Tag Archives: California

The Power of Prevention: Pathogen Monitoring in Cannabis Cultivation and Processing Facilities

By Nathan Libbey
2 Comments

As the cannabis market matures and the value chain becomes modernized, it’s important to address product safety in a comprehensive way. In other areas of manufacturing, Hazard Analysis & Critical Control Points (HACCP) has been the standard for reducing hazards both for employees and for the products themselves. A Critical Control Point (CCP) is any spot from conception to consumption where a loss of control can potentially result in risk (Unnevehr, 1996). In the food realm, HACCP has been used to drive quality enhancements since the 1980s (Cichy, 1982).

In a nutshell, HACCP seeks to help identify where a problem may enter a product or environment and how that problem may be addressed before it escalates. In cannabis, these hazards include many of the same problems that food products have: specifically molds, yeasts, and pathogenic bacteria (Listeria, E. coli, etc.). While the current industry standard is to test products at the end stage for these contaminants, this late-stage pass/fail regimen leads to huge lots of destroyed product and a risk for consumer distrust (Yamashiro, 2019). HACCP, therefore, should be applied at every stage of the production process.

Pathogen Environmental Monitoring (PEM) is a tool that can be used to identify CCPs in a cannabis cultivation or processing facility. The main goal of a PEM program is to find a contaminant before it reaches a surface that touches the product or the product itself. PEM is conducted using a pre-moistened swab or a sponge to collect a sample from the cannabis environment. The swab can then be sent to a lab for microbial testing. Keys to an effective PEM are:

1. Start with a broad stroke – When the FDA comes to a facility suspected of producing pathogen-laced food products, they conduct what is known as a Swab-a-thon. A Swab-a-thon is a top to bottom collection of samples, usually totaling 100 or more. Similarly, preemptively swabbing should be the first step in any PEM—swab everything to see what exists as a baseline.

2. Map your scene – identify on a map of your facility the following:

  • Cannabis contact surfaces (CCS) (belts, clippers, tables, etc)
  • Non-cannabis contact surfaces (Non-CCS) (floors, lighting, drains, etc)
  • Flow of air and people (where do air and people enter and where do they go?

Identifying the above zones will help deepen your understanding of where contaminants may come into contact with cannabis and how they may migrate from a Non-CCS to a CCS. 

3. Plan and execute:

  • Based on the results of mapping, and Swab-a-thon, identify where and when you will be collecting samples on a consistent and repeatable basis. Emphasis should be placed on areas that are deemed a risk based on 1) and 2). Samples should be collected at random in all zones to ensure comprehensive screening.

4. Remediate and modify:

  • If you get a positive result during PEM, don’t panic—pathogens are ubiquitous.
  • Remediate any trouble spots with deep cleaning, remediation devices or other protocols.
  • Re-test areas that were positive for pathogens to ensure remediation is successful.
  • Revisit and modify the plan at least once a year and each time a new piece of equipment is added or production flow is otherwise changed.

The steps above are a good starting point for a grower or processor to begin a PEM. Remember that this is not a one-size-fits-all approach to safety; each facility has its own unique set of hazards and control points.

Comprehensive guides for PEM can be found at the links below, many of the concepts can be applied to cannabis production.

https://affifoodsafety.org/lcp/advanced-search/

http://www.centerforproducesafety.org/amass/documents/document/263/Listeria%20Guidance%20UFPA%202013.pdf

Cichy, R. (1982). HACCP as a quality assurance tool in a commissary food-service system. International Journal of Hospitality Management, 1(2), 103-106.

Unnevehr, L., & Jensen, H. (1996). HACCP as a Regulatory Innovation to Improve Food Safety in the Meat Industry. American Journal of Agricultural Economics, 78(3), 764-769.

Yamashiro, C, & Baca, Y. (2019).  Prevent high-value cannabis crop loss with innovative environmental monitoring tool.

The Ultimate Guide to Intellectual Property Protection for Cannabis Businesses

By Roger Bora
4 Comments

As of this writing, one cannot register trademarks with the U.S. Patent and Trademark Office (USPTO) for cannabis products and services that “touch” the cannabis plant (i.e., cultivate, manufacture or dispense cannabis products), with the recent exception for certain hemp-based products and services, because use of trademarks must be lawful under federal law for federal trademark registration eligibility. Brand owners may, however, secure federal trademark registration protection for their brand names for certain cannabis-related products and services that are currently legal under federal law in advance of what could be the full legalization of cannabis at the state and federal levels.

Federal trademark registration provides brand owners with valuable benefits beyond common law (unregistered) and state registered trademark rights, including the preservation of national expansion rights and presumption of trademark ownership and validity. For those reasons, securing federal trademark registration protection for trademarks is a prudent business strategy.

This article summarizes certain laws and regulations for securing federal trademark registration protection for cannabis products (including cannabidiol (CBD) products) and services. It also identifies other forms of intellectual property protection for  cannabis businesses.

What Are Cannabis, Marijuana, Hemp and CBD?

  • Cannabis is a plant of the Cannabaceae family and contains many biologically active chemical compounds, including the well-known delta-9-tetrahydrocannabinol (THC) and cannabidiol (CBD) compounds.
  • Parts of the Cannabis sativa plant are controlled under the Controlled Substances Act (CSA) under the drug class “marijuana.” The CSA is a federal law that regulates drug policy for the manufacture, importation, possession, use and distribution of certain substances. Marijuana is currently listed as an illegal Schedule I drug under the CSA, along with cocaine and heroin, due to its high potential for abuse, which is attributable mainly to the psychoactive effects of THC and the absence of a currently accepted medical use in the United States.
  • Marijuana, a term the CSA uses, is the dried leaves of the cannabis plant. It is derived from the cannabis sativa and cannabis indica species and is used primarily as a psychoactive drug.
  • Hemp is derived only from the cannabis sativa species and has historically been grown primarily for its strong fibers used for industrial purposes, including for making fabrics, clothing and rope.
  • There is a significant difference between marijuana and hemp with respect to their concentration of THC, which gives the plant its psychoactive effect. While marijuana can reach THC levels of 30%, THC levels in hemp are typically 0.3% or less.
  • The low level of THC in hemp is a reason why federal authorities recently removed it from the legal definition of marijuana, which means that cannabis plants and derivatives such as CBD derived from hemp that contain 0.3% or less of THC on a dry-weight basis are no longer considered controlled substances under the CSA.
  • Cannabidiol (CBD) is an active ingredient in the cannabis plant and is derived primarily from the hemp plant. CBD has been touted for its many health benefits, including for the treatment of insomnia, pain and anxiety, and it has become a widely used ingredient in many types of products, including foods, cosmetics, building materials, industrial oils, plastics and textiles.

