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September 8, 2020

Leaders in Extraction & Manufacturing: Part 5

By Aaron Green

Cannabis extraction and manufacturing is big business in California with companies expanding brands into additional states as they grow. This is the fifth and final article in a series where we interview leaders in the California extraction and manufacturing industry from some of the biggest and most well-known brands.

In this week’s article, we talk with Kristen Suchanec, VP of Production at Island. Kristen converted her experience in traditional consumer packaged goods to cannabis to help create a brand that is sought after by many. The interview with Kristen was conducted on August 21, 2020.

Aaron Green: Good afternoon Kristen, I am glad we were able to put this interview together. I know you have been very busy!

Kristen Suchanec: I’m so sorry this took so long to actually work! Thank you for bearing with me. I’m happy we are able to talk.

Aaron: Great! I like to start off the conversation with a question that helps our readers get to know you a little better. So, Kristen can you tell me how you got involved at Island?

Kristen Suchanec, VP of Production at Island

Kristen: My background is in manufacturing and planning for consumer packaged goods. I had a friend of a friend and we were just at a happy hour and I asked what he was up to. He was actually our VP of Finance at Island and he handed me a box of pre-rolled joints. They were our Island Minis and I thought it was a great customer experience. I loved the brand and packaging which made it a consumer product versus, you know, this was a few years back where cannabis wasn’t necessarily commoditized or branded. I got really excited about that because I feel like cannabis should be traditional CPG and it should appeal to different people and it should have different brands that appeal to those different groups. So I literally just started a conversation. His brother is our founder and CEO and they needed someone to run production so that was my background and it all kind of lined up and I ended up being employee number five at Island!

Aaron: Wow, employee number five – awesome! OK, great. That is some nice background about how you got involved at the company. The next questions get into product development and manufacturing. The first question is: what’s your decision process for starting a new product?

Kristen: Yea, we are right now owning the lane between cultivation and distribution. So, getting those raw materials for whether it be concentrates or flower and then converting them into that final packaging for everything. So that is what we focus on and spend all of our time with automation and trying to make that process as efficient as possible.

When we’re looking at a new product we’re not necessarily creating a new extraction, we are really looking at the market and the end consumer and what people want. At Island we’ve really focused on vape, pre-roll and packaged flower. Those are the three categories we are working on right now. We are expanding and looking to move more towards vape and live resins and specialty concentrated products that we haven’t really had in our portfolio before. What we would like to do is make sure we have the capability to manufacture that and then take a look at where we think the market is going. We are trying to go in the flower, pre-roll and vape because that is where we spent so much of our time getting pieces of automation so not everything we are bringing in house is manual.

Aaron: Now when you say the capability to manufacture that are you talking about from a packaging perspective or…?

Kristen: Yes, so we won’t do any extraction on site. It’s getting distillate, shatter and flower and then we take that and convert that either into pre-rolled joint, a package of flower or any other final product. So, we are looking at automating that packaging piece.

Aaron: Got it. OK, so the next question — and I think you kind of touched on this as well — are you involved in manufacturing to the extent that you are manufacturing the packaging?

Kristen: Yes absolutely. My whole team’s manufacturing is based out of Oakland. That’s where we do all the conversion of products. I oversee that entire team and have been really involved in a lot of the equipment that we have sourced and iterations that we’ve gone through to make sure that we’re able to automate as much as possible. We’ve really focused on the issue of weighing the material. For our flower line everything is weighed and put into a jar, capped, sealed and labeled for it to come off our lines. We don’t have anyone in packing or anything like that. Our pre-rolls manufacturing is an automated machine where it actually weighs the flower before going into the cone so we’re not having to weigh after the fact and take into account the weight of the cone because that’s so variable so we know that the customer is getting consistency. Then for the vapes, it’ssame thing – the volumetric doses everything.

I have to give my credit to everyone on the floor who is doing the day to day, they find so many new solutions since they are the ones that are hands on. I am really involved in what new equipment we need, what problems we are looking to solve and what’s causing our bottlenecks so we can continue to improve our process week over week and year over year.

Aaron: We’ll dig into some of those problems in a bit. What is your process for not just starting new product but for developing a new product?

Kristen: Yeah, absolutely. So, I think it’s really interesting to see where the market is going. What’s selling really well and especially over the past year pre rolls have been a huge growth platform for us. And especially now, we’ve seen some changes because of COVID as well. We have single joints. But then we have our Minis, which I’ve mentioned before, which are half gram joints. We’re seeing sales on those actually increased because I think people are sharing joints as people want individual things because of this pandemic.

