Tag Archives: edibles

Unnecessary Obstacles for the Canadian Edibles Market

By Steven Burton
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The edible cannabis market in Canada is still green. Delayed by a year from the legalization of dried flower, the edibles and extracts market poses significant opportunities for manufacturers. Edibles and extracts typically have higher profit margins than dried flower (“value-added” products) and consumer demand appears to be high and rising. So, what is causing trouble for cannabis companies trying to break into edibles and extracts? Below are four observations on the market potential of edibles in Canada.

Canada’s Edibles Market: The Numbers

In 2020, Canada – the largest national market in the world for cannabis products – grew more than 60%, largely as a result of the introduction of new products introduced in late 2019, often called “Cannabis 2.0,” which allowed the sale of derivative products like edibles. Deloitte estimates that the Canadian market for edibles and alternative cannabis products is worth $2.7 billion, with about half of that amount taken up by edibles and the rest distributed amongst cannabis-infused beverages, topicals, concentrates, tinctures and capsules. More recently, BDSA forecasts the size of the Canadian edibles market to triple in size by 2025 to about 8% of the total cannabis dollar sales.

Source: BDSA

In December 2020, the Government of Canada reported that edibles made up 20% of total cannabis sales; Statistics Canada data shows that 41.4% of Canadians who reported using cannabis in 2020 consumed edibles. While sales have gone up and down over the course of the COVID-19 pandemic, there are clear indications that there is a substantial demand for edibles and extract products, which can be consumed more discreetly, with greater dosage precision and with fewer adverse effects (as opposed to smoking).

While sales of regulated edibles products continue to grow, edibles, extracts and topicals sales in Canada are facing a similar problem as dried flower sales: inventory growth is outpacing sales. Unsold stock sitting in inventory is growing at a dramatic pace, showing a clear lag in demand for these products on the legal market. How do we understand this contradiction?

1) Complex Regulatory Standards are a Major Barrier

Cannabis edibles compound the already existing problems around the conceptualization of cannabis products regulation. How should it work? Edibles can be considered in any of the following categories:

  • Cannabis as a pharmaceutical with medical application. Requires strict dosage and packaging requirements;
  • CBD as a nutraceutical with health benefits claimed. Requires specific nutraceutical regulations be followed;
  • Food product to be consumed. Must comply with food safety regulations around biological, chemical, physical hazards through a risk-based preventive control program. A full supply chain and ready-to-recall based system of regulatory standards need to be followed.

Incorporating elements from each of these three regulatory regimes into a single regulatory standards body is a confusing logistical and compliance challenge for both the regulators, and the producers and retailers of the product.

In mid-2019, the Government of Canada released the Good Production Practices Guide for Cannabis. This merged cannabis-specific regulations with food safety-specific regulations. Rigorous food safety requirements were combined with equally rigorous cannabis production and processing requirements, resulting in extremely laborious, detailed and specific regulations. These span everything from building design and maintenance, to pest control, to employee sanitation, to traceability – at all levels of the process. Navigating these regulations is a challenge, especially for many smaller producers who lack the necessary resources, like automation technology, to devote to understanding and tracking compliance.

2) Low Dosage Regulations Give an Edge to the Illicit Market

When edibles were legalized, THC dosage was capped at 10mg per package. For more experienced consumers, especially those who are dealing with chronic pain and other medical needs, this limit is far too low – and the unregulated market is more than able to fill this gap. One analyst from Brightfield pointed out that the dosage restriction, in combination with other regulations, will make it harder for the edibles market to grow in Canada.

It also makes the unregulated market almost impossible to beat. Barely more than half of cannabis consumers in Canada buy exclusively from government-licensed retailers, while 20% say that they will only buy unregulated products. According to a Deloitte report, 32% of legacy cannabis consumers said that unregulated products were better quality, and 21% reported that they preferred unlicensed products because there were more options available. Almost half of respondents also reported that quality was the biggest factor that would cause them to switch to regulated sources, and 28% said that higher THC content would prompt them to switch.

3) There is a Big Price Disparity between Legal and Illicit Edibles

As a result of dosage requirements and other factors, price per gram of regulated edible product is much higher than that of flower, unregulated edibles and edibles available through regulated medical distributors.

If you take the BC Cannabis Store’s price for Peach Mango Chews as an example: a 2pc package is $5.99. Since the dosage limits at 10mg per package, that’s the equivalent of $0.60/mg or $600/gram. A quick Google search reveals that an easily available edible from a medical cannabis distributor contains 300mg of THC and sells for $19.00, a price of $63.00/gram.

That means that not only is 10mg too low a dose for many users to achieve the result they were looking for, but the dosage restriction also makes the products less attractive from both a nutrition and cost standpoint. Deloitte reportsthat higher prices is the reason that 76% of long-time cannabis consumers continued to purchase from unregulated sources. The regulated industry as a whole is missing its legal market opportunity, where consumers prefer a lower price product with a greater range of dosage availability.

4) The Range of Products Available is Too Limited for Consumers

For most of 2020, chocolate edibles were the dominant product in this category in the Canadian market, garnering 65% of all edibles sales. But is this reflective of consumer wants? Despite a demand for other kinds of edibles like the ever-popular gummies, there are still only a few edible brands that offer the range of products consumers are asking for. According to research from Headset, there are 12 manufacturers in Canada making edibles but only two of them produce gummies. In comparison, 187 brands make gummies in the United States.

While some of this delay is likely due to the long licensing process in Canada and the newness of the market, there are other factors that make it challenging to bring a variety of products to market. The province of Quebec, Canada’s second-largest province, has banned the sale of edibles that resemble candies, confections, or desserts that could be attractive to children – giving yet another edge to unregulated sellers who can also capitalize on illegal marketing that copies from existing candy brands like Maynard’s.

When companies do want to introduce new products or advertise improvements to existing product lines, they are restricted by stringent requirements for packaging and marketing, making it harder to raise brand awareness for their products in both the legal and unregulated markets. Industry players are also complaining about government restrictions on consumers taste-testing products, which further compounds challenges of getting the right products to market.

In the meantime, illicit producers have also shown themselves to be savvy in their strategies to capture consumers. It is not uncommon to find illicit products packaged in extremely convincing counterfeit packaging complete with fake excise stamps. New consumers may assume the product they are purchasing is legal. Availability of delivery options for higher dosage, lower price illicit products is also widespread. All of this adds up to significant competition, even if it were easier to meet regulatory requirements.

Conclusion: Significant Room for Growth Remains Limited by Government Regulations

These four challenges are significant, but there are a number of opportunities that present themselves alongside them. A year and a half into the legalization of edibles, cannabis companies are getting a better picture of what Canadian consumers want and low dosages are proving to be desirable for Canadian consumers in some areas.

Some of the many infused products on the market today

In particular, sales of cannabinoid-infused beverages far outpaced other edibles categories last year, likely tied to the availability of these products in stores over the summer of 2020. BDSA’s research has shown that, in contrast with American consumers, the lower THC dosage for cannabis beverages is an advantage for Canadian consumers. Major alcohol brands like Molson Coors and Constellation Brands are investing heavily in this growing product area – though there the dosage limits also apply to how many products a consumer can buy at a time.