Relevant Laws and Regulations

Controlled Substances Act (CSA)

Under the CSA, the drug class marijuana is defined as “all parts of the plant Cannabis sativa L., whether growing or not; the seeds thereof; the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds or resin” (subject to certain exceptions). 21 U.S.C. §802(16).

The CSA prohibits, among other things, manufacturing, distributing, dispensing or possessing cannabis that meets the definition of marijuana, including CBD derived from marijuana.

2018 Farm Bill Removes Hemp from the Definition of Marijuana

The 2018 Farm Bill signed into law on December 20, 2018, amended the Agricultural Marketing Act of 1946 and changed certain federal laws and regulations concerning the production and marketing of “hemp,” defined as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol [THC] concentration of not more than 0.3 percent on a dry weight basis.”

  • Those changes included removing hemp from the CSA’s definition of marijuana, which means that hemp and its derivatives, such as CBD derived from hemp, that contain no more than 0.3% THC on a dry-weight basis, are no longer controlled substances under the CSA.
  • The recent change in the classification of hemp allows brand owners that legally manufacture and sell certain hemp-based products, including certain hemp-derived CBD products, to federally register their associated trademarks.
  • However, the 2018 Farm Bill explicitly preserved FDA’s authority to regulate certain products containing cannabis or cannabis-derived compounds, even if derived from hemp, including CBD derived from hemp. Thus, federal laws, including FDA regulations, must still be considered for product legality before introducing products into commerce.

Food and Drug Administration (FDA)

Even with the removal of hemp from the CSA’s definition of marijuana, not all hemp-derived products are lawful following passage of the 2018 Farm Bill because certain products may still violate the Federal Food, Drug, and Cosmetic Act. For example, certain hemp-derived CBD products, including human foods, beverages, dietary supplements and animal foods, still violate FDA laws absent FDA approval.

The FDA monitors and investigates the sale of products that violate FDA laws, including CBD products promoted for therapeutic uses and treating diseases. When the FDA detects such violations, it may send warning letters to the violating parties as a first step in the enforcement process.

On December 20, 2018, the then FDA Commissioner Scott Gottlieb, M.D. made the following statement on that point:

“We’ll take enforcement action needed to protect public health against companies illegally selling cannabis and cannabis-derived products that can put consumers at risk and are being marketed in violation of the FDA’s authorities. The FDA has sent warning letters in the past to companies illegally selling CBD products that claimed to prevent, diagnose, treat, or cure serious diseases, such as cancer. Some of these products were in further violation of the FD&C Act because they were marketed as dietary supplements or because they involved the addition of CBD to food.”

Furthermore, in a recent letter to a company selling CBD products, the FTC sent a joint letter with the FDA, and that letter included the following statements and warnings:

  • “The FTC strongly urges you to review all claims for your products and ensure that those claims are supported by competent and reliable scientific evidence.  Violations of the FTC Act may result in legal action seeking a Federal District Court injunction or Administrative Cease and Desist Order.  An order also may require that you pay back money to consumers.

  • You should take prompt action to correct the violations cited in this letter. Failure to promptly correct violations may result in legal action without further notice, including, without limitation, seizure and/or injunction.”

What about using hulled hemp seed, hemp seed protein powder and hemp seed oil in human food?

  • In December 2018, the FDA generally recognized as safe (GRAS) hulled hemp seed, hemp seed protein powder and hemp seed oil. Accordingly, the FDA’s current position suggests that those products may legally be marketed in human foods for the uses described in the notices, provided they comply with all other requirements. To date, the FDA has not received any GRAS notices for the use of hemp-derived ingredients in animal food.
  • Hemp seeds are the seeds of the Cannabis sativa plant. They do not naturally contain THC or CBD. The hemp seed-derived ingredients that are the subjects of the GRAS notices contain only trace amounts of CBD and THC. The FDA has reported that “[c]onsumption of these hemp seed-derived ingredients is not capable of making consumers ‘high.’”
  • Those GRAS conclusions do not affect the FDA’s position on the addition of CBD and THC to food.

U.S. Trademark Registration Eligibility

Trademarks Must Be Used for Lawful Activities

A trademark’s use must be lawful under federal law for federal trademark registration eligibility. Whether activities associated with cannabis and/or cannabis-related goods or services are lawful under federal law requires review of various federal laws, including the Federal Food, Drug, and Cosmetic Act.

Federal law controls federal trademark registration eligibility, period.

If a trademark application is filed for goods or services that violate federal laws, including for marijuana products and/or services or certain products that feature CBD, such as foods and nutritional supplements, the USPTO Examiner should refuse the application. Furthermore, filing an “intent-to-use” trademark application cannot obviate that refusal.

What does that mean? It means that filing a trademark application based on an “intent to use” the trademark “in the future” in anticipation of federal law legalizing cannabis still violates current law (the law as of the application filing date), and thus the application should be rejected because the applicant does not and cannot have a “bona fide intent” to use the applied-for mark for a legal purpose.

The USPTO Examination Guide 1-19 for examining cannabis marks states that:

“[r]egistration of marks for foods, beverages, dietary supplements, or pet treats containing CBD will still be refused as unlawful under the FDCA, even if derived from hemp, as such goods may not be introduced lawfully into interstate commerce.”

The following is an excerpt from an issued Trademark Office action refusing registration of a mark on the basis the listed cannabis goods are unlawful:

“Registration is refused because applicant does not have a bona fide intent to lawfully use the applied-for mark in commerce.

