kraft Heinz Company.
  • Melissa Wagamon has been promoted from VP of Brand Marketing to Regional President, Great Lakes (Illinois and Michigan). Mrs. Wagamon previously managed the development of Cresco Labs’ wholesale brands, including Cresco, Remedi, Mindy’s, High Supply, Reserve and Good News. She joined Cresco Labs from MillerCoors where she oversaw the retail and recruitment strategy for the Coors Light brand and communications strategy as Director for the Miller Lite brand. She also worked in various marketing roles at The Kraft Heinz Company and PepsiCo and started her career in territory sales with Pfizer Inc.
  • Sean McAlister has been promoted from EVP Sales to Regional President of Sales, Emerging Markets (Massachusetts, New York, Pennsylvania, Ohio and Maryland) and National Accounts. With the Company for over four years, Mr. McAlister has led the wholesale sales organization with a proven track record of success, getting Cresco Labs’ House of Brands into over 800 dispensaries across nine states and overseeing $55M in wholesale revenue in Q2—making Cresco Labs the largest wholesaler of branded products in the cannabis industry. Mr. McAlister previously led sales for global gaming technology producer and operator, Novomatic Americas.

Greg Butler, Chief Commercial Officer at Cresco Labs, added, “These individuals were added to our leadership team based on their knowledge of the cannabis industry, their ability to bring a best-in-class CPG experience to our P&L management and proven ability to develop and lead teams. Looking ahead at our industry, we see many opportunities emerging from both a wholesale and retail perspective. Having regional leaders will not only help us ensure that we create a scalable foundation from which to capture every opportunity within our markets, but also help us drive a superior capital agenda across our footprint. They all have a history of success—both in terms of building brands, developing strategic plans and providing leadership to our teams—and they are people you generally enjoy working with.”

Effective immediately, Mrs. Wagamon and Mr. McAlister will be based in Illinois and Mr. Gacom will reside in California.

About Cresco Labs:

Cresco Labs is one of the largest vertically-integrated multi-state cannabis operators in the U.S. Cresco is built to become the most important company in the cannabis industry by combining the most strategic geographic footprint with one of the leading distribution platforms in North America. Employing a consumer-packaged goods (“CPG”) approach to cannabis, Cresco’s house of brands is designed to meet the needs of all consumer segments and includes some of the most recognized and trusted national brands including Cresco, Remedi, High Supply, Reserve, Good News and Mindy’s Chef Led Artisanal Edibles created by James Beard Award-winning chef Mindy Segal. Sunnyside, Cresco’s national dispensary brand, is a wellness-focused retailer designed to build trust, education and convenience for both existing and new cannabis consumers. Recognizing that the cannabis industry is poised to become one of the leading job creators in the country, Cresco provides the industry’s first national comprehensive Social Equity and Educational Development (SEED) program designed to ensure that all members of society have the skills, knowledge and opportunity to work in and own businesses in the cannabis industry. Learn more about Cresco Labs at www.crescolabs.com.

Forward Looking Statements

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as, ‘may,’ ‘will,’ ‘should,’ ‘could,’ ‘would,’ ‘expects,’ ‘plans,’ ‘anticipates,’ ‘believes,’ ‘estimates,’ ‘projects,’ ‘predicts,’ ‘potential’ or ‘continue’ or the negative of those forms or other comparable terms. The Company’s forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including but not limited to those risks discussed under “Risk Factors” in the company’s CSE Listing Statement filed with SEDAR; and other factors, many of which are beyond the control of the Company. Readers are cautioned that the foregoing list of factors is not exhaustive. Because of these uncertainties, you should not place undue reliance on the Company’s forward-looking statements. No assurances are given as to the future trading price or trading volumes of Cresco’s shares, nor as to the Company’s financial performance in future financial periods. The Company does not intend to update any of these factors or to publicly announce the result of any revisions to any of the Company’s forward-looking statements contained herein, whether as a result of new information, any future event or otherwise. Except as otherwise indicated, this press release speaks as of the date hereof. The distribution of this press release does not imply that there has been no change in the affairs of the Company after the date hereof or create any duty or commitment to update or supplement any information provided in this press release or otherwise.

