Cannabis on the Learning Curve: A Conversation About Regulatory Compliance and Diversity & Inclusion in the Cannabis Sector

Although its early days were controversial, the cannabis sector in Massachusetts is now a thriving part of the business landscape. According to Dan Adams of the Boston Globe, cannabis sales have now reached over $1.5 billion in Massachusetts, since the start of the recreational and adult use market in November 2018. A recovery from the shutdown of many retailers during the pandemic also seems imminent, with celebratory 4/20 sales totaling $4.21 million.

But the cannabis sector is unique and its value can’t be measured by sales figures alone. Unique among such a fast-growing and highly regulated industry, the Massachusetts cannabis sector has a statutory and regulatory obligation to make substantial efforts towards racial and gender diversity and inclusion and create a positive impact on local communities affected by the history of cannabis prohibition. In this interview, attorney Richard M. Juang, Of Counsel to Royal LLP speaks with two leading businesswomen who provide critical services to the cannabis sector: Ashley Boucher, Founder of Quality Control Analytics, which provides regulatory compliance training, and Danielle Schumacher, Co-founder and President of THC Staffing Group, which provides executive-level recruitment and diversity & inclusion consulting. In this conversation, we take a birds-eye view of the landscape for regulatory compliance and for diversity and inclusion in the industry, and talk about what aspiring entrepreneurs should keep in mind as they seek to launch.

Richard M Juang (RJ): First, thank you both so much for doing this interview. Cannabis is a major and still-growing industry here in Western Massachusetts. Many of our cities and towns have welcomed cannabis businesses. I wanted to speak with you both because you both run businesses that are ancillary, but critical to the success of “plant-touching” parts of the sector. You both have a solid track record and see a lot of of what’s going on both statewide and nationally. Can I start by asking you to introduce yourselves?

Ashley Boucher (AB): It’s a pleasure to speak with you. I’m the owner and founder of Quality Control Analytics. QCA was the first accredited responsible vendor trainer here in Massachusetts. We provide compliance training to cannabis companies throughout the state and offer consulting with data and data analysis. Responsible Vendor Training is a curriculum that’s required for every employee in the Massachusetts cannabis industry, initially at hire and then yearly afterwards.

Personally, I came out of working in data and compliance in the medical industry. When the cannabis industry started in Massachusetts, I thought it was a great time to take my expertise and knowledge from the medical world over into cannabis. I started off as a manufacturing manager, but when the responsible vendor training opportunity came up, I left and founded QCA.

Danielle Schumacher (DS): Happy to be here. THC Staffing Group is a national consulting firm specializing in finding qualified executive, managerial and professional employees for cannabis businesses. We also have a specific focus on helping companies be genuinely inclusive, from the start.

I’m from Illinois and got involved in cannabis advocacy and policy work in the early 2000s as a student at the University of Illinois at Urbana-Champaign. I was involved with Students for Sensible Drug Policy. For 10 years before starting THC Staffing Group, I worked for dispensaries, a doctor’s office, and in large scale cultivation centers. I also created the first curriculum at Oaksterdam University, which was the first cannabis college. So, when I co-founded THC Staffing Group in 2014, it was one of the first specialized cannabis recruitment companies, but it was also a culmination of the work that Shaleen and I had been doing. From the start, we wanted to specifically focus on creating more diversity in the industry and to figure out ways to help companies truly be more inclusive. Personally, my very specific goal has always been to do whatever I can to help create sustainable employment for people who have been incarcerated due to the war on drugs.

RJ: The timing and growth of both your firms tracks the growth of the recreational and adult use cannabis sector in Massachusetts, from the time of its legalization to now. My own start with the cannabis industry was from the regulatory side, as one of the attorneys brought on by the Cannabis Control Commission (CCC) to help write the first set of regulations. My recollection of the early days is that I saw enormous entrepreneurial enthusiasm and a real commitment on all sides to racial and gender diversity. But I also recall thinking that navigating a highly regulated industry is inherently difficult and I couldn’t tell whether or not the sector would really thrive or whether it would be dominated by a handful of major, well-capitalized companies. Now, it’s clearly become a thriving industry with both small and large operators, despite a lot of challenges. Ashley, what do you see as the major regulatory and compliance issues that cannabis businesses face, and what should they look out for in the near future?

AB: Currently, it really depends where you are in the industry. If you are a cultivator, you might say, for example, “my biggest compliance challenge is not using certain pesticides on plants.” A manufacturer might say “purging out my extracts to have only a specific level of butane or a specific level of a residual solvent left.” So specific compliance issues depend on where you are in the industry.

Overall, the biggest challenge that cannabis companies face when we’re thinking about compliance is having good communication in your establishment. If your operational teams aren’t communicating effectively, you’re going to have a hard time maintaining compliance. Employees need the education to know what a compliance failure is, in the first place, and what needs to be reported. Then employees have to know what to do if they do witness or suspect any compliance failures. Who do they communicate to?

RJ: Are there recommendations that you’d make for the CCC to help businesses?