At the same time, the large quantity of unsold cannabis flower sitting in storage also poses an opportunity. While its quality as a smokeable product may have degraded, this biomass can be repurposed into extracts and edibles. Health Canada has also shown some responsiveness to industry needs when it shifted its stance to allow for Modified Atmosphere Packaging (MAP), which will help improve shelf life of products.

While strict regulatory obstacles remain, challenges will continue to outweigh opportunities and the illicit market will remain a strong player in the edibles market. As regulations become clearer and producers become more accustomed to navigating the legal space, barriers to entry into the regulated cannabis market and specifically the extracts and edibles market, will decrease. Meanwhile, those getting into the edibles market will do well to be wary of the challenges ahead.

Leaders in Infused Products Manufacturing: Part 5

By Aaron Green
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Cannabis infused products manufacturing is quickly becoming a massive new market. With companies producing everything from gummies to lotions, there is a lot of room for growth as consumer data is showing a larger shift away from smokable products to ingestible or infused products.

This is the fifth and final article in a series where we interview leaders in the national infused products market. In this final piece, we talk with Lisa McClung, CEO, and Glenn Armstrong, senior advisor at Coda Signature. Lisa got started with Coda in 2019 as a board member after transitioning from an executive role at Wrigley. She now heads up the company as CEO and President. Glenn has deep experience in product development and innovation with brands such as General Mills, Whirlpool and Wrigley.

Aaron Green: Okay, great let’s get started here. So we’ll start with Lisa. How did you get involved at Coda?

Lisa McClung, CEO of Coda Signature

Lisa McClung: I was lucky. Based on my experience, I was originally asked to be on the board of Coda. I’ve served on nine company boards in addition to my career as an executive at General Electric and at the Wrigley Company where I was heavily involved with innovation. The Board then asked me to consider stepping in as CEO after I’d been working there for six months. I was just overwhelmingly complimented that they considered me and I feel incredibly lucky to be here.

Aaron: Okay, great. Glenn, how did you get involved in Coda?

Glenn Armstrong: We’ve known each other for a long time at Wrigley. I was in innovation for the confectionery side and worked very closely with Lisa. When she became a board member, she asked me to do some advising for her. Im new to the cannabis industry so, I was really excited about doing something different. When Lisa became CEO, she asked me if I would help her.

Aaron: How do you think about differentiating in the market?

Glenn: I spent 90% of my career on the innovation side working with companies like General Mills, Quaker Oats and Amway. When I think about how to differentiate almost any company I always focus on innovation. In the cannabis industry, everybody’s got gummies and chocolates but you’ll hear people talking about gummies are going away.” No, youve just got to innovate, right? It’s like the carrot peeler from 20 years ago. It used to sell for about 25 cents, and it was all steel and now they sell for $10.99. Who would have known?

Glenn Armstrong, Senior Advisor at Coda Signature

I believe anything can be innovative. When I looked at the gummies I asked, what we learned at Wrigley, can we bring into Coda that currently is not in this industry?” Think about various gums and how they can change flavors over time like Juicy Fruit which dissipates really quickly and thats just how the flavor is.

Or, there are other ways like spearmint. You can get an initial boost and then extend that flavor by encapsulations. I don’t see much of that in the cannabis industry. It’s just taking what’s out there from flavor companies that people like and getting them into this market.

Aaron: Awesome. Do you have any particular technologies or work or products from other industries that really interest you?

Glenn: I would say it’s going to be from the pharmaceutical industry. You think about THC and CBD being so hydrophobic. With chocolate, it’s not such a hard thing to get into. If you try to get those kinds of compounds into aqueous solutions though it can be a challenge, the drug industry has been doing it for years! So, to me, delving into some of their patents and some of their ideas, that’s one of the most powerful industries I see where we could utilize their technologies to advance the industry. I expect big pharma to get into this. We can start looking at what they’re doing that we can leverage quickly to get into Coda products.

Lisa: We’re not necessarily a pharmaceutical brand, but we are committed to helping people live and feel better. It really is about how you weave cannabis into everyday life?

Coda’s line of chocolate bars

We have a platform of very indulgent products, which is our chocolates ranging from truffles to bars. We also are building our non-chocolate portfolio to include other ways to enjoy cannabis in their daily life. And then to Glenn’s point, I think there’s ideas and technologies from the pharmaceutical area, theres also things that have been in the food industry for years that provides sensations and experiences.

I think part of our goal is how many of the five senses can we touch from people in creating product?” The feel of something in your mouth heating, cooling. Not just the psychoactive aspect of it, but the complete end-to-end experience.

These are all dynamics of us delivering the live and the feel” piece of it. Then people can either use them from a lifestyle perspective for enjoyment, or a medical perspective. Our job is to provide consumers choices and options that provide those type of experiences.

Glenn: If you have a product that’s supposed to “reduce anxiety” why not start with the slight warming of the mouth? Something that feels calming long before the THC or CBD kicks in? Then have a flavor come up that just feels warm and comfortable. By combining all five senses, you have a product that really does something for your consumer.

Aaron: Thanks for that! Whats your process for creating a new product at Coda?

Lisa: Well, I think everybody talks about brainstorming sessions like innovation is something that just pops up. I think innovation has three legs to it. One is really customer-driven. So, we have to produce products that help our retailers make money, and that deliver really good experiences to consumers that we jointly serve.

The second piece of it is thinking about the discipline of innovation. So, when we make a product, what technologies do we bring to bear, can we scale them, and can we produce them at the right price point and delivery?

Coda Signature Fruit Notes

Then the last piece is the fun piece, trying to listen to what is and isnt being said in the market to really try to be a solutions company.

We spend a lot of time listening and watching the market to figure out where we can anticipate things. We used to call it problem detection” at Wrigley.

One project that Glen and I worked on was a mint that was designed really around adult usage in more professional situations. So, meaning the shape of the mint needs to be tucked in your cheeks so you couldn’t see it. And the packaging of it was something you could surreptitiously pop underneath the desk because we were designing it for people to use as really a business tool. You don’t think of mints as a business tool, but they really are, they give you more confidence with breath-freshening and you don’t necessarily want to hold that out with everybody else.

Some problems are about how to make a product more fun with our fruit. I can put pineapple jalapeño in my mouth and have a literal popping experience, which adds to my enjoyment of that experience.

The last piece is not to do too many products. One of the things that I think of in cannabis is that everybody’s still learning. It’s such a wide-open space, in some cases, that you also have to kind of pick what you do well. So, sticking close to our brand and what we stand for is also something that we’re trying to do. We’ve actually pulled in our SKUs recently and are trying to focus on a platform of indulgent experiences and of lifestyle products. We try not to do everything that we see out in the market and focus only on the things that we do well that solve problems for our consumers.

Glenn: From my perspective — I am not a big process person — I think the best way to do it is to say, okay, we’ve got these products. We could look at technology, we could look at something else, but let’s just go scour what’s out there. And let’s get outside of our industry.” Look outside your own game, and see what you can use.

Discovering how to use these technologies in a gummy or chocolate as opposed to just drugs isnt rocket science. My biggest avenue is looking outside and finding what you can apply as opposed to trying to reinvent everything.

Aaron: Weve focused on the front end of innovation. Can you articulate on the back-end how that moves into product development, manufacturing and commercial launch?

Lisa: We have a new product pipeline with a Stage-Gate process where we will have a number of ideas and whittle them down on certain criteria.

