In other words, decidedly less colorful (or at least in the North American sense) if not at lower volume than other places.
In the meantime, particularly filtered via American and Canadian coverage and industry success stories, the British are succumbing to the green magic any way they can.
Low-THC, CBD products as a result, are flourishing in a way that seems a bit like the “Colorado of Europe.” The early days. When all sorts of strange stories about processing leaked out of the first legalizing state market in the U.S. It is shocking to European eyes, in particular, of late.
“CBD” is, literally, everywhere.
For those with other kinds of experience in the world of cannabis, however, it is both slightly sad and slightly exhilarating. The Brits have the cannabis bug. But they seem a bit lost on where to go next.
What Is The Deal In The UK?
Regulations are weird here. You cannot use the flower of any cannabis flower (including those with under the requisite amount of THC) – also known as hemp. The novel food discussion is lost.
Regardless, there are clearly plans afoot, particularly on the corporate farming level, to begin a transformation of crops to include cannabis sometime soon. And far beyond the farmers, the boys in the city are getting hot under the collar for this kind of green.
London is also turning into (rather predictably) a center of all things cannabis equity.
There are already more specialty funds planning to list on London exchanges than anywhere else in Europe.
But is this all that surprising?
In the midst of Brexit, a failing NHS, and a society at odds with itself like no time since the 1970’s, the British are facing the cannabis revolution with anything but a stiff upper lip.
When it comes to all things cannabinoids, at least on the CBD side, no matter the odd police raid on a health food store or crunchy vegan experiment on land not protected by the rights of an inherited “country pile”, the cannabis horse, certainly of the broadly stroked CBD variety, is out of the barn.
But What Does this Really Mean?
For the moment? As globally financed companies set up in the UK for all kinds of cannabis trials, the CBD market here is taking on an oddly Bulldog twist.
There is more of a cottage industry of all kinds of CBD products unseen elsewhere in Europe (including from the U.S.). Labeling, testing and sourcing are largely a matter of hit or miss. And just like everywhere else, desperate, sick, depressed people (or those who fear becoming that way) are turning to the CBD miracle to fix a range of conditions.
The problem is that a lot of this is pure snake oil.
Yes, high quality, medical grade CBD does work as a stabilizer (just like THC). But not every oil containing some measure of highly diluted (or worse, contaminated) cannabinoid extract, is the panacea that cannabis offers.
Bottom line? The CBD market in the UK is sort of like Swiss Lite. There are medical trials in the offing, but the country is also in the middle of a constitutional crisis. There are many regulations, and of a bit more fundamentally intrinsic kind, on the line right now. Cannabis is in the room. But so is the Irish Border (the largest if not most existential sticking point in the never-ending Brexit negotiations).
Investing In The UK CBD Market
There are investors who are clearly examining the market, and a few big deals so far, but the vast majority of money flowing into the UK is going into its more flexible (if not frothy) equity market. The British, in other words, may be flailing a bit on domestic implementation, but equity funds in London are in touch with global investors on this issue – even if that money then flows back into Europe.
The cannabis industry is on the road to legitimacy, no matter the bumps, globally. No matter what, and no matter what happens next, that is a good thing. Issues like supply chain transparency, privacy, consumer and patient safety, and of course energy and water use have long been in the room just about everywhere.
Cleantech Is Cannatech
The modern cannabis industry was birthed and given significant shape in deserts (Israel, California, Nevada). In California, as of 2014, producers were warned, yet again, that they could not avail themselves of federally overseen aquifers of groundwater. The legitimizing industry trucked in what it needed.
On the medical discussion, in Europe, in particular, such issues are now in the room. All medical cannabis must be grown indoors. No exceptions.
That means low energy, high efficiency production is on the rise, not the wane.
What Does GMP Mean?
The overall regulations and operating procedures that surround this discussion are known as “Good Manufacturing Practices,” or GMPs for short. But like all the best acronyms, what the standards are, who sets them, and where they are equivalent is still a shifting picture.
Further, GMPs, and even more particularly EU-GMPs, are specifically referred to this way to distinguish the medically bound product from other consumer protection regulations that include novel food.
That said, “GMP practices” differ widely from industry to industry. The idea behind them, however is to prevent harm from occurring to the user, including that the end product is free from contamination, and the packaging as well as manufacture has been well documented. Additional requirements include that personnel are properly trained.
And while the practice, at the pointed end of enforcement can get nerdy, detail-oriented and specific, that is precisely the point. That is also why you might catch another variant of this acronym (cGMP – or current GMP guidelines), to denote a world that is changing fast.
Contamination of the supply chain if not the carbon impact of the same, for all food and plant-based pharmaceutical products is a 21st century problem that is exploding on the scene as fast as the planet warms and cannabis legalizes.
What Do GMP Guidelines Include?
These are guidelines, not steps. As a result, from a bird’s eye view, all international and sovereign national GMP standards include a few basic principles no matter how much they may differ in the weeds. Namely:
That manufacturing processes are clean, controlled and processes are verifiable and repeatable. Changes to any and all must also be clearly documented.
Record keeping, accurate accounting (of product and on the financial side) must be kept, including complete batch history through manufacture and distribution to the end user. Audits are a way of life.
Recall procedures must be in effect.
All complaints about products must be examined.
