As cannabis reform finally begins to hit the UK, the same confusion, lack of standards and uneven application of the “law” reigns supreme.
Just like other places (notably Israel, the United States and Canada), in the early days after medical reform hits, the English situation is instructive if not reminiscent of other fights elsewhere – no matter how much individual stories may differ on the surface. Just like in Israel for example, sick children had to be hospitalized before anyone moved forward on reform.
Just like in the United States, Canada and Israel, the people who were able to get into the changing industry first and early had money and political connections.
And just like everywhere else, who survives and who gets hit with red tape, is largely a matter not of entrepreneurial savvy, but connections, inherited privilege, race, gender and of course, bank account. In a place like the UK, where “class” is still a valid force on its own (beyond access to money), this is already obvious. As a theme, it is one that is sadly, not over yet for too many in or affected by “the industry.”
There are still, per the estimates available, less than 100 legal patients in the UK. Those served by the NHS are also well aware of their “second class” status when it comes to healthcare. This one issue, after all, drove Brexit, and may yet cause it to fail, just on this one issue. Cannabis may be a side note in the debate. But it is also, by this time, clearly in the room.
A Chelsea Popup Shop Survives While A Brighton Eatery Fails To Open
In January, two graduates of Imperial Business School (a private, prestigious university in London) opened a “pop up shop” (kind of like a kiosk) in Chelsea. This is a part of the city frequented by Royals on the hoof, reality stars of a certain vintage, and a lot of highly priced real estate.
So far, with the predictable fawning press coverage, the almost too “cutely” named TheDrug.Store (which by its own admission is selling non-medical products) has been doing brisk business.
Meanwhile, in the historic if less slightly less elite but almost as expensive touristy seaside town of Brighton, The Canna Kitchen, a CBD eatery with the catchy slogan of “let food be thy medicine”, was closed by the police right before it was supposed to open at the end of May (although there is no mention of this or the negative press on the website, which despite having no telephone number, still allows visitors to “book a table.”) The owners, who also seem to be quite well-heeled millennials themselves, appear to be on the verge of “losing hundreds of thousands of pounds and laying off 15 staff,” to quote The Guardian story on the subject.
Never mind the irony that they also seem rather well positioned financially. Or that many, many more people, usually called poor patients, are still at risk of being hospitalized because they cannot get (or afford) their medication.
As the industry, such as it is, and patient rights group organize in earnest this summer, reform in the UK also hinges on whether and what the country decides to do in the fall.
And despite the huge disparities that exist in terms of who has access (let alone to entrepreneurial capital), or perhaps because of them, look for a healthy debate from patients about policy, access and fairness.
The steady destigmatization and legalization of medical and recreational cannabis at the state level continues to propel a large and fast-growing industry forward. In 2018, the legal cannabis industry grew to $10.4 billion in the U.S., employing more than 250,000 people according to New Frontier Data.
The mass production of anything that humans consume is invariably accompanied by an increased concern for safety and accountability—especially in the case of cannabis, which the federal government still deems a Schedule I substance. Each U.S. state has its own mix of laws based on the will of its voters, spanning the spectrum from fully legal to fully illegal.
While the mix of legality in states can be hard to keep up with, all states with any form of cannabis legalization have one thing in common: the need to regulate this new industry. Last year, the federal government issued a Marijuana Enforcement Memorandum that allows federal prosecutors to decide how to prioritize enforcement of federal marijuana laws, so states are at risk.
If you are a public official involved in state cannabis regulation, or anyone involved in the supply chain from cultivator to dispensary, chances are you are using some kind of seed-to-sale tracking technology to monitor things like plant inventory, sales volume, chain of custody—and to hedge against federal encroachment by having a legitimate form of accountability.
Mandatory Request For Proposals (RFPs) issued by states for compliance solutions have spawned an entire sub-industry of seed-to-sale tracking, and point-of-sale hardware and software vendors, with large multi-million dollar contracts being awarded. Metrc’s RFID (Radio Frequency Identification) plant and packaging tags are gaining wide usage, and 11 states plus DC have adopted the technology.
While states are taking the right steps to keep their legal cannabis industry legitimate and accountable, there is actually a major gap that existing systems don’t cover: cultivation management. Most of the existing RFPs and platforms focus on the post-harvest side of the business (processing, packaging, distribution) and may have some cultivation management capability, but are not geared for the cultivation operation, which is where a lot of the risk actually lies for both growers and state regulators.