Media: 
Jason Erkes, Cresco Labs 
Chief Communications Officer 
press@crescolabs.com

Investors: 
Aaron Miles 
Vice President, Investor Relations 
investors@crescolabs.com

For general Cresco Labs inquiries: 
312-929-0993 
info@crescolabs.com

Source: Cresco Labs

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How to choose a tracking system: Scaling your cannabis company beyond compliance

Many states with legalized medical or recreational cannabis require license holders to report product movement using a chosen reporting system. The most common include Metrc, BioTrackTHC and Leaf Data Systems.

Regardless of whether a state has a mandated reporting system, licensed operators are obligated to maintain detailed records of product tracking should the state initiate an audit.

Because of this, cannabis operators look to technology for help.

While companies do not have a choice in the reporting system a state requires, they do have a choice in the software system used internally to track, manage and account for cannabis products.

An internal tracking software system must be capable of not only helping operators achieve compliance, but also operate a healthy, profitable and scalable business.

How should cannabis companies go about choosing a tracking system?

There are at least three approaches to the challenge.

Ultimately your choice will depend on factors such as an organization’s size, budget and its plans for growth and expansion.

Start small with manual tracking

Many, if not most, cannabis startups begin operation with big visions and small budgets.

So, like small-business startups in any industry, cannabis startups often begin life with an entry-level accounting package such as QuickBooks and a series of spreadsheets to manage the data that doesn’t have a home in that package.

Operating this way requires companies to collate and hand-key the required data into their state’s reporting system.

While a manual tracking system such as this can help a company meet compliance mandates, it involves a tremendous amount of duplicate data entry to maintain and does not provide insight into valuable business data such as profitability by product, materials-requirement planning, customer profitability or inventory turns.

cannabis tracking software overview

Add in a seed-to-sale application

Another approach to managing compliance is to use a software system that is often referred to as seed-to-sale.

Seed-to-sale systems are narrowly designed with one goal in mind: to aid cannabis companies in achieving compliance in product tracking.

These applications typically do not offer broader accounting functionality so here, too, companies tack on an application such as QuickBooks.

One benefit of seed-to-sale applications is that most include a level of integration with a state’s reporting software that helps minimize the burden of duplicate data entry.

While seed-to-sale systems simplify compliance, their narrow focus can hamper the ability to adapt to the changing cannabis landscape, forcing companies to track parts of the business in separate systems, or even outside the software, which limits an organization’s ability to be innovative, efficient and nimble.

Moreover, with business data broken up in separate systems, the ability to gain deep insight into the overall operation is compromised.

Scale and grow with cannabis ERP

As companies grow and plan for expansion, acquisition or venture funding, they must critically evaluate their operations, looking for efficiencies in how they manage data.

While smaller companies can get by using multiple applications to hold data for various functional areas, larger and growth-minded companies will often turn to enterprise level systems, or ERP (enterprise resource planning).

While cannabis businesses are unique, in many ways they are no different than other regulated manufacturers that must track and trace their raw materials, lots and finished goods throughout the supply chain, making ERP applications a good fit.

However, “generic” ERP applications lack the cannabis-industry specific capabilities necessary to streamline a compliant and scalable operation.

In response, a new category of enterprise resource planning is emerging: cannabis ERP.

Cannabis ERP brings together all business data, including accounting functionality, products, lots, customers, vendors, raw materials and supplies in one application.

A single source of information enables cannabis operators to adhere to the rules, regulations, and statutes of your state, while also running a successful and compliant business (not simply a compliant one).

In addition, cannabis ERP applications are designed to integrate with state reporting applications.

With cannabis ERP, companies are able to automate manual tasks – freeing resources to focus on building their brand and maintaining quality standards.

Businesses gain access to decision-making data that helps to optimize inventory holdings and understand what and who is making the company money.

By delivering broad functionality, deep insight and traceable workflows, cannabis ERP applications provide a strong foundation that appeals to investors as well – if that’s part of a company’s game plan.

Scaling beyond compliance

Regardless of the state in which a company does business, compliance with product tracking rules is simply a baseline for legal operation.

Cannabis businesses must go beyond simple compliance, functioning both efficiently and effectively, or they will soon get left behind.

The choice of tracking technology will ultimately depend on a company’s goals and budget.

While there are multiple approaches to achieving compliance, a more comprehensive approach will ultimately yield the most flexibility and scalability, providing the agility so vital in this volatile industry.

Alex Glueckler is director of sales and strategy at Phoenix-based Silverware, where he is largely focused on their cannabis offering, Silver Leaf CBC. He can be reached at alex@silverw.com.