Tag Archives: California

By Carl Silverberg

The first article of this series discussed resource management for cannabis growers. In this second piece of the series on how indoor farming has a reduced impact on the environment, we’re going to look at land use & conservation. There are really two aspects and we have to be up front and acknowledge that while our focus is on legal cannabis farming, there’s a significant illegal industry which exists and is not subject to any environmental regulation.

“Streams in Mendocino run dry during the marijuana growing season impacting Coho salmon and steelhead trout who lay their eggs in the region’s waterways.” One biologist reported seeing “dead steelhead and Coho on a regular basis in late August and September, usually due to water reduction or elimination from extensive marijuana farming.” The quotes are from an extensive article on cannabis land use by Jessica Owley in the U.C. Davis Law Review.The concept that land will stay in its natural state is a mixture of idealism and reality.

This is going to continue until it’s more profitable to go legit. For this article, we’re going to focus on the legitimate cannabis grower. On the land use side, we usually hear four main reasons for indoor growing: remaining land can stay in its natural state, fewer space usually translates to fewer waste, you conserve land and natural resources when you don’t use fossil fuels, greenhouses can be placed anywhere.

The concept that land will stay in its natural state is a mixture of idealism and reality. Just because someone only has to farm five acres of land instead of one hundred acres doesn’t necessarily mean they’re going to leave the rest in its pristine natural state. Granted the footprint for automated greenhouses is significantly less but the key is what happens to that extra space. Assuming that it will all be preserved in its natural state isn’t realistic. What is realistic is the fact that a developer may not want to build tract houses abutting a commercial greenhouse operation. If they do, likely there’s going to be more land set aside for green space than if a farm was sold outright and a series of new homes were plunked down as if it were a Monopoly board.

Combined with workforce development program funding, urban indoor farming is getting more attractive every day.That’s not the same kind of issue in urban areas where the situation is different. Despite the economic boom of the past ten years, not every neighborhood benefitted. The smart ones took creative approaches. Gotham Greens started in Greenpoint, Brooklyn and has expanded to Chicago as well. “In early 2014, Gotham Greens opened its second greenhouse, located on the rooftop of Whole Foods Market’s flagship Brooklyn store, which was the first ever commercial scale greenhouse integrated into a supermarket.”

Green City Growers in Cleveland’s Central neighborhood is another example. “Situated on a 10-acre inner-city site that was once urban blight, the greenhouse—with 3.25 acres under glass–now serves as a vibrant anchor for the surrounding neighborhood.”

The beauty of greenhouse systems even those without greenhouse software, is they can be built anywhere because the environmental concerns of potentially contaminated soil don’t exist. The federal government as well as state and local governments offer a myriad of financial assistance programs to encourage growers to develop operations in their areas. Combined with workforce development program funding, urban indoor farming is getting more attractive every day.

As for the argument that greenhouses save energy and fossil fuels, I think we can agree that it’s pretty difficult to operate a thousand-acre farm using solar power. To their credit, last year John Deere unveiled a tractor that will allow farmers to run it as a fully autonomous vehicle to groom their fields while laying out and retracting the 1 kilometer long onboard extension cord along the way. It’s a start although I’ll admit to my own problems operating an electric mower without cutting the power cord.

In a 2017 article, Kurt Benke and Bruce Tomkins stated, “Transportation costs can be eliminated due to proximity to the consumer, all-year-round production can be programmed on a demand basis, and plant-growing conditions can be optimized to maximize yield by fine-tuning temperature, humidity, and lighting conditions. Indoor farming in a controlled environment also requires much less water than outdoor farming because there is recycling of gray water and less evaporation.”

The overall trend on fossil fuel reduction was verified this week when the Department of Energy announced that renewables passed coal for the first time in U.S. history. And on the water issue, Ms. Owley had a salient point for cannabis growers. “The federal government will not allow federal irrigation water to be used to grow marijuana anywhere, even in states where cultivation is legal.” That’s not a minor detail and it’s why outdoor farming of cannabis is going to be limited in areas where water resources and water rights are hotly debated.

June 24, 2019

Cannabusiness Sustainability

Environmental Sustainability in Cultivation: Part 1

By Carl Silverberg

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Core values often get wrapped into buzzwords such as sustainability, locally sourced and organic. In the first part of a series of four articles exploring greenhouses and the environment, we’re going to take a look at indoor vs. outdoor farming in terms of resource management.