As a state official or a cultivator, what could be more damaging to business than a massive product recall—especially after the product has been distributed and consumed? This is the fastest way to get shut down or audited by the state as a grower or invite federal investigation if you’re a state. And these recalls cost growers millions of dollars and possibly their license. There is massive risk involved by not addressing the cultivation side.
A plant tagged with a barcode and date for tracking
With current tracking systems, it’s possible to see where the product came from in the event of such a recall, but nearly impossible to pinpoint and see what actually happened and when the recall happened. This makes it almost impossible to stop the same problem in the future and puts consumers at unnecessary risk.
The reason most seed-to-sale systems are difficult for growers to use is because they were designed for regulators to address the most obvious regulatory questions (are growers abiding by the law? Who is selling and buying what and how much? Is the correct tax amount being levied?). They were not designed for growers and in many cases, cultivation teams are using two systems—their own ERP and/or spreadsheets and seed-to-sale tracking mandated by regulators.
This means there is a huge missing link in data that should be captured during the cultivation process. In many cases, growers are tracking crop inventory during the growth stage with pen and paper, or at best, in Excel. Cultivators need a tool designed for them that helps both run better operations and identify hazards to their crop health before it’s too late, and regulators need complete traceability along the supply chain to reduce risk to consumers.
To fill this critical data gap, there is a strong case for states in their RFPs and ongoing regulatory capacity, to adopt and encourage cultivators to use Cultivation Management Platforms (CMPs) alongside any existing seed-to-sale and ERP solutions for complete traceability.
As more states move to legalize medical and recreational cannabis, mitigating risk as part of a larger regulatory framework will only become more important. Adopting and using a CMP empowers growers to focus on not just tracking data, but making that data accessible and functional for growers to drive efficiency and profits all while ensuring security and regulatory compliance in this rapidly evolving industry.
When a thriving cultivator purchased additional cannabis from a wholesale grower to meet the 5,000 pounds he was short, he was left holding the bag. A customer complained of a strong sulfur taste, and soon it was discovered that the wholesaler had applied the wrong pesticide concentration, rendering the cannabis unusable. The cultivator had to pull contaminated cannabis product from the shelves, a move that cost the company $3.5 million.
This story is not unique. When running short on product, cannabis businesses will often turn to other suppliers and partners to help them fulfill their orders. Unfortunately, improper vetting and a lack of understanding and compliance with state regulations and other requirements may lead to a loss of product integrity and costly product liabilities. Product liability can include more than just the cannabis itself, such as the equipment – vape cartridges, batteries, and lighters. This can quickly inflate the risk and, of course, the cost of a product liability claim.It is possible to transfer some of these cannabis risks to product liability insurance.
Top Three Product Liability Exposures Facing Cannabis Cultivators and Distributors
Three key areas of product liability exposure face cannabis business owners. It’s important to understand how each will affect your business.
Product contamination.When cannabis is sold in an edible form, business owners could face claims of food poisoning or illness. If the product is smoked, there are exposures to contamination, product mislabeling or misrepresentation, and possible health hazard claims related to long-term exposure to potential contaminants.
First party claims. Claims made in the event of an accident, injury or loss, whether caused by the business owner or someone else, will create another set of exposures, including manufacturing defects, failure to warn users on potential product usage hazards, improper labeling, or any product-related defect such as mold or odor.
Third party claims. Cannabis business owners could be liable for claims stemming from the use of their cannabis product that result in a DUI, property damage, loss of wages, medical expenses and bodily injury.
It is possible to transfer some of these cannabis risks to product liability insurance. While there are multiple lines of product liability insurance, you’ll want to make sure you choose one designed specifically for the cannabis industry. These policies may provide coverage for the following exposures:
Product contamination
Bodily injury damages
Fines and penalties for non-compliance with state regulation
Bodily or property injury caused to others by product misuse, or by a third party
Manufacturing or product-related defects
While product liability insurance covers a number of cannabis risks, it doesn’t cover them all. Cannabis operations require a variety of coverage – property, crime, general liability, worker’s compensationand crop insurance. Insurance carriers will differ in definitions, policy exclusions and coverage language for each policy.
Because designated cannabis product liability and business operations coverage is fairly new and the marketplace features a wide range of options, make sure to work with a broker who understands the fine print of your policies, and your unique needs. The right broker can provide advice and loss control to help you reduce product liability exposures, make product and risk management recommendations that best mitigate your exposures to prevent loss, and ensure the proper coverage to address potential claims.
Hold your hats and book your seats! The Limeys, no matter what they are doing on Brexit, are getting organized on the cannabis front. A unique coalition of “home-grown” as well as cross-European, American and Canadian industry insiders are already making travel plans for London during the last week of June.