Sometimes the ideas start with the technology and not the market. Glenn will find something and say, Hey, this is going on, should we be thinking about this in cannabis?” It allows our each of our teams to come up with how they can make it work.

Then, as that product passes through the next stage-gate, we’re looking at the actual economics of the product, and how it fits relative to our other products all while were getting consumer input.

We get to that point in the process when we start trialing with consumers to help decide. And sometimes you get the best idea in the world, and then it’s not going to work so in some cases so you put it back in the pantry.

I never like to say that we don’t take an idea forward, even products that we may have taken off the market, we say we freeze products, we don’t cut products!” because our goal is to have options. Our discipline is around a Stage-Gate process tied to our business goals and objectives. It’s also about playing around with concepts and seeing what materializes.

Glenn: There is this whole notion of a process, there’s a Stage-Gate, but before that, it’s a lot of playing around. What Lisa and Ive recently worked on was making innovation a way of life so that every time you see something, you say something.

“We dont think of innovation solely as the next flavor that’s going to be on the shelf.”We always gave people permission to play in the web.The reason brainstorming sessions don’t tend to work, is we expect people to become innovative in these next five hours.

So, if you think of innovation as a way of life, then it becomes what you do daily, and you look at things differently. I like to say when you’re driving home, go a different route, because you never know what you’re going to see. When you get out of that habitual mindset, you’ll think about your business differently, almost naturally. Innovation — this way of life — is one of our buzzwords.

Lisa: I think building that innovative culture is a responsibility, but also a challenge for a company like Coda. I mean, we’re not new. We’ve been around five, six years and we have some of the leading chocolate bars out there. We’re known for flavor systems.

Where our goal is to create a culture of innovation, you get these little pockets of creativity and innovation, and then it starts snowballing. You build on it, get people excited about it, and move it forward. That’s how everybody gets involved in innovation.

One of the goals of that pipeline process is to combine inspiration and discipline. But you don’t just want to be innovative in the next flavor. That isn’t doing enough for our consumers. Weve educated them on the potential flavors could bring. But now we really want to be much more innovative across the board and see what kind of culture of innovation Coda can do.

We’re looking at the packaging, how we interact with retailers, how we use digital messaging to support our retailers and support our products. We dont think of innovation solely as the next flavor that’s going to be on the shelf.

Aaron: From a supply chain perspective, how do you go about sourcing ingredients?

Lisa: We have some wonderful partners that have been with us at Coda. People that bring us chocolate from other parts of the earth.

We continue to keep building our ecosystem of partners. We look at different flavor houses and different food type researchers to be partners with us to broaden our ecosystem. It’s something that’s very much top of mind, even more so during COVID, because we’re feeling  very fragile about our supply chains.

Glenn: Yeah, I think Lisa, that’s one thing you and I bring, not only to Coda, but I think to the cannabis industry, is the whole CPG discipline of how we look at suppliers and procurement. We need to go out there find some smaller flavor labs with incredibly creative folks.

I think the whole notion of expanding the supplier and vendor base, is pretty unique in this industry and that’s one of the strengths we bring to Coda.

Lisa: Our goal is to really create an ecosystem of different suppliers. I just think that that’s something other industries — you talked about pharmaceuticals earlier — have done. Cannabis is just starting to get there, but that’s where you get exponential opportunities.

We’re really looking at cross-functional and interdisciplinary teams with outside partners. Cannabis is at the stage now where I think it’s looking for more sophisticated technologies and new ways of deploying. We’re also really interested, as Glenn said, in some of the younger, more entrepreneurial firms that want to possibly expand their reach into cannabis as well.

Aaron: Okay, great. So my next question is can you give me an example of a challenge that you run into frequently? And this can be either a cannabis challenge or a business challenge?

Lisa: I think one of the challenges that cannabis faces in general is educating consumers about our market. One of the opportunities we have is to bring people into the market. We’re at the same time developing products for people who are in the cannabis space and are active users and have varying degrees of understanding of how they’re using the category in their daily lives.

We’re also trying to create products and education to invite people into the cannabis market. That’s a different challenge than if you’ve had an Oreo cookie, and people kind of understand cookies. They understand Oreos, and then they understand organic Oreos and all the other permutations of two chocolate cookies with a vanilla thing in between. Our goal is to expand the ability for people to access cannabis in their lives.

That is a very unique business problem. And it does represent a bit of a screen, are you going to do some of your products for more sophisticated users and others for less sophisticated users?  Cannabis has consumers that have been taught essentially to think about milligrams; there’s one of the key components of choice. People will look at the product and flavor, and then they look at the milligrams and the price point.

That’s very unique to what we would find on CPG. You don’t necessarily look at dollars per milligram when you buy a cookie. So, if you’re trying to make a premium product with premium flavors, how do you say, Well, yeah, there’s dollars per milligram, but this product has all these other technologies to create the warming or whatever.” “Innovation in products and new categories is critical to get the industry beyond common confections.”

So you kind of have a dual issue. You’re trying to get people educated on a new category and how they use it. But the education of the consumer in terms of the potential and the possibilities that they can access is going to be very important.

Aaron: What trends are you following in the industry?

Lisa: Beyond paying close attention to legalization progress across the country and monitoring how states are setting up their regulatory standards, were focused on which consumer demographics are incorporating cannabis into their wellness and self-care practices—and how Coda Signature products fit into their daily routines.

Glenn: For edibles, fast acting” is probably beyond a trend and it will be interesting to see where this nets out. Consumers appear to be balking at the slightly higher price point for fast-acting gummies, but there may be a market for after-dinner dessert items. In other trends, use of minor cannabinoids and terpenes for specific benefits appears to be a solid consumer need, but this is going to require solid science to see if these products truly work. Innovation in products and new categories is critical to get the industry beyond common confections.

Aaron: Okay great! Lastly, what would you like to learn more about?

Lisa: Were fascinated by the technological advances being made in the cannabis industry, and how those achievements may enrich the consumer experience moving forward. Were also interested in the growing body of scientific research around how cannabis products can enhance peoples health and wellness.

Glenn: U.S. legalization and the constant changes in regulations require someone to distill the information and do a weekly report on changes.

Aaron: Thank you both! That concludes the interview!

ImEPIK Launches Cannabis Edibles Safety Course

By Cannabis Industry Journal Staff
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ImEPIK is a research-based online training company that is known for digital safety training in the food industry, offering courses on things like preventive controls. The company announced last week that they are launching their first class dedicated to the cannabis industry.

The two-part Cannabis Edibles Safety Course is designed to help edibles manufacturers put the quality and safety of their products above all. Part I, “GMPs and the Pyramid of Edible Safety” is now live and includes three modules covering cannabis edibles production under a food industry framework. The course gets into prerequisite programs, the principles of hazard analysis and provides an intro to the company’s “Pyramid of Edible Safety.”

The course is intended for employees that are new to the production of cannabis-infused products, those who are on the front lines of a production facility, or for those who might need a refresher on the basics.

“Part I of the Cannabis Edibles Safety Course prepares cannabis employees to support the sanitation, production and QA managers and the facility’s compliance with regulatory and safety goals,” says Kathryn Birmingham, Ph.D. ImEPIK’s chief operating officer. “The course reflects not only the ‘tried and true’ practices from the food industry, but the nuances of cannabis edibles production are also accounted for in ImEPIK’s course.” Birmingham says the course is designed for employees who work at both large and small facilities.

