Earlier this month, Colorado cannabis producer Herbal Wellness LLC recalled dozens of batches of cannabis due to positive yeast and mold tests. The Colorado Department of Public Health and Environment (CDPHE) issued a health and safety advisory following the news of microbial contamination.
The Colorado Department of Revenue then identified batches of both medical and recreational cannabis produced by Herbal Wellness that were not even tested for microbial contaminants, which is a requirement for licensed producers in the state. Just a few days later, the Denver Department of Public Health & Environment (DDPHE) issued a bulletin announcing their plans to conduct random tests at dozens of dispensaries.
“In the coming weeks, the Denver Department of Public Health & Environment (DDPHE) will be conducting an assessment in approximately 25 retail marijuana stores to evaluate contaminants in products on store shelves,” reads the bulletin. “DDPHE has worked with epidemiological partners at Denver Public Heath to create the assessment methodology. Participating stores will be randomly identified for inclusion in the assessment.”
“Current METRC inventory lists for each store will be used to randomly identify samples of flower, trim/shake, and pre-rolls. Each sample will be tested for pesticides and total yeast and mold by a state- and ISO-certified marijuana testing facility. Results of their respective testing will be shared with each facility and will also be shared broadly within a write-up of results.”
We’ve covered the CannaGrow Expo previously, but this time around we catch up with Joseph De Palma, founder of CannaGrow, to talk about the genesis of his conference and what makes the event so special. This year’s CannaGrow Expo heads to Palm Springs, California, a new location for the event, on May 19thand 20th.
We’ve watched De Palma’s conference grow over the years, moving around the country and becoming the tight-knit community we know it as today. The meat and potatoes of the show are definitely the educational sessions, panel discussions, roundtables and the expo hall. But covering it year after year we’ve noticed a real sense of community develop, one where genuine idea sharing, collaboration and inclusivity are preached. There are no dumb questions at the CannaGrow Expo.
According to Joseph De Palma, CannaGrow started in 2014, when the original event was held in Denver. “From the beginning, we wanted to create an event specifically for growers, where the focus was always on education and ‘becoming a better grower’,” says De Palma. “We had experienced the existing events in the marketplace, and almost all fit into two categories at the time, festival, or generic tradeshow. Those were fine for their purpose, but they didn’t foster an environment of education, and that’s what we believed was most important to the emerging cannabis industry.” Back in 2014, their show only had 10 sessions and 30 exhibitors. “Passionate growers from around the country had 2 days of grow-focused sharing and learning, and you could see the energy and excitement,” De Palma says. “Discussions would dive deep, people made new friends, and it really elevated the conversation around cultivation.”
Since the show’s debut, it’s grown substantially. The 7th CannaGrow Expo is fast approaching, and this upcoming conference has four separate tracks and roughly 100 exhibitors. But it still keeps its sense of community, one where you don’t feel crowded, where everyone has time to chat and network, without the overwhelming feeling that can come with larger trade shows. “That inclusivity and open dialog is built in,” says De Palma. “If you go to an event that’s tradeshow dominant, most people are there to walk, shop, and leave. At CannaGrow, growers and extractors come together with a plan for the weekend, remaining in a constant state of engagement with others at the show.”
This year’s show has some exciting additions to look out for. The agenda covers a wide range of topics, including everything from an introduction to growing with living soil to a discussion of cyber security. The Extraction Summit, new to this year’s event and held on Day 2, is their response to the massive rise in popularity and demand of extracts.
Eric Schlissel, cybersecurity specialist, president and chief executive officer of GeekTek, is giving a talk focused on IT infrastructure. “My presentation will center around the actions cannabis businesses need to take right now to repel cybercrime and potential federal seizure,” says Schlissel. “As cannabis operators build their businesses and develop their security strategies, they often focus exclusively on the physical portion of their business – the merchandise and the cash in particular – and overlook the importance of designing and fortifying a secure IT infrastructure. I will discuss the importance of a holistic security strategy that embraces both and how you can both create one and prepare it for expansion into other states or even globally from the very start.” Schlissel’s discussion is one example of just how all-encompassing CannaGrow intends to be.