Unlike Trump’s recent visit to the British capital, however, they are likely to meet nothing but enthusiasm if not a growing understanding in the British populace at large that the Great Green Cannabiz Has FINALLY Landed.
On the CBD “recreational” discussion, the entire enchilada is still being formed and reformed. A high-end CBD “pop up” shop opened in a ritzy part of London in January while a more crunchy CBD restaurant in the seaside town of Brighton was shuttered right as it planned to open. Just another innocent victim in all the fuss about novel food still working its way through the entire British conversation (as it is elsewhere in Europe, including most recently Germany and Italy), certainly, but hopefully one of the last.
However, for that very reason, enthusiasm is already high as organizers continue to add events even three weeks out.
What Is On The Agenda?
Check the event website for details and scheduling. There is also a lot that is not on the official website, but has clearly been organized around it. That includes a patient advocacy and policy formation gathering on Thursday being organized by the United Patients Alliance and other events not on the “official” ECW list (or website) but clearly all with the goal of networking, interacting and gaining ground (such as the internationally organizing Cannabis Tech Society).
The first two days are reserved (at least during the day) for Cannabis Europa – the “other” major European cannabis business conference that got its start in 2018 in London. Earlier this year, the event was also held to a standing room only audience in France. Organized by two of the leading cannabis consultancies in the UK who are making a clear play towards both North America and Europe- Prohibition Partners, and Hanway Associates, the event is primed to bring together those in the international industry curious about changing times and opening opportunities not only in the UK but across Europe.
The rest of the week, events are spread out across the city (and are already selling out). Of note on Wednesday is an investors conference as well as an introduction to the growing ranks of British doctors (one hopes for the future of nascent doctor training programs everywhere across Europe, without borders), even if nascent at the moment, who are joining the medical cannabis crusade.
Thursday’s planned events also include a focus on connecting women in the industry to investors – particularly of the medical kind – and MedPayRx’s third pilot to market workshop (Unveiling The Digital Prescription). It will also include a ground-breaking seminar about cannabis certification for doctors at King’s College (long known for its critical studies about the supposed connection between cannabis and a host of nasty mental illnesses and conditions starting with schizophrenia).
There is also a round of private parties, events, industry soirees and more that are invite only. However, as with most cannabis industry events, showing up and tagging along is one of the best ways to network and meet people.
It will be a busy week, for sure.The entire cannabis debate is absolutely hitting in this space in the UK in a way that it has not in other places
Why Is This Significant?
The British are finally kicking off their version of “the industry.” That said, problems abound, including of the kind seen in places like Germany, with the added whiff of further disruptions thanks to a still-pending Brexit. On the healthcare discussion at least, it is hard to find a fan of the NHS in the ranks of average cannabis patients (who are still struggling to get their numbers over 100 for the entire country six months after Schedule II prescriptions were authorized). However, it is also equally hard to find anyone in the ranks of the chronically ill at least, who would welcome a more U.S. style approach to healthcare provision – even if they can avail themselves of private healthcare coverage. That is just 10% of the population.
The entire cannabis debate is absolutely hitting in this space in the UK in a way that it has not in other places (including Germany). This is, beyond Brexit discussions, in part a testament to the creakiness of the British system, although the German one at present also leaves a lot to be desired.
Nobody wants an “American” system. And the Canadians in the room are also dealing with the problem that so far, Canadian public health insurance does not cover medical cannabis either.
Like it or not, this is also a theme that colors cannabis politics in Europe as much as the industry does not know how to channel and harness it. The Green Vest movement is certainly alive and well in the UK. Nor should it be underestimated. And that resentment at the moment also is hitting some of the biggest industry players who are the only ones allowed market entry where it counts (the regulated ones including medical).
On the CBD front, despite assurances by activists as late as last year, and certainly overflowing enthusiasm about the potential of this market, novel food still applies.
Where the conversation will certainly get interesting is the ability to distribute through online pharmacies (unlike in Germany where this is still verboten– and for all drugs, not just cannabis). But even here, don’t look for the UK to become just another Amazon outlet. New rules, including GDPR, still affect the UK and will continue to do so no matter what happens in the fall. This has to do with what is called “trusted nation” status that affects regulatory issues including pharmaceuticals but also financials (which is why the idea of the UK sailing off entirely on its own or as an American subordinate state is also ludicrous).
Not to mention of course, that supply and demand has yet to be effectively linked anywhere in Europe.
Cannatech, beyond distribution platforms, will also become more of a focus in climate change conscious Europe.