AB: I do think that some of the compliance challenges come from the need to clarify some of the regulations. In the medical world, when I had to do any internal audits, one of the best things that helped was that I would get a huge booklet of everything we have to maintain in the lab. It would also have a list of what’s acceptable for cited evidence of compliance. So having a checklist from the CCC and a higher level of transparency and communication with regulators would be tremendously helpful: basically, a way for businesses to know what records to maintain and how they’ll be evaluated for compliance.

In the industry itself, I think that the industry is going to start considering some more Current Good Manufacturing Practice (CMGP) standards so that we have more consistency in the products that are being delivered to the market.

RJ: Is that something you see coming in the sector?

AB: Yes. When you go into some establishments now, you see that they’re already ahead of the curve, and they’re implementing some of those CGMP standards. For example, you see that they’ve paid attention to the physical construction of the establishment and that have training to ensure quality manufacturing procedures and training on hazardous substances. The result is that employees are safe and the products that are going to consumers are also safe. Those standards might become regulatory requirements at some point. There are groups out groups out in Colorado in Washington that are really pushing for better standardization of the manufacturing processes in the cannabis industry, now, and the codification of those standards in regulations. I think Massachusetts may start seeing that as well.

RJ: Ashley, that makes a great deal of sense. While regulators should avoid, I think, stifling entrepreneurial creativity, having consistent regulations about consistent practices is probably good, when it doesn’t lead to a loss of creativity or growth.

Danielle, THC Staffing Group sees diversity in the cannabis workforce as both an ethical principle and good business sense. As you know, it’s also a cornerstone of public policy in Massachusetts. From your perspective with recruitment and hiring, what do you see as challenges and recommendations for the cannabis sector, going forward?

DS: I think there’s a big risk of a lack of planning and underinvestment in hiring. Breaking into the cannabis business is expensive and complicated and it’s an extremely competitive industry. So, when a business starts up, there’s a real sense of urgency: companies often feel that they need to hire as quickly as possible, as many people as possible, while spending as little as possible. This can make hiring a diverse workforce difficult. The problem isn’t a lack of racial or gender diversity in the talent pool; it’s that there hasn’t been the planning or the time to do recruitment well when a new company is having to move really quickly and has to get set up in harsh financial conditions and in a complicated regulatory context.

RJ: I think it’s pretty common for entrepreneurs in any sector to rely heavily on personal networks for finding good hires when they’re starting out and even after they’re established. And if one’s personal networks are not racially diverse, then the result is not going to be a racially diverse hiring pipeline. What do you recommend companies do?

DS: First, plan ahead and make a recruitment strategy part of the business plan from the start, not after everything else is set up. Second, recognize that the drug wars have had severe negative consequences for Black and Indigenous communities. For white entrepreneurs, relying on personal networks alone is simply not a sufficient way to do recruitment, especially in the cannabis sector.

RJ: That makes sense. And I think the CCC’s licensing requirements promote businesses breaking out of personal networks and engaging with communities of color when hiring, not just putting a posting online and hoping that candidates of color and women will see it.

DS: Yes, cultivating community relations and cultivating a wider network is really important. That’s certainly something that THC Staffing does for clients.

AB: In Massachusetts, community engagement is also part of the regulatory landscape.

DS: And that leads into the challenge of retaining a diverse workforce. If you take the time to really get to know the local communities and communities of color and truly support the work that’s being done within those communities, you’ll have a better chance of building a welcoming workplace and retaining good employees.

RJ: Agreed. From an attorney’s perspective, there can be a big gap between legal compliance and actually having a welcoming workplace. There are important policies and procedures that all companies need to have, like anti-retaliation policies for when employees raise a concern about discrimination or harassment. But those policies need to be supported by managerial competence, which includes competence in managing a diverse workforce and also making sure to eliminate racial and gender bias in key things like evaluations, promotion, and wages.

How do the two of you think the sector’s doing so far?

DS: I think we’re still learning. Right now, I find that initially, many companies start off with a diverse workforce because they’re hiring from the communities that they’re located in. But if we look at the retention of employees of color, that’s a different story. So the big question now isn’t how do cannabis companies attract and recruit a diverse workforce, but how do they retain a diverse workforce?

AB: And part of retaining that workforce is also making the workplace a safe place to learn. Even in a highly regulated environment where maintaining compliance and standards is essential, workplaces also need to be a safe place for people to make mistakes and learn from them. The cannabis workplace needs to be a place where people are able to learn from mistakes and grow. And by reducing turnover rates, your compliance is going to improve.

DS: Because — and this goes back to your earlier point about communication and education, Ashley — companies will have better internal communications about good practices and better institutional knowledge, if there’s less turnover.

RJ: Thank you both for these insights. It’s always a pleasure to work with you both and thank you for your time.

Richard M. Juang, is Of Counsel to The Royal Law Firm, LLP, Springfield MA and Hartford CT. Ashley Boucher is the Founder of Quality Control Analytics, Assonet MA. Danielle Schumacher is the President and Co-Founder of THC Staffing Group, Chicago IL.

The article can be found here: https://danielle-thcstaffing.medium.com/cannabis-on-the-learning-curve-a-conversation-about-regulatory-compliance-and-diversity-2c00790330c6