Tools of the Trade

Membership in cannabis trade associations has skyrocketed over the past decade, thanks to the industry’s explosive growth. And many industry executives endorse such groups as a way to communicate business-related issues to lawmakers and regulators who influence policy.

Yet, while membership helps further the industry’s broad interests, what specific benefits does it offer to individual business operators? And how do you choose the right trade association to meet your needs?

A decade ago, when the National Cannabis Industry Association was founded with 30 members, no such groups existed. Today, NCIA boasts nearly 2,000 member businesses in plant-touching and ancillary fields. There also are dozens of state-level and sector-specific trade associations, along with a handful of other national organizations, including the Cannabis Trade Federation and the Minority Cannabis Business Association.

“I’ve been involved in working with people in trade organizations for nearly 13 years,” said Sabrina Fendrick, chief public affairs officer with California-based Berkeley Patients Group, a medical cannabis dispensary established in 1999. “And some have really built themselves into incredibly impressive powerhouses.”

 

Member Benefits

The opportunity to work on association subcommittees is often cited as an effective way to achieve specific business goals.

Bryce Berryessa, president of La Vida Verde, a craft-infused products company in Santa Cruz, California, said participating on the manufacturing subcommittee for the California Cannabis Industry Association enabled the rollout of regulations in a compliant and effective way. The CCIA’s network of members are all tackling the same issues and challenges, he said, and can collectively propose ideas, table issues and solve problems.

That collaboration alone is “invaluable,” Berryessa said. “Rather than having to pay third-party consultants or lawyers, we’re working with our peers.”

Collaboration also often leads to seeing things in a different way than would be possible solely with staff. It provides an opportunity for competitors who usually are fighting “for the same spot on the shelf,” Berryessa said, to cooperate on issues related to Metrc, the state’s seed-to-sale tracking system, for example, or to figure out compliant ways to transport samples to dispensaries.

Associations also provide a centralized repository of key industry information, such as policy developments and changes to regulations. A designated individual gathers the information on a regular basis and shares it with members.

“Because the cannabis industry is so hyper-regulated, and it’s done on a state-by-state basis so differently, it’s really hard to keep up to date on some of the rule changes that are being talked about. A well-resourced trade group … with somebody that’s keeping an eye on that and sending good updates for their members, is another really helpful aspect … rather than every single owner monitoring that independently,” Berryessa said.

 

Choosing the Right Group

Regardless of how effective and comprehensive an association’s benefits might be, selecting an association to best meet your individual business needs requires due diligence. Cannabis companies, for example, should make sure the association is accurately representing its legal status and is aligned with their legislative priorities and objectives.

“There are a lot of groups that present themselves in how they brand and market and communicate as being not-for-profit, when in fact they are for-profit entities,” said Ben Gelt, board chair and co-founder of the Cannabis Certification Council.

“There’s a lot of that. There are still other groups that have an entity that is a nonprofit, but they are also operating for-profit entities that are either identically or similarly branded,” he added. “So they leverage their nonprofit traction into for-profit consulting and other business.”

Gelt noted that he’s unaware of any trade associations that are directly misrepresenting their status and points instead to a handful of third-party industry affiliates he said are doing so.

However, he said, “I think groups like that still negatively impact the credibility of all true nonprofits and trades, as they muddy the waters.”

Further, he adds, “I would posit that all these groups … compete for the same type of attention from the industry, which translates into dollars and support.”

Tom Howard, a Chicago-based attorney whose firm, Collateral Base, specializes in cannabis industry issues, said there are ramifications to joining an association that is either not aligned with your business goals or misrepresents itself in terms of its legal business status.

Other considerations include how much industry experience board members have and how the organization is structured.

“Who’s on the board, who’s on the subcommittees? What’s the point of those committees? And what are the association bylaws?” Howard said, adding that while it might not seem like the latter will affect you, having official bylaws and policies in place ensures the organization has procedures to keep it operating fairly, ethically and efficiently.

“Check the mission statement or first principles of the organization
and go all the way up to the bylaws to see if those ideals hold true or not,” he said.

Further, ask whether you must pay for board membership and, if so, what you’re getting out of it. “If you’re going to be paying to play,” he said, “well, what am I paying for? How much of an audience am I reaching through your network?”

Other industry executives advise checking an association’s reputation and testing its customer service:

  • Does the association have positive reviews? Are they recent?
  • Are there errors in the content posted on its website?
  • Is the chat feature on the website useful? Is calling the customer service line an efficient, effective process?

 

Time and Money

Trade associations don’t require active membership, but most members say the value they derive largely depends on participation. So, before joining, it’s a good idea to decide how much time you have to participate in subcommittees, write white papers, lobby on behalf of the group or simply attend the association’s social events.

“Passive membership is OK and is needed,” Fendrick said. “But if there is an issue that a company or individual is really passionate about, I think that (making) sure that concern or that message is relayed properly and articulated to the leadership requires some additional engagement.”

Deciding how much you can afford in terms of fees is also prudent.

Not everyone can afford to pay to play, said Brian Farmer, co-founder/director of certification services with the Cannabis Conservancy, which certifies marijuana producers’ sustainability practices and provides educational workshops through the NCIA and a variety of small- to medium-sized co-ops and cultivator associations.

“One of the things I’ve seen is that, typically, trade associations get set up, and the barrier to entry is so high in terms of what they want to charge their members that they’re not actually able to grow.”

“Small- to medium-sized growers,” Farmer said, “don’t see the value in trade associations per se. So they end up creating their own co-ops or other kinds of … farmer-advocacy associations.”

Berryessa, too, noted that association fees can be daunting—not only due to the size of a prospective member’s operation but also because of fluctuating market conditions.

“The majority of businesses in (California) are experiencing cash-flow issues and stagnant or negative growth because of the inability of local governments to issue licenses for retail,” he said. “Often, when businesses are having to make hard decisions, they’re cutting what they view as nonessential expenses, and so the trade associations can be one of the first things to get cut.”

Cutting association membership from the budget, however, is probably a mistake, Berryessa said. “Trade associations … are going to be the most effective at implementing change and bringing issues to the forefront
for politicians.”

Association dues vary. However, many associations have scaled participation rates, or a tiered system of dues. The NCIA’s annual dues, for example, range from $1,000 for a “regular” membership that, along with other services, provides discounts on trade-show tickets, access to a sales-tracking platform and eligibility to participate in NCIA subcommittees, to $5,000 for an “industry leader” membership, which offers all of the above plus “curated monthly insight reports” and eligibility to serve on the NCIA’s policy council.

“There’s certain benefits that come with higher levels of membership,” Berryessa said. “But even if it’s just a basic level of membership, it still gets you access to the network, and the enormous amount of information, and the ability to participate on subcommittees.” Joining a trade association is fast becoming as much a tool of the trade in the cannabis industry as it is in other industries. But, like most other aspects of doing business, you tend to get out of it what you put in.