“ImEPIK has a reputation for providing engaging food safety training that gives production employees the technical knowledge they need to make safe products,” says Jill Droge, ImEPIK’s chief creative and business development officer. “It’s more difficult than ever to make time for training, yet it is one of the most impactful things that manufacturers can do to ensure that their products are safe and will be well received by the market.”

Part II is expected to launch in early November and is designed for supervisors and managers.  Keep an eye on imepikcannabissafety.com for the latest course releases.

Leaders in Infused Products Manufacturing: Part 1

By Aaron Green
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Cannabis infused products manufacturing is quickly becoming a massive new market. With companies producing everything from gummies to lotions, there is a lot of room for growth as consumer data is showing a larger shift away from smokable products to ingestible or infused products.

This is the first article in a series where we interview leaders in the national infused products market. In this first piece, we talk with Keith Cich, co-founder of Sunderstorm, Inc. and the brand Kanha Gummies. Keith and his business partner, Cameron Clarke, started Kanha Gummies in 2015 after long careers outside of the cannabis industry. In 2015, they went all in and started the brand, which grew to be a major player and driving force in the California market.

Next week, we’ll sit down with Mike Hennesy, director of innovation at Wana Brands. Stay tuned for more!

Aaron Green: Keith, nice to meet you. Thank you for taking the time today. Tell me about how you got Sunderstorm off the ground and how you got involved in the company?

Keith Cich: Absolutely. So, my business partner, Cameron Clarke, is a lifelong friend. We met as undergraduates at Stanford University. I went on to work on Wall Street and did commercial real estate. Cameron has been a serial entrepreneur, from a much more technical side working in software. He was actually one of the first people to bring the Açai Berry to market and put it on the shelves of Whole Foods. So, he’s kind of the science and operations guy and I’m the finance and business guy.  It’s been very synergistic.

Keith Cich, co-founder of Sunderstorm, Inc.

By 2015 we had both traveled extensively and were big advocates of plant medicine and cannabis as another form of plant medicine. We also have a 15-year track record of going to Burning Man together. Really, explorations in consciousness and plant medicine were what tied us together. When cannabis came up as a business opportunity, we just kind of looked at each other and said, you know, we have a lot of business experience to bring to the table. We have a love of the plant and an appreciation for how it will impact society. So, we kind of went all in in 2015 under proposition D, and set up operations in Los Angeles at that time.

Aaron: How did you decide to get into infused products from the list of choices?

Keith: Yeah, we initially set up extraction, but we felt that cultivation and extraction would ultimately be commodities.  However, if you could develop popular brands you could carve out valuable shelf space and have longevity.

We acquired a small gummy company in February 2016. In the beginning of it all – I call it “Cannabis 1.0.” At that time, a lot of the packaging was really oriented around men in their 20s focused on “high consumption.” The packaging was a lot of black and skull and crossbones, and it didn’t really represent who Cameron and I were as people. You know, we were a little bit older and well-traveled. And we just felt like when adult use would come in that brands would take a different pathway. So, we hired a branding person to come in and help with packaging.

We really focused on a product that would appeal to females because it was clear they were going to be 50% of the market – and packaging that would really appeal to older people, which we thought would come on board once the stigma of cannabis was reduced. And so, we really set up Kanha gummies, at that time in early 2016, to be this adult use product that would appeal to a wide spectrum, both medical users as well as adult users in the time that would come in the not too distant future.

Aaron: Yeah, that’s interesting. You talked about how you thought about differentiating in the early days getting off the ground. How do you think about differentiating today?

Keith: The two things that really set Sunderstorm apart from the crowd is automation and innovation. We were the first gummy company to invest hundreds of thousands in European confectionery equipment, which allowed us to scale our business, but more importantly, produce an identical product every time. The reason we hear people come back to Kanha gummies is that they have the same replicable experience every time, which is really the key to CPG companies. So, it’s really stringent automation that allowed us to develop precise dosing. In fact, in 2019, we won the award from CannaSafe, which is the largest lab in California, for the most accurately formulated edible. We dialed in manufacturing and that’s what set us apart in the early years.

My partner is really geared towards science and implementing new delivery systems for cannabinoid products. We were the first company to come out with a nano edible about a year ago in 2019 and we are still the leader in offering consumers nano-molecular delivery systems. What does that mean? One of the common problems with edibles is that it takes 45 minutes to an hour for it to kick in. We all know friends who take a cookie and double up on the cookie and end up having too big of an experience. Rapid onset curbs that risk. Our nano gummy kicks in about 15 to 20 minutes, and it’s got just this really nice journey to it. We’ve separated the audience between the people that have our classic gummies, which takes longer to kick in, maybe a little bit stronger and the nano technology, which has a really fast onset, and really kind of a discrete journey. We stay ahead of the competition today, because of the nanotechnology that we’ve implemented in gummies.

As I always say, it’s not about how much vitamin C you take – it’s more about how much vitamin C gets in your blood stream. And it’s the same with cannabis, right? It’s how much THC and CBD or other molecules get in your system. So it’s about really having the highest bioavailability and the best performing products. And that’s what our customers have come to believe about Sunderstorm.

Aaron: You’ve talked about a couple new products from Kanha. At a high level, can you talk about your process for ideating and creating a new product?

Keith: Sure. I could use an example of a product that we’ve just kind of relaunched. It’s called the Tranquility gummy and it’s targeted for sleep. What we’ve discovered is there’s a whole host of medical reasons why people take cannabis – as well as the adults who take cannabis for entertainment – but sleep is a major issue for Americans of all ages. It’s surprising. It impacts 20 year olds and it impacts 60 year olds.

Part of the process of coming up with a product is trying to figure out what’s the need in the marketplace. So in this case, we really looked and said, hey, let’s target sleep and see if we can experiment and come up with a product. Our first round of Tranquility had a mix of CBD and THC in it because both of those are valuable for sleep. CBD is a chill-pill that kind of makes you calm so you can go to sleep. THC is often something that helps people stay asleep.

“We go through many iterations of a product before it actually hits the marketplace.”In that product, we also added 5-HTP, which is a serotonin booster, which once again, people take when they have anxiety or stress. So it’s kind of a stress reliever, and it helps you be calm, which again, I think a lot of the problems for people who have an issue with going to sleep, it’s having so much on their mind that they can’t stop the monkey mind to actually enter into sleep to begin with.

We also added just a small amount, one milligram, of melatonin. We know that Melatonin is a sleep aid, but you don’t want to take so much melatonin that your body stops producing melatonin because you’re taking the supplements. So at the end of the day, you want to just encourage and coax your body into healing and not overkill it with a pharmaceutical. Right?

So that was our first generation and we worked with that but my partner looks through a lot of research that’s occurring on different cannabinoid particles, and it became clear that CBN, which is kind of a new cannabinoid that’s hitting the press, actually had really strong properties for sedation and keeping people asleep. So, we added the largest dose of CBN in any gummy, and then re-launched that product a month or two ago. And we’re getting incredible feedback from shops that they’re selling out. It’s awesome, because people are actually taking the gummy and having the effect of falling asleep and staying asleep.