The World Health Organization (WHO) version of GMP is what’s used by pharmaceutical regulators worldwide. The European Union’s EU-GMP standards are seen as roughly equivalent, as are those now practiced in the U.S. by the FDA. That does not mean that confusion does not reign as standards are changing (across Europe, for example, between individual countries, there is still disagreement). However similar GMPs are used in countries including Australia, Canada, Japan, and Singapore. The UK, of course, is slightly different than anyone else but still has regulations that are roughly equivalent and referred to as “The Orange Guide” (in honor of the color of the book’s cover).
You Know It When You See It
Well, not quite. Beyond GMP, there are of course, other classifications for the kind of plant or product being made, manufactured and distributed. And here, along with international treaties about who can trade with whom, also impact this discussion.
It is not correct, however, for example, to claim that what are known as GACP guidelines (good agricultural and collection practices) are equivalent to GMP. Bio, or pesticide free production (in other words) is just one of many steps in meeting much higher standards now in the room for medically bound cannabis.
What Is GMP “Like”?
All industries have “best practices.” For example, the building industry has all sorts of codes and guidelines. However, in addition to this, about a decade ago, LEED (or green building) certification began to be implemented widely. In the U.S., in particular, there was much discussion about how honest such certifications actually were. The term “greenwashing” was frequently used to describe practices that were sold as energy efficient, but in the end cost more, environmentally and otherwise, than they should.
Like LEED, GMP is not a prescribed set of steps but rather best practice guidelines and regulations meant to guide industries on producing safe products – from seed to sale.
How Does This Differ From WHO Guidelines on GACP for Medicinal Plants?
The World Health Organization’s GACP guidelines are highly controversial in this context, especially when it comes to cannabis. Especially because they refer specifically to plants used as medicine that are “grown in the wild.” I.e. not greenhouse. How these guidelines are interpreted by different countries, however, within the context of the interpretation of “medical cannabis” not to mention pharmaceutical GMPs, are very different.
GACP guidelines, in other words, are sometimes the first step in qualification – but certification under the same (starting with outdoor grown crops produced without pesticides for example) is not likely to pass European medical standards any time soon.
This year, there were two firsts in a convention already looking to the future with digitalization – itself a huge issue in not only the European medical space, but Germany in particular. There is a national obsession with privacy auf Deutschland that does not exist anywhere else.
Beyond digitalization, however, medical cannabis was also a major theme this year. Many of the largest producers and distributors showed up in force. So did the smaller, newer ones. There are now 19 licensed importers in the country – and quite a few of them showed up in Dusseldorf last week.
Beyond that, the expo also saw the birth of the VCA – the Verband der Cannabis versorgende Apotheken e.V (German Cannabis Pharmacists Association). This is a group of pharmacists who are on the front lines of the medical cannabis revolution on its most complicated, expensive and paper-laden end, determined to make their voices heard.
According to Tobias Loder, the owner of Luxe 99 Apotheke in Cologne and one of the organizers of the VCA, “There is huge interest in our association.”
For those of American extraction, at least, there has yet to be such a conference anywhere in the U.S. simply because of the lack of acceptance at the federal level of cannabis as medicine. In Canada, and elsewhere, national pharmacy chains are already getting into the action.
Germany, however, remains the strange, and as a result, most interesting exception.
In Düsseldorf this year, despite added traffic and a great deal of excitement, cannabis as medicine was, as the press attendant said as he handed out the Cannabis Industry Journal press pass, “par for the course” and “no big deal.” Even though of course, the generation of all the interest and intrigue.
The drug is, while still highly stigmatized, on its way to legitimacy here. And in a decidedly normal, Deutsch weg (way).
The Inside Skinny On What Is Changing For German Pharmacists
As revealed during the Denton’s medical cannabis conference in Berlin in late September (about a day before the news hit the expo floor in fact), things are indeed changing at the last mile of the regulated cannabis path. Why?
Within the next thirty days, doctors will be able to prescribe up to 100 grams of floss (dried cannabis flower) or cannabis oil by the gram per patient prescription. That means that patients can indeed go to the doctor every three months – and that there are in fact more regular users in the system. This is also an indication that the supply chain is also beginning to normalize – although there is a huge demand so far unmet by supply. And as a result, while two of the three bid winners are now getting down to cultivation, imports are still the name of the game.
On this front, things are also changing. Cannabis just came into the country from Portugal. Other countries lining up to import include not only Canadian producers, but those from Spain, Malta, Greece, Australia, South Africa, Columbia and of course, Israel.
This is also a step towards international normalization on the pharma side. Schedule II narcotics in the American system are dispensed every 90 days.
The rules about pharmacy mark-ups are also in flux. One of the reasons, for example, that medical cannabis has been so expensive is that, up until now, at least, pharmacists were required to mark up such product 100%. That is also changing. In fact, the Federal Union of German Associations of Pharmacists (ABDA) and the National Association of Statutory Health Insurance Funds (GKV Spitzenenverand) have had to agree on a new surcharge that is expected to see significant and immediate savings of a projected 25 million euros.
It is not a casual argument or discussion. One of the reasons that the German pharmacy vertical has remained so strong and resistant to buyouts and consolidations is that by law, owners are limited to no more than three (and in so far one case discovered by CIJ in Bavaria) four brick and mortar pharmacies. The reduction in this preparation surcharge means that pharmacies will have to find ways to become more efficient. That is also a concern for the VCA, who, among other things, are looking to reduce their own overhead costs while gearing up to serve more patients.
