Tag Archives: analysis

July 13, 2018

German Authorities Will Issue New Cannabis Cultivation Bid

By Marguerite Arnold

According to Kermit the Frog, it’s never easy being green. It is also tough to be “first” in the cannabis biz. Anywhere.

One of the most remarkable features of the first years of state-level legalization in the U.S. was the sheer number of mistakes by the authorities in issuing licenses and bids for state-sanctioned cultivation and dispensation once the voters had forced legalization. There were several state-level “redos” and lots of legal mumbo jumbo thrown around as the green-rush kicked off at the state level.The real news? There is going to be a completely new one.

Fast-forward a couple of years and it is clear this is not just an issue of the confused state of legalization in the U.S.

Canada too, on a federal recreational level, has moved forward in fits and starts. And even though a fall start date to the market has now been enshrined into law, the continued moving target of the same has been a topic of fraught conversations and bargaining ever since the country decided to move ahead with full Monty recreational.

Across the pond, things are not going smoothly on the cannabis front. In the first week of July, the much stalled medical cultivation bid in Germany finally came to a limpid end. It remains to see if there will be any legal “bangs” as it whimpers away.

The real news? There is going to be a completely new one.

A Do-Over

According to documents obtained by Cannabis Industry Journal, the Bundesinstitut für Arzneimittel und Medizinprodukte (or BfArM) issued letters to original bid respondents in the first week of July. The letters appear to have been sent to all parties who originally applied to the first bid – far from the final top runners.

The translation, from German reads:

“We hereby inform you that we have withdrawn the above-mentioned award procedure…and intend to initiate a new award in a timely manner.”

The letter cited the legal decision of March 28 this year by the Düsseldorf Higher Regional Court as the reason the agency cannot award the contract. Specifically, because of “necessary changes to the tender documents…inparticular with regard to time, we have decided to cancel the procedure altogether and initiate a new award procedure.”

Per the letter, the new procedure will be published in the Official Journal of the EU. No date was mentioned.

An Expensive Surprise and a Global Response

Conventional wisdom in the industry about the fate of the first bid has been mixed since last September when the first hint of lawsuits against the procedure began to circulate. Highly placed sources within the industry have long had their doubts about the bid’s survivability, although nobody will talk on the record. The bid process is supposed to be secret.However, it is clear that another bid will be issued

Furthermore, for the last 9 months, BfArM has maintained that the agency would go full-steam ahead with the original tender. None of the major firms contacted by CIJ about this notification would confirm that they had received a similar letter, nor would they comment.

However, it is clear that another bid will be issued. Further, this time, it is also obvious to the extent that it was not before, the applicants will indeed hail from all points of the globe. On top of that, those who are qualified to respond and who missed it last time are unlikely to sit the bid out this time around.

It remains unclear of course, what the response of the finalists to the first bid will be. Including, theoretically,legal action forpotential damages. BfArM was, technically, held at fault by the court. This means that all the companies who made it to the previous “final round” have now suffered at a minimum, an expensive time delay where other outlays of cash were also required. That includes the leasing and retrofitting of high security real estate, but of course,is not limited to the same. If any of these firms do not obtain the bid in the second go around, will they sue?

At press time, there were no cannabis industry companies willing to comment on the matter as this is still a “secret” process – even if it now apparently has come to an end for this round.

Who Is Likely To Be a Major Contender This Time?

German firms who were sleeping the last time this opportunity arose (or brushed it off as a “stigmatized” opportunity) are not likely to sit the second tender offer out. Especially given advancements in legalization if not the industry both in Europe and globally in the period of time the bid has stalled.

Add to that Canadians, Dutch, Israeli and Uruguayan firms, and the mix of applicants this time is likely to be the who’s who of the global cannabis industry. Americans are still not qualified to participate (with experience at least). Why? No federal reform.Domestic cannabis will not be harvested in Germany until at least 2020.

It is also likely to be even more expensive. Not to mention require easy and quick access to European-based or at least easily confirmable pools of cash. It is conceivable that successful applications this time around will not only have to prove that they have a track record in a federally legal jurisdiction but will also have to be able to quickly access as much as 100 million euros. And there are not many cannabis companies, yet, who can do that, outside of the presumed top 10 finalists to the bid.

Will Bid Respondents Be Limited To “Just” the Cannabis Industry?

It is, however, absolutely possible that this time around the bid could include a more established pharmaceutical player or two who realizes that the medical market here has absolutely proved itself. Within the space of a year, according to the most recent “market report” on the industry (from the perspective of one of the country’s largest statutory insurance companies – Techniker Krankenkasse), there are now just over 15,000 patients.

Cannabis, in other words, is no longer an “orphan drug.” It is also still, however, considered a narcotic. For that reason, seasoned European and German players may upset the market even more with an entry via this tender bid.

Here is what is certain for now. Domestic cannabis will not be harvested in Germany until at least 2020. And until that time, it will be a growing, but import-based market.

July 11, 2018

Soapbox

Collaborative Health Model to Advance Cannabis Research

By Rob Adelson

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The projected growth of the legal cannabis market is astounding. According to a report from BDS Analytics, the industry is expected to grow from $9.2B to $47.3B in 2027 in North America, with medical cannabis contributing 33% of that overall growth. While this number is impressive for an industry still in its infancy, I have reason to believe it can be much higher.

