As of March 2, right before the UN punted on reclassification of cannabis at the international level for another nine months, the UK government eased import restrictions for people in search of the drug.
Specifically, licensed wholesalers will now be able to import larger quantities of cannabis-based products and hold supplies for future use by patients with prescriptions.
Previous restrictions meant that patients had to wait for weeks or months to obtain the still highly expensive drugs (an import license from Canada can take 8 weeks).
Essentially, while welcome, this also means that every single potential cannabis patient who does not suffer from epilepsy or MS must import, via private means, a drug that is still unbelievably expensive. Those with the means are subjected to high prices and bureaucratic complications (like a regular thirty-day review of the prescription).
Cynical Cannabis Moves
While those who can afford to pay approximately $1,000 a month now have options, this is not exactly cannabis reform that is inclusive. Indeed, the entire conversation appears to be about making sure that private companies make profits rather than scientific advancement.
While the government is planning to engage with patients and to participate in trials to figure out how the NHS can utilize the drug, this is little help for sick patients now. Particularly in the middle of a global pandemic and almost as surely, global recession.
Soundbites by government ministers are also putting a cheery face on a situation that is dire, not just because of access but because of cost.
Per British Health and Social Care Secretary Matt Hancock, “We still have a long way to go. We need more research into the quality and safety of these medicines, and to do all we can to cut down the costs and remove barriers so that, when appropriate, patients can access it, including on the NHS.”
As recent events, including not only Brexit and cannabis reform, but indeed the now global pandemic have proven, healthcare systems globally are not up to the kinds of threats now thrown in their direction. Designed mostly after WWII, with a far different tax and economic base to support them, as well as far different demographics, most are also clearly not up to the rigors of the 21st century.
It is not just the supply chains for cannabis or even pharmaceuticals that are in the mix of course. Food security in the UK is now also, according to one international expert, Tim Lang, World Health Organization advisor, “in serious trouble.”
The Covid-19 pandemic, in other words, caught the world with its pants down, despite numerous warnings and even models predicting almost exactly this situation as recently as last year. Just like the AIDS crisis. This time, however, there are options available.
The question is, will governments and international organizations rise to the challenge to meet them?
A New World Drug Order
The British, while behind the Germans, are unfortunately, delaying a decision which has been already extended for too long. Relaxing drug import rules are one thing. But recommendations about the uses of the drug are still very narrow in the UK (even more stringent than in Germany).
Beyond that, overall food and drug security (supply chain) issues are in the room and for drugs far from cannabis. As many have begun to point out, cannabis is now prescribed for patients (and in many countries) and these patients are the most vulnerable to a virus like Covid-19. They are vulnerable not just because their immune systems are weak, but frequently because they are also economically exposed.
As the world battles another retrovirus pandemic, perhaps it is time that the lessons of the past be learned by those with the power to make decisions that will ultimately affect billions of people globally.
The recent decision in Germany on the reclassification of CBD (kudos to the European Industrial Hemp Association) as something other than “novel” has now opened an interesting new discussion in Germany and by extension, Europe.
It basically means that hemp plants, if they are European in origin, can be grown (under the right regulatory structure starting with organic) and even extracted without ever being considered a “novel food.”
Look for (hopefully) similar discussions now across Europe and the UK where the Food Safety Authority is also examining similar policies.
What this ultimately means, however, is that the market is clearly opening on the CBD front, but only for products that make the grade.
What should the average producer or manufacturer from North America think about when setting up a supply chain for export?
Thanks to the new treaties in place between the United States, Canada and Europe right now, there are market openings in the cannabis industry in Europe. Starting with the fact that the cannabis bug has clearly hit the continent, but there is actually not enough regulated product to be found yet and just about anywhere.
This is keeping prices high right now, but do not expect that to last.
Regardless, pricing of imports will not be like anything you have experienced if your background is state or even national market in the U.S. or Canada. There are higher regulations in every direction in Europe. Understanding how to translate the same into equivalencies that do not bankrupt you, overprice your products, or worse, get you in trouble with authorities is a critical first step, and not one to be taken lightly.
Get professional guidance from the country you are hoping to export to, at minimum. And that includes the legal kind. Every step of the way, you have to be certified with, at minimum, federal if not at an international certification.
No matter what cannabinoid is in the mix, this is ultimately a plant-based product. All rules one would normally think about when talking about other food products (for starters) are in the room.
While it is far from “this easy” (although thanks to the USDA’s decision about hemp, not to mention the FDA update on its own deliberations, there are now federal standards), think about the problem this way: If you were the world’s best chocolate bar, or even tomato juice, how would you hit Europe right now?
They have tomatoes here, and unbelievably great chocolate already. What is it about your offering that can stand out? This is the million-dollar question. There are a few people and companies doing this right now, but it takes experience, and understanding the multiple regulatory guidelines involved. Once you figure that out, then you need to look at your supply chain, piece by piece and literally from the plant through end production for where you fit, and where you might not, into the regulatory discussion and market you hope to enter.