Digitalization, innovation and more, in other words, is on the table. And German pharmacists, for one, are not only on the front line – but stepping up to the challenge.
The negativity keeps on coming for the embattled CannTrust. As of late September, the Alberta Gaming, Liquor and Cannabis Commission (AGLC) decided to return $1.3 million of the company’s products – or almost all inventory already ordered by the commission.
The AGLC operates independently of Health Canada, and the regulator has not ordered a recall of any of CannTrust’s products even though they suspended the company’s license. However, the AGLC has a contractual relationship with the company, which allows it to return company products on CannTrust’s expense.
Why are so many recreational market Canadian authorities doing the same thing that Danish authorities initiated July 9, when the news about CannTrust hit Europe?
Beyond all the illegal growing, there are other problems that have now come to light that essentially invalidate if not put into question the legitimacy of CannTrust’s entire grow operation – and for both the medical and recreational market.
As Bloomberg first reported, CannTrust employees brought black market seeds into their unlicensed growing rooms at the facility in Pelham Ontario and even relabelled them to look like brands they were supposed to be carrying. It is unknown how many of these plants were actually sold, but over 1,000 plants were grown and flowered by CannTrust with murky origins. If that is not enough to make Canadian authorities go nuts, it certainly has stirred waves of anger in Europe where seed control is a huge issue, far beyond the medical market. See Novel Food and the huge angst of the developing CBD market.
It is hard to understand exactly, in retrospect, therefore, what CannTrust executives, or even employees thought they were doing exactly.
One thing, however is for sure. CannTrust is not “just” the meltdown of one company in Canada. The entire industry, globally, is paying attention. Particularly those in parts of the world now looking at the opening map of cannabis ex-im.
A Brave New World On The High Seas
As Peter Homberg, one of the top global legal experts at Denton’s law firm pointed out in September in Berlin during a high-level medical cannabis conference, the world is indeed changing fast on the cannabis ex-im front. Producers from Malta, Greece, Denmark, Spain, Portugal and Australia as well as latest market entrant Columbia right now are lining up to import into Germany if not Europe beyond that.
why did this company deliberately go so astray?This is a world governed by several international treaties, national law and regional tolerance.
It is complicated. But in Europe at least, while in the throws of now finding some standard equivalency tests, there is a universal standard – namely good manufacturing practices – to adhere to that is “international” even if just within the EU and for those firms interested in entering the market here.
That is one of the reasons that the Canadian government is in the hot seat to prove to the world that internal regs are up to snuff.
What Impact Will This Have On The U.S?
As CannTrust was not importing across the U.S.-Canadian border, there is no product recall to be had. However, other issues, including investor lawsuits, loom.
On top of this, the regulatory issues faced by the Canadian government in a fully recreational market are, of course, not invisible to those just “south of the border.” Notably, California. Of any state in the union right now, the state is the most advanced on the cannabis regulations front – even if more complicated and nuanced than in any other U.S. state jurisdiction. Of course, they still have generations of unlicensed grower networks to contend with.
None of this was ever going to be easy.
The question in the room, however, post-CannTrust, certainly, is that given the opportunity to go on the straight and narrow, why did this company deliberately go so astray?
The 1st Annual Cannabis Quality Conference & Expo featured dynamic discussions both in the sessions as well as on the exhibit floor. Take a look at some of the highlights from this year’s conference and expo.
The cannabis industry is growing exponentially, and the use of cannabis for medical purposes is being adopted across the nation. With this boom in cannabis consumers, there has been an increasing need for knowledge about the product.
The role of testing labs has become crucial to the process, which makes owning and operating a lab more lucrative. Scientists testing for potency, heavy metals, pesticides, residual solvents, moisture, terpene profile, microbial and fungal growth, and mycotoxins/aflatoxins are able to make meaningful contributions to the medical industry by making sure products are safe, while simultaneously generating profits and a return on investment.
Here are the key testing instruments you need to conduct these critical analyses. Note that cannabis analytical testing requirements may vary by state, so be sure to check the regulations applicable to the location of your laboratory.
The most important component of cannabis testing is the analysis of cannabinoid profiles, also known as potency. Cannabis plants naturally produce cannabinoids that determine the overall effect and strength of the cultivar, which is also referred to as the strain. There are many different cannabinoids that all have distinct medicinal effects. However, most states only require testing and reporting for the dry weight percentages of delta-9-tetrahydrocannabinol (Δ9-THC) and cannabidiol (CBD). It should be noted that delta-9-tetrahydrocannabinolic acid (Δ9-THCA) can be converted to THC through oxidation with heat or light.
For potency testing, traditional high-performance liquid chromatography (HPLC) is recommended and has become the gold standard for analyzing cannabinoid profiles. Look for a turnkey HPLC analyzer that delivers a comprehensive package that integrates instrument hardware, software, consumables and proven HPLC methods.
Heavy Metal Testing
Different types of metals can be found in soils and fertilizers, and as cannabis plants grow, they tend to draw in these metals from the soil. Heavy metals are a group of metals considered to be toxic, and the most common include lead, cadmium, arsenic and mercury. Most labs are required to test and confirm that samples are under the allowable toxic concentration limits for these four hazardous metals.