When we go through this process, we’re really – again – we’re so focused on what the consumer wants, and what we think is going to add to our portfolio. Then when marketing and our product team comes to me, we really focus on our machinery, what we can do with it currently, and if we would need something additional. So,we’re excited about expanding into 510s right now. We’re looking at how we can automate the process of capping – we can fill right now, but not cap. And then we also take a look at packaging.

I think it’s a little different than creating like a whole new product, extraction or anything like that, but we were looking at more sustainable options for packaging for child resistance because we’re trying to move away from barrier bags as much as possible. We’re looking at, okay, how many stickers do we need to put on there? What is the labor time going into each piece of product? And again, how are we eventually going to get some consistency across product lines, etc.

So, it’s really taking all three of those components, making sure we’re getting out the customer that feels like they want. I’m having it either fit into our process or again, then go through and look at what automations meanand automation equipment investment you want to make for long term future investments.

Aaron: Are you developing new products internally, or are you relying on outside manufacturers for that?

Kristen: Not everything we do is internal. We have a big network of, you know, cultivators and extractors we work with, but we’re in the midst of getting our own cultivation and manufacturing in house by working with other companies. So with that we’re doing everything.

Aaron: Do you ever bring in external product development consultants for helping out with your processes?

Kristen: No, we don’t bring in consultants. But we have brought in another brand into our fold via a brand called Neutron Genetics. That is part of our overall portfolio. We work very closely with the founder because he has a lot of trade secrets, a lot of his own processes to make sure you’re getting the best product for that specific brand.

Aaron: In your product development, what does getting stuck look like to you?

Kristen: That’s a good question. I think one of the biggest challenges is working with the plant itself, because it’s not consistent and it’s not homogenous. You could get the same strain from the same cultivator, but it’ll be a different batch. It might be a little stickier or a little larger, etc. When you’re looking at traditional manufacturing and automation, you want consistency, homogenized liquids, same viscosity every time, and we don’t have that because the plant itself is natural and is going to have all these different expressions depending on the batch and how it was grown and how it was trimmed even.“I think it’s really the proper equipment, the proper training and then, again, continuing to evolve as a team.”

So, getting stuck means finding an off-the-shelf solution that might work for, you know, nuts and bolts or some kind of food production and then you’re going to have to convert it to actually work with the cannabis plant. So that’s what makes it so challenging, but also really exciting. In the bud, humidity and air can really throw off a manufacturing process which is really different than just doing beverages for example.

Getting stuck means really having to work with the plant concentrates specifically if you think about just the nature of those whether it be shatter, distillate or very sticky product. So again, working with machinery isn’t always what goes hand in hand. So, getting stuck is dealing with all those different formats and inconsistency using the same product day after day.

Aaron: It sounds like consistency is kind of a main topic here?

Kristen: Yeah, I think it depends on what product format we have. For example, about a year ago, we launched infused pre-rolls for Neutron where we’re putting flower, kief and shatter into a joint. So that’s going to perform differently on a piece of machinery than just straight flower.

I think it all depends on the product. Usually it happens when it’s in that machine, you’re trying to get a good flow and a good consistency. You want to have time studies, you know how long it takes to make each batch. But if a certain flower mix is performing differently, it’s getting the settings of the machine dialed, right? It’s also properly training personnel so people know how to react when things get going. Sometimes things get physically stuck in the machine as well, so to be able to react on that.

I think it’s really the proper equipment, the proper training and then, again, continuing to evolve as a team. So for our pre-roll machine, we are now on our third version of it, just because we kept running into the same roadblocks and I’m hoping that continues to evolve and we just continue to get better equipment year after year.

Aaron: I see, do you ever hire outside consultants when you do get stuck?

Kristen: We’ve worked closely with vendors. I will say that we’re not a machine shop or engineering firm. So we’re not the ones creating a lot of what we use on the floor. We’ve partnered with various vendors, which has been helpful, but we haven’t used external consultants.“When you see the huge potential and then see how much is taken out from illegal activity right now, it is frustrating to see.”

Aaron: Okay, now imagine that you have a magic wand and somebody can come in and help you. What does your magic helper look like?