De Palma and his team leave few stones unturned as the show truly delivers vital information for cannabis cultivators in every area. Some things we are looking forward to? Seeing old friends and learning everything under the sun about cannabis science, growing and extraction. “People get to know each other, and with everyone sharing a core passion for cultivation and extraction, lifelong friendships are made,” says De Palma.
Last week, Hoban Law Group announced a major international expansion, with new offices in Latin America and the European Union. The Denver-based law firm said they will have four new offices across the EU by late fall and two new offices in Latin America by spring of 2018.
Bob Hoban, managing partner and co-founder of Hoban Law Group, says they have already been working internationally for years. “HLG steps in to global markets quickly as our direct work with government officials on policy and regulation has kept us in this important global curve,” says Hoban. “We have accepted the challenge of being global cannabis industry leaders & experts and will work with strategic industry-leading partners, such as New Frontier Data, to move the industry forward across six countries.”
The press release says the law firm has been advising governments around the world on cannabis policy for several years, as well as working on a handful of international business transactions in the past. These new offices will work mainly with structured finance, mergers and acquisitions, worldwide trade, regulatory law and equity placement in the cannabis (including industrial hemp) industry. “Combining the firm’s corporate practice, with our intellectual property and tax practice groups will position our firm’s client’s to succeed at the highest levels in this international marketplace,” says Hoban.
The press release also announced they have added Andrew Telsey, an experienced securities attorney, to their firm. He has helped take more cannabis businesses public in the U.S. than any other attorney.
Hoban Law Group, founded in 2009, is the nation’s largest cannabis business law firm. They have attorneys in every state that has legalized cannabis in the United States.
In November 2016, residents in Denver, Colorado voted to pass Initiative 300, allowing businesses to seek social marijuana use permits if neighborhood or business groups also agreed and signed off. In the very near future, the process for how cannabis consumers purchase and consume cannabis will no longer be restricted to only going inside a dispensary to make your purchase and returning to a private residence to consume. Instead, it may be as simple as visiting a drive-thru and then going to a cannabis bar or social club to enjoy.
Cities such as San Francisco have had on-site consumption laws in place for some time, with notable locations including sparc, a well-known dispensary with two locations in the city, and the recently announced Power Plant Fitness, a gym slated to open in late 2017 that will allow members to consume cannabis while working out.
Social consumption of cannabis is not a new topic of discussion—just look at Amsterdam’s cannabis coffee clubs—but it is undoubtedly a legalization trend that will continue to be at the forefront as more states pass legalization or convert to adult-use markets. There remains one reoccurring theme, however: a lack of clarity on how these laws will be structured and how social consumption regulation will be put in place.
In Colorado’s state legislature, there was bipartisan agreement that the state needed to allow for venues to let patrons consume cannabis in order to deter residents and tourists alike from consuming in public places such as sidewalks and parks. A Republican-sponsored measure proposed in the state legislature would have allowed for the regulation of cannabis clubs in a similar format to how cigar bars are managed, but that legislation was put on hold for rewrite.
Within the state, there also exists a heated debate over whether or not the creation of social cannabis clubs would instigate federal intervention by the new administration, especially in light of Attorney General Jeff Sessions’ comments in opposition of the adult-use cannabis industry.
One thing is clear: since Denver’s passing of the social use ballot measure in November, there have been numerous halting attempts to put a law in place and the current law is vague. There remains much work to be done before Initiative 300 may be enacted.
For those interested in learning more or joining the discussion, the National Cannabis Industry Association (NCIA) will be hosting a panel titled “For Here or To Go? Evolving Regulations on Social Consumption of Cannabis” at its 4th annual Cannabis Business Summit & Expo in Oakland, June 12-14. The panel will be led by Sam Tracy of 4Front Ventures, who supports the company’s business development and communication efforts.
You can learn more about the Summit and see the full conference agenda on the Cannabis Business Summit & Expo website. In celebration of 4/20, NCIA has extended the early bird pricing deadline for conference registration from April 21 to April 24 to allow for busy cannabis business owners and operators to take advantage of the savings.
Cannabis Industry Journal readers may use discount code CIJ15 to save 15% on registration.
Denver-based Green Man Cannabis last week voluntarily recalled batches of cannabis sold to both medical patients and recreational consumers. The recall comes after the discovery of off-label pesticides during inspections in both dry-flower cannabis and infused products.