The Medical Discussion
There is now the possibility of exporting medical grade hemp and hemp extracts from the United States to Europe. However, everything must be GMP-certified to a medical standard, from organic production on up. This is an international standard, not an American one.
That qualification does not exist much in the cannabis industry in the United States (although ISO very much is) yet. Although it is dawning. On the Canadian side, there are plenty of companies in the discussion, because there is already a beaten path to export.
As the German cultivation bid proved, European certification, certainly is a high barrier to reach. Indeed, it is not only GMP certification in the room on the medical side but also rules about the import of all plant products.
From this perspective, it is also easier to import “finished” product rather than plant.
The Recreational Discussion
Before anyone gets too excited about recreational reform, the reality is that Europe is not going to step ahead of the UN (which has now pushed its next deliberation on the topic to the end of 2020). Yes, there are trials in a couple of places, but far from earth-shaking (recreational trials in the land of the coffee shop anyone?)
More interesting, of course, is what has just happened on the CBD side. But before American hemp farmers get too excited about this, they have hemp and farmers in Europe. And quite a few people have seen the light on this one already.
Sure New York state exports to Europe are probably in the offing, but so are hemp exports from the Southern states where the weather is warmer and the labor cheaper.
Certified labs, processing and extraction, and labelling are all in the mix. And every step must be documented as you go.
How to Proceed?
Whatever your crop or product is, take stock of the certifications you have now. If your plant was not organic, forget export anywhere. You are out of the international game.
However, with this taken care of, look at the certification requirements in Europe for extraction, processing and import of food and plant products and obtain production partners with the same – either in the US or abroad.
With luck, patience, skill and knowledge, yes, the doors are slowing opening, even to U.S.-based cannabis trade of the international kind.
Just don’t expect it to be easy, and leave lots of time for workarounds, pivots and even re-engineering at every point of the way.
Europe continues to be the new frontier of medical and wellness developments in the cannabis industry, with various sources predicting that Europe will become the world’s largest legal cannabis market over the next 5 years. Key related statistics, include:
A population of over 740 million (over double US and Canada combined)
Total cannabis market estimated to be worth up to €123 billion by 2028 (€58bn medical cannabis (47%), €65bn recreational cannabis (53%))
Over €500 million has been invested in European cannabis businesses (including significant expenditure in research and development, manufacturing and distribution)
To reiterate this belief, this month, hundreds of industry experts and delegates will be attending Cannabis Europa in Madrid, to discuss the expansion of cannabis across Europe and the challenges facing the industry across the member states of the EU and the UK.
Global mainstream leans to European strength
Since late 2018, major global operators have made substantial moves into the cannabis sector. Anheuser-Busch InBev, the world’s largest beer company and maker of Budweiser, entered into a partnership to research beverages infused with two types of cannabis. Constellation, owner of Corona beer, announced a commitment for $4 billion investment in Canadian cannabis company Canopy Growth. BlackRock Inc, through five actively managed BlackRock funds, has invested into Curaleaf Holdings Inc, a dispensary operator, for a not too insignificant investment sum of $11 million (as at March 2019). Such international investments prove that cannabis has moved from the fringes and into the mainstream.
When considering the impact of mainstream cannabis, it should be recognised that major European countries have approved or are planning on implementing, legalisation of medicinal cannabis. The UK, Germany, Italy and the Netherlands already have legal systems in place for medicinal cannabis and France and Spain are currently reviewing key legislative reform to align themselves with international practices. At present the German market is the third largest cannabis market (in terms of size) behind the US and Canada.
In addition to medicinal cannabis, several key European countries have systems in place, or are developing systems, or considering the reform of existing systems, to approve cannabis with THC content at a recreational level. The Netherlands already has a system and Luxembourg’s health minister in August 2019 announced the intention to legalise cannabis for Luxembourg residents. The Luxembourg government is lobbying EU member states to follow suit.
Whilst the EU has a labyrinth of laws in relation to edible CBD (as a novel food) which make the regulatory landscape complex, there has been an explosion of CBD products for vaping and cosmetics. Of course, with each of these products being subject to different local laws (some aligned between EU members states) in relation to vaping and cosmetic related regulations. The Brightfield Group has predicted a 400% increase in the European CBD market (including vaping liquid) from $318m in 2018 to $1.7 billion by 2023. There is also an expansion into applications for CBD with animals with many US manufacturers of CBD-infused pet food.
The European Parliament’s health committee has been calling for properly funded scientific research and there are motions to establish policies to seek to incentivise member states to advance the studies of medical cannabis, with a priority on scientific research and clinical studies – the first step necessary to drafting legislation, designed to better support the industry.
Where does the UK sit within cannabis?
Medicinal cannabis famously saw a legalisation, of sorts, by the then Secretary of State, Sajid Javid, who provided the authorisations for prescriptions for the high profile cases of Billy Caldwell and Alfie Dingley. Subsequently, on 1 November 2018, this was codified into law by an amendment to Schedule 2 of the 2001 Misuse of Drugs Regulations. This allows clinicians to prescribe cannabis as an unlicensed medicine.