To qualify for federal trademark/service mark registration, the use of a mark in commerce must be lawful. Gray v. Daffy Dan’s Bargaintown, 823 F.2d 522, 526, 3 USPQ2d 1306, 1308 (Fed. Cir. 1987) (stating that “[a] valid application cannot be filed at all for registration of a mark without ‘lawful use in commerce’”); TMEP §907; see In re Stellar Int’l, Inc., 159 USPQ 48, 50-51 (TTAB 1968); Coahoma Chemical Co., Inc. v. Smith, 113 USPQ 413 (Com’r Pat. & Trademarks 1957) (concluding that “use of a mark in connection with unlawful shipments in interstate commerce is not use of a mark in commerce which the [Office] may recognize.”). Thus, the goods and/or services to which the mark is applied must comply with all applicable federal laws. See In re Brown, 119 USPQ2d 1350, 1351 (TTAB 2016) (citing In re Midwest Tennis & Track Co., 29 USPQ2d 1386, 1386 n.2 (TTAB 1993) (noting that “[i]t is settled that the Trademark Act’s requirement of ‘use in commerce,’ means a ‘lawful use in commerce’”)); In re Pepcom Indus., Inc., 192 USPQ 400, 401 (TTAB 1976); TMEP §907.

Here, the items or activities to which the proposed mark will be applied are unlawful under the federal Controlled Substances Act (CSA), 21 U.S.C. §§801-971.”

USPTO Guidelines for Marijuana and Hemp Products: Key Takeaways

  • Trademark registrations for marijuana and marijuana by-products, including CBD derived from marijuana, are still unavailable.
  • Trademark registrations for certain hemp products are available. If an applicant’s goods are derived from hemp, as defined in the 2018 Farm Bill, the identification of goods must specify that they are derived from hemp and that the products contain less than 0.3% THC. Thus, the scope of the resulting registration will be limited to goods compliant with federal law.
  • Trademark applications covering certain CBD infused products, including foods, beverages, dietary supplements and pet foods, are still refused, even if derived from hemp, because such goods may not be introduced lawfully into commerce without FDA approval.
  • The USPTO is currently approving trademarks for skin care preparations and cosmetics that feature hemp ingredients, including CBD derived from hemp, as long as the application complies with the 2018 Farm Bill and USPTO filing requirements.
  • If a pending application’s filing date is prior to December 20, 2018 (the effective date of the 2018 Farm Bill), the applicant must amend the filing date to a date later than December 20, 2018 before the application may proceed. Once the date has been amended, a new search is conducted for any prior pending confusingly similar marks.
  • Trademark applications for hemp cultivation and production, if allowed, will require proof of authorization and licensure in accordance with a plan approved by the U.S. Department of Agriculture.

Federal Trademark Registration Considerations and Options

Although marijuana products and services (i.e., products and services that “touch the plant”) and certain hemp-based products are currently illegal under federal law, making their associated marks ineligible for federal trademark registration protection, there are still certain cannabis-related activities that are legal and thus eligible for federal trademark registration.

Examples of legal activities include:

  • Providing informational services related to cannabis or marijuana-related goods and services.
  • Clothing, including t-shirts and hats, featuring a cannabis-related trademark.
  • Educational programs in the fields of cannabis and CBD, including for health benefits and therapeutic uses of medical cannabis and CBD.
  • Providing an internet news portal featuring links to current events, information, commentary, non-downloadable publications in the nature of brochures, articles, and non-downloadable multimedia files containing video, audio or text in the fields of cannabis or cannabis news.
  • Online journals, namely blogs featuring information about cannabis.
  • Entertainment services, namely, providing podcasts featuring medical and industry experts in the field of cannabis and medical marijuana.

If a brand owner secures federal trademark registration protection for marks for legal activities, including those listed above, those trademark registrations and rights may arguably preserve future product and service expansion under the same registered mark for “related” goods and/or services that are unlawful as of the trademark application filing date, but later become lawful, including CBD infused foods and nutritional supplements and marijuana itself.

Why? Because trademark law protects consumers from “source confusion.”

  • For example, if a brand owner adopts the trademark N-DuraRun for running shoes, another party may not adopt the same or confusingly similar mark for running pants because consumers would likely be confused as to the source of running shoes and running pants if offered under the same trademark by different parties.
    • It is not confusion as to what a consumer is buying (“I thought I was buying running shoes… instead I mistakenly purchased running pants…”). Rather, it is confusion as to the source of the products (“I purchased EnDuraRun brand running pants because I thought they were made by the same company that makes N-DuraRun brand running shoes!”).
    • A question to ask is “Would the average consumer reasonably believe that the parties’ respective goods are of the type that would originate from the same source?”
      • If the answer is “yes” and if the parties’ respective marks are confusingly similar, there may be a likelihood of consumer confusion as to the source of the parties’ respective goods.

For example, if a company provides informational services in the field of cannabis and cannabis derivatives, including CBD infused foods, and/or provides foods and nutritional supplements featuring hemp seed protein powder and hemp seed oil, and it secures federal trademark registration protection for its trademark for those goods and/or services, that existing federal trademark registration and rights may arguably preserve the brand owner’s right to use and register the same mark for “related” goods and services, which could include CBD-infused foods and nutritional supplements if/when those goods become legal. That is so because the average consumer would arguably believe that informational services about CBD infused foods and CBD infused foods themselves would originate from the same source and also believe that foods and nutritional supplements featuring hemp seed protein powder and hemp seed oil and foods and nutritional supplements featuring hemp-derived CBD would originate from the same source.

Source confusion is the crux of trademark law.

Therefore, securing federal trademark registration protection now for goods and services that are lawful can preserve future trademark rights for cannabis-related products and services that are currently unlawful and may avoid losing valuable trademark rights to third parties.

As companies prepare for the potential federal legalization of all forms of cannabis, securing federal trademark registration now for brand names for goods and services that are currently legal is vital for protecting valuable company assets, current and future business opportunities, and future growth, and it is possible as long as brand owners understand the current status of the regulatory landscape and the intricacies of trademark law.