Kristen: I could probably make a really long list if I’m focusing on just my manufacturing and everything! I think the next thing which we’re already thinking about that magic wand is how to get a perfectly rolled joint without having so much manual human touch to it. And like I said, we’ve really attached to that weighing problem. And we’ve seen solutions out there that you know, claim to twist and have that “perfect roll” and you don’t need to even touch it. But I think the biggest challenge there is it depends how well it’s packed. You know, you don’t want it too tight. You don’t want it too loose for that customer experience. So getting that quality, if I could wave a magic wand where I’m putting in, you know, paper on one side and out comes perfectly rolled joints, that would be my magic wand for sure. Okay, I think there’s a lot of solutions out there but to get that quality and that consumer experience that we want, I haven’t seen working practice yet.

Aaron: Okay, What’s the what’s the most frustrating thing you’re going through with the business right now?

Kristen: Again, that could be a long list! I think from a more macro-level, it’s definitely the competition with the illicit market and just how there’s not enough outlets for legal cannabis right now in the state of California. When you see the huge potential and then see how much is taken out from illegal activity right now, it is frustrating to see. We’re going to get this growth and projection of the right number of dispensary licenses and things like that are definitely a huge frustration as well as with the tax structure right now because it’s obviously contributing to people going to the illicit market.

Aaron: So what are you following in the market? And what do you want to learn more about?

Kristen: Yeah, I think that’s a great question. I think the thing I’m most excited about for the larger population isjust more research to come out about the actual attributes of the plant, or how different cannabinoids react together and can have different effects. How terpenes can affect the high, how things can be used and distantly, recreationally, etc. And really, hopefully evolve and move away from strictly some sativa, hybrid,indica classifications, and really be able to educate the consumer more about the plant so people can have a more a personal relationship to understand how cannabinoids or specific terpenes are going to give them a different effect. And again, I think that’s so interesting because it could be used for therapeutic reasons that people do consume cannabis or it could just make it a better experience for people who want to take this as an escape or a way to relax and everything. So I’m really excited because more research is going to be able to get done and we can really learn more about how all of these things interact in the body and then people can take it to a whole new experience and be more educated all around.

Aaron: Alright that’s the end of the interview Kristen! Nice chatting and meeting you!

Kristen: Alright, thanks Aaron!

July 14, 2020

What Cannabis Businesses Need to Do to Adapt to COVID-19

By Arthur Gulumian

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How COVID-19 Impacted Cannabis Businesses

Before jumping into what cannabis businesses can do amid this pandemic, it is crucial to explore the specifics behind how the virus impacted the industry as a whole. From a surface level, it seems obvious what happened: dispensaries had to implement social distancing protocols, require both customers and employees to wear masks and limited the number of customers that can be present on the point-of-sale floor room. But COVID-19 did not merely make shopping experiences a tab bit inconvenient.

Cannabis producers, and especially those involved in manufacturing cannabis goods, experienced an apparent disruption in their production schedules. If the metals and plastics were sourced from Wuhan, Shenzhen or any other dense industrial area in China, supplies suddenly stopped coming, and producers were left with limited production options. Businesses did not consider the value of having various vendors and instead put all their stock in one source. A disruption in production inherently impacts dispensaries.

COVID-19 impacted more than just supply chains, however. For instance, investors are now less likely than before the pandemic to invest in early-stage cannabis companies. Competition for capital now far outweighs the supply for cannabis companies, and we have seen (and will continue to see) a drop in company valuations. Indeed, COVID-19 is affecting more than just currently existing operators but those yet struggling to create cannabis businesses of their own.

Vendors & Supplies

A broad survey conducted by the Institute for Supply Management (ISM) between February 22, 2020 and March 5, 2020 found that 75% of U.S. companies had experienced supply chain disruption as a result of the COVID-19 outbreak. An estimated 90-95% of all components utilized in cannabis vaporizer pens were sourced from manufacturers in Shenzhen, China. In contrast, very few companies used domestic manufacturers. While this is just one example, it is equally important to note that cannabis-specific equipment and supply shortages were not the only factors that disrupted cannabis businesses. Shortages of personal protective equipment (PPE) presented challenges for cannabis dispensaries, producers and manufacturers that continued to operate during the “shelter in place” orders.