According to the Denver Department of Environmental Health (DEH), the products have labels that list an OPC License number of 403-00738, 403-00361, or 403R-00201. The cannabis in question is not a specific batch, rather, “All plant material and derived products originating from these cultivation facilities are subject to the recall.” The DEH’s statement includes contact information for the company (email: email@example.com) and the DEH Public Health Inspections Division (email: firstname.lastname@example.org or 720-913-1311).
The DEH statement does not mention which pesticides were detected or the levels at which they were detected. Christian Hagaseth, founder of Green Man Cannabis, says the chemical detected was Myclobutanil. “We had used Eagle 20 in the past, [the pesticide that contains Myclobutanil] but we stopped using it as soon as it was banned,” says Hagaseth. “The DEH found the residues in the growing environment so we immediately performed a voluntary recall.” Green Man has three cultivation facilities, one of which they suspect is contaminated from pesticides sprayed a few years ago.
As far as corrective actions being taken, Hagaseth says they are doing a thorough cleaning and sanitation in two of their grows and a complete remediation plan in the suspected contaminated grow. “This was a good learning experience- the key takeaway for us is we need to clean these environments more consistently,” says Hagaseth. “I am grateful that the system is working; public health and environmental safety are being looked after here.” Hagaseth says the facility in question was operating almost without interruption since 2009, but they adjusted and learned to implement preventative actions following the recall.
The DEH says there have been zero reports of illness related to the recall. “The possible health impact of consuming marijuana products with unapproved pesticide residues is unknown,” the statement reads. “Short and long-term health impacts may exist depending on the specific product, duration, frequency, level of exposure and route of exposure.” The DEH advises consumers that may be concerned to reach out to their physician.
The DEH performs routine inspections of cannabis infused product manufacturers and retail locations in Denver, as well as investigating complaints. “I am sorry that it happened to us, but I am happy the system is working and we are more than happy to comply,” says Hagaseth.
Recalls are a necessary part of our lives, and they occur quite often. There are hundreds of food recalls performed each year. Now we are experiencing recalls in the cannabis industry. It is important to keep in mind that the primary objective of performing a recall is to protect consumer safety.
Welcome to a whole new game!
A recall occurs to remove defective or potentially harmful products from the marketplace.
Recalls can be expensive and stigmatizing. Companies involved are usually highly motivated to remedy the issue and recover as quickly as possible. It is in the producer’s best interest to do everything in their power to maintain and regain patient & customer confidence and brand trust as soon as possible.
In the United States, food recalls are typically generated by the U.S. Food and Drug Administration (FDA), or by the U.S. Department of Agriculture (USDA) through the Food Safety and Inspection Service (FSIS). Food manufacturers regularly perform mock recalls and, when needed, perform voluntary recalls of possibly contaminated product. Recently, listeria has become a major concern for contamination in the food industry and as a result, many companies are preparing themselves for prevention strategies.
As cannabis is still federally illegal, the FDA does not perform cannabis recalls. As a result, we are seeing local health departments and the state departments of agriculture getting involved in cannabis recalls. Recent recalls are voluntary and are related to potentially dangerous pesticide residue on flower, concentrates and infused products. Colorado has come into the spotlight recently for businesses performing a number of voluntary recalls, in the interest of protecting consumer safety. This January, a recall included “individual units of marijuana concentrates that are used for vaporizing” testing positive for Imidacloprid, Myclobutanil, Etoxazole and/or Avermectin, which are all pesticides determined by the Colorado Department of Agriculture as not usable on cannabis.
How do we know there is a problem?
A manufacturer discovers a problem
Inspectors reveal a potential issue
A product fails a test carried out by a licensed laboratory
A state health department may be alerted to an issue
Preparing for the “What- Ifs”
What is your crisis management strategy?
How will your team communicate the issue with regulators?
What is the protocol to recover or destroy recalled product?
What is the communication plan with purveyors & consumers?
What new structures will be in place to prevent future issues?
How do we avoid a Recall?
