Leune Cannabis Works Across State Lines

California-based LEUNE manufactures pre-rolls, vape cartridges, gummies and other cannabis consumables in California, Arizona, Maine and Missouri. These days, Managing Director 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 provides a consistent product experience, but each state has its own rules, so much of the company's work is based on understanding and adhering to each location's particular regulations, she said.

Seed tracking for sale, testing requirements, packaging regulations, employee training, and tax rates differ from state to state. In Missouri, for example, the word "marijuana" must be larger than any other word on the package. In New Mexico, soon all packaging will have to be recyclable or biodegradable. This presents an additional challenge with current supply chain issues, Handa said.

And the rules may change as local cannabis control boards share best practices or respond to growing industry or consumer concerns. At one point, Handa said, she placed a large order with a Chinese company for packaging materials in anticipation of strong demand for a product that was selling well. Shortly after, she was informed that the rules were changing, so the size of the warning on the label was 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. "It's a bread-and-butter product for a fledgling consumer," Handa said.

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Handa supports increasing the number of cannabis licenses available in all states, in order to bring illegal cannabis operations (she calls them "traditional") under the umbrella of the law. "It's safer for consumers to know that the product has been tested," she said, and if someone has a bad experience with an illegal product, "it reflects badly on the whole 'industry". This is especially critical now as cannabis companies attempt to reduce product stigma and gain acceptance, she said.

Yet there is a balance between establishing a regulated industry and the expense it represents for the companies operating there, she added. Illegal operators will not want to join the legal market if the taxes are too high and the regulations too burdensome.

For entrepreneurs looking to join the "green rush", Handa has some advice. Find a balance between listening to other people's predictions and advice and listening to yourself, she said: "People make their best guesses, but it's all anecdotal because we have little history."

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There is no demand creation needed when it comes to cannabis, she said, because it already has a passionate fan base. "We don't have to convince people that the product is interesting or compelling," she said.

Instead, focus on agility, Handa said, "Be ready to pivot," when working with raw material supplier, regulations, and market dynamics. "The is not an industry for the faint of heart."

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