Heavy metal testing is performed by inductively coupled plasma mass spectrometry (ICP-MS). ICP-MS uses the different masses of each element to determine which elements are present within a sample and at what concentrations. Make sure to include accompanying software that provides assistant functions to simplify analysis by developing analytical methods and automatically diagnosing spectral interference. This will provide easy operation and analytical results with exceptionally high reliability.
To reduce running costs, look for a supporting hardware system that reduces the consumption of argon gas and electricity. For example, use a plasma ignition sequence that is optimized for lower-purity argon gas (i.e., 99.9% argon as opposed to more expensive 99.9999%).
The detection of pesticides in cannabis can be a challenge. There are many pesticides that are used in commercial cannabis grow operations to kill the pests that thrive on the plants and in greenhouses. These chemicals are toxic to humans, so confirming their absence from cannabis products is crucial. The number of pesticides that must be tested for varies from state to state, with Colorado requiring only 13 pesticides, whereas Oregon and California require 59 and 66 respectively. Canada has taken it a step further and must test for 96 pesticides, while AOAC International is developing methods for testing for 104 pesticides. The list of pesticides will continue to evolve as the industry evolves.
Testing for pesticides is one of the more problematic analyses, possibly resulting in the need for two different instruments depending on the state’s requirements. For a majority of pesticides, liquid chromatography mass spectrometry (LCMS) is acceptable and operates much like HPLC but utilizes a different detector and sample preparation.
Pesticides that do not ionize well in an LCMS source require the use of a gas chromatography mass spectrometry (GCMS) instrument. The principles of HPLC still apply – you inject a sample, separate it on a column and detect with a detector. However, in this case, a gas (typically helium) is used to carry the sample.
Look for a LC-MS/MS system or HPLC system with a triple quadrupole mass spectrometer that provides ultra-low detection limits, high sensitivity and efficient throughput. Advanced systems can analyze more than 200 pesticides in 12 minutes.
For GCMS analysis, consider an instrument that utilizes a triple quadrupole mass spectrometer to help maximize the capabilities of your laboratory. Select an instrument that is designed with enhanced functionality, analysis software, databases and a sample introduction system. Also include a headspace autosampler, which can also be used for terpene profiles and residual solvent testing.
Residual Solvent Testing
Residual solvents are chemicals left over from the process of extracting cannabinoids and terpenes from the cannabis plant. Common solvents for such extractions include ethanol, butane, propane and hexane. These solvents are evaporated to prepare high-concentration oils and waxes. However, it is sometimes necessary to use large quantities of solvent in order to increase extraction efficiency and to achieve higher levels of purity. Since these solvents are not safe for human consumption, most states require labs to verify that all traces of the substances have been removed.
Testing for residual solvents requires gas chromatography (GC). For this process, a small amount of extract is put into a vial and heated to mimic the natural evaporation process. The amount of solvent that is evaporated from the sample and into the air is referred to as the “headspace.” The headspace is then extracted with a syringe and placed in the injection port of the GC. This technique is called full-evaporated technique (FET) and utilizes the headspace autosampler for the GC.
Look for a GCMS instrument with a headspace autosampler, which can also be used for pesticide and terpene analysis.
Terpene Profile Testing
Terpenes are produced in the trichomes of the cannabis leaves, where THC is created, and are common constituents of the plant’s distinctive flavor and aroma. Terpenes also act as essential medicinal hydrocarbon building blocks, influencing the overall homeopathic and therapeutic effect of the product. The characterization of terpenes and their synergistic effect with cannabinoids are key for identifying the correct cannabis treatment plan for patients with pain, anxiety, epilepsy, depression, cancer and other illnesses. This test is not required by most states, but it is recommended.
The instrumentation that is used for analyzing terpene profiles is a GCMS with headspace autosampler with an appropriate spectral library. Since residual solvent testing is an analysis required by most states, all of the instrumentation required for terpene profiling will already be in your lab.
As with residual solvent testing, look for a GCMS instrument with a headspace autosampler (see above).
Microbe, Fungus and Mycotoxin Testing
Most states mandate that cannabis testing labs analyze samples for any fungal or microbial growth resulting from production or handling, as well as for mycotoxins, which are toxins produced by fungi. With the potential to become lethal, continuous exposure to mycotoxins can lead to a buildup of progressively worse allergic reactions.
LCMS should be used to qualify and identify strains of mycotoxins. However, determining the amount of microorganisms present is another challenge. That testing can be done using enzyme linked immunosorbent assay (ELISA), quantitative polymerase chain reaction (qPCR) or matrix-assisted laser desorption/ionization time-of-flight mass spectrometry (MALDI-TOF MS), with each having their advantages and disadvantages.
For mycotoxin analysis, select a high-sensitivity LC-MS/MS instrument. In addition to standard LC, using an MS/MS selective detector enables labs to obtain limits of detection up to 1000 times greater than conventional LC-UV instruments.
For qPCR and its associated needs, look for a real-time PCR amplification system that combines thermal cyclers with optical reaction modules for singleplex and multiplex detection of fluorophores. These real-time PCR detection systems range from economical two-target detection to sophisticated five-target or more detection systems. The real-time detection platform should offer reliable gradient-enabled thermal cyclers for rapid assay optimization. Accompanying software built to work with the system simplifies plate setup, data collection, data analysis and data visualization of real-time PCR results.