And of course, with a focus in London, there will be a much greater opportunity for both the concentration of specialty equity and the industry itself (in English) that will impact issues across the continent.
In a nutshell, in other words, the week-long events in London (held in conjunction with an equally interesting gathering now coalescing in Berlin just the weekend before) is proof positive that not only is the European cannabis industry in the middle of another seismic year, but the British and German movements are connecting, coordinating, cooperating, and driving change both at home and elsewhere across the region.
Disclaimer: European Cannabis Holdings and Prohibition Partners are sponsors of MedPayRx and a business relationship exists between them.
This is not a discussion of climate change, it’s a discussion of the impact of weather on the agriculture industry. The question for the cannabis & hemp industry, and basically the entire specialty crop industry, is what will be the impact? According to the U.S. National Climate Assessment, “Climate disruptions to agriculture have been increasing and are projected to become more severe over this century.” I’m sure that’s not much of a shock to anyone who owns a farm, orchard or greenhouse.
Every national newspaper for the past two weeks has published at least one article a day about the flooding in the Midwest, while industry newsletters and blogs have contained more in-depth stories. The question is, what can agriculture professionals do to mitigate these problems?
Relying on state and national legislators, especially heading into a presidential election year is likely to be frustrating and unrewarding. Governments are excellent at reacting to disasters and not so good at preventing them. In short, if we depend on government to take the lead it’s going to be a long wait.Instead, many farmers are looking at the future costs of outdoor farming and concluding that it’s simply cheaper, more efficient and manageable to farm indoors.
Instead, many farmers are looking at the future costs of outdoor farming and concluding that it’s simply cheaper, more efficient and manageable to farm indoors. Gone are the days when people grew hemp and cannabis indoors in an effort to hide from the police. Pineapple Express was a funny movie but not realistic in today’s environment.
Today’s hemp and cannabis growers are every bit as tech savvy as any other consumer-oriented business and one could argue that given the age of their customers (Statista puts usage by 18-49-year-olds at 40%), distributors must be even more tech savvy to compete effectively. Some estimates put the current split of cultivation at about one-third indoors/two-thirds outdoors. To date, the indoor focus has been on efficiency, quality and basically waiting for regulators to allow shipping across state lines.
A major driver in the indoors/outdoors equation is that as the weather becomes more unfriendly and unpredictable, VC’s are factoring climate disruption into their financial projections. When corn prices drop because of export tariffs, politicians lift the ban on using Ethanol during the summer months. It’s going to be a while before we see vehicles running on a combination of gasoline and CBD.
Leaving aside the case that can be made for efficiency, quality control and tracking of crops, climate change alone is going to force many growers to reassess whether they want to move indoors. And, it’s certainly going to weigh heavily in the plans of growers who are about to launch a cannabis or hemp business. Recently, one investment banker put it to me this way: greenhouses are the ultimate hedge against the weather.
For all the excitement about the “CBD” or “Cannabis-Lite” possibilities in Europe thanks to Switzerland over the last few years, the reality as of 2019 is proving to be a little different.
As of the end of May, Italy’s top court, the Court of Cessation, ruled that selling derivatives of cannabis sativa (from the buds and leaves to oils and resins) is illegal. Hemp of course, is excluded from this decree. And in fact, this decision was intended to close a loophole that was created in 2016 for so-called “Cannabis-Lite.” In other words low THC, CBD products and extracts that are showing up in the market as is or as an ingredient in something else (from food to makeup).
While this development is certainly a blow to those who were not in the know already, it is hardly surprising– especially given current events next door. German authorities just declared that they could find no use for “CBD”. This of course confuses the issue even further (since CBD is obviously found in both hemp and cannabis sativa.) Austria did the same thing late last year- and further did so on a level unseen anywhere else in Europe (namely putting cosmetics on the list too).Novel food regulation, at its heart, is all about the source of the plant and how it is processed.
In fact, and certainly in comparison, far from being nebulous, Italy appears to have taken, surprisingly, a rather scientific, if not clear-headed, approach to the issue in general. Not to mention a step that is absolutely in line with current EU policy on the same.
Novel food regulation, at its heart, is all about the source of the plant and how it is processed. This entire discussion about CBD falls squarely within that- although of course, hardly limited to just this one cannabinoid or in fact, plant genus.
What Should Investors Be Aware Of?
There is, as always, a hype around CBD. That is true in almost every legalizing market, but Europe, with a much stricter regional regulatory regime and at least a four-year path to recreational, has seen an odd twist in all of this for the last two years.