Manufacturers and cultivators endeavor to prevent issues in the first place. Good Manufacturing Practices (GMP), Good Agricultural Practices (GAP) and Hazard Analysis and Critical Control Points (HACCP) plans are used to ensure quality and safety during the production process. Mistakes can occur. It is ultimately the manufacturer’s responsibility to remove any possibly contaminated product from the market quickly and before potential damage is incurred.
As we pioneer the cannabis industry, it is important to be as proactive as possible at every step of the supply chain, from seed to the sale of cannabis: Cultivating, trimming, curing, extracting, infusing, producing, packaging, shipping, receiving, storing and selling are all points where safety measures should be in place.
How is your team doing with the following?
GAP, GMP & HACCP plans to ensure quality product
Testing, TESTING, Testing- to confirm safety of your goods
Requiring strict & tested operating procedures from your suppliers
Internal quality reviews
Training and Accountability
Our desire is that you do not ever need to recover from a crisis, but mistakes happen. They create a learning opportunity for us to make a higher quality product, to strengthen our procedures and to show our consumers that we are committed to excellence.
Those that follow the legal cannabis industry are undoubtedly aware of the struggles of Colorado to regulate pesticide use on cannabis. At the time of this writing, there have been 19 recalls of products contaminated by pesticides in as many weeks. Authorities could not in all cases identify exactly how many units of products may have been tainted, but based on the numbers available, roughly 200,000 individual cannabis products, if not more, have been pulled from dispensary shelves. Along with these recalls have come a large amount of coverage and commentary from various news outlets, industry stakeholders, and even those companies who have had products pulled from shelves.
As this is a controversial and contentious subject, it can be difficult to parse and evaluate the various points of view being offered. In what follows, we will outline the issues at hand objectively: first providing a brief overview of federal and state pesticide regulations and how they pertain to cannabis; addressing claims of whether pesticide usage is “safe” or not; and, finally, offering our opinion of how the cannabis industry should address the pesticide conundrum considering the current regulatory environment and the state of our knowledge.
Before diving in, we are also aware that there is controversy around cannabis testing methodologies, and that the reliability of cannabis testing labs in general has been called into question by a number of the companies that have faced recalls. While we cannot comment on the operations of particular labs, we do support the application of consistent standards, proficiency evaluations, and stringent regulatory oversight to testing labs themselves, so that their results can be assured of being beyond reproach.
Still, 3C’s stance is that quality cannot be tested into a product. To have growers continue to produce contaminated cannabis only to see it recalled repeatedly is unsustainable for the industry; indeed, it threatens its very existence, as we discuss below. That is why we focus in this paper on the cultivation of the plant, as correcting problems on the production side is the only way to ultimately resolve the dilemma in which the industry finds itself.
Pesticide Regulation in the US Relative to Cannabis Cultivation
Cannabis’ pesticide problems stem in large part from the fact the pesticide regulation takes place at the federal level, under the auspices of the EPA. All pesticides undergo years of research and development before they can be sold to farmers and employed on crops. That research addresses questions such as where and how a pesticide can be employed, on what crops, in what concentrations, with what frequency, and how long before harvest can a pesticide be applied. Questions of worker safety are also addressed, such as those concerning what Personal Protective Equipment (PPE) might be required and how long workers must avoid treated areas (ReEntry Intervals), among other concerns.
The fruits of such studies are then distilled to the contents of a pesticide’s label, which must be registered with and approved by the EPA before a pesticide can be distributed for sale. Federal and state laws require that pesticides be applied according to label directions, making the label a legal document of sorts. “The label is the law,” is a phrase common among agricultural professionals with which the legal cannabis industry is becoming acquainted.
The sticking point in regard to cannabis is that, due to its federal illegality, no research has been performed on the use of pesticides on cannabis. Due to the lack of research, no pesticides registered currently with the EPA are labeled for use on cannabis. Since all pesticides must be applied according to label specifications, this essentially prohibits pesticide use in cannabis production. However, some labels are written in such a broad manner that the use of those pesticides could not be construed as a breach of the legally binding use directions. Additionally, certain pesticides are of such lowtoxicity that the EPA has deemed that their registration is not required; these are known as minimum risk products under section 25(b) of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). At this time, the Colorado Department of Agriculture (CDA), in an attempt to offer guidance to cannabis growers, is maintaining a list of such products that, either due to broad label language or 25(b) status, may be used on cannabis without that use being a violation of the label.
