California-based LEUNE makes pre-rolls, vape cartridges, gummies and other cannabis consumables in California, Arizona, Maine and Missouri. Chief executive Nidhi Lucky Handa is working with partners in six additional states to start production there as well. Handa wants to create a trustworthy brand that offers a consistent product experience, but each state has its own rules so much of the company’s work comes from understanding and adhering to the particular regulations in each location she said.
Seed to sale tracking, testing requirements, packaging regulations, employee training, and taxation rates differ from state to state. In Missouri for example, the word “marijuana” needs to be bigger than any other word on the packaging. In New Mexico, soon all packaging will need to be recyclable or biodegradable. That offers an extra challenge with current supply chain issues she said.
And rules can change as local cannabis control boards share best practices or respond to developing industry or consumer concerns. At one point, Handa said, she had put in a large order with a Chinese company for packaging materials in anticipation of high demand for a product that had been selling well. Soon after, she received notice that the rules were changing so the size of the warning on the label had to triple. “I had 30 days to use the packaging I had ordered,” she said.
States can also prohibit specific product categories from being sold. Pennsylvania, for example, does not allowed pre-rolls. “That is a bread and butter product for a nascent consumer,” said Handa.
Handa favors expanding the number of cannabis licenses available in all states, to bring illegal cannabis operations (she calls them “traditional”) under the legal umbrella. “It’s safer for consumers to know the product has been tested,” she said, and if someone has a bad experience with illegal product, “it reflects badly on the whole industry.” This is especially critical now when cannabis companies are trying to reduce the product’s stigma and gain acceptance she said.
Still, there’s a balance between setting up a regulated industry and the expense that presents to the businesses operating in it she added. Illegal operators won’t want to join the legal market if taxes are too high and regulations are too onerous.
For entrepreneurs eager to join the “green rush,” Handa has advice. Find a balance between listening to others’ predictions and advice, and listening to yourself, she said, “People are making their best guesses, but everything is anecdotal because we have little history.”
There’s no demand-creation necessary when it comes to cannabis she said because it already has a passionate fan base. “We don’t have to convince people the product is interesting or compelling,” she said.
Instead, focus on staying nimble said Handa, “Be ready to pivot,” as you work with raw material supplier, regulations and market dynamics. “The isn’t an industry for the faint of heart.”