There have, of course, been some high profile licensed medicines. The UK company, GW Pharmaceuticals, is the largest exporter of legal medical cannabis in the world, cultivating medical cannabis for production of cannabis-based medicines (e.g. Epidiolex & Sativex). Epidiolex (manufactured by subsidiary Greenwich Biosciences) became the first cannabis-derived medicine approved for use in the US for treatment of seizures caused by Lennox-Gastaut and Dravet syndromes (both severe forms of epilepsy).
When considering the level of research development and investment in the medicinal field, it is no surprise that the UK is the world’s largest producer and exporter of medical cannabis. Research published by the International Narcotics Control Board indicates that the UK produces over 100,000kg a year of medicinal cannabis.
Previous guidance from the National Institute for Health and Care Excellence (NICE) indicated that further research is required to demonstrate the benefit of medicinal cannabis, citing its cost versus evidenced benefit. However, there is now renewed confidence in the UK following NICE’s approval of two cannabis-based medicines produced by GW Pharmaceuticals, Epidiolex (cannabidiol) oral solution and Sativex (nabiximols), for routine reimbursement through the NHS.
Following the re-categorisation of medicinal cannabis in November 2018, a number of clinics have been established where specialised clinicians can start the process of prescribing cannabis based medicinal products (CBMPs). Whilst this route is not fast, and challenges are well documented as to the satisfaction of prescriptions made in the UK, there is momentum behind the development of this as a means for providing genuine and established medical care. A significant step in October 2019, was the CQC registration of one such cannabis clinic, Sapphire Medical Clinics Limited.
The UK medicinal cannabis sector is establishing a research-based approach to expand usage in the UK and across Europe.
How North America compares to Europe
Canada, as a first mover within the cannabis sector, has a multitude of large companies which are well-capitalised and have substantial international footprints. The Canadian exchanges have large listed companies looking to Europe with the intention of acquiring or investing into European operations. As of the date of writing, the 10 largest cannabis companies in Canada have an aggregate market cap of over $23.5 billion (and all registered cannabis companies in Canada having an aggregate market cap of over $46.5 billion).
Listed companies have had a tough time over the last 6-12 months with a slowdown in the market as a natural re-balancing occurs – part of which is due to rapid expansion and heavy investment into cultivation by all the major participants in the market. Over the next 6 -12 months we can expect to see management changes (some of which will be voluntary and some of which will be imposed by institutional pressure) to introduce different skill sets at board and senior management level to facilitate the oversight and leadership necessary for large pharmaceutical companies. Many operations have expanded into highly regulated products and complex supply chains whilst still operating with fundamentally the same team that established the operations with entrepreneurial efforts but, perhaps, a lack of experience in these sectors. The recent announcements by Aurora Cannabis and Tilray demonstrate that these restructurings and costs reductions have already commenced. However, with increased experience at board level and an improvement of profitability focused on sustainable business practices, should come new opportunities on a global scale for these North American operations.
The US market, because of the complexity of state and federal laws not being fully aligned, is closer to its infancy than the Canadian market. This is not too dissimilar to the European market. That said, there are a number of well-funded and quite large US enterprises. A limited number of these, such as Tilray, are looking to expand into Europe.
Many of the companies in the US have, and continue to, expand quickly so we can expect to see a number of mergers and acquisitions. We are likely to witness Canadian and US entities merging with one another with the potential for acquisitions for operations within Europe. It is unlikely that the North American companies will risk their capital through organic growth so would be expected to be identifying “turnkey” solutions.
One of the major challenges facing US companies is the complexity of supply and distribution. This is largely a result of the complexities for state and federal laws interacting with one another as well as international importation and exportation with US states.
How you can invest within the UK and Europe
Developments in the fields of research and development are anticipated to add further weight to the lobbying of government and regulatory bodies across Europe.The UK remains, despite the events of Brexit, a major financial hub for Europe. The London market has seen the growth of several investment and operation cannabis companies. This includes private companies such as; EMMAC Life Sciences Limited and the operations formerly trading as European Cannabis Holdings (now demerged into several new entities including NOBL and LYPHE) as well as publicly listed companies; including Sativa Group PLC (the first publically listed cannabis specific company in the UK) and World High Life Plc, both operating on the NEX Exchange.
The Medical Cannabis and Wellness Ucits ETF (CBDX), Europe’s first medical cannabis ETF fund, domiciled in Ireland, and which has been passported for sale in the UK and Italy, has also caused a renewed stir within the market with a further platform for listed investment.
As the regulatory framework evolves further there is an anticipation that more medicinal cannabis and CBD related enterprises should have the opportunity to list on public exchanges, whether in the UK or in European countries.
Despite a period of slow down following the natural rebalancing of the fast-growing North American markets for the cannabis sector, there is renewed confidence in the expansion of the industry. Developments in the fields of research and development are anticipated to add further weight to the lobbying of government and regulatory bodies across Europe.
There is an increased push for a public dialogue and consultation in relation to medicinal and recreational cannabis in the UK, backed by several mainstream media platforms. This is likely to be shaped in some parts by national debates in Luxembourg and other European countries as they consider their own domestic laws.