Operators must establish a resilient supply chain. Do not simply limit your options to one specific region, as this can be a costly mistake. Operators must cultivate an in-depth understanding of their supply chain beyond critical suppliers and their stress points; they need to develop and follow a systematic supply process that takes potential disruptions and stress points into account. When vetting potential vendors, always ask detailed questions that elicit evidence-backed responses. Ask vendors where they source their materials from, whether they have any history of experiencing disruptions in their supply chain and what kind of setbacks they have suffered as a result of COVID-19.

Investing in Your Core Business

In light of COVID-19, operators must invest in solutions that increase efficiency and improve the customer’s experience. This entails ensuring your customer safely enters and leaves your dispensary with a product they are satisfied with—the essence of any retail operation. Your operation should focus on enhancing customer flow as opposed to encouraging aimless roaming. Having an open-space, Apple store style dispensaries might have been a popular option before, but times have changed, and dispensaries must adapt.

Guided purchases offer not just more efficient transactions, but also serve to ensure that your waiting room isn’t backed up with an endless stream of unmanageable customers. Depending on your locally-mandated COVID-19 protocols, your dispensary will likely not be permitted to hold a high number of customers in the store, nor should it during this pandemic. Each customer service representative must be active as opposed to passive, directly asking customers what they are interested in, offering product or strain choices when customers seem unsure and answering questions as thoroughly as possible to avoid confusion and inherently delays. Be sure to emphasize the value of guided purchases to your employees and how they can promote the safety of both themselves and their customers.

Maintaining Urgency

The uncertainty of COVID-19 and its impact on the general economy has left many individuals “clocked out.” Simply put, many people feel that they should wait until things go back to normal before making any critical decisions. As essential businesses, cannabis operators cannot afford to make this same mistake. Now is not the time to sit back, reflect and wait for the vaccine. Instead, operators must work to precisely assess how COVID-19 impacted their business and execute a clear plan of action to address foreseeable problems.

Execution is far more important than perfection; you’ll need to make changes on a dime and avoid spending excessive hours obsessing over debating specific actions rather than taking them. It is far more essential to get tasks done versus ensuring they are perfect. If something is not working in your business, it must be readdressed or removed entirely from the protocol. It is far better to make necessary changes now amid the pandemic as opposed to reactively waiting and seeing what may come next following it.

Stay nimble by cutting out any factors that may be slowing down your company’s efficiency. Is your point-of-sale system causing issues? Can you use a better payment processing tool? Are any employees underperforming? Are there any internal policies that may be hindering your employees’ ability to work as optimally as possible? These are some of the many factors that must be considered to ensure your business stays agile and adaptable. Determine what is working against you and execute a plan of action to address. Do not wait and do not take shortcuts around regulations.

Understanding the Shift in Purchasing Behavior

Regardless of whether or not a vaccine for COVID-19 is completed anytime soon, operators must know that there is no “returning to normal.” People’s habits and behaviors have changed due to this virus, whereas slow browsing of items might have been preferable for some individuals before COVID-19; this is likely not the case today. Furthermore, research groups like Accenture have found that most customers expect their shopping habits to change permanently.

Source: Accenture COVID-19 Consumer Research, conducted April 2–6. Proportion of consumers that agree or significantly agree.

In the study mentioned above, shopping more consciously is one of the two top priorities for customers during this pandemic. According to Accenture, “[c]onsumers are more mindful of what they’re buying. They are striving to limit food waste, shop more cost consciously and buy more sustainable options. Brands will need to make this a key part of their offer (e.g., by exploring new business models).” Furthermore, customers are now more likely to shop locally; this is why community engagement would be especially important to ensure you develop transparency and trust between your brand and your customers. Understanding this shift in purchasing behavior will remain one of the more crucial tasks of any cannabis operator.

Expanding Sales Avenues

More and more customers are now relying on online and curbside purchases than ever before. Dispensaries must look to their current sales avenues and determine where key focuses should be made. Use your sales data to determine where customers are making their purchases the most, be it through third-party delivery services such as Eaze, standard home delivery, online ordering or curbside pickup. Focus on identifying friction and streamlining the user experience on all customer-facing platforms and services. Equally, consider which platform your customers are using the most to make purchases; are they making more online purchases, or do most still prefer direct shopping at the store? Remember that having more products doesn’t necessarily mean more revenue. You must also identify which products are performing well and which have low margins.