In the pharmaceutical industry, treatment of pain and insomnia represent an annual revenue exceeding $140B; concurrently, studies have shown cannabis to be an effective treatment for both conditions. If medical cannabis can capture 10% of that revenue over the next ten years, it essentially doubles the current estimates mentioned above.

So, what stands in our way? Education.

To gain acceptance from the medical community, physicians need to better understand the plant and its therapeutic benefits. To do so, they need more substantial data to prove cannabis’ efficacy before prescribing it to their patients. However, federal illegalities have prevented government-mandated clinical studies, but I believe there’s another way.

By adopting a collaborative health care model, patients and caregivers can work together to track the effectiveness of their cannabis treatments and share their learnings with the larger medical community. With the right tools in place, we can fast-track the research process and provide physicians and politicians with the information they need to make this medicine more approachable and accessible to those who could benefit from it.

By harnessing the power of the community, we can apply learnings from one patient’s cannabis use to help countless others.The Spine Patient Outcomes Research Trial (SPORT) was a five-year study consisting of approximately 2500 patients with back and spine conditions. Participants entered qualitative data into an online portal, including post-surgical results and patient outcomes, to provide a comprehensive insight into treatment methods and their efficacy. Today, others suffering with those same conditions can enter their personal information into an online calculator and receive a prospective treatment plan. Together, patients and their doctors can view results and build a customized plan using more informed decisions about the available treatment options.

Another example comes from OpenNotes– an exploratory study that provides patients with full access to their medical files and the opportunity to input comments about their doctor visits and prognosis and make corrections related to the care they received. Results showed that this process helped patients retain a better understanding of their condition which improved their decision making and resulted in increased adherence to treatment plan protocols because they had greater trust with their doctors.Not only will this improve the patient experience by providing a safer, more sustainable treatment option, it also provides a very significant financial opportunity.

I believe the cannabis industry can take a leadership role in empowering patients to become active participants in their own treatment, while also sharing knowledge with the larger patient and physician communities. In fact, this core belief was the reason I founded Resolve Digital Health. Data-empowered patients not only make better decisions but also enjoy a greater feeling of control over their treatment. The power of collaborative healthcare grows exponentially when the data is shared to educate a broader group. By harnessing the power of the community, we can apply learnings from one patient’s cannabis use to help countless others.

Businesses within the cannabis industry can also leverage this data to create new products and services. For example, insights as to what products work best for certain conditions can help LP’s improve their product offerings and guide recommendations from dispensaries. Through product innovation, companies can make cannabis more accessible to a larger group of patients, who may be currently taking pharmaceuticals. Not only will this improve the patient experience by providing a safer, more sustainable treatment option, it also provides a very significant financial opportunity.

Ultimately, knowledge is power. When patients are empowered to make educated decisions about their health care and doctors are more tuned into the patient-tested cannabis treatment options, it’s a win-win for everyone.

July 11, 2018

Soapbox

Which Safety Standards Work Best for the Cannabis Industry?

By Steven Burton

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Now that governments are legalizing cannabis around the world, the question looms for cannabis businesses seeking legitimacy in the new industry: what safety standards should apply? This question is more difficult as different jurisdictions grapple with defining and implementing legal requirements and struggle to keep up with the pace of growth.

For visionary cannabis business, it makes sense to anticipate requirements – not only from governments, but also from consumers and partners. Most regulations currently focus on security and basic health issues but, in the long-term, the industry that may offer the best model for cannabis businesses isn’t pharmaceuticals, but food. Cannabis (especially edibles) share similar hazards and traceability challenges with food products, so taking the lead from the food industry will be much more applicable and could offer greater benefits.

marijuana buds drying in racks biotrackthc — Dried cannabis curing with RFID tags as part of a traceability system.

Companies that achieve the highest and most flexible certification will enjoy a crucial competitive advantage when it comes to winning market share, popularity and consumer trust. Let’s take a quick look at the different options of food safety (and quality) certifications that cannabis businesses may consider. But first, let’s clarify two important definitions that are necessary to understand the food industry.

Basic Concepts from the Food Industry

The first acronym you should be aware of is GFSI, the Global Food Safety Initiative. GFSI is a food industry-driven global collaboration body created to advance food safety. When it comes to understanding GFSI, the important part to note is that certifications recognized by GFSI (like SQF, FSSC 22000, and BRC) are universally accepted. Companies operating under GFSI-recognized certifications open the most doors to the most markets, providing the highest potential for growth. For this reason, cannabis companies should be aware of and seriously consider seeking GFSI certifications

Secondly, many food safety programs are built around Hazard Analysis Critical Control Points, or HACCP. While many people may talk about HACCP like it’s a certification in and of itself, it is not actually a certification like the others on this list, but rather a methodology that helps companies systematically identify and control biological, chemical, and physical hazards that may arise during food production, handling, and distribution. Companies that adopt this methodology end up with a HACCP plan, which must then be followed at all times to avoid and address health and safety issues. It’s often required for food businesses and is generally required in most of the world, except where ISO 22000 is more common, primarily in Europe and countries whose primary export market is European. Since HACCP plans are also incorporated into most of the other achievable certifications, developing a HACCP program early will build a strong foundation for higher levels of certification.

Certifications for the Cannabis Industry

Now that we understand the basics of GFSI and HACCP, we can see how the certifications that have been developed by and for the food industry may apply to cannabis companies – and which you should consider necessary for your business.