Moisture Content and Water Activity Testing
Moisture content testing is required in some states. Moisture can be extremely detrimental to the quality of stored cannabis products. Dried cannabis typically has a moisture content of 5% to 12%. A moisture content above 12% in dried cannabis is prone to fungal growth (mold). As medical users may be immune deficient and vulnerable to the effects of mold, constant monitoring of moisture is needed. Below a 5% moisture content, the cannabis will turn to a dust-like texture.
The best way to analyze the moisture content of any product is using the thermogravimetric method with a moisture balance instrument. This process involves placing the sample of cannabis into the sample chamber and taking an initial reading. Then the moisture balance instrument heats up until all the moisture has been evaporated out of the sample. A final reading is then taken to determine the percent weight of moisture that was contained in the original sample.
Look for a moisture balance that offers intuitive operation and quick, accurate determination of moisture content. The pan should be spacious enough to allow large samples to be spread thinly. The halogen heater and reflector plate should combine to enable precise, uniform heating. Advanced features can include preset, modifiable measurement modes like automated ending, timed ending, rapid drying, slow drying and step drying.
Another method for preventing mold is monitoring water activity (aW). Very simply, moisture content is the total amount of water available, while water activity is the “free water” that could produce mold. Water activityranges from 0 to 1. Pure water would have an aW of 1.0. ASTM methods D8196-18 and D8297-18 are methods for monitoring water activity in dry cannabis flower. The aW range recommended for storage is 0.55 to 0.65. Some states recommend moisture content to be monitored, other states monitor water activity, and some states such as California recommend monitoring both.
As you can see, cannabis growers benefit tremendously from cannabis testing. Whether meeting state requirements or certifying a product, laboratory testing reduces growers’ risk and ensures delivery of a quality product. As medicinal and recreational cannabis markets continue to grow, analytical testing will ensure that consumers are receiving accurately
labeled products that are free from contamination. That’s why it is important to invest in the future of your cannabis testing lab by selecting the right analytical equipment at the start of your venture.
In early September, Polish authorities halted medical cannabis product registrations.
It is still unclear what this was caused by. However, in conversations with the Dutch Cannabis Agency, Cannabis Industry Journal learned the Dutch government ran into significant problems with Polish acceptance of documents in the February 2019 timeframe. Further, CIJ has also learned that several other Canadian companies had apparently been trying to target Bedrocan products in Poland with this knowledge.
Even before authorities halted the registration process, it is clear that the often cut-throat game-playing seen in Germany frequently over the last few years, has also clearly entered the room just a bit east.
Is Cannabis Really Coming to Poland?
There is a national election in late October in Poland. There is a great deal on the line.
Including, of course, not just the dreams of Polish entrepreneurial hopefuls, but all of the largest cannabis companies on the planet. Poland has been a strategic and often unheralded market for most of them over the last 18 months. Aurora in fact, even announced its first import into the country last fall when the government announced a loosening of restrictions. And as the last country to enter into the EU-US MRA Agreement, with a conservative approach to cannabis at least in government, the country is ostensibly a big blue ocean for all things canna reform.
However, since most of the big companies use Germany as their product breakpoint, the news of a product registration delay nationally means that companies already in the room with EU-recognized product just got a big break.
Even if it is only short selling as much as they can into the market until product registration finally occurs.
A new kind of German-Canadian canna blitzkrieg of Poland is about to get underway this fall – certainly of the cannabis kind, although anyone with already registered EU product (see Germany for starters) has a big competitive leg up.
Cannapolitics Are In Play Across Europe
If this is the temperature in the room already, look for more machinations over the apparently pending Polish bid – although perhaps by that point, reform will have progressed far enough in Europe to prevent the same kind of local market hijacking by those with a public company and a will to dominate the market.
That said, expect backlash too, now from frustrated advocacy patient groups tired of more government blather about widespread reform that is clearly not mapped to come their way any time soon.
Here is the inconvenient and certainly unsolved reality in the room that so far has remained unsolved.
There is zero way that even the largest companies in the room can provide enough product, local producers are on the rise, and there is clearly a building “green-vest” kind of uprising in the burgeoning industry itself. EU local and national sovereign producers are getting into the game and in a big way.
The reality is that this plant provides relief to pain of several kinds – from patients to locally starved municipal and state budgets.
Recreational Is On The Longer Term Horizon – But Major Hurdles Remain
While the largest companies have clearly been in the room shaping reform policy and in ways that are not necessarily in the best interests of the overall industry itself, let alone patients, there is the real potential for backlash right now. Particularly in Europe which has heard all the wonder stories about the economics if not other impacts of cannabis reform.
Europeans – even in the industry here – who venture to American state markets in particular, but also Canadian outlets – are very much in envy. However, most also realize that the market here will evolve differently.
That is why there are now starting to be all kinds of trials on the map – and of the recreational and medical kind.
The culture is in the middle of a massive, cannabis shift. The early market entry created by the political and economic clout of the early movers was important.
But as the world turns ever more green, local politics, and even more importantly, sovereign cannabis production and even export is increasingly a political issue in the room.
As the industry faces what is undoubtedly a watershed moment for the international cannabis vertical, a new Spanish firm steps into the market with its own EU GMP certification license. Linneo Health is also helmed by the ever eloquent and highly experienced Jose Antonio de la Puente – a tall drink of water with a conscience, a brain and an admirable mission statement.