With European parliaments across the EU (including the UK) hopefully having time freed up to discuss other political matters now that Brexit is progressing, the next 18 months should prove an exciting time within the European cannabis sector.
Constellation Brands, the beer brewer behind Corona and Modelo, has finally admitted the obvious. Its four-billion-dollar bet on the Canadian cannabis company Canopy Growth in 2018 was a long-term play for market share, not immediate profitability. Indeed, Canopy has yet to turn a profit and its shares are down 30% from this time last year. So far Constellation has lost $71.1 million of its investment in the cannabis industry company leader. That is 19.25% of its total investment in 18 months. In other words, hardly insignificant.
That said, Canopy is not, by any stretch of the imagination, “down for the count.” If their overexpansion plans and statements over the last three years have been, at best, optimistic, they have not done anything broadly different than any of their other major competitors (see Aurora for example). And have still emerged, financial bloodbath although it has been so far, four years after entering the European market at least, with global presence that is not going anywhere. Even if in some markets overall sales are lower than hoped or anticipated.
At least two quarters of real reorganization and reshuffling in every office on every continent the country does business in have at least resulted in a major victory in Luxembourg at least that will bear fruit for years to come. That is a strategic victory worth a few dings along the way.
Starting, almost certainly, in 2021, when changing laws in Europe will also allow the company to bring together its background and reach in the spirits industry to a world that is finally opening to the blending of the cannabis world into the same.
This year, in other words, will almost certainly see the company continue to service its existing steady business in multiple countries – however unfancy that may be. And it is decidedly not glam here. In places like Germany the company is essentially only holding onto market share in the medical market by its purchase of the largest dronabinol maker in the country.
That said, beggars cannot be choosers. Aurora in contrast, is looking at a serious review of its cultivation licenses and practices. In the meantime, Canopy snagged a lucrative contract for a strategic, central country in the European debate – Luxembourg – that no matter how small, that will create at least a trickle of medical sales until the country changes its laws.
One of the things that the Canadian cannabis industry has in spades, and this is absolutely true of Canopy, is accurate business acumen about market entry timing and overall strategy.
No matter how much cannabis industry execs, in other words, have only been positive and upbeat before, this statement by Constellation also signals a change in the way Canopy presents itself externally.
Mistakes have been made. It is time to clean house and move on.
What other new industry in the lifetimes of those alive today, continues to admit its mistakes and pivots less than a decade after its global birth in continual pivot and expansion mode? The only other one that comes close is of course the internet. And these days, more specifically, Internet 2.0.
So, as the world says hello to 2020, Canopy seems to be sending its new year message. Trimming the sails after a wild, wild year, and setting course again, for a greener horizon.
Canndoc, an Israeli medical cannabis producer, just received a shipment of 250kg of dried whole flower cannabis. The company, a subsidiary of InterCure, just signed a strategic cooperation agreement with Canada’s Tilray.
Interestingly the agreement is both for the import and export of flower. So don’t count out a stream coming the other way. Or, more likely, the export of seed and cannatech related to the same.
Everything goes both ways – yin and yang. Even in this industry.
However what this also does is set up Tilray to have an excellent shot at being partnered at least with the first Israeli exporters when local demand is satisfied. And that, given their strategic footprint globally, but particularly in Europe, is a very unique advantage in a cannabis map that is shifting, literally, as the year becomes the new decade.
What Gives With The Ex-Im Discussion Anyway?
Israeli producers have longed for the day when they can bring their considerable tech and research advantage if not plant genomes and medicines to a global market. The medical program in Israel was originally funded largely by American federal money while domestic reform was fought, tooth and nail until the middle of the last decade. And of course so far, at least, despite Illinois clocking over into the 11th recreational state as of January 1 of this year, has remained stalled on a federal level in the U.S.
However, no matter the shifting politics of Israel (where lets not forget, the government is also mired in scandals and it appears the Israeli president, Benjamin Netanyahu delayed the export of cannabis in a deal with the U.S. to move the capital to Jerusalem), one thing was made clear last year by government officials: Israelis come first.
It is likely to be an attitude that spreads – particularly in places like Europe and even more so Germany. So far, the entire market here has been met with imports. This is the first year that there is regular medical production hitting pharmacy shelves thanks to Demecan and the former Wayland (now ICC).
Indeed, Wayland basically did the same thing in Germany as Tilray is doing now in Israel, although the firm had to sink a huge capital expenditure into setting up its cultivation sites. And at far greater cost.
Tilray appears to be hitching a ride on an existing industry to expand its reach, markets and of course, IP. Israeli cannatech, for sure, is going global.
How Could This Impact Other Discussions?
There are two places this development is likely to impact policy discussions outside of Europe where home grow has, let’s not forget, also hit Italy in the last months. But similar ripples are afoot everywhere right now – from Portugal and Spain to Greece. While exporting can be a lucrative game, should it come at the expense of domestic citizens?