GMP: Good Manufacturing Practice Certification

GMP (or sometimes cGMP) certification requires that companies abide by a set of good manufacturing processes for food and beverage products, pharmaceuticals, cosmetics, dietary supplements and medical devices. Since it really only covers basic sanitation and employee hygiene, it is considered the lowest level of certification in the industry. It is not recognized by GFSI, but GFSI does require all the standard benchmarks of a GMP be met before granting GFSI certification.

While GMP certification is often required, it is far below the standard that should be upheld by any serious businesses. It doesn’t cover many of the different types of hazards associated with food production – that I have argued will become increasingly relevant to cannabis producers – and doesn’t provide a systematic approach to identifying and controlling hazards like a HACCP program would. It’s really just about providing the basic procedures and checks to ensure that the facility is clean and that employees aren’t contaminating the products.

Final Verdict: Recommended, but as the bare minimum. GMP is not sufficient on its own to adequately control the risk of recalls and foodborne illness outbreaks, and it limits a company’s market potential because it lacks the GFSI worldwide stamp of approval.

Some companies consider GMP certification a good place to start if you’re on a tight deadline for distribution in markets where only GMP is required by regulators. I would argue that striving for the minimum standards will be costly in the long run. Health, safety and quality standards are the foundations upon which winning companies are built. It’s critical to develop a corporate culture that will lead to GFSI-recognized programs without major organizational overhaul. Start on the right foot and set your sights higher – obtain a certification that will stand the test of time and avoid the pain and risks of trying to change entrenched behaviors.

SQF: Safe Quality Food Program Certification

SQF is my number one recommendation as the best certification for the cannabis industry. One of the most common certifications in North America, SQF is a food safety management system recognized by retailers and consumers alike. It is administered by the Food Marketing Institute (FMI) and, importantly, recognized by GFSI, which gives companies a huge competitive edge. SQF focuses on the whole supply chain.

SQF was also the first to develop a cannabis program and is currently the leader in this market segment. It is also the scheme that best integrates food safety with quality. Since it is recognized worldwide, SQF provides the greatest leverage to accelerate a company’s growth. Once obtained, products with SQF certification can often jump the queue to enter different regulatory markets.

Final verdict: Highly recommended. A cannabis company with an SQF certification has the greatest advantage because it offers the broadest worldwide reach and keeps companies a step ahead of competitors. It’s also achievable – just this past April, Curaleaf Florida ostensibly became the first cannabis company to achieve SQF certification. It is tough, but fair and practical.

Other Certification Standards

SQF is the top certification that should be considered by cannabis companies, especially outside of Europe. However, the food industry has several other major types of standards that, at this time, have limited relevance to the cannabis industry today. Let’s take a quick look.

When considering GFSI-recognized programs, the main choice for food companies is between SQF, which we’ve covered, and BRC (the British Retail Consortium Certification). BRC has the most in common with SQF but, while SQF was originally developed for processed foods, BRC was developed in the UK for meat products. Today, they are quite similar, but BRC doesn’t focus quite as much on the quality component as SQF does. While BRC could be a good option, they don’t have a program for cannabis and, thus far, do not appear to be as friendly toward the cannabis industry.The food industry has a lot to offer cannabis companies that are anticipating future regulatory changes and market advantages

Across the pond, there are a few other certification standards that are more common than SQF. One of these is ISO 22000, which is the certification for the food-related standard created by the International Organization for Standardization (ISO) in Europe. It is not recognized by GFSI but is the primary system used in Europe. If your market is exclusively in the EU, it might be a good choice for you in the future. However, to date, there is no indication that any cannabis company has achieved ISO 22000 certification. Some cannabis companies have attained certification for other ISO standards like ISO 9001:2015, which specifies requirements for quality control systems, and ISO/IEC 17025 for laboratory testing. These are generally more relevant for the pharmaceutical industry than food and beverage, but still apply to cannabis.

There is the perception that cannabis is more accepted in EU countries like the Netherlands, but the regulatory attitude to cannabis is complicated. In the Netherlands, for example, cannabis isn’t actually legal – “coffee shops” fall under a toleration policy that doesn’t include regulation. Medical cannabis in the Netherlands is all produced by one supplier and several countries in the EU allow for licensed distribution and import, but not domestic production. Various EU countries are trying to keep up with the legalization trend, however. The Czech Republic, Germany, and others all recently introduced legislation for domestic production of cannabis for medical use. For companies with their eye on the EU, it is crucial to watch which regulatory requirements will be implemented in each market and how.

The last certification standard to mention is the result of a compromise between ISO and the more HACCP oriented programs like SQF. FSSC 22000 (Food Safety System Certification) tries to address the gaps between ISO 22000 and GFSI-recognized certifications by introducing another component called PAS 220. Since it is recognized by GFSI, FSSC 22000 is starting to get more traction in the food industry because it makes products a bit easier to export to the EU. FSSC 22000 satisfies the EU ISO standards but isn’t as closely tied to HACCP. We will be keeping an eye on this one.

Final Takeaway

The food industry has a lot to offer cannabis companies that are anticipating future regulatory changes and market advantages – but it’s difficult for cannabis companies to understand all the options available and how each apply to their specific products. While markets adjust beyond the preliminary issue of legality, it’s crucial for companies to look forward and comply with safety and quality standards like SQF. Companies who strive for SQF certification (or other GFSI-recognized certifications as they become available) will find themselves far better prepared to seize market share as cannabis markets blossom.