Are Pesticides Safe for Use on Cannabis?
Since the first plants to be quarantined after discoveries of improper, off-label pesticide use to the most recent recalls, some of the Colorado cannabis companies caught up in those enforcement actions have made public statements claiming that their products are safe. These statements are dangerously misleading, as they do not take into account the issues laid out above, nor the facts that follow.
Frequently, attempts to justify such claims point out that pesticides are employed on our food and therefore must be okay to apply to cannabis as well. This is a classic case of comparing apples to oranges; or, in this case, comparing apples and oranges to cannabis. Such data cannot be bridged for the simple reason that apples and oranges (and most other agricultural food crops) are not smoked. Smoking remains the primary method of cannabis ingestion, but cannabis products are also vaporized (concentrates), consumed (edibles), applied to the skin (topical creams and patches), and taken sublingually (tinctures, sublingual strips).
As noted, the studies that pesticides must undergo prior to being approved by the EPA involve measuring acceptable residues based on the method of consumption of the final product. Since most food is consumed and digested, few pesticides on the market have undergone pyrolysis studies, which examine how the chemical structures of pesticides degrade when burned. This means that while the fungicide myclobutanil, the active ingredient in Eagle 20EW, may be approved for use on grapes, that approval is meaningless in regard to cannabis, as grapes are not smoked and the relative safety of myclobutanil residues was not tested in regard to such a consumption method.
While studies may eventually reveal that certain pesticides may be used on cannabis without ill effects to the end users, such research has not been performed and no one can say with certainty what the effects of consuming cannabis containing pesticide residues might be. Even the CDA qualifies the list of products that may be used without violating labeling guidelines with the following statement, “These products have not been tested to determine their health effects if used on marijuana that will be consumed and thus the health risks to consumers is unknown.”
Again, no one can currently say what pesticides, if any, can be safely employed on cannabis; anyone claiming definitively that their products are safe despite off-label pesticide use is making a statement that at this time lacks any scientific basis whatsoever.
Another claim made numerous times by companies defending their off-label pesticide use is that no one has yet fallen ill from pesticide use on cannabis. While this is true, we must remember that we are in uncharted territory, and no largescale public health studies have been done to determine what, if any, effects result from consuming cannabis to which pesticides were applied. We hope that no ill effects will surface, but the fact of the matter is that chronic health issues may take years to show themselves and a public health crisis may yet emerge.
Recommendations for the Cannabis Industry
We are advocates for cannabis legalization and want to see this industry grow and develop into one that is beneficial for all involved. We believe that cannabis can continue to be a force for positive change in numerous areas of society, from medicine to criminal justice to agriculture, and beyond. But, in order for it to do so, we must navigate issues such as those around pesticide use in an intelligent and responsible manner.
Our primary recommendation should be preceded by the statement that the use of chemical pesticides of the type triggering Colorado’s recalls is not needed in cannabis production. We make this statement based on years of experience working in, managing, and advising cultivation operations of all types, methodologies, and scales on how to grow successfully without illegal pesticides. Cannabis has survived and flourished throughout human history without pesticides, and will continue to do so if we cultivate it correctly.
As such, we recommend that growers not employ any pesticides in a manner that violates label directions, and only use 25(b) products that have undergone pyrolysis testing to ensure that they are not releasing harmful compounds when burned. Furthermore, applications should only be made during the vegetative stage, prior to the emergence of flowers. Overall, if there is any doubt as to whether a product or material is safe, it should not be used until legitimate, peer-reviewed research has been performed by a reputable institution.
Successful pest control can be achieved via intelligent facility design, robust environmental controls, workflow protocols, and strict cleanliness standards, in addition to preventative applications of appropriate minimum risk pesticides. There is no magic bullet that will solve all pest problems, which is why experienced agricultural professionals rely on Integrated Pest Management (IPM), defined as “an ecosystem-based strategy that focuses on longterm prevention of pests or their damage through a combination of techniques such as biological control, habitat manipulation, modification of cultural practices, and use of resistant varieties.” Overall, the adoption of Good Agricultural Practices (GAP) is much needed in the industry, and cannabis growers should look to agricultural operations that promote the four pillars of GAP standards (economic viability, environmental sustainability, social acceptability, and safety and quality of the final product) for guidance in formulating best practices in this new field.