This also implies, at minimum, government lack of coordination and agreement on EU GMP cert even between European nations, for a nascent industry while also trying to avoid the thorny issue of patient home grow. See also the trials and travails of the erstwhile German cultivation bid and its reconstituted Frankenstein-esque bigger if younger sister. In fact, this contretemps is almost certainly involved if not indirectly to blame.
Not All Is Entirely Rosy On Cannabis Europe’s Eastern Front
Almost simultaneously to Linneo Health’s announcement, however, the news came that in Poland, authorities had suspended the pending product registration process. Will this be on hold until after the October election?
In this environment it is almost impossible to know.
Here is one thing to consider. These almost simultaneous developments in Spain and Poland and the newest announcement about further certification of the Dutch recreational system under a new pending “recreational trial” are almost directly related.
That said, even such political maneuverings are not new – and far from limited to any single company. Both Germany and Poland have been wracked by reform stuttered by short term gain and market entry strategies executed by most of the biggest players in the room. Aurora, for example, announced their first import into Poland the same day the Polish government changed the law last fall. Aurora uses Germany as its breakpoint distribution center for Europe.
A Stamp of Authenticity That Is Sorely Needed
Beyond the pharma and market entry politics, however, this Alcaliber-helmed project creates a ring of authority to the same that creates at least one cannabis brand the European medical community can see the certification for.
For now at least, certainly among the ranks of the upper echelons of the international cannabis industry, there must surely be a sigh of relief.
EU GMP certifications (in other words, the authorization to produce product bound for a medical, pharma market) do not happen overnight. On the European front, this is surely at least a step in the right direction for an industry embattled by scandals, particularly of the securities, production, certification and accounting kind right now.
In this case, however, it is also clear that no matter the egregious oversteps and potentially illegal and certainly dubious behaviour of some members of the industry, there are also clearly those within it, and at high levels, who have tried to do the right thing. And further, from the beginning of the nascent industry here as of 2015.
Who Is Alcaliber?
Alcaliber is one of the world’s largest opioid manufacturers. Unlike American counterparts, the company decided several years ago to invest in and back ideas of the opioid-to-cannabinoid therapy model. Linneo Health is a 60% subsidiary of Alcaliber and 40% owned by a Spanish family office called Torreal, S.A.
This is, as a result, one of the most important GMP licenses in Europe at the moment if not the world. It means that within a pharmaceutical environment, the first widespread research and production of plants and therapies for those suffering from both chronic pain, plus neurological and oncological conditions that cause or are related to the same, will be put on a fast track long in the offing. Certainly in Europe.
And that for one, is a positive development that will have widespread implications elsewhere. Particularly given the news that the opioid epidemic in the United States finally has a name, and culpable parties.
What Else Is Unusual About This Project?
GMP certification is a vastly misunderstood concept at the moment. It is also a highly thorny one because of a still standardizing set of agreements. The regulatory environment is in place, in other words, but there are many, many gaps, as well as shifting rules and underlying treaties.
However, on top of this, there is also an amazing lack of innovation in interpretation, in part because of many misadvised consultants who are actually seeking to “save” production costs for their clients, or because they do not know any better. Or because producers are scared of doing the wrong thing.
The new project in Spain is unusual because it is a greenhouse grow that got EU GMP cert – although look for more of this in the future. It means that with careful, standardized, pharma production, not all regulated cannabis grows, even for the medical market, have to use huge amounts of energy in repurposed post-industrial developments. It is also certainly cleaner than growing outside. And, when done right, saves huge amounts of water.
Cleantech, in other words, has finally hit the cannabis industry in Europe. As well as a pharmaceutical company invested in the cannabinoid treatment of (at least) chronic pain.
That is an overdue and hugely positive development. No matter what else can be said for shenanigans engulfing the rest of the industry at the moment.
Tilray just did something very interesting. In addition to announcing that it was shipping product to German distributor Cannamedical via its Portuguese facility, it also announced that it had begun outdoor cultivation.
Even more intriguing: the company is claiming that somehow, via its proprietary technology (apparently), this kind of crop will be legit for distribution within the EU medical system.
There is only one problem with this. Outdoor growing does not sound remotely GMP-certified.
Here is the next bit of exciting news. Tilray, apparently, is not the only large Canadian cannabis company now operating in Europe that appears to be trying to get around GMP certifications for medical market penetration. Or appear oblivious to the distinctions in the international (and certainly European market).
And things are a bit smelly on that front, not only in Denmark post CannTrust, but in truth even in Germany, the supposed “Fort Knox” of regulatory consumer and pharmaceutical standards.
In fact, at least according to insiders, there is apparently quite a bit of gray market product sloshing around in the Teutonic medical market. Even though so far, at least not publicly punished for the same, nobody has been caught. Or at least publically reprimanded.
And who is on the hot seat at least according to most of the licensed if not just pre-licensed indie producers and distributors who were contacted for this story? Sure, there are dark horse “start-up” indie violators, but they are not the only problem. Many who talked to CIJ named big public Canadian companies too. And potentially Bedrocan beyond that.
Who Is Who And What Is What?