Full disclosure; I love the fact that I can eat fresh blueberries in February when my bushes outside are just sticks. Is there a better way to do it than trucking the berries from the farm to a distribution plant to the airport, where they’re flown from the airport to a distribution center, to the grocery store and finally to my kitchen table? That’s a lot of trucking and a lot of energy being wasted for my $3.99 pint of blueberries.The largest generation in the history of the country is demanding more locally grown, sustainable and organic food.

If those same blueberries were grown at a local greenhouse then trucked from the greenhouse directly to the grocery store, that would save diesel fuel and a lot of carbon emissions. People who can only afford to live near a highway, a port or an airport don’t need to ask a pulmonary specialist why their family has a higher rate of COPD than a family who lives on a cul-de-sac in the suburbs.

Fact: 55% of vegetables in the U.S. are grown under cover. The same energy saving principles apply to indoor cannabis and the reasons are consumer driven and producer driven. The largest generation in the history of the country is demanding more locally grown, sustainable and organic food. They want it for themselves and they want it for their kids.

The rapid proliferation of greenhouses over the past ten years is no coincidence. Millennials are forcing changes: organic fruit and vegetables now account for almost 15% of the produce market. A CNN poll last month revealed that 8 of 10 of registered Democrats listed climate change as a “very important” priority for presidential candidates. The issue is not party I.D.; the issue is that a large chunk of Americans are saying they’re worried about the direct and indirect impacts of climate change, such as increased flooding and wildfires.

So how does the consumer side tie into the cannabis industry? Consumers like doing business with companies who share their values. The hard part is balancing consumer values with investor values, which is why many indoor growers are turning to cultivation management platforms to help them satisfy both constituencies. They get the efficiency and they get to show their customers that they are good stewards of their environment. The goal is to catch things before it’s too late to save the plants. If you do that, you save the labor it costs to fix the problem, the labor and the expense of throwing away plants and you reduce pesticide and chemical usage. When that happens, your greenhouse makes more money and shows your customers you care about their values.

The indoor change is happening rapidly because people realize that technology is driving increased revenue while core consumer values are demanding less water waste, fewer pesticides, herbicides and fertilizers.Let’s add some more facts to the indoor-outdoor argument. According to an NCBI study of lettuce growing, “hydroponic lettuce production had an estimated water demand of 20 liters/kg, while conventional lettuce production had an estimated water demand of 250 liters/kg.” Even if the ratio is only 10:1, that’s a huge impact on a precious resource.

Looking at the pesticide issue, people often forget about the direct impact on people who farm. “Rates in the agricultural industry are the highest of any industrial sector and pesticide-related skin conditions represent between 15 and 25% of pesticide illness reports,” a 2016 article in The Journal of Cogent Medicine states. Given the recent reports about the chemicals in Roundup, do we even need to continue the conversation and talk about the effects of fertilizer?

I’ll finish up with a quote from a former grower. “The estimates I saw were in the range of between 25%-40% of produce being lost with outdoor farming while most greenhouse growers operate with a 10% loss ratio.”

The indoor change is happening rapidly because people realize that technology is driving increased revenue while core consumer values are demanding less water waste, fewer pesticides, herbicides and fertilizers. Lastly, most Americans simply have a moral aversion to seeing farms throw away food when so many other people are lined up at food banks.

June 24, 2019

Tips for Finding the Perfect Cannabis Packaging Partner for Your Business

By Danielle Antos

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Whether your cannabis business is a start-up in its infancy, or established with a loyal customer following, the product packaging you use is essential to building and maintaining your brand. The packaging is the first thing a potential customer sees, and it creates that critical first impression. While the primary function is to contain, protect, and market your products, your packaging is a reflection of your company to the customer. In many ways, the package is the product. Partnering with a quality plastic packaging manufacturer for your cannabis products will increase your success.

Bottles made of high-density polyethylene (HDPE), low density polyethylene (LDPE), polypropylene (PP), and polyethylene terephthalate (PET) have become widely-accepted packaging options within the cannabis industry. There are many plastic bottle manufacturers, but how do you find the right one? In short, seek a manufacturer who makes quality products that are unlikely to present downstream problems for your company, provides services and options that align with things you feel are important, and wants to build a long-term relationship with you so both of your businesses grow faster through strategic partnership.

What to Look for in a Plastic Bottle Manufacturer

Excess Bottom Flash creates a poor printing surface.