The first place this issue has already been a theme is obviously Canada, where this spectre was much in the room last year as the country transitioned to recreational while its top companies also established themselves abroad. In Europe this was mostly done without cultivation domestically except in a few rare instances. See Tilray in Portugal, Demecan in Germany, ICC in Italy and all of the partnerships between the top Canadian cultivators and Danish, Greek and Maltese producers.
The second place this will undoubtedly have an impact, however, is very much likely to be the United States. While most pundits agree that federal reform is at least a year or so off (roughly equivalent with European change of a recreational kind), this discussion is already in the room.
These days, six years after Colorado and Washington State upped the ante, companies may operate separate operations in multiple states, but of course, cannot ship across the border of any of them.
As soon as federal reform hits however, also expect to see these discussions going on at a state level across the United States. With healthcare devolving very much to the states, locally grown cannabis is going to play a major role in all of these discussions (starting with the opioid epidemic). If not, as many expect, an influx of cannabis from south of the border.
Those days, however at least in the U.S. are still several years away. In Israel, however, as Tilray lines up a unique profile across all of said jurisdictions, look for intriguing cannabis developments coming soon, in multiple jurisdictions.
Here is the headliner: As of the second week in January, there will be a cannabis related exchange-traded fund (ETF), trading on the Frankfurt Stock Exchange (or Deutsche Börse), the third largest stock exchange in the world and the meeting point between equities and the vast majority of institutional investment globally.
The Medical Cannabis and Wellness UCITS ETF (CBSX G) will trade on Deutsche Börse’s Xetra.
London-based ETF provider HANetf is the creator of the fund.
The idea is to create a fund with targeted exposure to the European market. And as a result, it is bound to be interesting. Especially as the companies included must go through a due diligence process that will only include equities traded on stock exchanges like the NYSE, Nasdaq and TSX.
This of course is no guarantee, particularly given the scandals of the major Canadians last year (who are listed on all or an assortment of the above).
Indeed, in the eyes of German authorities, this is not necessarily all that significant. And that in and of itself is a watchword of caution here. Namely the Deutsche Börse put the entire North American cannabis equity market under special watch two years ago and that has not changed since then. That said, with legalization now clearly in Europe, things in general look a lot different on the ground.
What will be really intriguing is when the fund (or the ones inevitably to follow) that look at the discussion from a European market perspective.
Purpose Investments, the Canadian partner involved, has over CA $8 billion in assets under management as of last month and across a range of ETFs.
Solactive, the German company which independently calculates the index, may also be unknown to North Americans in particular. In Germany, particularly Frankfurt, they have developed, since their founding in 2007, a reputation for being not only quirky, but not risk averse. In other words, decidedly “non-German,” at least by stereotype. And cannabis right now, particularly with this approach, is an inevitable development. This could, in fact, do very well. The problem, however, that is still in the room is the vastly different levels of compliance – but that too is a risk calculation that is to the people at the table, no different than certain kinds of commodities.
That alone makes this ETF intriguing simply because it will indeed be evaluated by German eyes – if not processes.
Things are clearly normalizing on both the accounting and reform front. The growth of the regulated Canadian market and the increasing focus on regulation of all kinds is only going to make things less risky for investors.
Bottom line: Good development, but won’t be the last. By far.Further, there are not many public European companies, yet. That may also change. However, for the moment, they are still a trickle (and all over the map).
What is intriguing is the timing of the fund. If not what it potentially spells for the public markets. And further the obvious research the Auslander team have done in finding the right European-based partner. Look for interesting things indeed.
This is the first real foray into Europe by anything outside a single stock offering on a European equity market.
For Germans, in particular, who are extremely risk averse, and tend to invest in other kinds of securities if not insurance to build up their pensions, the equity markets sniff a bit too much for most of “North American scam.” Far from cannabis. Yet some Germans do invest in the markets. As do other Europeans.
Bottom line: Good development, but won’t be the last. By far.
One year after Canadian recreational cannabis’s historic date of October 17th, 2018, in comes Cannabis 2.0, which will see edibles containing cannabis and cannabis concentrates enter the legal recreational market. As of October 17th, 2019, there are seven classes of legal cannabis products in the marketplace, making Canada an innovative leader in this evolving industry.
The launch of cannabis edibles and concentrates into the legal market has also led to changes in the regulatory framework and the introduction of new best practices in terms of Good Production Practices (GPP). This should not come as a surprise, as these products are introducing the inclusion of cannabis and food products.
Since Oct 17th, 2019, we have seen a significant amendment to the Cannabis Regulations through the addition of sections 88.93 and 88.94, stating that holders of a license to process cannabis edibles or extracts must identify and analyze all potential hazards and have control measures in place to prevent, eliminate or reduce these hazards from occurring. Any license holder that conducts activities related to cannabis edibles, extracts or produces an ingredient used in an edible or extract must also prepare, retain, maintain and implement a preventive control plan (PCP). To indicate that cannabis edibles and extracts regulations resemble other regulated food commodities, would not be an understatement.
By having license holders establish food safety practices similar to the ones being used by federally regulated food commodities, it is allowing cannabis producers to implement a preventive approach by focusing on safety and reducing hazards in their operation.