Part of the problem, beyond any kind of deliberate flouting of regulations on the part of many companies who are at least trying to understand them, is that global standards are different. “GMP certifications” of every country, even within a region like Europe, are in fact, not uniform. That is why, for example, the new EU-US MRA agreement had to be signed first regionally and then on a state-by-state level across the EU.
Beyond Germany of course, there are other problems that are coming to the fore.In the medical cannabis space, in particular, right now, that is causing problems simply because many with pharma experience are not hip to the many risks in the cannabis industry itself. On the Canadian, Australian and American side, there is also a lot of bad advice, in particular, coming from consultants who should know better.
To be properly EU and German GMP-certified, one of the required steps is to have German inspectors walk your production floor. It is also not good enough to have “pesticide-free” or national organic certification at the crop cultivation site, and add GMP cert at time of “processing.” That piece of misadvise has been showing up not only in Canada, but Australia too. And creates a nasty reality if not expensive retooling upon entering the legitimate market in Europe, for starters.
These Issues Affect Everyone In The Industry
In an environment where ex-im is the name of the game, and even the big guys are short of product, compliance is getting granular as smaller players step up to the plate – and many if not most hopeful Canadian producers (in particular) now looking to Europe for sales are not (yet) up to speed.
A big piece of the blame also lies in the lack of proper administration at the federal and state level too – even auf Deutschland. To get a distribution license, a company must actually get three licenses, although there are plenty in the market right now who begin to describe themselves as “distributors” with less than the required certs.
The lack of coordination and communication, including which certs to accept as equivalent and from where is creating a market where those who know how to game the system are.
For example, several people who contacted CIJ, claimed that uncertified product was making its way into Germany via Central and Latin America, through Canada, picking up “GMP cert” along the way. In other words, not actually GMP-certified but labelled fraudulently to make it appear that way.
The same claims were also made by those with on-the-ground industry knowledge in South Africa (Lesotho).
Beyond Germany of course, there are other problems that are coming to the fore. As CIJ recently learned, a firm authorized by the Dutch government to provide cannabis packaging, including for exports, was not GMP certified until July 2019 – meaning that all product they shipped internationally even within Europe before that date potentially has labelling issues. Cue domestic importers. If not regulators.
Grey Market Product Is Making Its Way In Through Official Channels
For those who are taking the time to actually get through the legal registration and licensing process, it is infuriating to see others who are apparently fairly flagrantly buying market position but are in no position to fulfil such obligations. It is even more infuriating for those who intend to meet the requirements of the regulations to realize that the vast amounts spent in consulting fees was actually money paid for inaccurate information.
And the only way ultimately the industry can combat that, is by standing up, as an industry, to face and address the problem.German distributors are so aware of the problem that they are starting to offer gap analysis and specific consulting services to help their import partners actually get compliant.
Government agencies also might be aware of the problems, but they have been reluctant to talk about the same. CIJ contacted both BfArM and the local Länderauthorities to ask about the outdoor grow in Portugal and the lack of GMP cert for a Dutch packager. After multiple run-arounds, including sending this reporter on a wild rabbit chase of federal and state agencies (who all directed us back to BfArm) and an implication by the press officer at BfArM that the foreign press was not used to talking to multiple sources, CIJ was redirected back to state authorities with a few more instructions on which bureau to contact. The state bureau (in Berlin) did not return comments to questions asked by email.
Here is the bottom line that CannTrust has helped expose this summer: the entire global cannabis industry is trying hard to legitimize. Not every company is shady, and there are many who are entering it now who are playing by the rules. But those who are hoping to exploit loopholes (including “name” if not “public” companies) are also clearly in the room.
And the only way ultimately the industry can combat that, is by standing up, as an industry, to face and address the problem.
Editors Note: This is a developing story. CIJ has been contacted by the Dutch Cannabis Agency as it investigates what appears to be an intra-government debate over qualification of EU-GMP cert, acceptance of audit documents and other matters within European countries that appear to have caused much of this confusion with regards to Bedrocan and its packager Fagron. Many reputable, licensed sources within the industry spoke to us on deep background, out of concern that they too would be held liable. That said, so far, nobody can explain why the only licensed Dutch packager, was issued a new EU GMP cert document on July 9, 2019, the same day that Danish authorities halted CannTrust product entering Denmark. That is a government decision. Further it is also still unclear why rival cannabis companies would attempt to contact the cannabis media with a certain (and misguided) spin on this situation.
As Europe swooned under record-breaking heat this summer, the cannabis industry also found itself in a rather existential hot seat.
The complete meltdown at CannTrust has yet to reach a conclusion. Yes, a few jobs have been lost. However, a greater question is in the room as criminal investigatory and financial regulatory agencies on both sides of the US-Canada border (plus in Europe) are getting involved.
As events have shown, there is a great, big, green elephant in the room that is now commanding attention. Beyond CannTrust, how widespread were these problematic practices? And who so far has watched, participated, if not profited, and so far, said nothing?
Who, What, Where?
The first name in the room? Canopy Growth.
Why the immediate association? Bruce Linton, according to news reports, was fired as CEO by his board the same day, July 3, 2019, that CannTrust received its first cease and desist notice from Health Canada.
Further, there is a remarkable similarity in not only problematic practices, but timing between the two companies. This may also indicate that Canopy’s board believed that Linton’s behaviour was uncomfortably close to executive misdeeds at CannTrust. Not to mention, this was not the first scandal that Linton had been anywhere close to around acquisition time. See the Mettrum pesticide debacle, that also broke right around the time Canopy purchased the company in late 2016 as well as the purchase of MedCann GmbH in Germany.