Other Forms of Intellectual Property Protection

In addition to trademark and federal trademark registration protection, there are other intellectual property protections available for marijuana, hemp and cannabis businesses, including:

  • State trademark filings. In states that have legalized cannabis, state trademark registrations may be available.
  • Common law trademark rights. In states that have legalized cannabis, common law trademark rights may be available.
  • Patent protection. Patent protection may be secured for various inventions, including plants, such as new strains of the cannabis plant, and methods of cannabis hydration and lighting.
  • Trade secrets. Trade secrets can protect certain aspects of a business, including formulas, processes or methods, that are not generally known or reasonably ascertainable by others and that can help a business obtain an economic advantage over competitors or customers. To be eligible as trade secrets, however, a business owner must take the necessary steps to legally protect them or they will be lost.
  • Copyrights. Copyright protection may be secured for certain company creative works, including trademark logos (artwork), written materials, photographs and software.

As the laws governing the cannabis industry continue to evolve, including trademark, FDA and banking laws and regulations, all interested parties, including cannabis business owners, law firms and investors, must stay abreast of the rapidly changing legal landscape to maximize business growth opportunities, ensure proper legal and regulatory compliance, and avoid having their businesses go up in smoke.

Notice: This article is for educational purposes only, is not legal advice and should not be substituted for retaining an attorney.

dry cannabis plants

How to Grow Cannabis Plants for Concentrate Production

By Andrew Myers
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dry cannabis plants

While flower is still the most popular way to consume cannabis, the concentrates market is booming. Some predict concentrates will be nearly as popular as flower by 2022, with an estimated $8.5 billion in retail sales. That’s a lot of concentrates and, chances are, cannabis producers are already feeling the pressure to keep up.

Concentrates refer to products made from processing cannabis – often resulting in much higher THC or CBD percentages. The category includes oils, wax, dabs, shatter, live resin and hash. Consumers are increasingly drawn to these cannabis products for their near-immediate and intense effects. They’re often consumed through vaporization, dabbing or sublingual absorption and are sometimes favored by those who want to avoid smoking. Cannabis growers who have traditionally focused on flower yields may decide to prioritize quality and potency levels in order to tap into these changing consumer tastes.

What Growers Should Focus on to Produce High Quality Concentrates
We’ll let you in on a little secret: making good concentrates starts with good flower. If you’re starting with low-quality flower, it’s impossible to create a high-quality concentrate. Whatever qualities inherent to the flower you’re starting with will be amplified post-processing. So, really, the concentrate-making process starts at the seedling level, requiring the right care and attention to coax out the results you’re looking for.

Tetrahydrocannabinol (THC), just one of hundreds of cannabinoids found in cannabis.

But what makes good flower? While this can be a subjective question, those producing concentrates generally look for flowers with big, abundant trichomes. Trichomes are the small, dewy structures found across the cannabis plant on buds, leaves and even the stem. They’re responsible for producing the plant’s cannabinoids and terpenes – the chemical compounds that give a strain its unique benefits, aroma and taste. Evolutionarily, trichomes attract pollinators, deter hungry herbivores and provide some defense against wind, cold and UV radiation.

Generally, trichomes indicate how potent the flower is. Plus, what we’re most often looking for when making concentrates is higher cannabinoid and terpene profiles, while also ensuring absolute safety.

What measures can growers take to produce crops that are ideal for concentrate production? Start with the following:

Avoiding Contaminants
Just like you would wash your fruits and vegetables before consumption, consumers want to be sure there’s no dangerous residuals in the concentrate they are ingesting. Growers can avoid any post-process residuals by taking a few key steps, including:

  • Photo: Michelle Tribe, Flickr

    Cutting out the pesticides. Any pesticides that are on your flowers before they go through processing will show up in your concentrates, often even more – you guessed it – concentrated. This is a serious health concern for consumers who might be sensitive to certain chemicals or have compromised immune systems. It’s dangerous to healthy consumers, too. Rather than spraying hazardous chemicals, growers could consider integrated pest management techniques, such as releasing predatory insects.

  • Limiting foliar spraying. Some growers will use foliar spraying to address nutrient deficiency or pest-related issues through delivering nutrients straight to the leaves. However, this can also result in contaminated concentrates. If you really need to spray, do it during the vegetative stage or investigate organic options.
  • Taking the time to flush the crop. This is a critical step in reducing potential contaminants in your concentrate, especially if you’re using a non-organic nutrient solution or fertilizer. Flushing simply means only giving your plants water during the final two weeks of flowering before harvest, resulting in a cleaner, non-contaminated flower and therefore a cleaner concentrate.

Perfecting the Indoor Environment
When cultivating cannabis indoors, growers are given ultimate control over their crop. They control how much light the plants receive, the lighting schedule, temperature and humidity levels. Creating the ideal environment for your cannabis crop is the number one way to ensure healthy plants and quality concentrates. There are many factors to consider when maintaining an indoor grow:

  • Temperature regulation. Trichomes are sensitive to temperature changes and start to degrade if they’re too hot or too cold. To maintain the best trichome structure, you’ll want to maintain an ideal temperature – for most strains, this falls between an idyllic 68 and 77 degrees.
  • Adequate light. For plants to perform photosynthesis indoors, they’ll need an appropriate light source – preferably one that is full-spectrum. Full-spectrum LEDs are able to closely replicate the sun and provide ample, uniform light to your crop. Another selling point for LEDs is their low heat output, making it much easier for growers to regulate ambient heat.

    dry cannabis plants
    Rows of cannabis plants drying and curing following harvest
  • CO2. Another necessary ingredient for photosynthesis is CO2. Providing your indoor crops with CO2 can boost plant size and yields and, therefore, provides more surface area for trichomes to develop and thrive.
  • Cold snap prior to harvest. Some growers rely on this age-old tactic for one last push before harvest – lowering their temperature for a few days right at the end of the flower cycle. They believe this puts the plants into a defense mode and will produce more trichomes in order to protect themselves.

Following Best Practices Post-Harvest
You made it to harvest – you’re almost done!