It’s the combination of the different factors. No one factor is so overwhelming like a pharmaceutical drug. But it’s the combination of the different factors together that make for a great product. And we fortunately have dozens of people in our company who are happy to do R&D for our new products. We also have some people outside the company that are consultants and experts as well. We go through many iterations of a product before it actually hits the marketplace. And that’s the second thing: it’s a lot of rigorous R&D testing of products before we launch it for the end consumer.

Aaron: Yeah, so if we can touch on that, can you tell me about your experience with your most recent product launch? Whether it’s the NANO5 or the Tranquility gummies? How did you think about preparing the market for the launch? Preparing your team for the launch? And then how did it go?

Keith: I’ll talk about our sublingual line called NANO5. Again, it’s a nano product where every molecule of CBD or THC is wrapped in a molecule of fatty lipids, so that when you spray it on your tongue, it tricks your body into absorbing it directly into the bloodstream and doesn’t actually go through the digestive tract and the liver. The bioavailability of these sublinguals is high and 70 to 80% of the cannabinoids actually get into your bloodstream.

We’ve done blood sampling tests versus your standard tincture. Your standard tincture is just MCT oil and cannabis, it’s pretty crude, kind of caveman-ish, quite frankly, when compared to the delivery of pharmaceuticals are today. NANO5 is a much more advanced delivery system.“We’re here to really try to educate people the best that we can.”

Now we have the product… right? This is a sophisticated product that’s challenging for bud tenders to explain when consumers come in with their medical needs. We had to create a lot of written brochures about how the product works, what the dosages are and that sort of stuff. Then our sales people go in and actually train the shops. They’ll pull bud tenders out and do training sessions and talk about NANO5, what makes it different from other tinctures, what medical conditions is it good for, etc. It’s kind of old fashioned, in-store training.

Then we finally have implemented a new piece, which is digital bud tender and consumer training. We are leveraging a platform for bud tender training, we talk with the shop, talk about the product and if the shop manager agrees we send a link out to all the bud tenders who take a quiz. The bud tenders get educated on an online platform, take a quiz, and then when they pass the quiz, they get a licensed sample of the product to try themselves so they have firsthand experience.

What we find in many shops is that the consumer is still not that educated about cannabis, particularly for medical uses, and particularly what I call the “new consumer” that hadn’t used cannabis in their lives, because it had such a high stigma to it and now with the reduction of the stigma it means a 40 or 50 year old woman might go into a store to find something to help with pain, or help with anxiety. Now, the bud tender can use the training that they’ve learned on NANO5, and understand that this could be a good product for them, and then talk about it intelligently and give some materials to the consumer before they walk away.

It can be intimidating for consumers to go into a shop, you know, it’s a new experience. It’s like going to the doctor’s office, you don’t always hear what they say, because you’re kind of nervous. So giving them the written materials, and even a test to follow up on online really allows for a form of education that is in tune with the user needing to learn at their own speed and really to just take away what’s important for them.

Aaron: Did I hear you correctly? The user – the end consumer – can also do a quiz?

Keith: Yes. Sunderstorm is about science and education. There’s a lot of assumptions in the marketplace that may not be correct. So, we’re here to really try to educate people the best that we can. And we really believe the rest of the world acts in a digital manner for education. In some ways, cannabis is a little bit behind the times because it’s difficult to advertise on Facebook and traditional venues. So we have one hand tied behind our back when we’re dealing with the digital world. But we at Sunderstorm are big believers that digital will be the way that cannabis consumers learn about brands, learn about products and learn about cannabinoids, and we want to be at the forefront of that education process.

Aaron: OK, we talked about some challenges. One of the challenges I hear a lot is about sourcing ingredients for infused products. How do you go about sourcing ingredients in your infused product lines?

Keith: Our primary ingredient that we source is distillate. And starting back in prop 215 days, we have a zero parts per billion policy on pesticides. What we discovered is before lab testing and licensure came in place is that 80 to 90% of the oil out there actually had pesticide levels that were way beyond safe. It really took licensing and the implementation of lab testing to change that regime. We now buy distillate from third party extractors and we have a handful of really big, really solid players onboard who provide that oil to us. The key is that if there’s any detectable trace of pesticides, we send it back and they replace it with a not-detect batch. So for us, that’s really the key to the whole supply chain: starting with oil that’s clean and really good quality.“Delivering the product in a compliant manner has been one of our logistical challenges, but one that I think we’ve done quite well at day in and day out.”

Fortunately, we’re one of the bigger brands in the industry so we have a little clout to make sure that the people that give us our oil are giving us their top shelf, and not their bottom shelf. We then have also made it a point to use only natural flavoring and natural coloring in our gummies. Believe it or not some of the red coloring actually is derived from beets and beet juice. We use spirulina as a source for our blue green colors. All of the gummies that we produce, not only have no pesticides, but they have no artificial flavors and no artificial coloring, which is of course standard in mainstream gummies that you buy at CVS or the local drugstore. So we really feel like we want to put out a healthy product and Cameron and I always look at each other, like, ‘we wouldn’t sell a product that we wouldn’t put into our own bodies.” And we’re very health conscious, you know, buying organic produce and not wanting pesticides to be inside us.

Aaron: Can you give me an example of a challenge you run into frequently, and this could be a business challenge, a marketing challenge, financials… something that you run into frequently?

Keith: Yeah, so we not only manufacture our products in California, but we also do self-distribution to over 500 retailers, meaning in store dispensaries and delivery services throughout California. With these 500 customers, we have two distribution points, one in LA and one in the Bay Area where I’m located. It’s an amazing challenge logistically. Not only are we running a manufacturing operation that requires precision – and it’s highly regulated – but we run a distribution company that’s highly regulated. For us the challenge is how do we efficiently deliver product to the Oregon border when we’re manufacturing in LA? We’ve had to spend a lot of time developing protocols for logistics and distribution to be able to basically meet demand throughout the state. And we’ve been growing like crazy. We add 10 new shops probably every week.

Delivering the product in a compliant manner has been one of our logistical challenges, but one that I think we’ve done quite well at day in and day out.

Aaron: What kind of trends are you looking at in the industry? And what keeps you excited?

Keith: I think COVID-19 has touched every aspect of our lives and it is impacting how we consume cannabis. Because it’s a respiratory disease, I think people have been wanting to shy away from smoking flower or vaping to keep their lungs healthy as a precaution in case they get it. So edibles have been kind of a natural choice for that. As well as the simple act of sharing something; sharing a joint raises a lot of safety risks, especially during the pandemic. It’s a lot easier to share a single gummy out of a bag safely.

Secondly, what I’ve noticed is that parents have their kids at home and yet they still want to consume cannabis as they did before. Edibles have been big because of discretion. So mom or dad can pop a gummy and have a spritzer before dinner and enjoy the night and my theory is happy parents make happy kids. So discretion has been critical.

Then I think there’s a whole round of new entrants that I mentioned before. These are people that maybe smoked weed in college or high school and haven’t touched it for 20 years and now that the stigma has been reduced, they’re coming back to the marketplace and wanting to explore. They may try a vape product, but very few of them want to smoke, as the country is generally pretty anti-smoking.

I think edibles and gummies have been a way for new cannabis consumers, particularly those who are older, to come and enjoy the positive effects, the medical effects and the social lubricant that cannabis offers, while being safe and discreet at the same time. I think COVID has definitely changed the way that that people think about consuming cannabis.

Aaron: Okay, awesome! Lastly, what would you like to learn more about? What are you interested in?