According to the Cannabis Regulations a license holder’s PCP must include the following:
Identify all of the biological, chemical and physical hazards that could contaminate or could be at risk of contaminating any cannabis product or anything that could be used as an ingredient in producing a cannabis product. Once all of the hazards have been identified, you need to determine the likelihood of that hazard occurring
The measures to be taken to control each identified hazard. Each control measure must then describe the task involved, how the monitoring task is carried out, who will be performing the monitoring task and how often the monitoring task is carried out
A description of the critical control points, which are the steps in the process where a control measure is applied and is essential to eliminating a hazard. Next are the measures to be taken to monitor a critical control point
A description of each cannabis product produced or ingredient that will be used in a cannabis product, including extract contents, permitted & prohibited ingredients, exceptions, naturally occurring substances and uniform distribution
A description of corrective action procedures for every critical control point
A description of verification procedures
What else comes with the collaboration of these two commodities in a regulatory environment? The need for industry to adapt and move beyond the basic GPP and pharmaceutical requirements and start thinking in terms of preventative controls and food safety. By encompassing the GPP requirements, traceability, employee training and now a complete hazard analysis and preventive control plan, you have the makings of a full food safety plan. However, food safety plans can be comprehensive and difficult to manage by utilizing a manual system.
Companies that are serious about the integration of cannabis edibles and extracts into their operations, will need to implement compliance and traceability technology that will facilitate an automated system. In return, you will streamline all monitoring processes throughout the production, packaging and storage stages of the system. This is crucial to a preventive control plan. An automated solution will also help with record keeping, document management and corrective actions, as license holders deal with failures in real time to avoid negative impacts on their products.
There are many compliance software platforms available in the industry and choosing the right one for your operation is a task in itself, as not all software platforms for the cannabis industry are created equally. Although many seed-to-sale platforms handle regulatory requirements and some document management, these platforms do not see cannabis as food products, and therefore, are leaving companies with a void in this aspect of their operation. When looking for a software platform that will encompass all of your regulatory needs, pay particular attention to systems that are designed for the food industry but have adapted to cannabis. These systems will be the most dynamic when it comes to implementing preventive control plans, handling in-depth traceability with recall plans and the ability to become completely digital.
For more information on how to automate your food safety plan for cannabis edibles and extracts, please contact Iron Apple QMS to learn about our online Cannabis QMS.
The Italian Supreme Court seemed to take a page from both Israel and Thailand last year (who announced exports and reform legislation on Christmas Day 2018). In the dying days of 2019, on December 19, the court ruled in what is basically a landmark decision for not only the country but the continent, that small-scale domestic cultivation of cannabis (both of the CBD and THC kind) is legal.
Even more intriguingly, the ruling was ignored for several days in Italy before being picked up by news agencies. This in turn has apparently set off a much wider and predictable debate about the use of the plant in the country – either for medical and or recreational purposes. Many are doubtful that any legislation will pass formalizing the inevitable in the near future (one attempt has already been killed), but one can never know these days. This is an issue that perennially takes countries and politicians by surprise as populations warm quickly to the concept of medical reform.
That said, so far efforts to formalize the ruling into law have been slapped down by the center right Forza Italia Party. Further, if a right or center right coalition comes to power in Italy as widely expected, it is likely to try to overturn the court ruling legislatively which has been described at least in such circles as an “absurd verdict.”
It is important also to understand this distinction if not label and how it translates both internationally and domestically.
In Canada, reform was championed by economic liberals (who are basically centrist, globalists if not free traders) and libertarians more than any other label. However initially, reform was driven not by political campaigns but rather a national challenge to prevailing cultivation law at the supreme court. This then became the legal basis for reform legislation of both the medical and recreational kind.
In the U.S., cannabis reform is frequently championed by states’ rights advocates, who are from a European perspective, extreme right wing. Right down to opposing the federal imposition of not only civil rights but other kinds of regulatory law. Including in this space. This also includes absolute hostility to anything resembling “national” if not “single payer” federal healthcare.
The two issues obviously overlap, intersect and create many strange juxtapositions if not outright contradictions and paradoxes. And many strange bedfellows.
This disconnect of course is also what has held back a united front on passing federal reform no matter how much this has allowed recreational to now spread to 11 American states as of January 1 this year. As a result, for now and certainly for several years after the next presidential election, barring a surprise realignment of politics in the U.S., there is unlikely to be any progress on federal reform. But in the U.S., cannabis legalization is a “purple” issue. Trump, for example, still opposes any national change – although if the election is tight, look for a lot of promises from both sides.
Across the Atlantic however, what Italy’s new judicial stance on the subject means for the first time, is that there is potential for a real fight on the ground from a political grass-roots front in a socially conservative European state. This is also intriguing for another reason. Italy’s health ministry also just cancelled one of Aurora’s cultivation licenses. For all the naysayers on the significance of this development, this should not be discounted.
Kind of like a Canada or Mexico moment for the continent indeed.
Not to mention what this discussion does for the CBD discussion. Both in Italy and elsewhere.