When harvesting and storing your plants, handle them with care to reduce damage to trichomes. If you’re planning on immediately making concentrates, you can move forward to the drying and curing process. If you’re going to wait a few weeks before processing, freeze your plants. This will preserve the cannabinoid and terpene profiles at their peak.

As the cannabis industry continues to expand, more consumers are likely to reach for concentrates at their local dispensaries. It makes sense that businesses want to diversify their offerings to satisfy customers looking for the most effective way to consume cannabis. As with any cannabis-derived product, producers will want to prioritize quality and safety – especially in the concentrate market.

Radojka Barycki picture

Preparing Your Recall Strategies

By Radojka Barycki
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Radojka Barycki picture

A product recall is the removal of a defective product from the market because it can cause harm to the consumer or place the manufacturer at risk of legal action.

Although a recall is not something that companies want to be related to, preparing for it is very critical and it is an important part of crisis management.Product recalls can cost companies million dollars in profit loss and civil damages. The company senior management and employees can also face criminal action, if the investigation shows negligent acts. The company will also face loss of reputation and the trust of its customers.

Although a recall is not something that companies want to be related to, preparing for it is very critical and it is an important part of crisis management.

There are several phases when preparing a recall strategy:

Planning Phase

During the planning phase, a recall plan is developed. A recall plan is the procedure that will be followed by an appointed company’s team during an actual recall. A good recall plan will have the following components:

  • Definitions of the type of products recalls. According to federal regulations, there are three types of recalls. The company should know what type of recall they are performing to understand the risk the consumer is facing.
  • A Recall Team. The recall team is the key stakeholders that are responsible for different processes within the company. A good recall team will be multidisciplinary. A multidisciplinary team is a group of people that have different responsibilities within the manufacturing site (i.e. Receiving Manager, QA Manager, etc.) and/or outside (i.e. Legal Counsel, Public Relations, etc.) 
  • A description of the recall team member’s responsibilities must be outlined. A recall coordinator and a backup should be assigned to ensure that there is one person organizing all activities during the recall. 
  • A Communication Plan. It is important that only the appointed person that has the responsibility of external communications (i.e. media, regulators, customers, key stakeholders, etc.). In addition, there should be only one person appointed to handle all the communication within the team (internal communications.)
  • Documents to be used during the recall are:
    • Communication documents: Letters to customers, regulators and media must be drafted and kept on hand for use during the crisis.
    • Forms that will be used to keep track of product inventory on hand (still in the site), product being returned and product being destroyed.
  • A Traceability Procedure should be in place to ensure that materials used in the manufacturing of the finished good can be traced from the time of the delivery to the facility and throughout the product manufacturing process. In addition, traceability must also be provided for finished goods from the manufacturing site to its first point of distribution. This is known as traceability one step back (materials used) and one step forward (first point of distribution.)

    PlantTag
    A plant tagged with a barcode and date for tracking
  • A description of (or reference to) product quarantine (product hold) procedures that must be followed to ensure that the product that is still at the site do not leave the facility. 
  • Product Destruction The company must outline (or reference) how product will be destroyed during a recall process.

Implementation Phase

There are three processes that need to be followed when implementing the recall plan:

  • Training: The recall team must be trained on their roles and responsibilities. Employees working at the site will be receiving directives from the appointed recall team members. It is also important that they are aware about the recall plan and understand the importance of urgency during the situation.
  • Exercise: It is important that the company doesn’t wait until the incident occurs to ensure that everyone in the team understands their roles and responsibilities during the recall. Therefore, annual testing of the procedure is imperative. This implies creating a “mock recall” situation and providing the information to the team to evaluate if they fully understand their role and responsibilities. This also allows the testing of the traceability protocols and systems that have been put in place by the site. Ensure that the team understands that this is an exercise and not an actual recall. You don’t want the team members going through the emotions that an actual recall gives. However, stress the importance of their participation during this exercise. You do not communicate to customers, media or regulators during a recall exercise. 
  • Execution: This is the actual recall and full implementation of the plan. During the actual recall, you communicate to the regulators, customers and media. The company must also conduct daily recall effectiveness checks by using the forms developed for tracking product inventory, recovery and destruction. 
  • Identify root cause and implement corrective actions. Root cause(s) will be identified during the recall process by analyzing the information resulting from the investigation of the incident. Regulatory agencies will actively participate in the discussion for identifying in the implementation of corrective actions. 

Improvement Phase

The recall team should always meet after the recall exercise or the actual recall incident. The team must evaluate what positive or negative outcomes resulted from the process. If there are gaps identified, these need to be closed, so the process is improved.

Banking Rights in the Hemp Industry

By Jonathan Miller
2 Comments

The hemp industry has experienced and continues to see a surge of growth and awareness nationwide. Following the passage of the 2018 Farm Bill, permanently legalizing the crop and removing hemp from its classification as a controlled substance, consumer demand for hemp and hemp products like CBD have skyrocketed.

Unfortunately, there remain many challenges. Confusion about hemp’s legal status – and the differences between hemp and its intoxicating cousin, marijuana – has too often stymied commerce in the industry, particularly with traditional banking products and merchant services being limited in their availability to those trying to grow their businesses.

This month, we witnessed a breakthrough development. Upon the bipartisan urging of Senate Majority Leader Mitch McConnell and Senator Ron Wyden, four federal banking regulatory agencies – Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, the Federal Reserve, Financial Crimes Enforcement Network – joined by the Conference of State Bank Supervisors – issued joint guidance confirming the legal status of hemp and the requirements for banks providing financial services to businesses.

Just some of the many CBD products on the market today.

The new guidance achieves many necessary benchmarks integrating hemp and banking, such as no longer requiring banks to file suspicious activity reports for customers solely because they are engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations. Further, the guidance clarifies the difference between hemp businesses and marijuana businesses – adding yet another point of relief to banks concerned with national and state legality.

The hope is that the joint guidance should alleviate any fear of audits or regulatory crackdowns that have slowed financial institution integration with the hemp industry. However, this does not require banks or financial entities to participate in business with hemp companies. Nor does this guidance directly address the legality of hemp-derived CBD commerce.