As you search for a packaging partner for your cannabis business, here are a few key things to look for:

Bottles That Visually Support Your Brand

It’s essential to partner with a manufacturer who understands the importance of defect-free plastic bottles. Does everything about your packaging convey a sense of trust for your customers? Defects in plastic bottles typically occur during the manufacturing process.

Excessive Side Taper results in uneven, wrinkled labels.

For instance, excessive side taper on the bottles can result in uneven, wrinkled labels that are hard to read and make your product look unprofessional. If flashing on the bottle bottom is not removed, it creates a poor printing surface and results in a poor brand impression.

Partnering with a manufacturer who understands that plastic bottle defects diminish brand presence and who continually strives to remove defect-producing problems out of their manufacturing process is of utmost importance. This avoids many downstream quality problems and helps to keep the focus on growth and off of damage control.

Bottles That Minimize Risk and Waste

Product recalls or safety concerns can be a result of cloudy bottles or material trapped in the resin that makes the plastic packaging look dirty or contaminated. These situations can erode consumer confidence in your brand or expose the customer to risk.

Foreign material trapped in the resin results in reduced customer confidence.

Sub-par plastic bottles can lead to inefficiencies on your filling lines, lost production time, and product that cannot be sold. These situations lead to reduced profitability and negatively impact your bottom line. It’s never good when filled packaging or product has to be thrown away because problems are identified on the filling line.

Uneven Sealing Surface results in poor closure seal and increased risk of product spoilage or contamination.

Worse yet is when your product reaches the point of sale and the problems are identified at the dispensary or by a consumer. For example, over time, an improper seal between the plastic bottle and cap can cause flower to be excessively dry. In turn, when this flower is dispensed to the consumer it can lead to overfilling to make up for weight loss. And some consumers just don’t like their flower to be too dry, resulting in lost sales. Does the defective product get shipped back or trashed at the point of sale location? In either case, this results in the dilemma of wasted product that can’t be used and extra costs that eat into your profitability.

Closures That Work With The Bottle

The closures for the bottles are also an important part of your cannabis packaging. Can your packaging partner manufacture and supply plastic closures that assure complete functionality to protect your product? Closures produced by the same manufacturer as the bottles ensures that the closure and bottle function correctly together. A one-stop-shop approach will save you time and money.

The cannabis industry is growing quickly and faces many complex regulatory challenges, including regulations for child-resistant packaging. Many states have their own unique cannabis packaging requirements which must be strictly adhered to. Are their bottle and closure pairings compliant with current regulations and those that are under legislation for the future?

Customization for Your Brand

Can the cannabis packaging manufacturer customize their products to your exact design and specifications? Your product is unique, and your packaging should reflect that. Make sure your brand stands out with the exact image you want to project. There should be “depth” in your supplier: can they do more than just sell you packaging that already exists?

A Safe Resin Source

Another important aspect of safety is country of origin. Plastic bottles and closures manufactured overseas may have impurities in the resin or colorant that could leach or bleed into your products. They may not have documentation of origin or comply with FDA regulations. Your plastic packaging partner should be able to provide this documentation so you can rest assured that your bottles are manufactured under strict guidelines for the safety of your consumers and that your product won’t be affected.

Commitment to Sustainability

To many consumers, packaging made from recycled materials is important. Does your packaging supplier have a strong commitment to environmental sustainability? There is strong market support for carbon-friendly alternatives. Progressive plastic packaging manufacturers are actively working to provide alternatives to plastics made from fossil fuels and instead, using resins produced from renewable resources (i.e. sugarcane). By partnering with a supplier that provides alternative and recycled materials, you enhance your brand by appealing to a growing segment of environmentally concerned consumers.the best cannabis packaging suppliers understand that consistency in the manufacturing process is essential.

Scalable Growth

As your business grows, can your packaging partner grow with you? It’s important that they are able to keep up with the demand for your product and that their supply chain can match your manufacturing needs. As you add to your product line, are they capable of continuing to offer new and innovative packaging? A manufacturer that has a strong business model for growth will benefit you now and for the future.

A Real Cannabis Packaging Partner

Your cannabis business should develop a true partnership with your packaging supplier. They should invest in your success and care about your business. Businesses depend on one another for continued growth – look for a knowledgeable partner that is responsive, courteous and dependable now and for years to come. The best suppliers realize that there is more to a relationship than just the financial transaction of buying packaging.