There is the potential for a CBD play in Europe, but it is niche, and country-by-countryIn the EU, the distinction between hemp and cannabis-derived cannabinoids (including but not limited to THC), is a well-known fact for those with any stripes in either the cannabis, or beyond that, mainstream food and drug industry. The largest confusion, in other words, is strictly at the lower rungs of the biz. Not to mention all foreigners.
Proof of the same? Purvey the contents of even the most wide-ranging Dutch Seed shop catalogue, and you will be hard-pressed to find non-hemp products. And even though such entities know how to get around loopholes themselves (starting with the online sale across Europe of cannabis seeds from all over the world), novel food is not a regulation even these cannabis entrepreneurs want to cross.
In other words, there is the potential for a CBD play in Europe, but it is niche, and country-by-country in an environment where both local and regional rules are shifting. And further are likely to do so for some time to come.
And in the meantime, those who make the grade, are certainly freed from one pressing if not looming question. The market in Italy is, in fact, not only far from “illegal,” but opening up both in terms of import and export to cannabis products from all over the world. Including of course, Canada and the United States.
There’s a better way to design HVAC for cannabis grow rooms, and it may seem a little odd at first.
Central chillers are a tried-and-true solution for projects requiring large refrigeration capacity. They’re found in college campuses, hospitals, office buildings and other big facilities.
While central chillers are a good default for most large-scale applications, they fall short in this industry. Grow rooms, with their need for tight, variable conditions and scalable, redundant infrastructure, have HVAC requirements that the central chiller model simply can’t deliver on.
Let’s unpack the shortcomings with the central chiller in this niche and explore some possible solutions.
What’s Wrong With Chillers?
Building a scalable HVAC system is essential for the cannabis industry as it continues to ramp up production in the U.S. and Canada.
Many growers are building their large facilities in phases. In Canada, this is common because growers must have two harvests before they can receive a production permit, so they build just one phase to satisfy this requirement and then build out the facility after the government’s approval.
This strategy of building out is less feasible with a central chiller.
Indoor cultivator facilities use high powered lights that give off heat, requiring an efficient air cooling system.
A chiller and its supporting infrastructure are impractical to expand, which means it and the rest of the facility needs to be built to full size for day one, even though the facility will be in partial occupancy for a long time. This results in high upfront capital costs.
If the facility needs to expand later down the road, to meet market demand for example, that will be difficult because, as mentioned, it’s expensive to add capacity to a central chiller.
Additionally, the chiller creates a central point of failure for the facility. When it goes down, crops in every room are at risk of potentially devastating loss. Grow rooms are unusual because of their requirement for strict conditions and even a slight change could have big impact on the crop. Losing control due to mechanical failure could spell disaster.
One Southern Ontario cannabis grower met with some of these issues after constructing their facility, which uses a central chiller for cooling and dehumidification. The chiller was built for full size, but the results were disappointing as early as phase one of cultivation. While sensible demands in the space are being easily met, humidity levels are out of control – flowering rooms are up to 75% RH.
Humidity is one of the most important control aspects to growers. Without a handle on it, growers risk losing their entire crop either because there’s not enough and the plants dry out, or there’s too much and the plants get mold disease. This facility has fortunately not yet reported serious crop issues but is mindful of the potential impact on harvest quality.
By going unitary, capital costs scale on a linear basis.If tight control over humidity is what you need, then a chilled water system needs very careful consideration. That’s because typical chiller system designs get the coils cold enough to lower the air temperature, but not cold enough to condense water out of the air as effectively as a properly designed dehumidifier coil.
A chilled water system capable of achieving the coil temperatures needed for adequate dehumidification in a typical flower room will also require full-time reheat to ensure that air delivered to the plants isn’t shockingly cold — either stunting their growth or killing them altogether. This reheat source adds complexity, cost and inefficiency which does not serve growers well, many of whom are under pressure from both utilities and their management to minimize their energy usage.
How Do Unitary Systems Solve These Problems?
Compared to central chillers, a unitary setup is more agile.
A facility can commence with the minimum capacity it needs for start-up and then add more units in the future as required. They’re usually cheaper to install than a central system and offer several reliability and efficiency benefits as well.
The real business advantage to this approach is to open up the grower’s cash flow by spreading out their costs over time, rather than a large, immediate cost to construct the entire facility and chiller for day one. By going unitary, capital costs scale on a linear basis.
One of the flowering rooms in an indoor set up (Image: Tall Trees LED Company)
Growers can have more control over their crop by installing multiple units to provide varying conditions, room-by-room, instead of a single system that can only provide one condition.