With all of this in mind, there is still work to be done. Priority #1 is passage of the SAFE Banking Act. This bipartisan legislation, initially focused on providing a green light to marijuana banking in states where pot is legal, was amended to ensure a separate safe harbor for hemp, with far fewer hoops since it is not a controlled substance. It also directs federal financial agencies to provide clear guidance to both banks and other financial institutions – such as credit card companies – that hemp and CBD commerce are legal. The bill was passed overwhelmingly by the House in September and we are hopeful to see full Senate consideration soon.

Banking is one of the key targets that the hemp industry is aiming to secure, as this will allow for an increase in legal hemp business growth and practices. The goal of the U.S. Hemp Roundtable is to provide consumers with safe and legal hemp products along with the knowledge that the companies are meeting the highest standards and complying with national and state law.

Soapbox

Increase Density in your Canopy

By Carl Silverberg
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One goal all growers seem to agree on is the need to increase density in their houses. How that gets done, well, there are a variety of ways and here’s one way a grower chose to do it:

With 45,000 square feet of greenhouse space, Nathan Fumia, a cannabis grower and consultant for a commercial operation in California, wasn’t pleased with what he was seeing. “If I put my hand inside the canopy and I can see sunlight on it, I’m losing money,” was how he described the situation. Unfortunately, the operators and staff of the greenhouse disagreed. They thought increasing density would rob the leaves of needed light.

He chose to test his theory by increasing the number of plants on one of his benches from 140 to 150 plants. To ensure the validity of the research, Nathan grew the same strain on Bench 1 as Bench 2, and to make sure all the metrics were equal, he even processed the crops separately. After weighing, Bench 2 (his research bench) showed an 8% higher yield than Bench 1.

“The post-harvest data from the weight, yield confirmed my decision to maximize density by increasing the total number of plants per bench,” says Fumia. “Whenever I saw red on the canopy heat map from LUNA, I knew there was room for improvement and I knew that I wasn’t making the money that I should have from those areas.”

His next challenge was where to place the extra ten plants? Did it make a difference or could he just shove 150 plants in a space that was originally planned for 140? Again, his greenhouse system was able to pinpoint the best sub-sections on the benches and Nathan was able to see exactly which plants were growing the fastest. That also gave him the ability to understand why certain quadrants of the bench were doing better than others.

“We were able to determine which quadrant on which bench was already at 100% density, and determine which quadrant wasn’t. Without that data, it would have been pure guesswork.”

He dialed down even further to find out which cultivars grew the best on a particular bench in the greenhouse. “Some cannabis cultivars need more light, some need less, some need warmer climates, and some need cooler climates,” Fumia noted. “Additionally, in order to increase the density of flowering points/buds, we began focusing on better pruning techniques in the vegetative phase, directly increasing branches for flowering.”

With optimization even more important now than it was 12-18 months ago, Nathan summed up the impact on his bottom line. “With a crop cycle averaging just over six a year, at that time we were averaging $600-$800 a pound depending on the strain. Some were even more. Ten extra plants per bench per cycle was a nice bounce for us.”

Obviously, this isn’t the only way to increase density. What’s your suggestion? Share your ideas with the rest of us by posting your comments below.

PerkinElmer & Emerald Scientific Collaborate

By Cannabis Industry Journal Staff
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Last week, just before MJBizCon, PerkinElmer announced a collaboration with Emerald Scientific, allowing Emerald Scientific customers access to PerkinElmer’s portfolio of cannabis and hemp testing products and services. PerkinElmer is a leading instrument manufacturer and analytical method developer. Emerald Scientific is a distributor for scientific lab testing equipment and instrumentation.

Emerald Scientific now offers their customers PerkinElmer products, like their QSight® 420 Triple Quad system LC/MS, the Titan MPS™ Microwave Sample Preparation System, the Clarus® SQ 8 Gas Chromatograph/Mass Spectrometer (GC/MS) and the Flexar™ High-Performance Liquid Chromatography (HPLC) system. This partnership also allows Emerald Scientific customers to utilize the PerkinElmer analytical methods and standard operating procedures (SOPs) for cannabis and hemp testing. That includes SOPs for things like sample preparation, acquisition methods and consumable use. They’ll also be able to shop for lab products like PerkinElmer’s chromatography columns, vials and sample prep products.

According to Greg Sears, vice president and general manager, Food and Organic Mass Spectrometry at PerkinElmer, the cannabis testing market is exploding and this will help labs get their equipment and necessities all in the same place. “With the cannabis and hemp markets continuing to grow rapidly and regulations strengthening, labs increasingly need streamlined access to best-in-class, user-friendly testing solutions geared toward the unique requirements of the industry,” says Sears. ““This collaboration with Emerald Scientific brings together leading cannabis analysis offerings in one place to help labs start up and expand more efficiently.  In addition, we can build on the work we have done with Emerald around testing standardization which is important for the science of the industry.”

Kirsten Blake, Vice President of Emerald Scientific, says they are really excited about the partnership. “As regulations become more challenging, laboratory competition intensifies, and the science of the industry receives increasing focus, it is essential to align with organizations dedicated to improving both the quality and throughput of analytics,” says Blake. “After working with PerkinElmer to inform, educate, and advance the cannabis science industry around best practices, we see them as the industry leader for providing analytical instrumentation, methods and SOP’s. By adding their complementary solutions to our existing portfolio, we can now deliver complete packaged analytical solutions to the cannabis and hemp industries.”

Top International Cannabis News Stories of 2019

By Marguerite Arnold
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Cannabis as a news story and an industry moved forward again this year, albeit in a rather more halting way than the last few. The volatility of the market in fact was one of the largest stories of the year, particularly after the events of this summer.

It’s Been A Wild Ride Kind Of Year

This time last year, the world was in a tizzy over the literally billions of bucks invested into a few top Canadian cannabis companies. This year, predictions are definitely a little more sober when it comes to the future of cannabis stocks. Most of the industry has taken a major beating this fall.