Additionally, the best cannabis packaging suppliers understand that consistency in the manufacturing process is essential. Using virtually perfect bottles time after time not only reduces waste but helps build consumers’ trust in your brand. Consistency saves you three precious commodities – time, hassle and money.

Remember, a brand consists of more than just a logo and company name. It identifies who you are, what your company stands for and the integrity of your product. Quality cannabis packaging will reinforce your company standards and attract consumers to your product – consistently defining you as a quality provider with integrity in the marketplace. Improving your bottom line and meeting your company’s financial goals is at stake. Is your cannabis packaging partner going to help you grow?

June 24, 2019

Soapbox

4 Reasons Why Community Relations is Critical to Cannabis Industry

By Savannah Bailey

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There’s no denying that the cannabis industry is experiencing a boom. While it feels a bit like the wild west, many organizations are riding a wave of (mostly) positive publicity as opportunities increase for cannabis products and distribution.

From a public relations standpoint, relying on this initial excitement, however, is shortsighted at best. As regulations allow for increased competition in many markets such as cannabis dispensaries, manufacturers and distributors, we must find new ways to creatively garner positive attention while staying compliant with regulations.

But what do you do after the initial excitement fades? How do you individualize your company to make it stand out and sustain within the market? For many, the solution is held within a strategic community relations program.

No matter the size or reach of the organization, we encourage many of our clients, especially those in the cannabis industry, to engage with their immediate communities. Not only does this demonstrate that you’re invested in the well-being of your neighbors, but can provide long-term benefits, such as brand loyalty and improved public image.

Here are four reasons why businesses in the cannabis industry should be investing in community relations outreach:

1. Initial Publicity Only Lasts So Long

Like the gold rush, businesses are looking to help themselves to a slice of the cannabis pie. And understandably so. In 2018, the industry earned nearly $10 billion in the U.S. last year, creating 64,389 jobs, according to CNBC. With the newness of the industry comes a lot of excitement and media attention. While this attention is great for those first-to-market trailblazers, as competition increases, the newsworthiness will dwindle.So, what’s the best way to gain awareness without blatantly advertising? The answer is giving back.

For examples of this, look no further than the tech industry. Remember when apps (or websites if you want to go way back) used to be a big deal? In order to stand out in a crowded marketplace you must be different and have a story to tell. Making a meaningful connection through outreach will help you succeed long after the first wave of publicity fades away.

2. Regulations Rule

In many ways, your hands are tied when it comes to advertising or promoting a cannabis business versus a traditional retail product or location. In some states, it’s almost entirely off the table. So, what’s the best way to gain awareness without blatantly advertising? The answer is giving back. Community outreach programs through philanthropic efforts will help build your business, create brand awareness and bring people together. Community relations is a critical part of getting the word out even in the face of strict regulatory guidelines. And the best part – it can be inexpensive to do. As an added bonus, you make friends and create advocates in the process.

3. Combat the Stigma

In some states and communities, cannabis still faces a bad rap. Currently only 33 states have legalized medical cannabis, while 11 states have legalized cannabis recreationally. And even with growing legalization and acceptance, the industry must still combat outdated stigmas and misgivings. By making your business a reputable part of the community you will build trust and loyalty. Take this as an opportunity to educate the community about the facility and meet staff members.

4. Stay in Good Graces

Community relations is a great way to create ambassadors out of community leaders and influencers. Simply put, people are more interested in supporting an organization that supports them in return. Show that you’re invested in your neighbors and ingrained in the success of the local business community. As an added bonus, community involvement will also help boost public image and build the morale of employees. This is important for long-term success of your company as well as employee retention.

No matter what your reason for implementing a community relations initiative, you’ll find it to be a great addition to your public relations strategy.

The best part- community outreach doesn’t have to be extravagant, either. Coat drives, food drives or volunteering time with local events are all great ways to show your support for the community while raising your own profile.

As the cannabis industry continues to grow and competition increases, you’ll feel good about setting the bar high as a responsible and thoughtful invested member of your local business community.

June 19, 2019

Key Points To Incorporate Into a Sanitation Training Program

By Ellice Ogle

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To reinforce the ideas in the article, Sanitation Starting Points: More Than Sweeping the Floors and Wiping Down the Table, the main goal of sanitation is to produce safe food and to keep consumers healthy and safe from foodborne illness. With the cannabis industry growing rapidly, cannabis reaches a larger, wider audience. This population includes consumers most vulnerable to foodborne illness such as people with immunocompromised systems, the elderly, the pregnant, or the young. These consumers, and all consumers, need and deserve safe cannabis products every experience.