Reorg also appears to be underway in Europe as well. As of August, Paul Steckler has been brought in as “Managing Director Europe” and is now based in Frankfurt. Given the company’s history of “co-ceo’ing” Linton out the door, is more change to come?
Video showing dead plants at Canopy’s BC facility surfaced. Worse, according to the chatter online at least, this was the second “crop failure” at the facility in British Columbia. Even more apparently damning? This all occurred during the same time period that the second round of lawsuits against the reconstituted German cultivation bid surfaced.
Canopy in turn issued a statement that this destruction was not caused by company incompetence but rather a delay in licensing procedures from Health Canada. Despite lingering questions of course, about why a company would even start cultivation in an unlicensed space, not once but apparently twice. And further, what was the real impact of the destruction on the company’s bottom line?
Seen within the context of other events, it certainly poses an interesting question, particularly, in hindsight.
Canopy, which made the finals in the first German cultivation bid, was dropped in the second round – and further, apparently right as the news hit about the BC facility. Further, no matter the real reason behind the same, Canopy clearly had an issue with accounting for crops right as Canadian recreational reform was coming online and right as the second German cultivation bid was delayed by further legal action last fall.
Has Nobody Seen This Coming?
In this case, the answer is that many people have seen the writing on the wall for some time. At least in Germany, the response in general has been caution. To put this in true international perspective, these events occurred against a backdrop of the first increase in product over the border with Holland via a first-of-its kind agreement between the German health ministry and Dutch authorities. Followed just before the CannTrust scandal hit, with the announcement that the amount would be raised a second time.
German health authorities, at least, seem doubtful that Canadian companies can provide enough regulated product. Even by import. The Deutsche Börse has put the entire public Canadian and American cannabis sector under special watch since last summer.
By the turn of 2019, Canopy had announced its expansion into the UK (after entering the Danish market itself early last year) and New York state.
Yet less than two weeks later, Canopy announced not new cultivation facilities in Europe, but plans to buy Bionorica, the established German manufacturer of dronabinol – the widely despised (at least by those who have only this option) synthetic that is in fact, prescribed to two thirds of Germany’s roughly 50,000 cannabis patients.
By August 2019, right after the Canopy Acreage deal was approved by shareholders, Canopy announced it had lost just over $1 billion in the last three months.
Or, to put this in perspective, 20% of the total investment from Constellation about one year ago.
What Happened At CannTrust And How Do Events Line Up?
The current scandal is not the first at CannTrust either. In November 2017, CannTrust was warned by Health Canada for changing its process for creating cannabis oil without submitting the required paperwork. By March of last year however, the company was able to successfully list on the Toronto stock exchange.
Peter Aceto arrived at CannTrust as the new CEO on October 1 last year along with new board member John Kaken at the end of the month. Several days later the company also announced that it too, like other major cannabis companies including Canopy, was talking to “beverage companies.” It was around this time that illegal growing at CannTrust apparently commenced. Six weeks later, the company announces its intent to also list on the NYSE. Two days later, both the CEO and chair of the board were notified of the grow and chose not to stop it.
Apparently, their decision was even unchanged after the video and resulting online outrage about the same over the destroyed crops at the Canopy facility in BC surfaced online.
On May 10, just over a week after the Bioronica purchase in Germany, the first inklings of a scandal began to hit CannTrust in Canada. A whisteblower inside the company quit after sending a mass email to all employees about his concerns. Four days later, the company announced the successful completion of their next round of financing, and further that they had raised 25.5 million more than they hoped.
Six weeks later, on June 14, Health Canada received its warning about discrepancies at CannTrust. The question is, why did it take so long?
Where Does This Get Interesting?
The strange thing about the comparisons between CannTrust and Canopy, beyond similarities of specific events and failings, is of course their timing. That also seems to have been apparent at least to board members at Canopy – if not a cause for alarm amongst shareholders themselves. One week after Health Canada received its complaint about CannTrust, shareholders voted to approve the Canopy-Acreage merger, on June 21.
Yet eight days after that, as Health Canada issued an order to cease distribution to CannTrust, the Canopy board fired Bruce Linton.
One week after that, the Danish recipient of CannTrust’s product, also announced that they were halting distribution in Europe. By the end of August, Danish authorities were raising alarms about yet another problem – namely that they do not trust CannTrust’s assurances about delivery of pesticide-free product.
Is this coincidence or something else?
If like Danish authorities did in late August 2019, calling for a systematic overhaul of their own budding cannabis ecosystem (where both Canadian companies operate), the patterns and similarities here may prove more than that. Sit tight for at least a fall of more questions, if not investigations.
Beyond one giant cannabis conspiracy theory, in other words, the problems, behaviour and response of top executives at some of the largest companies in the business appear to be generating widespread calls – from not only regulators, but from whistle blowers and management from within the industry itself – for some serious, regulatory and even internal company overhauls. Internationally.
And further on a fairly existential basis.
EDITOR’S NOTE: CIJ reached out to Canopy Growth’s European HQ for comment by email. None was returned.
Correction: This article has been updated to show that the Danish recipient of Canntrust’s product announced they were halting distribution one week after Bruce Linton’s firing, not one day.
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