July 9, 2018

EVIO Labs Berkeley Accredited To ISO 17025

By Aaron G. Biros

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According to a press release, EVIO Inc. announced recently that their Berkeley, California testing lab, C3 Labs, LLC doing business as EVIO Labs, received their ISO 17025 accreditation from Perry Johnson Laboratory Accreditation, Inc. (PJLA). EVIO Inc. acquired C3 Labs in January of this year, but C3 Labs is a well-established cannabis-testing lab that has been serving the Northern California industry since 2015.

The new and improved EVIO Berkeley laboratory

The accreditation and announcement were well-timed given the California regulatory changes that came on July 1, essentially requiring all cannabis products be tested for a range of contaminants before sold in a retail setting. The press release states EVIO Labs Berkeley should be well equipped to handle the surge in demand for testing services and is prepared for the new regulations.

Ron Russak, vice president of operations at EVIO Labs

According to Ron Russak, vice president of operations at EVIO Labs, they hope these regulations can give producers, retailers and consumers assurance that their products are safe. “EVIO is committed to upholding the highest standards throughout each step of the testing process and we are extremely pleased with the team’s hard work to reach this great achievement,” says Russak. “As the California cannabis industry evolves and state-mandated laboratory standards of operation prove vital, both clients and consumers will now have assurance that the results will be accurate and reliable.”

In June, we spoke with the EVIO team as they were gearing up for the July 1 phase-in of the new rules. They said they were expanding their capacity in anticipation of a higher demand for lab testing services, including adding more resources, equipment and personnel.

July 9, 2018

Canada Legalizes Recreational Use of Cannabis

By Marguerite Arnold

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In what has already been called an “historic” vote, the Canadian Senate voted to legalize cannabis on June 19.

C-45 – or the Cannabis Act, passed overwhelmingly in the Senate by a vote of 52-29. Canadian Prime Minister Justin Trudeau has subsequently announced that the legislation will pass into law on October 17. The intent behind the legalization effort was to cripple organized crime and protect minors.

Only one other country in the world has taken such a dramatic step – Uruguay.

Now what?

The Medical Discussion Is Just Getting Underway

While legalization advocates and the increasingly corporate industry have everything to celebrate, this does not necessarily change the other conversation on the ground – in fact it only strengthens it.

Clearly this is a blow against prohibition still in force just south of the border in the U.S. This move alone is also likely to drive the debate in an environment where California and other states are clearly thumbing their noses at the federal government and proceeding apace with its own (and largest) U.S.-based marketplace.

However, there is another topic floating around this conversation. If cannabis is “harmless” enough for recreational use, its use for medical purposes has become the third rail that is now driving the conversation in other places – most certainly Europe.In the meantime, Canadian firms are in an unparalleled position to enter global markets (as they have already begun to do) and set the tone and debate.

Here, full legalization is absolutely off the table as policymakers and scientists begin to seriously contemplate integration of cannabinoids into comprehensive health systems. This week’s dramatic announcement in the UK to that effect, which came the same day as the Canadian vote, is one indication of that. Germany’s own cautious foray into medical use is another. The change in the law last year mandating public health insurance coverage of the same has created a population of 15,000 patients in the last year with many more lining up to obtain it. This population of patients will reliably use more cannabis every month than even the most dedicated recreational consumer.

What Comes Next?

Four and a half years after Colorado took the plunge, the world of cannabis acceptance has clearly changed – and for good.

But what is the next step? Clearly the pressure is now on in the U.S. to consider rescheduling to at least a Schedule II if not Schedule III drug. Marinol, the synthetic version of the drug, became a Schedule III drug in 2010. Epidiolex, GW Pharma’s drug derived from cannabis, just received FDA approval too. GW Pharma is the only British company allowed to develop cannabinoid medications. Let’s see how long that flag flies in the new commonwealth, with Canada fast behind the UK now as the two compete for the title of largest canna exporter. Globally.

The drug war, in other words, is finally coming to close for cannabisHowever full legalization – even in the United States and most certainly in Europe – is at least several years away.

In the meantime, Canadian firms are in an unparalleled position to enter global markets (as they have already begun to do) and set the tone and debate. How they will position themselves – as medical pharmaceutical or recreational companies – is another discussion that is still unfolding. Particularly because cannabis is a hybrid substance. And further, it is not entirely understood (nor has of course it been studied) where cannabis stops becoming a drug. If a consumer uses CBD, for example, as part of a wellness routine but also heads off a more serious condition, is the use of the plant “medical” or “recreational?”

These are all questions now on the table. But at least they are.

The drug war, in other words, is finally coming to close for cannabis. But the horizons beyond that, widely unexplored, promise blue ocean opportunities for decades to come. And not “just” in recreational use, but in the amazing worlds of science, technology and medicine that now lie within reach.

