New social responsibility standards for the cannabis industry

Cannabis companies see new standards as key to growth and further development of the fast-growing sector.

Newly certification standards  will encourage and validate actions by members of the global cannabis industry. A group of Western weed growers and a non-profit cannabis group are building the first CSR rules to drive standardization, compliance and transparency.

The aim of the newly announced certification standards is to encourage and validate actions by members of the global cannabis industry to advance environmental stewardship, social responsibility and good governance, delegates of the second annual World Cannabis Congress were told.

The Global Cannabis Partnership (GCP), a collaboration of leaders in the government-sanctioned cannabis industry, released a corporate social responsibility framework. All 45 members and organizations have agreed to adhere to the framework with the purpose of establishing a standard for the new and rapidly growing cannabis industry worldwide.   

“This is the first time that I can think of where an industry’s decided to get CSR right out of the gate,” said Rick Petersen, author of the Global Cannabis Partnership’s corporate social responsibility framework. The group includes 45 cannabis companies, government agencies and law firms, representing countries including Canada, the U.K. and Israel.

The nascent sector is in need of standardization, governance and compliance in the wake of several major scandals with Aphria Inc. and Beleave Inc.  Short-sellers accused Aphria of paying inflated prices for “largely worthless” assets owned by insiders. A special committee found the company paid an “acceptable” amount for the assets but also found that certain directors had conflicting interests in the deal that weren’t fully disclosed to the board. At the same time, Beleave Inc. recently settled with regulators in British Columbia after it admitted paying C$7.5 million to consultants who didn’t do any work for the company. And recently, Ascent Industries Corp. filed for bankruptcy protection after a host of problems, including having its Canadian license suspended for “unauthorized activities with cannabis.”

None of this is comes as a surprise from a sector that just recently emerged from the shadows of illegality, according to Dan Daviau, CEO of cannabis investment banker Canaccord Genuity Group Inc.

The world’s first Responsible Cannabis Framework (RCF) seeks to positively influence the industry’s impacts on the environment and society, and aims to support GCP members in continually improving their corporate performance over time.

“We’re building an industry for the future,” said the GCP’s Executive Director Kim Wilson. “It’s one thing to have a legal license to operate; earning and keeping a social license is another story. We have a long road ahead of us, but today’s announcement is an important step in the right direction.”

The RCF will rely on best practices from within and outside the industry to go beyond minimum compliance with all relevant and applicable laws, articulating expectations of members for evaluating, developing, implementing, measuring and disclosing their environmental, social and governance initiatives.

“It’s amazing how quickly this industry moves and it really is coming to a point of maturity,” he said. “We made a conscious decision to be at the forefront of that maturation process. We want to be one of the leading companies when it comes to corporate governance, transparency and compliance.”

The RCF is the result of extensive research and consultation with a variety of stakeholders,” said Rick Petersen, one of the world’s experts in corporate responsibility and author of the Framework. “We knew that we could rely on the experience of other industries, while at the same time coming up with the right steps to meet the challenges in our specific sector.”

The companies and organizations that have agreed to the Framework’s guiding principles will try to apply them not only in their day-to-day operations but across the entire supply chain. They will be governed by principles of responsibility, collaboration, transparency and continuous improvement. They will be given up to a year to complete work necessary to apply for one of four certification categories. Minimum requirements include, among others, minimizing greenhouse gas emissions; promoting responsible use, and reinforcing ethical conduct. The formal certification process was developed by EY and member applications will be submitted to an independent evaluation panel.

The GCP expects members to make improvements when Framework standards are not met and to develop mechanisms to ensure ongoing compliance and continuous improvement.