Keith: I have a degree in philosophy and religion. I’m a big fan of the evolution of consciousness. I think that is the container of the story through which we view human civilization and I honestly think we’re at a turning point for how humans in Western society view plant medicine.

I think cannabis is just the first to come along and be legalized. They’ve been doing phase II and III clinical trials on psilocybin and end of life anxiety. People, particularly war veterans, are using ecstasy or MDMA for depression.

What we’re discovering is that what we think we know about the mind is only the tip of the iceberg on how the mind works. I’m interested in exploring how these plant medicines impact individually with our psyche. Secondly, what happens to society when we reach a tipping point and a majority or at least some significant portion are taking these plants and medicines on a regular basis? It opens us up to a whole new perspective on ourselves, on society and on the universe that we live in. So I read a lot in those fields. And that’s what really excites me.

Aaron: Great. So that’s the end of the interview. Thank you for that.

Leaders in Extraction & Manufacturing: Part 2

By Aaron Green
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Cannabis extraction and manufacturing is big business in California with companies expanding brands into additional states as they grow. This is the second 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. Click here to see Part 1.

In this week’s article we talk with Matthew Elmes, director of product development at Cannacraft. After cutting his teeth in academic and industry research, Matthew was approached by Cannacraft leadership to bring a new perspective to their product development efforts. The interview with Matthew was conducted on July 22, 2020.

Next week, we’ll interview Joaquin Rodriguez, chief operating officer at GenX BioTech. Stay tuned for more!

Aaron Green: Hi Matthew, and thank you for taking the time to chat today, I understand you have a busy schedule!

Matthew Elmes: Thanks – yeah, last week was pretty insane!

Aaron: Well, I’m happy we found a chance to put this together. Let’s start from the beginning. How did you get involved at Cannacraft?

Matthew Elmes, director of product development at Cannacraft

Matthew: I did my Ph.D in biochemistry at Stony Brook University on cannabinoid intracellular transport and metabolism. I then did a post-doc with Artelo Biosciences in endocannabinoid system modulation. While I was doing my post-doctoral research, Dennis Hunter, co-founder of Cannacraft, had learned about my work and reached out to offer me a position.

Aaron: Awesome, that’s a great feeling when people are reaching out to you! The next questions here will be focused on product development and manufacturing. What is your decision process for launching a new product?

Matthew: We do our best to anticipate what the market will want. A lot of our new product development comes from improving our current products. Things like improving stability, shelf-life and reducing bitterness. For brand-new products and technologies, we first get a lot of feedback from the marketing and sales teams and will then go into a planning session to decide what is feasible and what is not prior to moving forward.

Aaron: Do you personally get involved in manufacturing? Tell me about your process there.

Matthew: I do get involved in manufacturing. My main inputs are figuring out how much cannabis oil to use to hit a target potency around the size of a batch. This is the type of thing I do for all our beverage products like HiFi Hops, our Satori line of infused edibles, and the various gummy products sold under our brands Absolute Xtracts and Care By Design.

Aaron: Are you developing new products internally?

Matthew: For the most part we develop everything internally. We are very vertically integrated here at Cannacraft and we extract all of our oil in house. I don’t do the oil extractions myself. Most of our stuff is supercritical carbon dioxide extraction, but we have hydrocarbon and cryoethanol extraction facilities opening soon. For our gummies, we use distillate oils for the best flavor and for our droppers/vapes we use full-spectrum oils for a more sophisticated array of effects.

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

Matthew: Getting stuck happens a lot! You know, strict regulations make it challenging to source ingredients. Foods we’d like to source for a product are often too high in pesticides or heavy metals for the cannabis regulations. What’s good enough for the grocery store is very often not good enough to be compliant in the California cannabis industry. Fruits that are totally free from pesticides are hard to find. Our edibles brand Satori Chocolates actually might be the only player in the entire California cannabis industry that uses real whole fruit in our products rather than something artificial or a processed fruit paste. We actually had to source our strawberries from Italy to find ones that were both compliant in metals/pesticides and tasted good enough to meet our high standards! The same sort of challenges apply to sourcing biomass for oils.

Aaron: If you get stuck is it usually the same place? Or is it different each time?

Matthew: We’re so diversified. We have lots of different products. The process for each one can have its own issues. The problems you encounter with cannabis beverages are not the same ones that you’ll encounter with vapes, edibles, topicals or sublinguals, etc. We are one of the oldest players in the California cannabis industry (CannaCraft was founded in 2014, well before regulated recreational cannabis was a thing) so we have the advantage of working on all these issues for years longer than most of our competitors and we have largely figured out all the major ‘kinks’ already. A big part of it is also that we have assembled a great team of food scientists, chemical engineers, chemists, legal and regulatory experts, all with diverse specialties that allows us to quickly address any new ‘stucks’ and be fully confident in all of our products.

Aaron: Feel free to answer the next question however you like. What does your magic helper look like?

Matthew: I would love a magic helper! What would a magic helper look like to me? I think my magic helper is a recent undergrad with lab experience. I would have them take care of a lot of the quality and lab day to day activities. My responsibilities often make me too stuck to the computer screen where I don’t have time to get to all the experiments that I’d like to do…a trained magic helper could physically perform those experiments for me!

Aaron: OK, and now for our final question! What are you following in the market and what do you want to learn about?

Matthew: I am personally really interested in yeast grows and cannabinoid synthesis from biological organisms. We stick to only natural plant-derived cannabinoids for all our products, but it’s a new field that’s just fascinating to me. I also think that minor cannabinoids will have a bigger place in coming years. In particular I have my eye on THCV, ∆8-THC, CBG and THCP. THCP is a phytocannabinoid that was just discovered a year ago and exhibited very potent effects in preclinical models, but no one has been able to produce and purify it in appreciable amounts yet. We already manufacture and sell a ∆8-THC vape cart under our ABX brand, but for the others keep an eye out for new product announcements from us that are on the horizon.

Aaron: Well, that brings us to the end of the interview Matthew, this is all awesome feedback for the industry. Thanks so much for your time and insights into product development in the cannabis industry.

Matthew: Thanks, take care!

Leaders in Extraction & Manufacturing: Part 1

By Aaron Green
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Cannabis extraction and manufacturing is big business in California with companies expanding brands into additional states as they grow. This is the first 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 George Sadler, President and Co-founder of House of Platinum. George and his son Cody started their cannabis journey in 2010 when they sold their dirt bikes and set up a 10×10 garage. They have since built the business into a $70 million dollar cannabis empire across California, Michigan and now Oklahoma. The interview with George was conducted on July 31, 2020.

George Sadler, President and Co-founder of House of Platinum

Next week, we’ll interview Matthew Elmes, Director of Product Development at Cannacraft. Stay tuned for more!

Aaron Green: First off, George, congratulations on your recent announcement on the LOI from Red White & Bloom!

George Sadler: Thanks! The deal isn’t done yet but we’re looking at a sixty-five-million-dollar deal. Cody and I will be staying on as officers to oversee growth as we expand into new markets.

Aaron: That’s great news! I hope it all works out well for you and best of luck closing the deal. Now on to the interview questions we had planned. So first off, how did you get involved at House of Platinum?