June 20, 2018

Top 10 Common Findings Detected During Cannabis Laboratory Assessments: A Guide to Assist with Accreditation

By Tracy Szerszen

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With the cannabis industry growing rapidly, laboratories are adapting to the new market demand for medical cannabis testing in accordance to ISO/IEC 17025. Third-party accreditation bodies, such as Perry Johnson Laboratory Accreditation, Inc. (PJLA), conduct these assessments to determine that laboratories are following relevant medical cannabis testing standard protocols in order to detect potency and contaminant levels in cannabis. Additionally, laboratories are required to implement and maintain a quality management system throughout their facility. Obtaining accreditation is a challenge for laboratories initially going through the process. There are many requirements outlined in the standard that laboratories must adhere to in order to obtain a final certificate of accreditation. Laboratories should evaluate the ISO 17025 standard thoroughly, receive adequate training, implement the standard within their facility and conduct an internal audit in order to prepare for a third-party assessment. Being prepared will ultimately reduce the number of findings detected during the on-site assessment. Listed below is research and evidence gathered by PJLA to determine the top ten findings by clause specifically in relation to cannabis testing laboratories.

PJLA chart — The top 10 findings by clause

4.2: Management System

Defined roles and responsibilities of management system and its quality policies, including a structured outline of supporting procedures, requirements of the policy statement and establishment of objectives.
Providing evidence of establishing the development, implementation and maintenance of the management system appropriate to the scope of activities and the continuous improvement of its effectiveness.
Ensuring the integrity of the management system during planned and implemented changes.
Communication from management of the importance of meeting customer, statutory and regulatory requirements

4.3: Document Control

Establishing and maintaining procedures to control all documents that form the management system.
The review of document approvals, issuance and changes.

4.6: Purchasing Services and Supplies

Policies and procedures for the selection and purchasing of services and supplies, inspection and verification of services and supplies
Review and approval of purchasing documents containing data describing the services and supplies ordered
Maintaining records for the evaluation of suppliers of critical consumables, supplies and services, which affect the quality of laboratory outputs.

4.13: Control of Records

Establishing and maintaining procedures for identification, collection, indexing, access, filing, storage and disposal of quality and technical records.
Providing procedures to protect and back-up records stored electronically and to prevent unauthorized access.

4.14: Internal Audits

Having a predetermined schedule and procedure for conducting internal audits of its activities and that addresses all elements that verify its compliance of its established management system and ISO/IEC 17025
Completing and recording corrective actions arising from internal audits in a timely manner, follow-up activities of implementation and verification of effectiveness of corrective actions taken.

5.2: Personnel

Laboratory management not ensuring the competence and qualifications of all personnel who operate specific equipment, perform tests, evaluate test results and sign test reports. Lack of personnel undergoing training and providing appropriate supervision
Providing a training program policies and procedures for an effective training program that is appropriate; identification and review of training needs and the program’s effectiveness to demonstrate competence.
Lack of maintaining records of training actions taken, current job descriptions for managerial, technical and key support personnel involved in testing

5.4: Test and Calibration Methods and Method Validation

Utilization of appropriate laboratory methods and procedures for all testing within the labs scope; including sampling, handling, transport, storage and preparation of items being tested, and where appropriate, a procedure for an estimation of the measurement of uncertainty and statistical techniques for analysis
Up-to-date instructions on the use and operation of all relevant equipment, and on the handling and preparation of items for testing
Introduction laboratory-developed and non-standard methods and developing procedures prior to implementation.
Validating non-standard methods in accordance with the standard
Not completing appropriate checks in a systematic manner for calculations and data transfers

5.6: Measurement Traceability

Ensuring that equipment used has the associated measurement uncertainty needed for traceability of measurements to SI units or certified reference materials and completing intermediate checks needed according to a defined procedure and schedules.
Not having procedures for safe handling, transport, storage and use of reference standards and materials that prevent contamination or deterioration of its integrity.

5.10: Reporting the Results

Test reports not meeting the standard requirements, statements of compliance with accounting for uncertainty, not providing evidence for measurement traceability, inaccurately amending reports.

SOP-3: Use of the Logo

Inappropriate use of PJLA’s logo on the laboratories test reports and/or website.
Using the incorrect logo for the testing laboratory or using the logo without prior approval from PJLA.

Former Deputy Attorney General James M. Cole

June 20, 2018

James Cole to Keynote Cannabis Business Summit

By Aaron G. Biros

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The National Cannabis Industry Association (NCIA) announced last week their newest addition to the Cannabis Business Summit: former Deputy Attorney General James M. Cole as the keynote speaker. Cole will be joining Aaron Smith, executive director of NCIA, for a fireside chat where they will take a look at his legacy in the cannabis industry as author of the Cole Memo. They will also discuss his predictions for the future of federal cannabis policy under the Justice Department.

As author of the Cole Memo, James Cole was an instrumental figure in the fight for legal cannabis in the United States. The Cole Memo was a policy directive issued in 2013 that instructed U.S. attorneys general in states that have legalized cannabis to use their resources in prosecuting Controlled Substances Act offenses only if they violated specific federal enforcement priorities. The Obama-era policy directive essentially served to protect state-legal medical cannabis businesses from federal raids and prosecution as long as they were abiding by the state’s regulations.

In January of 2018, current Attorney General Jeff Sessions rescinded the Cole Memo. The new policy leaves it up to federal prosecutors to determine how they wish to enforce federal law and the Controlled Substances Act.

At the Cannabis Business Summit, James Cole will share insights on the future of the Justice Department’s policy towards cannabis. “The Justice Department holds a huge number of cards when it comes to the future of our industry, but its inner workings and internal debates on cannabis policy aren’t well understood,” says Smith. “That’s what makes this keynote with Jim Cole so exciting and valuable for anyone trying to predict what comes next for the industry.”