That said, the current correction was in the cards for just as long. What goes up, dramatically, must come down.

That said, this is not the whole picture of the industry – not by a long shot. Reform ain’t going back. Patient numbers are climbing, albeit slowly.

Here in Europe, the first and so far biggest public tender on cannabis was finally concluded in Germany with Aurora, Aphria and the cannabis company formerly known as Wayland (ICC) winning the bid lots for domestic cultivation this spring.

The British, who waffled around all year on what kind of “animal” cannabis actually is, celebrated that anniversary late in the year with a highly limited scope of coverage by the NHS.

And Luxembourg threw down the gauntlet on “recreational” within an aggressive timeframe (by 2022) and tripling its medical cannabis training budget for doctors next year.

International Cannabis Is Growing Like…A Weed

The most interesting discussions right now are clearly emerging on the international front. Cannabis became an internationally mainstreaming commodity this year as patient numbers began to climb on the continent.

Canopy_Growth_Corporation_logoThis in turn has led to the normalization of the idea at least of an export trade in cannabis not only across Europe but globally as companies target the region. Cross border cannabis companies, in other words, are a “thing” that blossomed this year – and frequently, while sometimes financed by Canadians, called another country home.

The announcement of at least the first German wholesale reference price this year will also do wonders to start to normalize prices across not only the EU but all those hoping to export here.

That in turn will have global impact.

Regulation Is Beginning to Materialize

For those who thought that higher standards were a passing fad, the events of this year, particularly of the latter half of it have confirmed one thing for sure: Regulatory muster is here to stay.

GMPTo add to the general confusion, however, international standards on medical products and even food are absolutely in the mix as countries find that standards, measurements and production processes might be similar, but on the ground, still differ. Harmonization is a word many in the cannabis industry are hearing now, and not just in the medical space, but also the food and supplements market.

The initials “GMP” are on the lips of many this year. Not to mention another exciting development the cannabis industry from abroad did not see coming and still broadly does not understand – namely Novel Food.

The War For Reform Is Being Fought On Several Fronts

Inevitably, just as in the United States, the fights in the room right now as well as legislative gridlock are focusing on some strange nitty gritty. For example, cannabidiol (CBD) is just one cannabinoid from the plant. It is a chemical substance. Yet, suddenly, in Europe, this discussion is being bogged down in pseudo-scientific discussions in the name of public policy about whether CBD is a “new kind” of food.

The structure of cannabidiol (CBD), one of 400 active compounds found in cannabis.

Ultimately this is a discussion about regulation – whether CBD and hemp production should be regulated differently than they are right now – and whether the plant should be put in a different bucket than, say, tomatoes. Or when extracted, tomato juice.

GMP is also a very strange discussion which has still not exited the stage – mostly because of the lack of uniformity internationally between Canada and European states although that is moving in the right direction.

The last issue of course, which has been looming from the Canadian side for several years, including of course all the pesticide scandals, new regulations on the cultivation of all plants for human consumption. Even German farmers are up in arms (with a recent tractor protest in Berlin that paralyzed the city).

Cannabis is in the bullseye on all fronts.

Auld Lang Syne

If there was a theme to the industry as of this summer, it was clearly that things cannot continue as they have. The CannTrust Scandal absolutely encapsulated all that is wrong with the industry.

That said, there is every reason to believe that the most egregious scandals (or at least quite so many of them) are a passing fad. Indeed, many in the industry are in fact committed to turning over a new leaf (for the new year or just because).

The good news? There is every sign of course that it will.

Managing Cannabis Waste and Protecting Your Business from Risk

By David Laks
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Cannabis producers know that they cannot treat plant waste like common yard waste. They need to develop a detailed waste disposal plan in order get a license to operate.

Failing to follow the approved plan and improperly disposing of dry waste materials and waste products from oil extraction leads to fines, liabilities or even having your license rescinded.

Learning to deal with cannabis waste appropriately is crucial to the success of an operation. There are a number of strict controls in place for dealing with any kind of hazardous waste, which can’t just be sent to a landfill or composting facility.

In the US, the EPA and state governments provide guidelines for disposing of hazardous waste properly, and other countries have federal and local requirements as well. The EPA, like other environmental bodies, differentiates between two types of waste: solid and liquid.

Solid waste disposal: The guideline for identifying solid waste is that it’s “unrecognizable and unusable.” This means no one should be able to look at a bag of waste and know immediately that it is cannabis. Many cannabis operations have a facility on site for grinding down the waste into smaller bits. If the waste is non-hazardous, it is mixed with other non-cannabis organics such as garden trimmings and then composted or sent to the appropriate landfill. If it’s hazardous, it’s mixed with cat litter, sand, plastic or sawdust and sent to the appropriate landfill.

Liquid waste disposal: Liquid waste is a bit more complicated. It must be disposed of properly or sent to a hazardous waste treatment facility. Cannabis operations must partner with a shipping company to dispose of the hazardous waste appropriately, unless they transport it themselves.

It can be confusing to manage the risks of proper disposal of cannabis waste. Keep it simple by following these three tips:

  1. Become an expert in all the legal restrictions – and follow them. Federal restrictions will guide you overall, but local (i.e., state and municipal) restrictions are equally important and may vary.
  2. Seek out experienced, reputable disposal companies – and hire the best one.Look for one that is familiar with handling hazardous waste in general and cannabis waste in particular.
  3. Familiarize yourself with the guidelines for proper tracking, transportation and sign-offs – and follow them.Completing all appropriate documentation ensures you have a paper trail to protect you in the event of an audit. Much of the documentation creates a written record so inspectors can confirm appropriate handling.

Waste disposal policies should be reviewed regularly as state and municipal regulations can change. At the same time, it would be wise to review your environmental insurance policy to ensure your business is covered for any accidental releases.

It can be tempting to take shortcuts – saving both money and time – when it comes to hazardous waste disposal. But properly disposing of hazardous materials can demonstrate your organization’s credibility and financial wellbeing, and it can also save you from unnecessary risk.