For example, flowering rooms that each have different strains of crop may require different conditions – so they can be served by their own unit to provide variability. Or, rooms that need uniform conditions could just be served by one common unit. The flexibility that growers can enjoy with this approach is nearly unlimited.
Some growers have opted for multiple units installed for the same room, which maximizes redundancy in case one unit fails.
A cannabis facility in the Montreal area went this direction when building their HVAC system. Rather than build everything in one shot, this facility selected a unitary design that had flowering rooms served independently by a series of units, while vegetation rooms shared one. The units were sized to provide more capacity than currently required in each room, which allows the grower to add more plants and lighting in the future if they choose.
This facility expects to build more grow rooms in a future phase, so it was important to have an intelligent system that could accommodate that by being easy to add capacity to. This is accomplished by simply adding more units.Multiple, small systems also have a better return-on-investment.
The grower, after making a significant investment in this facility, was also averse to the risk of losing crop due to mechanical failure, which is why they were happy to go with a system of independent grow room control.
Multiple, small systems also have a better return-on-investment. Not only are they easier to maintain (parts are easier to switch out and downtime for maintenance is minimal) but they can actually be more efficient than a large, central system.
Some units include heat recovery, which recycles the heat created by the dehumidification process to efficiently reheat the unit’s cold discharge air and keep the space temperature consistent, without needing expensive supplementary heaters. There’s also economizer cooling, which can be used to reduce or even eliminate compressor usage during winter by running the unit on dry outside air only.
Demand for cannabis continues to increase and many growers are looking to expand their businesses by adding new facilities or augmenting existing ones. Faced with the limitations of the traditional chiller system, like the lack of flexibility, scalability and redundancy, they’re looking for an intelligent alternative and the unitary approach is earning their trust. It’s expected this option will soon become the leading one across North America.
In a sign of how widely the German government is now casting its net for medical cannabis, even South America is not off the table. At the end of last month, two firms– one from Uruguay and another from Columbia- announced that they would begin importing medical cannabis of the THC and CBD kind.
Fotmer Life Sciences (from Uruguay) and Clever Leaves (Columbia) are entering a market where domestic cultivation has been on the drawing board for two years so far, but so far, brought down by lawsuits.
At present, Aphria, Aurora and Wayland are the big Canadians in front position on the German bid- but so far that is only importing. There are legal challenges against what appears to be the domestic cultivation licenses that appear so far to be unresolved. And against that backdrop, the big Canadians are also facing competition from indie German distributors now casting a wide net for product, globally.
Due to the timing of the announcement from South America and the firm involved in the import, CanSativa GmbH is clearly connected to the large gap in demand that is now developing in the German market and supply requirements. Further CanSativa is also a German firm engaged in what insiders on the ground admit is basically the only way to enter the market here right now, namely via an agreement with one of the new (and Frankfurt-based) distributors who are interested in this space.
Cannabis Central Is Not Berlin
To the great surprise of outsiders, who have long believed that Berlin is the center of all things cannabis in Germany, CanSativa is now one of quite a few firms who have not only called Frankfurt home, but have begun to put the city on the global cannabis map. That started of course with MedCann GmbH (later acquired by Canopy Growth), now with a huge new office in the center of the banking district.
However that also includes the now controversial Farmako, and several other new distributors who are setting up shop with a “Mainhatten” address.
Why Frankfurt? It has one of the best and busiest airports in the world just 20 minutes from the center of the city, and of course, it is home to the Deutsche Börse, the center of not only German, but European finance.
What Does This Announcement Mean?
For those interested now in setting sail for Europe, there is clearly a strategic path to get there, even if it means picking up stakes and setting down cultivation roots in places where there is an ex-im market. While the announcement about Latin American exports is not unexpected, it is also surprising that the very competitive young distributors now popping up in Germany, in particular, cannot find closer sources to bring cannabis into the country from.
However, it is early days yet. The Israelis are coming as of this summer. German inspectors are also on the ground in Macedonia through June, certifying the early movers in the market there to begin importing presumably just before Israel enters the global ex-im business, finally.
There will also be an uptick in firms exporting at least medical grade (GMP-certified) CBD and hemp in the direction of Europe from the United States, although at present that traffic is a trickle as firms begin to find out about the possibility.
Regardless of the source, however, the news is yet another sign that the medical market is taking root, no matter how ambiguous the numbers still are, and no matter how hard it is on the ground to obtain.
Cannabis is now, indeed, entering Europe via Germany from all over the world, and it’s only going to get hotter this year.