This recommendation is not simply a matter of principle, but one that will preserve your business. In addition to costly and brand-damaging recalls, we have already seen the first product liability lawsuits filed last year against LivWell by cannabis consumers over offlabel pesticide use. Another issue is that of worker safety. Most cannabis cultivation takes place indoors, where pesticide residues can linger in garden areas and on equipment, creating toxic work environments. Unfortunately, based on the widespread nature of pesticide use in the legal cannabis industry, we feel confident in stating that thousands of workers employed in legal cannabis cultivation operations have applied chemical pesticides without proper PPE or safety training. Businesses employing pesticides off-label will likely find themselves subject to liability claims from workers, as well as consumers, in the relatively near future.
In closing, the bottom line is that applying pesticides off-label is a violation of state and federal law and could result in criminal and civil sanctions, should regulators and affected parties choose to pursue them.
It must also be noted that off-label pesticide use threatens the industry as a whole. Point six of the Cole Memorandum states that the federal government will not make the enforcement of the Controlled Substances Act a priority as long as the “exacerbation of (…) public health consequences associated with marijuana use” is prevented. The emergence of a public health problem would be a violation of the Cole Memo and it could be argued that the current situation unfolding in Denver is already a violation and could trigger federal intervention against states that have legalized cannabis. In this light, the Denver Department of Environmental Health, which is driving the recalls, has not “launched a campaign against legal cannabis,” as a company recently subject to a recall claimed, but is actually acting as a bulwark against a potentially serious Cole Memo violation that could shutter the entire industry.
Based on the current situation, the cannabis industry must come together to denounce and eliminate off-label pesticide use. In order to ensure the health of patients, consumers, workers, and the industry itself, we must seize this opportunity to grow without chemicals that are currently illegal, potentially very harmful, and ultimately not even necessary.
With 2015 coming to a close, to understand and start strategizing for the next year, we must look back on the year and gauge the industry’s progress. A lot has happened this year and there is a lot to look forward to in 2016.
Nic Easley, founder and CEO of Comprehensive Cannabis Consulting (3C), gave a presentation at the High Times Business Summit last week, reviewing the cannabis industry’s progress in 2015, and providing some insights on what to look for in 2016. 3C is a national cannabis and hemp consulting firm dedicated to ensuring the highest standards in large-scale, sustainable organic production and product manufacturing. Over the past eight years in Colorado and nationwide, Easley has helped more than 60 clients design, build, start up, and optimize their operations. Easley is an active participant on multiple committees in various industries, non-profit groups, and rule making organizations that are setting the standards and regulations guiding this industry. Through his involvement he is able to promote sustainable, sensible practices and policies that drive cannabis cultivation and industry best practices into new realms of productivity, profitability, and professionalism.
We were able to sit down with Nic Easley after the conference to get some better insights for how the industry performed in 2015 and what is in store for 2016.
CannabisIndustryJournal: How do you think Colorado’s year of pesticide recalls will help shape the industry’s future?
Nic Easley: As a member of the Pesticide Advisory Committee with the Colorado Department of Agriculture, I think there is a tangible need for better, more comprehensive regulatory guidance. If we come out with strict pesticide regulations, it will be better for everyone in the industry and consumers, but more importantly it will benefit patients gaining access to safe, laboratory-tested medicine. The regulators will need our help to write the rules. Harder laws are good for us though, because the ethical businesses will always take the route of integrity, as opposed to the businesses that cut corners. Those companies not playing above board will be weeded out and reprimanded in due time. A lot of it comes with the responsibility as a grower and producer to facilitate medical needs, that is a responsibility that requires great integrity. As for the testing regulations, there are too many conflicts of interest and we need to look toward third party testing and accreditation to prevent laboratory shopping, skewed results and other inconsistencies. We need to not allow producers to provide their own samples, sampling and sample preparation needs to be controlled through third party laboratories working above board, as opposed to labs wanting to keep clients instead of providing accurate and consistent test results. Looking forward to 2016, we will continue to see the pesticide issue shape the industry, for better or worse, this is a problem we need to find the right solutions for and that comes through working with regulators, like the Colorado Marijuana Enforcement Division, to write the required regulatory framework.