The CalCannabis Appellations Project Is About to Spark a New Chapter in Place-Based Branding

By Amy Steinfeld, Jack Ucciferri
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Connoisseurs know that pairing a fine cut of steak with a Napa Valley cabernet sauvignon is a sure winner. But how many are aware that pairing strawberry cheesecake with a certified Santa Cruz Blue Dream cannabis strain creates an equally delicate palatal synergy? Thanks to the California Department of Food and Agriculture’s CalCannabis Appellations Project (“CAP”), premium cannabis regions will soon have the potential to capitalize on such newfound awareness among discerning consumers.

For decades, cannabis connoisseurs have been willing to pay a premium for flower said to have been grown in certain regions or with certain techniques, but because of cannabis’ legal status, supply chains have been opaque. As a result, cultivators of distinct cannabis strains struggled to capture the full market potential of their products. That has begun to shift with implementation of California’s Cannabis Track-and-Trace System. The costs associated with implementation of the METRC1 system have been bemoaned by many in the industry, but there is also tremendous potential value in having the most transparent supply chain in the world. The CalCannabis Appellations Project is the vehicle through which brands will be able to harness that value.

The underlying premise behind the CalCannabis Appellations Project is that the distinctive qualities of a cannabis product are often attributable to where and how the plant is grown. Through this project, CalCannabis is developing a statewide appellations system2 that will allow qualifying licensed cultivators to effectively communicate information about their cannabis crops (i.e., the standards, practices and/or varietals used) through labels, advertisements and other marketing techniques. It will also prevent disingenuous cannabis cultivators from making inaccurate claims about where and how a product is grown, which protects the integrity and value of the appellation.

What is an appellation?

In general terms, an appellation is an identifying name, title or label that can be legally defined and protected. Appellations are most commonly used in the wine industry to geographically identify the origin of grapes in a particular bottle. This place-based identification system comes from an understanding that certain regions have unique environmental and growing characteristics, which result in a product that cannot be produced from other regions even when the same varietals are used. Famous wine appellations or American Viticultural Areas (AVAs) in California include the Napa Valley and Santa Ynez AVAs, and sub-AVAs such as the Russian River Valley AVA, located within the larger Sonoma County AVA.

Recognizing there are also growing regions that produce uniquely distinctive cannabis, CalCannabis is developing a process for:

  1. Establishing an appellation (i.e., identifying regions that produce distinctive cannabis and defining standards, practices and/or varietals that must be used in those regions to qualify for an appellation); and
  2. Qualifying to use a particular appellation once they are established (i.e., determining the cannabis cultivators that can legally label or market themselves as belonging to a particular appellation).

While the state has not released program details, it’s likely that cultivators will have to demonstrate their outdoor-grown cannabis is distinctly unique.3 CalCannabis has until Jan. 21, 2021,4 to establish these processes, but a draft is expected to be released by early January 2020.5 This is an opportunity for cultivators to organize and participate in the process to define and create unique local appellations.

What are the benefits of an appellations system?

Napa wine country
Image: James Faulkner, Flickr

Appellations benefit both cannabis cultivators and consumers. It allows small farmers to capture the value that consumers place on unique and local cannabis products. Allowing for product differentiation through an appellations system will prevent cannabis from becoming a commodity—a situation that could result in indistinguishable products and a single market price for cannabis regardless of how or where it is grown. Thus, an appellations system protects not only local economies and farming communities, but also consumers that care about the origin and growing practices of their cannabis.

A criticism of appellations, particularly in the wine industry, is that they can disincentivize innovation and industry growth when strict growing practices and standards are required to be a part of an appellation. This will be an important consideration as CalCannabis establishes its appellations system.

County of Origin

In addition to setting up an appellations system, the CalCannabis Appellations Project will expand upon current county of origin regulations. Unlike an appellation designation, the county of origin designation is designed to be much more inclusive—it can currently be used on any cannabis product as long as 100% of the cannabis is grown within the designated county.6 Whereas an appellation will communicate information about the quality of a cannabis product and how it was produced, a county of origin designation is more like a “Made In” label. For example, a county of origin designation can be applied to indoor cannabis whereas an appellation will likely only include sun-grown cannabis.

There is also a desire to allow city of origin designations in addition to county of origin designations, which would enable products grown wholly within the political boundaries of a city to further differentiate themselves.7 As the legal cannabis landscape changes nationwide, it may also be important to have a statewide appellation allowing products to be marketed as “Grown in California.”

What should cannabis cultivation regions be doing now?

After CalCannabis releases a draft process for establishing an appellation, the next steps will be clarified. However, not everyone is waiting. For instance, growers in Mendocino County have already started to organize.8 The Mendocino Appellations Project divided the county into 11 unique subregions based on regional growing conditions and practices that could potentially be turned into appellations in the future. The goal of the appellations outlined by the Mendocino Appellations Project is to protect cannabis products coming out of Mendocino County and preserve the region’s growing heritage.

A group in Sonoma County is also discussing the establishment of appellations with the hope that it will help differentiate their cannabis and draw attention to the unique microclimate and soil structure in parts of Sonoma County.9 The groups involved in these discussions also believe it will allow cultivators to develop strict growing standards and to protect certain strains, while creating new jobs and encouraging agritourism. Appellations will become increasingly important as sophisticated consumers begin to select quality cannabis that aligns with their preferences.

References

  1. METRC is the third-party-owned software contracted by California authorities to implement the commercial cannabis track-and-trace system “from seed-to-sale.”
  2. Passage of Senate Bill 185 calls for the use of the term “appellations of origin” instead of “appellations.”
  3. Based on comments made during the October 23 Cannabis Advisory Committee Meeting.
  4. Business and Professions Code Section 26063.
  5. Based on comments made during the October 23 Cannabis Advisory Committee Meeting.
  6. Business and Professions Code Section 26063(a).
  7. Based on comments made during the October 23 Cannabis Advisory Committee Meeting.
  8. https://swamiselect.com/mendocino-appellation-project/
  9. https://www.sonomacountygazette.com/sonoma-county-news/cannabis-appellations-the-small-cannabis-farmers-elyon-cannabis.