Sanitation is not an innate characteristic; rather, sanitation is a trained skill. To carry out proper sanitation, training on proper sanitation practices needs to be provided. Every cannabis food manufacturing facility should require and value a written sanitation program. However, a written program naturally needs to be carried out by people. Hiring experienced experts may be one solution and developing non-specialists into an effective team is an alternative solution. Note that it takes every member of the team, even those without “sanitation” in their title, to carry out an effective sanitation program.

Sanitation is a part of the Food and Drug Administration’s Code of Federal Regulations on current Good Manufacturing Practices (GMPs) in manufacturing, packing or holding human food (21 CFR 110). Sanitation starts at the beginning of a food manufacturing process; even before we are ready to work, there are microorganisms, or microbes, present on the work surfaces. What are microbes? At a very basic level, the effects of microbes can be categorized into the good, the bad, and the ugly. The beneficial effects are when microbes are used to produce cheese, beer or yogurt. On the other hand, microbes can have undesirable effects that spoil food, altering the quality aspects such as taste or visual appeal. The last category are microbes that have consequences such as illness, organ failure and even death.In a food manufacturing facility, minimizing microbes at the beginning of the process increases the chance of producing safe food.

Proper sanitation training allows cannabis food manufacturing facilities to maintain a clean environment to prevent foodborne illness from affecting human health. Sanitation training can be as basic or as complex as the company and its processes; as such, sanitation training must evolve alongside the company’s growth. Here are five key talking points to cover in a basic sanitation training program for any facility.

Provide the “why” of sanitation. While Simon Sinek’s TEDx talk “Start with why” is geared more towards leadership, the essential message that “Whether individuals or organizations, we follow those who lead not because we have to, but because we want to.” Merely paying someone to complete a task will not always yield the same results as inspiring someone to care about their work. Providing examples of the importance of sanitation in keeping people healthy and safe will impart a deeper motivation for all to practice proper sanitation. An entertaining illustration for the “why” is to share that scientists at the University of Arizona found that cellphones can carry ten times more bacteria than toilet seats!
Define cleaning and sanitizing. Cleaning does not equal sanitizing. Cleaning merely removes visible soil from a surface while sanitizing reduces the number of microorganisms on the clean surface to safe levels. For an effective sanitation system, first clean then sanitize all utensils and food-contact surfaces of equipment before use (FDA Food Code 2017 4-7).
Explain from the ground up. Instead of jumping into the training of cleaning a specific piece of equipment, start training with the foundational aspects of food safety. For example, a basic instruction on microbiology and microorganisms will lay down the foundation for all future training. Understanding that FATTOM (the acronym for food, acidity, temperature, time, oxygen and moisture) are the variables that any microorganism needs to grow supplies people with the tools to understand how to prevent microorganisms from growing. Furthermore, explaining the basics such as the common foodborne illnesses can reinforce the “why” of sanitation.
PPE for all employees at every stage of processing is essential
Inform about the principles of chemistry and chemicals. A basic introduction to chemicals and the pH scale can go a long way in having the knowledge to prevent mixing incompatible chemicals, prevent damaging surfaces, or prevent hurting people. Additionally, proper concentration (i.e. dilution) is key in the effectiveness of the cleaning chemicals.
Ensure the training is relevant and applicable to your company. Direct proper sanitation practices with a strong master sanitation schedule and ensure accountability with daily, weekly, monthly and annual logs. Develop sanitation standard operating procedures (SSOPs), maintain safety data sheets (SDS’s) and dispense proper protective equipment (PPE).

Overall, sanitation is everyone’s job. All employees at all levels will benefit from learning about proper sanitation practices. As such, it is beneficial to incorporate sanitation practices into cannabis food manufacturing processes from the beginning. Protect your brand from product rework or recalls and, most importantly, protect your consumers from foodborne illness, by practicing proper sanitation.

June 18, 2019

A Case for Digital Cultivation Management in the Cannabis Industry

By Allison Kopf

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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.

PlantTag — 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.

June 13, 2019

Clearing Up the Haze Surrounding Cannabis Product Liability Risks

By Susan Preston, T.J. Frost

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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.

June 5, 2019

Disposable Gloves: The Unregulated Cannabis Threat

By Lynda Ronaldson

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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.