Look Homeward Deutsch Angel
Advocates across the continent if not the UK, are of course, also watching closely. Germany in particular, tried to avoid this exact discussion three years ago, but it is unlikely that advocates at least, will let this continental victory rest. Starting with the fact that this is a debate that was firmly shut off in 2017 with the passage of the medical cannabis insurance coverage law to widespread patient frustration and huge patient issues with access ever since. Even though, in fact, Guenther Weiglein, the German patient who brought the suit, took it as far as he could legally. His right to domestic cultivation, along with the few patients who managed to avail themselves of the same right before the law changed, are no longer allowed to do so.
So of course, beyond charging the debate in Italy, this development will also increase pressure in Germany (for starters) as well as other European countries to reconsider what so far at least has been verbotten and largely because of Germany’s lead so far.
Even in places like Holland, Denmark, Portugal, Spain and Greece, the domestic cultivation discussion has been off the table. Luxembourg, and just outside the EU, Switzerland, has not raised this prospect.
That may well change in all of these countries plus others as the clock now starts to tick down to the end of 2021.
Regardless, early predictions about the pace of change as well as the size of the markets have largely been wrong.
So, for all the intriguing possibilities, this is not a slam dunk, but certainly a strong charge down the court in the right direction.
Cannabis as a news story and an industry moved forward again this year, albeit in a rather more halting way than the last few. The volatility of the market in fact was one of the largest stories of the year, particularly after the events of this summer.
It’s Been A Wild Ride Kind Of Year
This time last year, the world was in a tizzy over the literally billions of bucks invested into a few top Canadian cannabis companies. This year, predictions are definitely a little more sober when it comes to the future of cannabis stocks. Most of the industry has taken a major beating this fall.
That said, the current correction was in the cards for just as long. What goes up, dramatically, must come down.
That said, this is not the whole picture of the industry – not by a long shot. Reform ain’t going back. Patient numbers are climbing, albeit slowly.
Here in Europe, the first and so far biggest public tender on cannabis was finally concluded in Germany with Aurora, Aphria and the cannabis company formerly known as Wayland (ICC) winning the bid lots for domestic cultivation this spring.
The British, who waffled around all year on what kind of “animal” cannabis actually is, celebrated that anniversary late in the year with a highly limited scope of coverage by the NHS.
The most interesting discussions right now are clearly emerging on the international front. Cannabis became an internationally mainstreaming commodity this year as patient numbers began to climb on the continent.
This in turn has led to the normalization of the idea at least of an export trade in cannabis not only across Europe but globally as companies target the region. Cross border cannabis companies, in other words, are a “thing” that blossomed this year – and frequently, while sometimes financed by Canadians, called another country home.
The announcement of at least the first German wholesale reference price this year will also do wonders to start to normalize prices across not only the EU but all those hoping to export here.
That in turn will have global impact.
Regulation Is Beginning to Materialize
For those who thought that higher standards were a passing fad, the events of this year, particularly of the latter half of it have confirmed one thing for sure: Regulatory muster is here to stay.
To add to the general confusion, however, international standards on medical products and even food are absolutely in the mix as countries find that standards, measurements and production processes might be similar, but on the ground, still differ. Harmonization is a word many in the cannabis industry are hearing now, and not just in the medical space, but also the food and supplements market.
The initials “GMP” are on the lips of many this year. Not to mention another exciting development the cannabis industry from abroad did not see coming and still broadly does not understand – namely Novel Food.
The War For Reform Is Being Fought On Several Fronts
Inevitably, just as in the United States, the fights in the room right now as well as legislative gridlock are focusing on some strange nitty gritty. For example, cannabidiol (CBD) is just one cannabinoid from the plant. It is a chemical substance. Yet, suddenly, in Europe, this discussion is being bogged down in pseudo-scientific discussions in the name of public policy about whether CBD is a “new kind” of food.
Ultimately this is a discussion about regulation – whether CBD and hemp production should be regulated differently than they are right now – and whether the plant should be put in a different bucket than, say, tomatoes. Or when extracted, tomato juice.
GMP is also a very strange discussion which has still not exited the stage – mostly because of the lack of uniformity internationally between Canada and European states although that is moving in the right direction.
The last issue of course, which has been looming from the Canadian side for several years, including of course all the pesticide scandals, new regulations on the cultivation of all plants for human consumption. Even German farmers are up in arms (with a recent tractor protest in Berlin that paralyzed the city).
Cannabis is in the bullseye on all fronts.
Auld Lang Syne
If there was a theme to the industry as of this summer, it was clearly that things cannot continue as they have. The CannTrust Scandal absolutely encapsulated all that is wrong with the industry.
That said, there is every reason to believe that the most egregious scandals (or at least quite so many of them) are a passing fad. Indeed, many in the industry are in fact committed to turning over a new leaf (for the new year or just because).
The good news? There is every sign of course that it will.
2019 opened with a strange vibe in the air on the cannabis front. Israel and Thailand set the stage with dramatic reform announcements last Christmas. And as the calendar counts down to 2020, the larger players all seem to be licking their wounds (if not stock prices).