George: My son Cody and I wanted to do extraction and have a vape company. Five or six years ago we climbed on a plane to China to speak with manufacturers. We started off with extraction equipment in a small room with a table top machine. After a time, we took year and a half off to get our licensing and do our buildout. We opened up again two years ago in June. At the time, China was the main resource for packaging, and everything really. We got hardware from another company and had our Chinese partners rework the hardware to address some of the issues we had. Cody and I spent a week in Shenzhen where we met with our Chinese partners. They first did cartridges, packaging and batteries.

Aaron: Thanks for that, George. The next questions will focus on product development and manufacturing. What is your decision process for starting a new product?

George: In the beginning, Cody and I would both be a part of new product development from beginning to end. Cody has taken lead now on the beginning phases so our new product development really starts with him. We collectively come up with the concept. Cody does the market research. The concept then goes to our design team for visuals and to do the artwork- this usually takes some time. After we are satisfied with the branding, we start the manufacturing process. We do everything start to finish and can go from design to package in less than two weeks. The only thing we still manufacture in China is hardware these days, so cartridges and batteries.

Aaron: Are you personally involved in manufacturing? Tell me about your process

George: Cody and I are both involved in manufacturing. In California, we have about a hundred employees at our facility. In Michigan we have another hundred, and Oklahoma has about thirty. In Michigan, we do carts only right now and are getting ready to launch chocolates and gummies. Oklahoma is also getting ready to do edibles and gummies.

Aaron: What is your process for developing new products?

George: In manufacturing, when we start a new line of edibles, we’ll first do a full test batch of products before committing to full-scale manufacturing. We start small at first then scale into larger batches. If everything looks good, we’ll decide whether or not to invest in larger equipment.

Aaron: Are you developing new products internally?

George: Our California and Michigan production is done 100% in-house. In Oklahoma we have a licensing deal with a manufacturing partner.

Aaron: Do you ever bring in external product development consultants?

George: No. We do all of our product development internally.

Aaron: In product development or manufacturing, what does being stuck look like for you?

George: That depends on what phase of the process we’re talking about. One challenge is getting the recipe dialed and then figuring out how to move into large scale. Take chocolate for example: going from a one spout pour on chocolate to a three-spout pour. That process can take a while to figure out. Any time you are trying to move forward in your manufacturing process, if there isn’t existing equipment available you may need to purchase it. There isn’t a lot of information out there to gauge on the cannabis side what is relevant.

Aaron: How about source materials for your products?

George: We pride ourselves on doing a deep dive on all of our suppliers.  That includes packaging, chocolate, sugar, and flower.  The advantage of longevity in this industry, we have keen radar on those doing premium work.

Aaron: What’s the most frustrating thing you are going through with the business?

George: I think a majority of people would agree that there’s lack of understanding of what’s happening with licensing. Legacy market products and unlicensed stores are frustrating. Inconsistency on testing is also frustrating. The states aren’t really doing anything to correct inconsistent testing. But banking is the number one industry pain point. We have a handle on the rest. Banking we don’t have any help.

Aaron: Feel free to answer the next question however you like. Imagine you could have someone come in and wave a magic wand to solve your problems. What does your magic helper look like?

George: Hah! Not sure what a magic helper would look like. Distribution is our biggest headache. Distribution is a different animal that is outside cannabis product development. We do all of our distribution in-house and it can be a pain.

Aaron: Now for my final question: What are you following in the market and what do you want to learn about?

George: We’re semi-new in the CBD space. Anything up and coming is something we are looking at. We’re focused on going big and multi-state. Arizona is the next state we are looking at. Nevada is after that. The partnership with Red White and Bloom is going to grow the brand into other states with them. Growth continues in that direction. Recently we’ve been going back to cultivation and doing cultivation deals. We started as cultivators and a lot has changed in the past several years. We are trying to pick up new knowledge.

Aaron: Well, thanks for that George, this is all awesome feedback for the industry. That concludes the interview! Thanks so much for your time and congrats again on your recent announcement with Red White & Bloom.

George: Thanks.

The Brand Marketing Byte

The Hottest Edibles Brands in the United States Right Now

By Cannabis Industry Journal Staff
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The Brand Marketing Byte showcases highlights from Pioneer Intelligence’s Cannabis Brand Marketing Snapshots, featuring data-led case studies covering marketing and business development activities of U.S. licensed cannabis companies.

In this week’s Byte, we’re taking a look at the top edibles companies in the country. Using a scoring methodology that factors in a wide variety of data sets, Pioneer’s algorithm tracks brand awareness, audience growth and engagement. Using more than 80,000 relevant data points per week, they analyze business activity across social media, earned media and web-related activities.

For April 2020, here are the top 25 hottest U.S. edibles brands:

  1. Kiva Connections
  2. Wyld
  3. Tyson Ranch
  4. Wana Brands
  5. Serra
  6. STIIIZY
  7. 1906
  8. Kushy Punch
  9. Coda Signature
  10. Kush Queen
  11. PLUS
  12. Theory Wellness
  13. Incredibles
  14. Kikoko
  15. Dixie Elixirs
  16. Fairwinds
  17. Deep Roots Harvest
  18. Willie’s Reserve
  19. Chalice Farms
  20. Care By Design
  21. Beboe
  22. District Edibles
  23. Bhang
  24. Satori
  25. Betty’s Eddies
HACCP

HACCP for Cannabis: A Guide for Developing a Plan

By Radojka Barycki
1 Comment
HACCP

Hazard Analysis and Critical Control Points (HACCP) is a systematic approach that evaluates hazards that may potentially be present in food products that can harm the consumer. The process used to manufacture the product is evaluated from raw material procurement, receiving and handling, to manufacturing, distribution and consumption of the finished product1. The documented process is what is known as HACCP plan. Although HACCP was designed to evaluate hazards in foods, it can be used to assess or evaluate hazards that may potentially be present in cannabis consumable products (edibles and vaping) that can cause harm to the consumer.

HACCP plan development requires a systematic approach that covers 5 preliminary steps and 7 principles. A systematic approach means that each step must be followed as outlined. Skipping a step will result in a HACCP plan that most likely will be ineffective to control potential hazards in the product.

The 5 preliminary steps are:

  1. Establish a HACCP team
  2. Describe the product
  3. Establish the intended use of the product
  4. Develop a flow diagram
  5. Verify the flow diagram

The 7 Principles are:HACCP

  1. Conduct a hazard analysis
  2. Identify the critical control points (CCPs)
  3. Establish critical limits (CL)
  4. Establish monitoring procedures
  5. Establish corrective actions
  6. Establish verification procedures
  7. Establish records and record keeping procedures1,2

It is important to mention that HACCP plans are supported by programs and procedures that establish the minimum operational and sanitary conditions to manufacture safe products. These programs and procedures are known as pre-requisite programs (PRP) or preventative controls1,2.

Figure 1. Flow Diagram

A multidisciplinary team must be established in order to ensure that all inputs of the product manufacturing process are considered during the hazards analysis discussions. The description of the product and its intended use provides detail information on ingredients, primary packaging material, methods of distribution, chemical characteristics, labeling and if any consumer might be vulnerable to the consumption of the product. A verified flow diagram is an accurate representation of the different steps followed during the product manufacturing process and will be used to conduct a hazard analysis. An inaccurate flow diagram will set the stage for an inadequate HACCP plan. Therefore, it is important that the HACCP team members verify the flow diagram. Figure 1 is a flow diagram for a fictional infused apple juice manufacturing plan that I will be using as an example.