May 24, 2019

Soapbox

Warning Signs For CBD Food & Drink Manufacturers

By Jonathan C. Sandler

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CBD-infused coffee? CBD-infused chewing gum? Many think cannabis and its derivatives are the next big wellness craze that will make the demand for flax, fish oil and turmeric combined seem meager. The food and drink industries are cautiously exploring the cannabis market, trying to determine the optimal timing to introduce their own product lines.

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

The cannabis plant produces chemicals known as cannabinoids, one of which is cannabidiol, or CBD.When the Agriculture Improvement Act of 2018 (also known as the Farm Bill) passed, the food and drink industries jumped into the hemp-derived CBD world with both feet because the Farm Bill lifted the federal ban on hemp production, which previously classified hemp as a controlled substance akin to heroin. Lifting the ban led to an explosion in the number of CBD products hitting the market around the country. However, repeated and recent actions by the U.S. Food and Drug Administration (FDA) provide clear warning signs that the legal pitfalls surrounding CBD in food and drinks are not yet resolved.

CBD is marketed as a featured ingredient for a wide variety of products ranging from pain relievers, to protein bars beverages and supplements. Both CVS and Walgreens have announced plans to carry CBD products in their stores. However, despite the money pouring into CBD products, federal agencies are not relinquishing their controls.

In the Farm Bill, the FDA retained authority to regulate products containing cannabis or derivative products. The FDA has regulatory authority over foods (including dietary supplements and food additives), drugs (prescription and non-prescription), cosmetics, veterinary products and tobacco products, among other categories. Therefore, vendors of virtually all products containing CBD are regulated by the FDA.

It is important to note that the FDA does not view CBD derived from hemp differently than any other CBD despite the fact that it is non-psychoactive. CBD is an active ingredient in at least one FDA-approved prescription drug—Epidiolex. Therefore, under the logic of the Federal Food, Drug & Cosmetic Act (FDCA), CBD is a drug. If a substance has been “approved” by the FDA as an active ingredient in a drug product, it is per se excluded from being defined as a “dietary supplement” under sections 201(ff)(3)(B)(i) and (ii) of the FDCA and it cannot be included as an ingredient in food.

It is highly unusual that CBD has been able to proliferate in the marketplace given the FDA’s technical legal position on it. FDA regulations on drugs are much more stringent than for food or dietary supplements. Generally, the FDA’s position on CBD in food and beverages is that it is unlawful to engage in interstate commerce with products containing CBD. The given reason is that the Federal Food, Drug, and Cosmetic Act prohibits the introduction of a food product into interstate commerce that contains an active ingredient in an approved drug. While arguments against this position exist, they have not carried the day, yet.

An example of a warning letter the FDA sent to a CBD products company making health claims

In March 2019, FDA Commissioner Scott Gottlieb announced he would be resigning on April 5, 2019, but he sent clear warning signals to the CBD industry prior to his departure. In early April, the FDA cracked down on websites making “unfounded, egregious” claims about their CBD infused products. The FDA sent warning letters to three companies who made claims about their CBD products including that their CBD products stop cancer cell growth, slow Alzheimer’s progression, and treat heroin withdrawal symptoms. Commissioner Gottlieb issued a statement that he believed that these were egregious, over-the-line claims and deceptive marketing that the FDA would not tolerate.

The FDA also announced in early April that it will hold a public hearing on May 31, 2019, to obtain scientific data and information related to safety concerns, marketing and labeling cannabis and cannabis-derived compounds including CBD. The FDA expressed interest in hearing whether drug companies would still be motivated to develop drugs with CBD and other compounds if their use in food and beverages became more widespread. The FDA also announced plans for an internal working group to review potential pathways for legal marketing of CBD foods and dietary supplements. Of particular concern to the FDA is online retail products available nationwide such as oil drops, capsules, teas, topical lotions and creams.

Still, some states are trying to take matters into their own hands. For example, the California State Assembly recently passed bill A.B. 228 that permits the inclusion of CBD in food and beverages. Colorado has already passed a similar bill. Other states such as Ohio and cities such as New York City have gone the other way, prohibiting CBD from being added to food or beverages.

The May 31 FDA hearing is an opportunity for interested parties to give feedback and help focus where the FDA should be creating clear industry standards and guidance. In the meantime, the industry should continue to expect warning letters from the FDA as well as possible state-level scrutiny. Companies would be wise to proactively review their labels and promotional practices in order to mitigate the risk of forthcoming actions and engage in the FDA’s provided avenues for industry input. Companies must also look to the laws of the states and even to the counties where they are selling their products.