These considerations can help strengthen your highest performing platform while working to fix any more inferior performing platforms. As stated before, stay nimble; if something is not working out, cut it out from your business model, and move forward. Do not be afraid to cut poor-performing platforms to hone your focus on the successful ones. Since post-COVID-19 shopping behavior is likely to stay permanent, these changes may still be applicable following a slowdown or cessation of the virus.

Delighting Your Customers

Virus or not, customer satisfaction remains one of the most crucially defining points for the future of your business. Your customers must be safe and must be happy with their purchase. To ensure this outcome, you need to maintain adequate safety policies while equally promoting streamlined purchases. Although a limited number of individuals may be annoyed with over-the-top safety precautions, most customers will enjoy the heightened security that comes alongside these types of measures.

Contactless service, such as having customers scan their identification upon entry or encouraging more credit card versus cash transactions, can increase customer satisfaction, as they will feel a stronger sense of security when shopping at your dispensary. Focus on streamlining curbside pickup. Things such as requiring vehicle descriptions (e.g., license plate numbers, color, make) for curbside pickup purchases can go a long way in helping employees quickly identify customers.

Equally, be sure there is hand sanitizer available near the entrance of your dispensary. This adds a further sense of security for your shoppers. Delivery should be consistent; delays and setbacks must be minimal to win the confidence of your customers. Take the extra steps to ensure your dispensary is clean and products hygienic. All these factors work to increase customer satisfaction while maintaining their safety, and more importantly, impact the level of trust your customers have in association with your brand.

Scaling Operations Taking Advantage of Limited Competition in Emerging Markets

As stated before, several individuals—including existing and emerging cannabis businesses—are clocked out following COVID-19. This mindset is not only detrimental for operations but can also impact how you scale your business. New markets are coming online and will continue to do so as regulators are increasingly incentivized to replenish government coffers. Riverside County in California, for instance, is now allowing for capless licenses for all cannabis business types. However, what remains the key focus for regulators is expanding the number of delivery and distribution operators. In Massachusetts, delivery endorsements for dispensaries are available without a set deadline to social equity applicants and do not have a defined cap. In Illinois, the cap for transporters was equally removed, and each applicant who scores above 75% will receive a license.

These types of licenses are now more valuable than ever before for two reasons. The first reason is that regulators are keener to award delivery and transporter licenses than other types. Secondly, customers now prefer home delivery over shopping in stores due to COVID-19. With more people clocked out during these times, you have far more opportunities and far fewer competitors during application processes. Use this time to truly develop a strategy for expansion, as the chance might not come so quickly again.

Conclusion

As a final point, be sure to expand your online presence during this time. Although you may not have the capacity to reflect your company’s personality and value through quick in-store transactions, you can use social media to encourage product reviews, social interactions, and recommendations. Invest in marketing through social media platforms. Platforms such as TikTok have helped form communities of like-minded individuals. Use platforms such as that to highlight your company’s personality and values, avoid being “salesy” and focus more on being funny, entertaining and just alive. Character adds value to your business.

People want to laugh, to feel safe and they want to live. Create social interactions and immersion and always prioritize being honest and transparent with your customers. This final point stands as equally as important as the rest of the considerations highlighted throughout this article. Stay nimble, stay active and stay alert! Do not view the chaos behind this pandemic as a pit, and instead see it as a ladder. Track down opportunities, do not be afraid of change, and, more importantly, do not wait for an answer to COVID-19, be the answer.

May 18, 2020

Managing Supply Chain Challenges During a Crisis

By Daniel Erickson

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Discussion of supply chain disruption has permeated media reports almost daily since the advent of the current COVID-19 crisis – from shortages of toilet paper to cleaning products and meat. Cannabis businesses have not been immune to impacts on their supplies, and for an industry that faces unique challenges during normal times, a disrupted supply chain has emerged as one of the biggest issues to business due to the coronavirus. Deemed essential in many states, cannabis has weathered the storm relating to government-imposed restrictions only to face logistics problems or a scarcity of supplies necessary for manufacturing and/or distributing products to consumers. For many companies, cannabis ERP software has provided a necessary and supportive structure to efficiently manage and mitigate supply chain challenges during this unprecedented time – facilitating continuity and trust in the supply chain for their customers.

What is COVID-19’s impact on the cannabis supply chain?