The novel foods discussion in Europe is a thorny one- and further one very misunderstood by natives, let alone those who would take Europe by canna storm. Within Europe, this discussion has festered and percolated for the better part of two years. Last year, despite a huge bump in sales in certain regions (see Switzerland), police were directly involved on the ground in Spain and rumblings of the same possibility took place in Austria at the end of the year. Early this year, further indecision at the EU level has continued to confuse the entire discussion.
This year, while there have been recent blow-ups in the UK, and fights at the EU level, the main action has been in the DACH region of the EU. The DACH trading alliance includes Germany, Switzerland and Austria.
In fact, the debate in this region of the world may drive not only European but UN policy. For that reason, the road currently is a thorny one, with lots of drama shaking out along the way in policy fights that still, at least in many European countries, involve the fuzz and what has been ostensibly packaged and labelled as “health food.”
It is for that reason that the most recent move by the German Federal Office of Consumer Protection and Food Safety (or BVL), which said that CBD should not be sold in food at all, has gotten all the attention lately. Especially and more worrying for the nascent CBD industry across the continent, the agency also opined that it does not see a case where CBD-containing cannabis would be marketable in foods or health supplements.
Last month, on April 11, the European Industrial Hemp Association (IEHA) issued a sharp rebuttal to the same. As they have just been asked to serve in an advisory role in setting EU regulations on novel foods and hemp extracts, this is likely to move the conversation forward regionally. Including in the DACH region where this issue is all over the place.
What Exactly Does Novel Foods Regulation Cover?
Novel Foods regulation in Europe covers two things, and this is true far from cannabis. It is consumer rights legislation and guidelines that cover all plant-based food and supplements across the continent. It also covers beauty products (since the skin is the body’s largest external organ) although so far, this tiny part of a niche industry has largely escaped attention. Do not expect that to last.
Where this crosses with cannabis is an interesting discussion. Hemp and cannabis of course have been consumed in Europe for thousands of years. As such, food and extracts of the plant, from species that occur naturally here, normally would not raise a fuss. However, this discussion has also become complicated for a few reasons. Starting with the fact that the seeds and strains now being developed in the U.S. and Canada are not “native” to the European region.
In fact, the early exports across the Atlantic (and there have now been a few) are all on the hemp side of the equation. Currently hemp is the only plant containing CBD that is recognized as viable under novel foods. Cannabis sativa strains that are low in THC are where this whole discussion gets dodgy. The strain, Girl Scout Cookies, and its contents including CBD for example, would under this regime, never be allowed. Nor would cannabis strains bred for their low THC in the United States.
The second issue is how such plants are processed and the cannabinoids extracted. That is another issue that directly relates to how concentrates, tinctures and extracts are made in the first place. This is also in the room.
But that is also where the entire debate also spins off into other semantic hair-splitting that the industry so far has found not only tedious but largely impenetrable.
Why Is The German Announcement So Cynical?
Germany is following its DACH neighbour Austria to directly put the brakes on the CBD and THC discussion across the border with Switzerland. In contrast to its Teutonic trading partners, the Swiss have been experimenting with all kinds of CBD products, from all sorts of sources, and are now talking THC recreational trials (even if sold out of pharmacies).
The structure of cannabidiol (CBD), one of 400 active compounds found in cannabis.
In contrast, over the last six months, both Germany and Austria have come out with statements and official pronouncements not about hemp, per se, but rather CBD- a cannabinoid found in all instances of both hemp and cannabis sativa. While politically this might send a statement that both countries are not ready to engage the cannabis debate on the next level (beyond medical in other words), scientifically of course, this is a silly argument to make. A cannabinoid is a chemical compound that acts the same whether it comes from cannabis, hemp or synthetic sources (see the synthetic dronabinol).
In the meantime, CBD itself has not been declared a “novel food.” In other words, for all the legal regulatory “brakes” and excuses, the dust is starting to clear on the debate as both regional and international bodies finally take on the entire cannabis discussion, albeit in a plodding, multi-year way. That, however, is undeniably under way at this juncture.
In the meantime, look for political grandstanding about every cannabinoid under the sun and further such drama will not abate even with “recreational” reform. Even when Europe accepts full boat regulated, recreational, novel food regulation will still be in the room. Even if politicians no longer play games with individual cannabinoids.
That said, at this point, that is also unlikely. In other words, expect the battle on the novel food front to continue for the entire industry, and shift, when recreational comes, to merely another cannabinoid, unless policy makers address the bottom-line issues now.