This year’s 5^thannual Cannabis Business Summit will be held in San Jose, California on July 25 to 27. Cole and Smith’s keynote discussion will be held on Thursday, July 26.

June 19, 2018

From The Lab

Quality Plans for Lab Services: Managing Risks as a Grower, Processor or Dispensary, Part 2

By Dr. Edward F. Askew

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Editor’s Note: The views expressed in this article are the author’s opinions based on his experience working in the laboratory industry. This is an opinion piece in a series of articles designed to highlight the potential problems that clients may run into with labs.

In the previous article, I discussed the laboratory’s first line of defense (e.g. certification or accreditation) when a grower, processor or dispensary (user) questions a laboratory result. Now let us look behind this paperwork wall to the laboratory culture the user will encounter once their complaint is filtered past the first line of defense.

It is up to the client (processor, grower or dispensary) to determine the quality of the lab they use.In an ISO 17025 (2005 or 2017) and TNI accreditation, the laboratory must be organized into management, quality and technical areas. Each area can overlap as in the ISO 17025-2017 standard or be required to remain as separate sections in the laboratory as in the ISO 17025-2005 or TNI 2009 standards. ISO 17025 standards (e.g. 2005 and 2017) specifically require a separation of monetary benefits for laboratory results as it applies to the technical staff. This “conflict of interest” (CoI) is not always clearly defined in the laboratory’s day-to-day practices.

One example that I have experienced with this CoI separation violation goes back to my days as a laboratory troubleshooter in the 1990s. I was called into a laboratory that was failing to meet their Department of Defense (DoD) contract for volatile organic hydrocarbon analyses (VOAs) of soil samples by purge trap-gas chromatography-mass spectroscopy. I was required to “fix” the problem. What I determined was:

The analytical chemists performing the VOAs analyses were high school graduates with no coursework in chemistry or biology.
There was no training program in place for these analysts in instrument use, instrument troubleshooting and interpretation of the analytical results.
The only training the analysts received was for simple instrument set-up and basic instrument computer software use. (e.g. Push this button and send results to clerks)
Clerks with a high school degree and no analytical chemistry training in the business office generated the final reports and certified them as accurate and complete.

None of the staff was technically competent to perform any in-depth VOAs analytical work nor was the clerical staff competent to certify the results reported.

When I pointed out these discrepancies to the laboratory management, they declined to make any changes. The laboratory management had a direct monetary interest in completing all analyses at the lowest costs within the time limit set by DoD. If the laboratory did not complete the analyses as per the DoD contract, DoD would cancel the contract and not pay the laboratory.

The DoD, in a “Double Blind” test sample, later caught this laboratory.. A Double Blind test sample is used to check to see if the laboratory is performing the tests correctly. The laboratory does not know it is a test sample. So if the laboratory is cheating, they will be caught.This does not mean that all laboratories have staff or management issues

Once the laboratory was caught by DoD with the Double Blind, laboratory management claimed they were unaware of this behavior and management fired all analytical staff performing VOAs and clerical staff reporting the VOAs results to show DoD that it was a rogue group of individuals and not the laboratory management. The fired staff members were denied unemployment benefits as they were fired with cause. So, the moral to this story is if the analytical staff and specifically the clerical staff had wanted to hold the laboratory management accountable for this conflict of interest, they may have been fired, but without cause. The staff would have kept their reputation for honesty and collected unemployment benefits.

I have witnessed the “CoI above repeatedly over the last 30+ years both in laboratories where I have been employed and as a consultant. The key laboratory culture problems that lead to these CoI issues can be distilled into the following categories:

Financial CoI: In the financial CoI, the laboratory management must turn out so many analytical test results per day to remain financially solvent. The philosophical change that comes over management is that the laboratory is not producing scientific results, but is instead just churning out tests. Therefore, the more tests the laboratory produces, the more money it makes. Any improvement in test output is to be looked upon favorably and anything that diminishes test output is bad. So, to put this in simple terms: “The laboratory will perform the analyses quickly and get the report sent to the user so the laboratory can be paid. Anything that slows this production down will not be tolerated!” To maximize the Return on Investment (RoI) for the laboratory, management will employ staff that outwardly mirrors this philosophy.
I Need This Job CoI: This is the CoI area that poor quality lab technical staff and clerical staff most readily falls into. As outlined in the example above, both the analytical staff and clerical staff lacked the educational credentials, the technical training to be proficient in the use of the analytical instruments, ability to identify problems performing the analytical methods or complications in reporting analytical results. That means they were locked into the positions they held in this specific laboratory. This lack of marketable skills placed pressure on these staff members to comply with all directives from management. What happened to them in the end was regrettable, but predictable. Management can prey on this type of staff limitation.
Lack of Interest or Care CoI: This form of CoI is the malaise that infects poor quality laboratories, but can reach a level in management, quality and technical areas as to produce a culture where everyone goes through the moves, but does not care about anything but receiving their paycheck. In my many years of laboratory troubleshooting this type of CoI is the most difficult to correct. Laboratories where I had to correct this problem required that I had to impress on the staff that their work mattered and that they were valued employees. I had to institute a rigorous training program, require staff quality milestones and enforce the quality of work results. During my years of laboratory troubleshooting, I only had to terminate three laboratory staff for poor work performance. Unfortunately after I left many of these laboratories, management drifted back to the problems listed above and the laboratory malaise returned. This proves that even though a laboratory staff can achieve quality performance, it can quickly dissolve with lax management.