During this pandemic, the global supply chain has been disrupted due to factory closures, worker illness, slowed production, closed ports and altered transportation routes – leading to shipping delays and fewer supplies available, from cultivating essentials and vaping accessories, to baking ingredients for edible manufacturers and packaging materials. A quarantined workforce, as well as a shortage of healthy crop care and production workers necessary to grow and harvest crops, has also had an effect. Similar to other current supply issues, there has been significant inventory depletion as consumers prepared to stock up on cannabis products for “stay at home” orders in anticipation of spending extended periods of time at their residence. Uniquely pertinent to the cannabis industry, due to the lack of federal legalization, regulation occurs at the state level and therefore each state governs its cannabis inventory available for sale. These factors have all led to the two biggest problems facing today’s cannabis industry – companies lacking visibility into their inventory and the fact that many do not have alternate vendors for their supplies to meet current consumer demands.

How a cannabis ERP software solution can help

During a disruption to the supply chain such as the COVID-19 outbreak, natural disasters, or other unexpected events, here are three ways an industry-specific ERP system supports effective supply chain management for the cannabis industry:

1) Continuous management and monitoring of inventory and effective material planning – With a real-time tracking system that monitors the movement and storage of inventory by managing and automating transactions and providing lot tracking and traceability, cannabis companies have up-to-the-minute access to crucial inventory data. Accurate analysis of future requirements, as well as procurement guidelines that include minimum order quantities and safety stock levels, ensure the proper planning and reordering of materials – avoiding lags in production due to inventory shortages. Using the information recorded in an ERP solution’s centralized database, such as vendor lead times, shelf life and production timelines, buyers and planners are able to effectively utilize materials requirements planning (MRP) functionality to factor supply, demand and forecasted requirements to plan production and purchasing. Customer purchasing fluctuations throughout the year for holidays and seasonal consumer trends are also tracked in the system, and its analytics software provides growers, cultivators and manufacturers with the visibility to mitigate supply shock and analyze previous periods of hardship to provide actionable insight.

An integral part of inventory control includes testing protocols and quality processes that are automated in an ERP solution. These workflows and approval processes ensure that specific quality standards are met and non-compliant raw materials are quarantined, removed from production and issues are rectified – keeping undeclared substances, harmful chemicals and impure ingredients from infiltrating the supply chain or ending up in finished goods. During these critical and trying times, assurances that materials and ingredients are safely managed and monitored is imperative.

2) Maintenance of supplier information and rankings – A cannabis ERP solution provides features for managing supplier and item specific details to monitor and control which materials can and should be purchased from each vendor. A strong relationship with each supplier is critical in gathering this information, as this helps assign and manage a risk level with each supplier. Current and accurate information (either provided by the vendor or acquired from on-site visits) regarding sanitation programs in place, security measures, physical distancing policies and other details ensures that a cannabis company starts with a foundation of quality raw materials for their products. An ERP solution maintains a list of these approved suppliers to provide already vetted and documented alternatives should a primary supplier’s materials be unavailable. Once vendors are recorded they can be ranked in order of preference and/or risk level so that if a supplier becomes unavailable, another can be quickly identified and used in its place. An ERP’s maintenance of approved supplier lists is an industry best practice that provides supply chain visibility to enhance the assurance of safety.

3) Establishment of supplier transparency through audit rights and communication – An ERP’s ability to manage and monitor all supplier transactions and communications helps facilitate audit rights to evaluate the financial viability of vendor partners. Data is collected regarding vendor price points, historical transactions, average lead times and quality control results in order to identify vendor trends and build a risk assessment with a scorecard rating system for each supplier. Potential supply chain issues can be identified in real-time – such as price increases or delivery delays – prompting communication with suppliers to address problems or triggering the change to an alternate source for materials. Transparency and open communication are key to vendor analysis by researching all suppliers. An ERP solution’s maintenance of current, accurate information is essential to keeping a consistent inventory.

A centralized ERP system facilitates the maintenance and management of the supply chain when a crisis of the magnitude of COVID-19 hinders supplies from arriving or the safety of vendor materials comes into question. Inventory management best practices within the solution help to avoid production lags due to inventory shortages, materials planning provides insight into scheduling and production, and quality assurance procedures prevent harmful products from being sold to consumers. By utilizing features such as the approved supplier and alternative supplier processes within the system should a primary suppliers’ materials be unavailable, there is no need to scramble to find replacement vendors, as they are already vetted and documented within the solution. The system also provides transparency of supplier information to make key decisions regarding vendor rankings and risk level. While the cannabis supply chain is relatively new and untested, proactive companies have the technological tools available in an ERP solution at their disposal to weather the current crisis and face future industry challenges head-on.

