See Hot Smoking Topics in Operations Panel here.
The growth and legitimacy of the cannabis industry is at an all-time high with nearly two-thirds of the country in support of the federal legalization of cannabis. With such legitimacy and potential for further growth, it’s no surprise ancillary businesses are coming to the forefront to provide services to the cannabis industry. However, with so many new and ever-changing developments in the rapidly growing cannabis industry, ancillary businesses need to be positioned to understand and adapt to the complex landscape of the cannabis industry in order to provide sound advice and guidance to cannabis operators.
The Hot Smoking Topics in Operations Panel, presented by Burns & Levinson, examined the landscape of ancillary services provided to the cannabis industry and the Governor’s ban on vaping products.
Tina Sbrega, President and CEO of GFA Federal Credit Union, a well-capitalized, $540 million member-focused credit union, is at the forefront of providing services to the cannabis industry. Under Ms. Sbrega’s leadership, GFA Federal Credit Union created a subsidiary company in 2018 to provide banking services to cannabis operators, employees of cannabis operators and other companies willing to service the cannabis industry.
According to Ms. Sbrega, GFA Federal Credit decided to get into providing financial services to the cannabis industry out of the need for public safety. Ms. Sbrega explained that the cannabis industry is a legitimate business industry and, as such, needs similar banking services offered to other legitimate businesses outside of the cannabis industry. Providing banking services to the cannabis industry allows for GFA Federal Credit Union to help (the best it can) normalize the cannabis industry, where other financial institutions are reluctant to provide financial services, Ms. Sbrega further explained.
Josh Smart, North American Practice Leader of HUB International, highlighted the importance of understanding the landscape of the cannabis industry and how it relates to providing sound advice and guidance to cannabis operators, especially in the context of providing insurance to cannabis operators. According to Mr. Smart, insurance companies are passing along insurance policies to cannabis operators that are largely not applicable to the operations of the cannabis industry. Mr. Smart explained that having a better understanding of the landscape of the cannabis industry and the potential liabilities that a cannabis operator may face with respect to its operations is crucial to providing sound advice and guidance to cannabis operators.
Ms. Sbrega also echoed similar sentiments to those of Mr. Smart, albeit from a tax perspective. Since cannabis is still illegal federally under the Controlled Substances Act, cannabis operators are reluctant to file income tax returns in connection with their cannabis operations, Ms. Sbrega noted. Ms. Sbrega explained that cannabis operators must strictly comply with local, state and federal tax laws, including understanding IRC Section 280E and how it affects cannabis operators, as there are severe financial and criminal penalties for the failure to adhere to such local, state and federal tax laws.
Other panelists also weighed in on the Governor’s vaping ban, which prohibits the sale or display of all vaping products to consumers in the Commonwealth of Massachusetts.
Carmen Lam, Senior Vice President of Business Development at KushCo Holdings, Inc., a publicly traded company and the parent company to a diverse group of business units in the cannabis industry, and Jacques Santucci, President of Nucleus-One Consulting, a business performance management firm specializing in the cannabis industry, both echoed similar sentiments that education for better decision making by consumers in the selection of vaping products is part of the solution to the current vaping issues.
Ms. Lam explained that consumers have been vaping for over 10 years and recently there has been an influx of illicit, unregulated vaping products entering the market that contain harmful ingredients not apparent to consumers. Mr. Santucci further explained that the lack of standard in the cannabis industry with respect to the vaping issues is a cause for concern, and that educating consumers on the importance of selecting vaping products that are properly tested and verified (as opposed to counterfeit vaping products) is a way to create a best practice and standard in the selection of vaping products by consumers.
Complete List of Panelist
- Mary Amato, CohnReznick
- Carmen Lam, KushCo Holdings, Inc.
- Patrick Ryder, Hub International
- Jacques Santucci, Nucleus One
- Tina Sbrega, GFA Federal Credit Union
- Josh Smart, HUB International