CIJ: Looking nationally, what major trends were highlighted in 2015 and what would you like to see change for 2016?
Nic: With Oregon going online October 1st, and Maryland’s license application process opening up, we are recognizing some diminishing barriers to entry in markets previously difficult to tap due to things like residency requirements and where the capital came from. Maryland’s infused product and processing licenses are much more readily available as opposed to the cultivation licenses due to stipulations. States like Oregon and Alaska that dragged their feet a little with regard to their regulatory model, are just releasing a lot of barriers to entry for licensing applications. Oregon may have missed some tax revenue in the initial launch of the program, but they are doing it right through diligent research instead of using their citizens as guinea pigs. For businesses looking to get started, you can avoid poor decision making by knowing the rules. New and established businesses alike need to take the responsibility to write the rules to be socially, environmentally and economically responsible. If we want to make money in this industry to help the government’s role in keeping us safe, then doing business in the most socially responsible way possible will lead to profitability. What I would like to see change for 2016 is the expanding list of qualifying conditions. As a military veteran, I would like to see Colorado stop looking at the tax revenue of adult use cannabis, and make PTSD a qualifying condition for medical marijuana. The Bob Hoban lawsuit suggests that Colorado is marginalizing medicine because they will make more tax revenue by blurring the lines of adult use and medicine. All of the studies out there, including Dr. Sue Sisley’s work, suggests PTSD can be treated with medical marijuana. That highlights another trend I would like to see change in 2016: We need clinical research on these conditions, because observational research just is not credible enough. We [businesses in the industry] need to actively promote the need for clinical research to help propel social change and get the information and knowledge out there. With the right information, this industry can make informed decisions that will help all stakeholders.
CIJ: What advice can you offer to cannabis businesses for 2016?
Nic: I tell my clients that, because cannabis is still federally illegal, you must understand the present risk associated with the work you are doing. We need to ask questions like how can we do this responsibly and set a good example so when the time comes, the federal government will look to us as a legitimate industry, working with regulators to write the rules for safety. For new businesses, produce the safest, highest quality, and affordable medicine and work with other businesses and regulators to keep innovating in the area of safety. Focus on the structure of your business: build your foundations and using expert advice, you can avoid major pitfalls and become the leaders in this brand new industry. Look for environmentally sustainable solutions, climate change issues need to be addressed in this industry. Use appropriate technology instead of burning coal to grow marijuana, which increases our carbon footprint. This includes both environmentally sound standard operating procedures and the right technologies, but also social justice. We are presented with a terrific economic opportunity to work on climate change issues, so work to address inefficient practices and innovate to be as sustainable as possible.
CIJ: For the entire cannabis industry in 2016 , what kind of growth do you expect?
Nic: We have reached a point where I foresee a holding pattern beginning to take shape. In 2016, the industry will continue to grow and demand will not be satiated by supply. August of 2015 was the first month when Colorado saw over $100 million in sales. We will increasingly see more price fluctuations as bigger projects come online. Many states in 2016 will focus on problems with their regulatory models and devising solutions for them. Businesses will continue their strategic growth planning, with key states potentially coming online for adult use such as Nevada and California. Nevada is one of the most up and coming markets in America with a 68% approval rating, and they have the ability to grandfather in businesses and previous rules associated with their medical marijuana program. Knowing licensing applications can take eight to eighteen months before you can become operational, we have to place our bets wisely. There is a lot happening in all these states and from the big November votes on, chaos will ensue as regulators tackle big problems with the overhaul. In 2016, the cannabis industry will make a big impact on the United States, and the exciting part is that progress is made through business as usual for us.
As of now, it is difficult to find information available on pesticide use and flowering, its effect on the body through combustion and inhalation, and its effect on medical patients with already weakened immune systems. Research suggests up to 69.5% of pesticide residues can stay in marijuana smoke. Of course, there is a need for more research, but it is safe to accept that pesticides already banned for use on foods by the USDA or state departments should not be allowed in cannabis production.