Today in the states where medical and recreational cannabis is legal, cannabis products purchased from licensed facilities are required to have undergone testing by accredited labs. The compliance testing verifies advertised potency levels and checks for microbial contamination, herbicides, pesticides, fungicides and the presence of mold and mildew, among other potential contaminants.
Until recently, little attention has been given to disposable gloves and their possible involvement in the contamination of the products they handle. What factors should you consider when purchasing gloves?
Disposable Gloves Facts
Disposable gloves, like cannabis products, are not made of equal quality. There are several different types of disposable gloves on the market, and huge variations in glove quality and chemical compositions exist between and within each glove type.
Recent scientific studies have revealed how gloves produced in factories with poor manufacturing standards and raw material ingredients can contaminate the products they handle. High-level toxins in disposable gloves were found to affect lab results, toxins in gloves contaminated the food they touched, and pathogen contamination of unused disposable gloves has been proven. Should the cannabis industry take more interest in the disposable gloves they are using? With so much at stake if compliance test results are compromised, we think so!
Glove Procurement: Factors to Consider
What factors should you consider when purchasing gloves?
Industrial grade gloves- There is no such thing as an industrial grade glove certification, although it does give an incorrect impression that gloves are strong and resilient. Industrial grade means they have not been subjected to inspection nor have passed any specific testing requirements.
Food contact gloves are certified under FDA Title 21 CFR Part 177, which states the components of the glove comply with the FDA regulations and the gloves consist of “substances generally recognized as safe for use in food or food packaging.” Few controls exist for glove manufacturing relating to the reliability of raw materials and manufacturing processes, and costs can be reduced with the use of cheap, toxic materials.
Medical grade gloves have to pass a series of technical tests in order to meet the safety requirements specified by the FDA. Gloves are tested for puncture and abrasion resistance, must meet tension and elongation tests and are also tested for chemical substance resistance. Manufacturers of these gloves must receive 510k certification. As this study shows, even medical gloves can contain high levels of toxic ingredients, affecting laboratory test results.
The Acceptable Quality Level (AQL) refers to a quality standard for measuring pinhole defects- the lower the AQL, the less defects the gloves have. There are no AQL requirements for food grade or industrial grade gloves, meaning there are no guidelines for the number of failures per box. Medical grade gloves must have an AQL of 2.5 or less, meaning 2.5 failed gloves per 100 gloves is an acceptable level.
For Californian cannabis companies, are your disposable gloves Prop. 65 compliant? Accelerator chemicals, such as 2-Mercaptobenzothiazole (MBT) found in some nitrile gloves, have recently been added to the Prop. 65 chemicals known to cause cancer.
How Gloves Can Contaminate Products
Physical, chemical and microbiological hazards have been identified in disposable glove supply chains. Gloves of any grade are not tested for cleanliness (microbial and bioburden levels), raw material toxicity and chemical composition, or pathogen contamination.
100% of glove factories supplying the United States are based in Southeast Asia. These factories are generally self-regulated, with FDA compliance required for a rough outline of the ingredients of the gloves rather than the final product. Few controls are required for glove manufacturing relating to the reliability of raw materials, manufacturing processes and factory compliance or conditions. A clear opportunity exists for accidental or intentional contamination within the glove-making process, especially to reduce costs.
In order to safeguard their customers from product contamination, a selection of tests and certifications, some of which are unique within the glove industry, are being implemented by glove supplier Eagle Protect. These tests make sure Eagle’s gloves coming into the United States are made in clean, well run factories, free of any type of contamination and are consistent in material makeup to original food safe specifications. This glove Fingerprint testing program, consists of a number of proprietary risk reduction steps and targeted third-party testing methods, includes gas chromatography combined with mass spectroscopy (GC/MS); surface free energy determination; in vitro cytotoxicity analysis; and microbial viability-linked metagenomic analysis.
With a great deal of faith placed on a glove supplier’s ability to deliver disposable gloves sight unseen, we believe these tests are essential to further reduce risks or pathogen contamination associated with them, keeping your cannabis products safe.
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Just like in the United States, Canada and Israel, the people who were able to get into the changing industry first and early had money and political connections.
Meanwhile, in the historic if less slightly less elite but almost as expensive touristy seaside town of Brighton, The Canna Kitchen, a CBD eatery with the catchy slogan of “let food be thy medicine”, was closed by the police right before it was supposed to open at the end of May (although there is no mention of this or the negative press on the website, which despite having no telephone number, still allows visitors to “book a table.”) The owners, who also seem to be quite well-heeled millennials themselves, appear to be on the verge of “losing hundreds of thousands of pounds and laying off 15 staff,” to quote The Guardian story on the subject.