So, what are the conclusions of this article?

Laboratory culture can place profit over scientific correctness, accuracy and precision.
Laboratory management sets the quality of staff that determines the analytical results and report quality the user receives.
Laboratory quality can vary from acceptable performance to unacceptable performance over the lifetime of the laboratory depending on management.
This does not mean that all laboratories have staff or management issues. It is up to the client (processor, grower or dispensary) to determine the quality of the lab they use.

The next article in this series will introduce the user to the specific Quality Control (QC) analyses that an acceptable laboratory should perform for the user’s sample. These QC analyses are not always performed by accredited laboratories as the specific state that regulates their cannabis program does not require them. The use of these QC samples is another example of how laboratory’s with poor quality systems construct another paper work wall.

June 18, 2018

Soapbox

Quality Assurance for the Cannabis Industry

By Amy Ankrum

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Have you paused to consider that quality assurance is a moving target rather than a destination? It is culture within a company that requires constant improvement and change, rather than the work of a select few to reach one defined end goal. Quality, therefore, is not a box that must simply be checked but an overarching and driving force propelling organizations forward.

For those within the cannabis industry and specifically cannabis testing labs, quality assurance is critical to having a successful and thriving business within the rapidly evolving industry. Dr. Kim Ross, who earned her Ph.D. at the University of Colorado in Molecular Biology, and also has worked with multiple cannabis labs, says, “It is not that often that you get a new testing industry born these days and people are scrambling to borrow processes from other industries and apply these to the cannabis industry.” Those within cannabis testing labs are looking towards established industries like water and food testing labs to serve as a quality assurance beacon. Ross elaborates:

The cannabis industry is operating in the absence of federal oversight. If you think about it, the water, food, and pharmaceutical industries have federal oversight. In lieu of that, it is up to states to adopt regulatory practices and enforcement strategies to uphold a level of compliance and data defensibility that these types of regulators have seen in their careers working in the FDA, EPS, NELAC or ISO.

For cannabis testing labs, the stakes are high. First, there is the need to keep up with the rapidly evolving industry climate as more and more states and governing bodies are setting requirements and expectations for quality and compliance. It is in nobody’s best interest to fall behind or be a late adopter to the increasingly regulatory compliance environment.

Additionally, untrustworthy data sets can have detrimental impacts on people and patients. Medical applications of cannabis require specific results in order to ensure the safety of patients, many of which are immunocompromised. Beyond damage to people and patients, businesses themselves can be hurt if a cannabis testing lab were to present inaccurate or flawed data sets. Ross shared hypothetical examples of potential negative impacts:

If, for example, you fail a product for microbiology based on false-positive results then it incurs damages to the client because now their product can’t go to market. Additionally, falsely inflated THC results are also a huge problem in the industry, and can result in downstream problems with edible dosing or consumer satisfaction.

A quality assurance system can minimize risk and maximize adherences to proper procedure, resulting in reliable data. Recalls, product issues and lawsuits cost organizations tremendous amounts of time and money, both to manage the problem at hand and prevent future incidents. Not to mention, the immeasurable damage done to the brand & industry by being viewed as untrustworthy–especially as a consumable product. “Ensuring data defensibility and data integrity protects the laboratory from lawsuits,” says Ross. “That is a really important piece of a quality assurance system for a laboratory.”

One common misconception is viewing quality assurance as a cost center rather than a profitability maximizer. A robust quality assurance system is a competitive advantage–especially for those who are not yet mandated to be compliant to a particular standard, like ISO/IEC 17025, but choose to pursue that accreditation knowing it reflects reliability. In many ways, quality assurance can be summarized as “say what you do, and do what you say”, with a willingness to allow third-party confirmation of your commitment and practice. “Accreditation gives an unbiased stamp of approval that helps ensure data defensibility in the laboratory,” affirms Ross.

Accreditation as a result of quality assurance ultimately leads to reliable and trustworthy data sets. Ross shared:

It might appear to be easy to buy expensive instrumentation, accept samples, and produce data. There are so many ways to do that, some of which are incorrect, and therefore accreditation is really an opportunity to have professionals evaluate methodology and post-analytical data processing to ensure that it is scientifically sound. It is an opportunity for a laboratory to be confident that their processes and reporting procedures are robust and error free.

Remember: this is a new industry. There aren’t firmly established methods and procedures like other legacy industries. “We are operating in a time and space where there is no standard methodology and that makes oversight by a third party even more important,” shares Ross. When a company opts to pursue accreditation they are indicating a willingness to be honest and transparent with their business processes, procedures, outcomes and data. Accreditation, therefore, is necessary for this emerging industry. Having a robust, inclusive quality assurance system in place will ease and quicken their pursuit of accreditation.The stress on an audit day when there is a digitized system is vastly lower than a system that is printed and physically maintained.

Not all quality assurance systems are created equal. There are still some companies seeking to implement systems that lack the modernization necessary to truly propel them forward towards continuous improvement and scalability. Quality assurance software with widespread use and adaptation across organizations is both scalable and in support of continuous improvements. Binders, rows of filing cabinets and complicated excel spreadsheets are not a scalable backbone for a quality system.

