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 trusted 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 specific regulations in each location, she said.
Tracking from seed to sale, testing requirements, packaging regulations, employee training, and tax rates vary from state to state. For example, in Missouri, the word “marijuana” must be larger than any other word on the package. In New Mexico, all packaging must soon be recyclable or biodegradable. That presents an additional challenge with today’s supply chain issues, she said.
And rules can change as local cannabis control boards share best practices or respond to evolving industry or consumer issues. At one point, Handa said, she placed a large order with a Chinese packaging materials company in anticipation of high demand for a product that sold well. Shortly after, she was informed that the rules were changing, so the warning on the label had to triple. “I had 30 days to use the packaging I ordered,” she said.
States may also prohibit the sale of specific product categories. Pennsylvania, for example, does not allow pre-rolls. “That is a bread and butter product for a novice consumer,” says Handa.
Handa is in favor of expanding the number of cannabis licenses available in all states, to bring illegal cannabis activities (she calls them “traditional”) under the legal umbrella. “It’s safer for consumers to know that the product has been tested,” she said, and if someone has a bad experience with illegal products, “it has a bad effect on the entire industry.” This is especially critical as cannabis companies try to reduce the stigma of the product and gain acceptance, she said.
Still, there is a balance between setting up a regulated industry and the costs that the companies operating in it have to pay, she added. Illegal operators will not want to enter the legal market if the taxes are too high and the regulations too heavy.
Handa has advice for entrepreneurs who would like to participate in the ‘green rush’. Find a balance between listening to the predictions and advice of others and listening to yourself, she said: “People do their best, but everything is anecdotal because we have little history.”
There is no need to create demand when it comes to cannabis, she said, as it already has a passionate fan base. “We don’t have to convince people that the product is interesting or attractive,” she said.
Focus instead on staying nimble, Handa said, “Be ready to turn,” as you work with raw material supplier, regulation and market dynamics. “It’s not an industry for the faint of heart.”