March 16, 2020

How Coronavirus is Affecting the International Cannabis Industry

By Marguerite Arnold

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Frankfurt: Germany right now is not the worst place to be as a global pandemic closes borders and leads predictably to mass change overnight, which is unparalleled during peacetime. But it is still eerie. Berlin and Cologne are starting to close public spaces (like restaurants, bars and clubs).

The grocery stores and pharmacies are still stocked and open however- it is a national priority.

On Germany’s borders, Europe is closing in a way it has not since WWII. The EU is considering banning all non EU “foreigners” from entering the region for nonessential reasons for the next 30 days – albeit in an environment where leaders are also concerned about making sure supplies get through to those who need them.

It also feels like wartime – only this time the “enemy” is a virus. It is called COVID-19, and it is spreading. It cannot be “stopped” although authorities are now doing everything they can to slow it down. At risk are not only populations but also vulnerable health care systems. The goal here is to prevent masses of sick people showing up at hospital. There will not be enough space for everyone if the rapid spread of the virus is not stopped, starting with beds and ventilators. In Italy, doctors are already triaging patients (deciding, in an overwhelming influx of sick patients, who has a chance of living and who does not), because there is a shortage of staff, beds and medical devices for those who need the most care.

The German government, in particular, is clearly prioritizing slowing down the spread and mitigating the load on a system that is strong, but also vulnerable to this kind of existential overload. Jens Spahn, Germany’s health minister, sounded the alarm early about mass gatherings. The country’s Chancellor, Angela Merkel, has promised to throw “Germany’s arsenal” (funding) to help German organizations hit hardest.

But that is just one country. Italy is in lockdown, Spain is on its way this week, and many others are closing borders. In Switzerland, as of this weekend, the only shops that were open were pharmacies and grocery stores. To get in, you must wait in line outside, spaced 1 meter from other people, and use hand sanitizer as you enter.

These are not privations that any generation alive today remembers viscerally. The closest is stories, perhaps second or third hand, of what life was like here during wartime.

Both China and now Germany have sent medical supplies to Italy (the worst affected country in Europe so far), and a German company is on the front lines of producing a vaccine which is likely to be ready for human trials as of June.

What Is The Impact On The Cannabis Industry Specifically?

But how does all of this impact the global cannabis industry, especially as it is an industry still very much and by design, built on international imports? Throughout the world, including the United States, cannabis-related trade shows, expos and conferences are all being either cancelled or rescheduled to June at the earliest. President Trump also instituted a European travel ban, although this will not have much effect on the industry here, since Germany imports cannabis from Canada, not the U.S. for its medical market.

The connection to the industry from the threat of the virus itself is also on display. In Illinois, for example, some dispensaries are giving priority to their medical patients, shutting the doors to recreational customers. Just months after legalizing recreational sales, the state is now telling dispensaries to discourage crowds and prevent customers from lining up. That is not so far the case in Europe where cannabis is slowly being normalized into the regular pharmacy system. But pharmacies are also on the front lines of this epidemic – not only in that they serve front-line customers, but also deliver medicines to retirement homes.

German authorities have already suggested that they nationalize medical supply chains from Asia for vital medical supplies, including presumably vaccines and other medications as well as medical equipment, like ventilators.

Clinical trials, fast-tracked vaccine production and new drug approvals are evidence of how quickly governments can work to produce new treatment options. Countries still hampered by the slow pace of cannabis reform should look at how a global health crisis has allowed governments to bypass certain areas of red tape, untethered by high prices in developing supply chains. While cannabis reform is indeed not the same as a global pandemic, it has the ability to save lives regardless. That ability should be enough impetus for quick reform, much like actions taken by governments so far during this crisis. Not to mention the fact that many cannabis patients are also the demographic of who is most vulnerable in this epidemic – the chronically ill and the elderly.

The International Cannabis Business Is Built on Global Supply Chains

In the U.S. right now, there is a significant concern about sourcing of the vaping industry (the vast majority come from Asia). In Europe this is of course far less of an issue. The only vapes of medical designation produced here are made by German Storz and Bickel.

However, there are other considerations. Right now, more cannabis is being imported than grown in Germany legally, Europe’s still largest medical market. And so far, most of the cannabis here is coming in from Canada, Holland or Portugal although domestic production has now been seeded from Greece and Malta to countries further east. There is only one entity (the former Wayland in partnership with the German Demecan) who is now even certified to produce in Germany.