Beyond the accessibility and traceability that a digital system creates, it also protects. “We can protect that data with credentialed logins for key personnel and have information at our fingertips to reduce the regulatory stress on all personnel,” says Ross. The stress on an audit day when there is a digitized system is vastly lower than a system that is printed and physically maintained.

For those in the cannabis industry, specifically cannabis testing labs, there is an unequivocal advantage to implementing a system that supports continuous improvement, reliable data sets and the very best in business practices. Doing so will help sustain and grow the industry, and could be pivotal in transforming the production, market and research of cannabis.

June 18, 2018

Designing the Perfect Cannabis Edible in California

By Celia Schebella

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Are you a product designer in the edible cannabis market? Well, you live at the intersection of the food and pharmaceutical industries and need to know both worlds, utilizing best-practice product development principles, regardless of which industry you are working in. In the cannabis industry, this means knowing your chemistry principles, food science, food safety, Good Manufacturing Practices (GMPs, applicable to the food industry) along with the more intense records and documentation requirements of the pharmaceutical industry.

California is the most recent state to implement legal recreational cannabis. It is estimated to deliver $7.7B in sales by 2021, including a reduction of medical use cannabis and an uptake of adult recreational use. How often do you live at the inception of such a potentially enormous market? Not often, so product developers, here is an opportunity. However, with that opportunity comes the responsibility. A recent emergency legislation adopted by the California Cannabis Safety Branch states:

Operational Requirements Licensees must have written procedures for inventory control, quality control, transportation, security and cannabis waste disposal. Descriptions of these procedures or Standard Operating Procedures (SOPs) must be submitted with the annual license application. Cannabis waste cannot be sold, must be placed in a secured area and be disposed of according to applicable waste management laws. Good manufacturing practices must be followed to ensure production occurs in a sanitary and hazard-free environment, cannabis products are contaminant free and THC levels are consistent throughout the product and within required limits. Extractions using CO2 or a volatile solvent must be conducted using a closed-loop system, certified by a California-licensed engineer. Volatile, hydrocarbon-based solvents must have at least 99% purity. Finally, volatile solvent, CO2 and ethanol extractions must be certified by the local fire code official.

Part of this emergency legislation for all California cannabis product manufacturers is the newly published GMP requirements, which appear to be a combination of food, supplements and HACCP requirements. Helpful resources to learn more about this new California emergency legislation impacting cannabis product manufacturers can be found at the California Manufactured Cannabis Safety Branch with the details of the emergency cannabis regulations.

Once developers have decided on a product, research and education to develop a good understanding of the regulatory environment is a must. For example, in order to develop compliant cannabis edibles, compliance with state, and in some cases local regulations, for food and cannabis must be met. Proactive compliance is a big part of designing a successful product in the most efficient manner.The attention to detail here will create a safe and satisfying experience for consumers as they receive a consistent product every time.

As a product developer you must first know the incoming cannabis plant characteristics to determine what type of cannabinoids they contain to determine what types you wish to source. This requires a strong and well documented supplier program that can identify reliable suppliers of high purity and consistent cannabis raw materials, the same principles that are typically required of food manufacturers. When looking for examples of credible ingredient supplier programs, looking at those used by the food industry is a good start. Make sure supplier management programs apply to all the raw materials and direct-contact packaging that you plan to use in your new product.

Once reliable sources of raw material have been secured, the next challenge is to conduct periodic tests of cannaboids levels found in your incoming cannabis. With this information, you need to adjust blending amounts to reflect the correct cannaboid dose in the finished ready-to-eat (RTE) product. Like any other medicinal product, the active ingredient dosage will directly impact the effect on the consumer, thus it is important that you, the manufacturer, are completely aware of the exact cannaboid levels in your incoming ingredients, your blending amounts and your final product levels. This will require a robust either in-plant or commercial laboratory testing program. There is a great deal of technology and chemical analyses available to help dose the product accurately. This must also include robust testing and verification steps. If a consumer of your product were to over-consume from “normal” consumption rates of your cannabis-based food product, the liability, both financial, civil, ethical and criminal would fall on your company. The attention to detail here will create a safe and satisfying experience for consumers as they receive a consistent product every time.

design your products with commercial manufacturing viability in mindOnce regulatory responsibilities for manufacturing and marketing a cannabis-based food product have been met, so that you may sell a compliant and consistent product, it is time to add some creative juices and make the product interesting and enjoyable to consumers. With cannabis edibles, for example, explore what sort of food is appealing to consumers. Consider when, where and with whom your potential customers would be eating that food. Evaluate the best packaging design and size to suit the occasion. Ensure the packaging is child resistant yet practical for adult consumers. And above all manufacture a food that is delicious. Curiosity will attract your customers for the first time but quality and consistency will keep them coming back.

Product developers are usually fantastic at developing great lab scale products, but part of a developer’s job is to ensure that the design and manufacturing process is scalable for consistent and compliant commercial manufacturing. So design your products with commercial manufacturing viability in mind. Try to minimize the number of ingredients whilst still making a consumer-desirable product. Finally, rationalize your ingredients across your portfolio to avoid overcrowding the warehouse and risking expired ingredients.

If successful, your consumers will desire your product, your compliance team will be satisfied, your manufacturing partners will be thankful, the State of California will determine that you are fully compliant and your sales team’s job will have great business and professional success. In the end, you will have developed and launched a successful legacy product!