The Oregonian and OregonLive investigation found pesticides in most of the 10 marijuana concentrates that were screened. “Many of the pesticides detected aren’t regulated by Oregon’s medical marijuana rules, which means products that contain these chemicals still can be sold.”
Just last week, two of the largest recalls in the cannabis industry occurred in Colorado due to potential pesticide contamination. According to The Denver Post, as many as 30,000 packages of edibles produced by two companies were recalled by the Denver Department of Health.
Alex Garton, a cultivator in Michigan, agrees with many proponents of organic methods, citing the need for close management of the plants without pesticides. “The best way to avoid pests is to keep the grow room clean,” he says. “Mites will come and go, as will temperature and humidity issues, but without using pesticides, there are some safe, natural products that are very effective.”
“I treat my plants with natural compounds that are permitted under the federal government’s guidance for use in vegetable applications for human consumption,” Garton adds. “Never use anything remotely resembling a pesticide on flowers particularly when maturing and in the flowering process.”
Adam Jacques, master cultivator and owner of The Growers Guild in Eugene, Oregon, agrees with the sentiment of caution shared by many in the industry. “I would say, nationwide, there needs to be a more in depth look at pesticides, even organic strawberries can have [the pesticide] Eagle 20 on them,” he says. “With cannabis, we can’t scrub and wash pesticides off like fruit that you take off the vine, and there is a real lack of research on residues and combustion.”
Jacques tests all of his cannabis products for pesticides, molds, microbials and pathogens along with potency profiles, most of which is not required by the state. Growers should take lessons from Garton and Jacques by forgoing any application of pesticides until there is more confident state-level guidance on the dangers associated with pesticides on cannabis.
Cultivators, manufacturers and dispensaries face a variety of ever-changing regulations that vary between states. The cannabis industry is notoriously inconsistent with regulations and as new legislation changes the rules so often, it can be difficult for businesses to keep up and stay compliant.
CannaScore provides a cannabis compliance auditing system that takes an inspector through questions around the operation, flagging areas that are out of compliance with state regulations. CannaScore works in Washington, Oregon and Colorado, and has plans to provide its services in Nevada and Maryland soon.
After co-founding DANK, a dispensary located in Colorado, Kush Bottles Colorado, a marijuana child-safe packaging company, and Denver Consulting Group, license-to-sale consulting company for the marijuana industry, Greg Gamet co-founded CannaScore after finding third party compliance audits to be lengthy, time-consuming and inefficient. The company developed the program and a mobile app within one year and beta-tested it for another six months.
“We are trying to stay in code with city and state regulations, along with the Colorado Marijuana Enforcement Division [MED], who finally has enough money to go out and enforce those laws. CannaScore identifies areas of concern and allows business owners to take corrective actions before problems ensue,” says Gamet.
According to Gamet, some of the biggest areas of concern for business owners involve making sure employees and day-to-day operations follow the extensive rules set forth by state and local governments. “The MED wants to make sure there is no hidden ownership [or] diversion of the product, and that dispensaries are following the rules, especially when it concerns public safety,” he says. “CannaScore can help businesses get a great overview on how they are operating within these rules that are enforced not only by the MED, but local police and fire departments, local health departments, and the Colorado Department of Agriculture.” The program will be available to other qualified consulting services to use through licensing agreements.
The overall score, much like a FICO or Dun and Bradstreet score, rate an individual’s or business’ credit score, which helps business owners, banks, landlords and other stakeholders know what level of compliancy a cannabis business is operating. It also keeps a compliancy record on hand if a business is required to prove to a governing body its willingness to follow the rules.
In performing dispensary, grow, infused products, and MIP kitchen audits, CannaScore can give the consulting company that is performing the audit the ability to assist in the correction of any and all violations. “Once a violation has been found, the consulting company can work with the customer to get it corrected immediately, which will increase revenues,” says Gamet.
“Because rules and regulations change so often it can be very difficult to stay on top of managing everything that goes into staying compliant,” Gamet adds. “Keeping compliant in the cannabis industry is a full time job and CannaScore can make it easy.”
As the industry grows and regulators hammer out details in legislation, compliance will remain an important part of any cannabis business. Staying in code with local laws and state regulations can make or break a business.
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