Wash your hands, limit social interaction and cancel large events. Stock markets around the globe are in free fall as investors fear the crisis will plunge the global economy into a recession. This obviously affects publicly traded companies, as well as companies looking for capital. Expect the larger cannabis companies to continue taking bigger hits on their stock price.

But while borders are being closed all over Europe to people, emergency medical supplies and the like will increasingly be given priority.

How countries begin to view cannabis in this kind of epidemic is another question. It is certainly a drug of last resort right now, highly expensive and in many cases going to the elderly and those in palliative care. For this reason alone, cannabis companies need to step up to the plate. This industry is being built to serve the chronically ill. In other words, those people who are already most vulnerable to this virus.

But how to do that? Dronabinol (manufactured in Germany) is no longer the only option now available. It was patented as a direct response to the AIDS crisis in the early 1980s. But in a country with other options now, this is also on the plate.

So what can cannabis companies do during this time of crisis? For starters, read the guidelines on how companies can do their part to mitigate the spread of disease. Wash your hands, limit social interaction and cancel large events. Consider using in-store pickup or delivery options, where legal. And use telecommunications platforms like Skype or other remote cloud solutions to manage your workforce remotely.

Cannabis companies ought to have the wherewithal to do their part in mitigating the spread of COVID-19. As the global pandemic continues to spread outside of China (the only place where new infections are now levelling off), it’s increasingly important to monitor the situation and take extra precautions to mitigate the spread.

June 6, 2018

EVIO Labs Expands Ahead of California Testing Deadline

By Aaron G. Biros

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In a few short weeks, the regulations in California’s cannabis market will expand to include more laboratory testing. The previous exemption for selling untested product will be eliminated come July 1^st, meaning that every product on dispensary shelves will have to be tested for a number of contaminants.

EVIO labs photo — Pesticide testing, expanded residual solvent testing and foreign materials testing will be added come July 1st.

According to William Waldrop, chief executive officer and co-founder of EVIO Labs, the state is currently finalizing a revision to the existing emergency rules, which is designed to target the potential supply bottleneck situation. “To help alleviate the bottleneck, the state is eliminating the field duplicate test on every batch of cannabis or cannabis products,” says Waldrop. “This will give the labs additional bandwidth to process more batches for testing.” So one test per batch is the rule now and batch sizes will remain the same. This, of course, is contingent on the state finalizing that revision to the emergency regulations.

William Waldrop, chief executive officer and co-founder of EVIO Labs

In addition to that change, the state will expand the types of testing requirements come July 1^st. New mandatory pesticide testing, expanded residual solvent testing and foreign materials testing are added in addition to the other tests already required.

With July 1^stquickly approaching, many in California fear the rules could lead to a major market disruption, such as the previously mentioned bottleneck. Waldrop sees the elimination of duplicate testing as a preventative measure by the state. “It is a good move for the industry because it allows labs to test more batches, hopefully reducing the bottleneck come July,” says Waldrop. Still though, with only 26 licensed laboratories in the state as of March, testing facilities will have to meet higher demand, performing more tests and working with more clients.

EVIO Labs is preparing for this in a number of ways. They already have a lab in Berkeley and are working to expand their capacity for more analyses. In addition to their lab in Berkeley, the company is working to get three more locations operational as quickly as possible. “Right now, EVIO Labs is expanding through the identification of new market locations,” says Waldrop. “We have announced the acquisition of a facility in Humboldt and we are outfitting it for state-mandated testing. We have secured a location in LA, and licensing for LA just began as of June 1^stso we are going through the local licensing process at this time. We are still moving through the licensing process for our facility in Costa Mesa as well.”

“In the meantime, we have expanded capacity of personnel in our Berkeley facility to support our client base until these other locations come online,” says Waldrop. “We are refining our business, bringing on additional equipment and more resources.” While the rules haven’t been implemented yet, Waldrop says he’s seen an uptick in business with licensed operators requesting more testing for the new July 1^ststandards.

While some might feel a bit panicky about how the new standards could disrupt the market, Waldrop says his clients are looking forward to it. “Our clients are very happy with the proposed new rules, because it reduces the cost of testing per batch, which will inherently reduce wholesale costs, making cannabis more affordable for patients and recreational users.”