May 22, 2019

EU Regulations Address Heavy Metals In Consumer Products

By Christopher Dacus

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RoHS 3 (EU Directive 2015/863) adds a catch-all “Category 11” of regulated products that includes electronic nicotine delivery systems (ENDS), e-cigarettes, cannabis vaporizers and vape pens. This category becomes effective July 22, 2019. The most significant restricted substance applicable to this category is lead, and RoHS requires regulated products to contain less than 1000 parts per million (ppm). This follows on the heels of California’s new 2019 regulations requiring the testing of contents of cannabis vape cartridges using even stricter limits for lead (which makes sense because it applies to the product being consumed, not the separate electronic components). These regulations may seem unrelated, but anecdotally there have been widespread reports of higher than expected lead content in China-sourced electronic components, including both cartridges and related electronics. Whether metal used in e-cigarette type products is the source of any lead in the actual nicotine, cannabis or other concentrated product is an entirely different topic, but new laws, and in particular the new RoHS catch-all category, make 2019 an important year for any company responsible for certifying or testing lead levels in e-cigarette or vape products.

Background on EU RoHS

RoHS (Restriction of Hazardous Substances) originated in the EU in 2003 as a restriction on hazardous substances in specified categories of electronics and electronic products. Other countries have passed laws styled after RoHS, but only the EU RoHS is addressed here. Unlike some environmental laws, RoHS is not only focused on the safety of products during their life cycle of consumer use, but is designed to keep restricted substances out of landfills and recycling centers.

The original RoHS restricted the use of lead, cadmium, mercury, hexavalent chromium, PBB and PBDE. RoHS now restricts the use of a total of ten substances after the EU added four types of phthalates to its restricted substance list. Compliance with RoHS became a requirement for the use of the CE mark in 2011, and replaced a RoHS compliant mark on restricted products.

RoHS specified categories for regulation include large household appliances, small household appliances, computer equipment, lighting, power tools, toys, certain medical devices, control equipment (smoke alarms, thermostats and their industrial equivalents), and ATM machines. Newly added Category 11, the “catch all” category, includes all other electronic and electrical equipment not covered in the previous categories, including electronic nicotine delivery systems, cannabis vaporizers and vape pens.

RoHS Lead Exemptions Complicate Compliance

RoHS provides numerous exceptions to its strict 1000ppm lead standard that are slated to expire in phases from 2021 through 2024. Most Category 11 exceptions will not expire until 2024. For example, RoHS permits different levels of lead for lead in glass and ceramics, lead in high temperature solders, and lead in copper and aluminum alloys. So, an e-cigarette may contain some parts that are held to the highest level of lead restriction, it may but contain isolated components that (at least through 2024) are held to more permissive standards. While this leeway may reduce manufacturing costs for certain components, it creates greater complexity in testing. Anecdotal reports suggest that especially for products that compete heavily on price, sourcing from lesser-known Chinese foundries has resulted in unpredictable lead levels.

Take Away Points

As vape and e-cigarette companies compete with new features and design elements each year, and companies rely on new manufacturers, keeping up with regulations has proven to be difficult for both U.S. and for EU regulated products. For example, a company has to comply with numerous regulations regarding the oil or concentrate that will ultimately be inhaled by a consumer, and with regulations like RoHS that regulate parts a consumer may never touch or see. Each year, some company comes out with a new set of electronic features that may interact with newly formulated oils or concentrates, other companies compete for features or price points, making these products a moving target when it comes to testing.

Adding lead to many metals makes them easier to work with and therefore cheaper. Anecdotal reports suggest that especially for products that compete heavily on price, sourcing from lesser-known Chinese foundries has resulted in unpredictable lead levels. This can be the result of any number of causes: changes in sub-contractors, uses of industrial equipment for other products that permit higher lead content, or simply unscrupulous management that is willing to risk a contract to save money manufacturing a batch of components. There is speculation that some lead may leach into oil or concentrates in e-cigarette and vape products from the contact between the oil or concentrate and internal heating elements in certain type of products. RoHS compliance with regard to lead levels may reduce the chance of inadvertent lead contamination by such means, and compliance may therefore yield benefits on several regulatory fronts.

Compliance with RoHS for each part of an e-cigarette or vape therefore requires knowing your supplier for each component, but given increased regulation of these products (both the hardware and consumable elements) this can only help compliance with regulations in every relevant jurisdiction.