But cannabis reform is not just about profits on the public markets. What has gone down and where and ultimately, has the year lived up to its promise?
Reform Marched On In Several Countries
At this point, reform is certainly “too big to fail.” There will be no going back anywhere no matter the laggards still in the room.
From the perspective of opening patient access (and markets beyond that), There were several big stories on the medical front this year – and – in a real first for the EU – of not only the medical, but recreational kind as well.
Germany of course is going, relatively speaking, like “gangbusters” on the medical front although supply, quality and supply chain issues are still in the room. Even more so now because the German government has also announced, for the first time, a public reference wholesale price per gram of floss. That alone is big news, although expect that too to drop (see Aurora’s pricing for Italy, for starters).
In the UK, the NHS finally got down to brass tacks and negotiated a bulk discount for GW Pharmaceuticals cannabis drugs for a very narrow band of patients (mostly child epileptics and MS patients). A tiny minority of the estimated 1.4 million daily British “medical” users including those suffering from chronic pain can afford imports. The rest is all black, or in the case of CBD, gray market.
In France, the country finally got on the reform bandwagon with a “medical trial.” This means that all the major countries in the region are finally on board with some kind of reform. That too is a meaningful move.
Poland is also opening – a good sign for the remaining conservative countries in Europe still on the fence.
And in a real first (although do not get too excited just yet), on the “recreational” front, it is not just Holland that is in the room any more. Both Denmark and Luxembourg announced that they were opening this conversation. In Denmark and Holland’s case, this is in the form of “trials” in places where operational grey markets have already been established. In Holland, this is of course, regulating the “coffee shop” trade in large cities like Amsterdam. In Denmark, the new “trial” will be on the grounds of a revived hippy experiment called Christiana, that morphed predictably into the control of gangs over the last generation.
Luxembourg, however, seems intent on setting the benchmark if not timeline and is moving aggressively in one direction. As a result, as of this year, the strategic “heart” of Europe is now on the schedule to go full monty by 2022. That said, it is a country of about half a million people. Further, no matter the inevitably hype on the way, don’t expect the country to turn into a big cannabis hub- nor encourage pot tourism even from neighboring Europeans.
The end of 2021 is the time to watch for all things recreational. In the meantime, including next year, look for increasing “experiments” in other places. Particularly of the Swiss variety (where both recreational and medical products are sold via pharmacies.)
THC Is Being Accepted As Having Medical Efficacy
No matter the controversy in the room, and the strange inclinations of the British NICE to try to undo forty years of medical knowledge about the impact of THC on chronic pain, medical cannabis and specifically medical cannabis with THC has made its global medical debut as of this year.
That said, the push is on to “pharmacize” the product.
Flower (floss) is in the room, in other words, but the future is looking towards oils and distillates – at least for the medical market long term. And a lot of that will also come increasingly to this market from places like Portugal, Spain, Greece and other European markets now moving into the cultivation space seriously.
Then again, there is still a lot of road to travel. Wags who predicted that German health insurers would never pay for floss cannabis just five years ago were wrong.
CBD Is Not All Its Cracked Up To Be
For all those who sang “Free the CBD” this year, Europe has taken a rather conservative and concerted push back. From Austria to Italy and Sweden to Poland, the path to market for any product containing CBD has been a tough one this year.
That said, perhaps it is a call for more standardization- no matter how painful that might be economically. At a presentation given at this year’s IACM medical conference in Berlin, a medical researcher revealed the results of a study he had conducted on the accuracy of labelling of these products in several European countries. The industry has not standardized, labelling is all over the place in terms of accuracy – and the claims about “medical efficacy” are hard to swallow for substandard over-the-counter product.
If the CBD-based part of the industry is to thrive here, it will have to find a way to establish and certify itself. That appears to be going on in Italy right now. It also impacts every cultivator from Portugal and Spain to Eastern Europe looking at the possibilities right now.
However, with labelling and other EU cross currents in the room, this route to the industry has been fraught this year with all the cross winds and those are not likely to dissipate next year or indeed for the next several.
The Cannabis Winds Of Trade Are In The Air
While it may be a bit ironic, given that international trade has pretty much always been a hallmark of the development of the modern cannabis industry, next year will undoubtedly be the year of “International Cannabis Trade.”
No matter the problems “back home,” as of this year, a German-based manufacturer of GMP-certified product got fully underway (see ICC/Wayland’s success this year). That, along with the final decision on the first German cultivation bid, has clearly shaped a market that is still changing. And that change is driven by the admission, even by authorities, that there is not enough legal cannabis grown in the country.
That means that the strength of the German market will continue to drive policy (see the recent announcements on wholesale pricing) as well as demand that will be met across the continent.
Along the way, cannabis reform is also being driven locally. And that means, no matter the trials and tribulations of the Canadian part of the sector, which perhaps can be considered aptly warned for getting a bit too big for its britches, and no matter how faulting, the winds of reform are still afloat. Just perhaps, on the cards for next year and those to come, blowing from many more points on the globe.
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