The hazard analysis is the backbone of the HACCP plan. There are two elements that must be considered when conducting the hazard analysis:

  • Identification of the hazard associated with the ingredient(s) and/or the product manufacturing steps. These hazards have been categorized as: Biological, chemical (including radiological) and physical. Biological, chemical and physical hazards should be considered for each ingredient, primary packaging and process step. Also, it is important that the team is specific as to what hazard they are referring to. I often find that biological hazards are identified as “pathogens” for example. The team has to be specific on which pathogen is of concern. For example, if you are processing apple juice, the pathogens of concern are pathogenic coli and Salmonella sp. However, if you are processing carrot juice, you need to add Clostridium botulinum as a biological hazard also. If the choice of method to eliminate the hazards is pasteurization for example, the processing temperature-time combinations will differ greatly when manufacturing the apple juice vs. the carrot juice as C. botulinum is an organism that can sporulate and, therefore, is harder to kill.
  • Characterization of the hazard. This implies determining the significance of the potential hazard based on the severity of the consequence if it is consumed and the likelihood of occurrence in the ingredient or process step. Only steps in the process that has significant hazards should be considered further.
Table 1. Ingredient Hazard Analysis

In my professional experience, the hazard analysis is one of the most difficult steps to achieve because it requires the expertise of the multidisciplinary team and a lot of discussion to get to the conclusion of which hazard is significant. I find that a lot of teams get overwhelmed during this process because they consider that everything in the process may represent a hazard. So, when I am working with clients or providing training, I remind everyone that, in the bigger scheme of things, we can get stricken by a lighting in the middle of a thunderstorm. However, what will increase our chances would be whether we are close or not to a body of water for example. If I am swimming in the middle of a lake, I increase my chances to get stricken by the lighting. In comparison, if I am just sitting in my living room drinking a cup of coffee during the thunderstorm, the likelihood of being stricken by a lighting is a lot less. The same rationale should be applied when conducting the hazard analysis for manufactured products. You may have a hazard that will cause illness or death (high on the severity chart) but you also may have a program that mitigates the likelihood of introducing or having the hazard. The program will reduce the significance of the hazard to a level that may not need a critical control point to minimize or eliminate it.

Table 2. Process Hazard Analysis (1)

Clear as mud, right? So, how would this look like on the infused apple juice example? Table 1 shows the hazard analysis for the ingredients. Tables 2 and 3 show the hazard analysis for the part of the process. In addition, I have identified the CCPs: Patulin testing and pasteurization. There is a tool called the CCP decision tree that is often used to determine the CCPs in the process.

Once we have the CCPs, we need to establish the critical limits to ensure that the hazard is controlled. These limits must be validated. In the case of Patulin, the FDA has done several studies and has established 50 ppm as the maximum limit. In the case of pasteurization, a validation study can be conducted in the juice by a 3rd party laboratory. These studies typically are called thermal death studies (TDS) and provide the temperature and time combination to achieve the reduction of the pathogen(s) of concern to an acceptable level that they do not cause harm. In juice, the regulatory requirement is a 5-log reduction. So, let’s say that the TDS conducted in the infused apple juice determined that 165°F for 5 seconds is the critical limit for pasteurization. Note that the 5 seconds will be provided by the flow of the product through the holding tube of the pasteurizer. This is measured based on flow in gallons per minute.

Table 3. Process Hazard Analysis (2)

Monitoring is essential to ensure that the critical limits are met. A monitoring plan that outlines what, how, when and who is responsible for the monitoring is required.

Ideally, the system should not fail. However, in a manufacturing environment, failures can happen. Therefore, it is important to pre-establish steps that will be taken to ensure that the product is not out of the control of the facility in the event of a deviation from the HACCP plan. These steps are called corrective actions and must be verified once they are completed. Corrective actions procedures must address the control of the product, investigation of the event, corrective actions taken so the deviation doesn’t reoccur and product disposition.

Table 4. HACCP Plan Summary

Verification activities ensure that the HACCP plan is being followed as written. Typically, verification is done by reviewing the records associated with the plan. These records include but are not limited to monitoring records, calibration records, corrective action records, and preventive maintenance records for equipment associated with the CCPs. Record review must be done within 7 working days of the record being produced.

Finally, establishing records and record keeping procedures is the last step on developing HACCP plans. Records must be kept in a dry and secure location.

Table 4 show the summary of the HACCP plan for the infused apple juice example.

For more information on how to develop a HACCP plan for your facility, read the resources below:

  1. HACCP Principles and Application Guidelines – The National Advisory Committee on Microbiological Criteria for Foods (NACMCF)
  2. ASTM D8250-19: Standard Practice for Applying a Hazard Analysis Critical Control Points (HACCP) Systems for Cannabis Consumable Products
control the room environment

Food Safety: What it Means and How ERP Helps Edibles Manufacturers

By Daniel Erickson
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control the room environment

The diverse cannabis industry has experienced tremendous growth, especially in the popular edibles market whether consumed recreationally or medicinally. Since these cannabis-infused food and beverage products come in a variety of forms, including candies, baked goods, energy drinks, chips, chocolates and teas, food safety questions and concerns for companies manufacturing these products can seem daunting. ERP software solutions designed for the cannabis industry play an imperative and necessary role in addressing key food safety issues for edibles producers, helping to fill in the gaps where new and established businesses struggle. By mitigating the potential for damaging effects of a food safety event, companies can prevent, or greatly lessen the impact, to both their reputation and public perception, as well as limit the financial liability and legal penalties.

What is safety?

On a fundamental level, safety is the state of being protected from undergoing or causing hurt, injury or loss. As a manufacturer of cannabis edibles, it is critical that products are consistent, labeled appropriately and safe for consumers. Forward-thinking companies are employing ERP solutions to help ensure their products are not harmful to their current and future customers.

FDAlogoA lack of safety in the cannabis edibles market stems from the unregulated nature of the industry on a federal level, despite consumers’ expectations otherwise. Similar to products in the food and beverage industry, safety issues with inaccurate labeling, food-borne pathogens and disease outbreaks are all concerns within the manufacturing environment. Particularly to cannabis businesses, extraction methods, bacteria and mold growth, pest and pesticide contamination, chemical exposure, improper employee handling and the unintentional consumption or overconsumption of edibles are all potential safety concerns. In states where edible products are legal, local municipalities and state governments each have their own unique regulations – requiring manufacturers to comply to different guidelines. With the absence of federal regulations, many cannabis companies have adopted a more conservative approach to food safety. Following U.S. Food and Drug Administration (FDA) guidelines and Food Safety Modernization Act (FSMA) best practices allows manufacturers to address key current food safety issues and prepare for future regulation.

Utilize Best Practices and ERPGMP

Introducing current Good Manufacturing Practices (cGMP’s) traditionally implemented in the food and beverage industry help to form a foundation for cannabis edibles safety in 9 key areas:

  1. Personnel – As an often-overlooked aspect of cannabis edibles manufacturing, adequate training on procedures to ensure disease control and proper cleanliness is required to maintain a company culture of safety. Advocating for quality standards with proper safety procedures should be a priority for every employee.
  2. Manufacturing Environment – Effective management of the manufacturing environment ensures that facilities are controlled to prevent the contamination of finished goods – restricting extraneous materials such as glass, metal, rubber, etc. from the production floor. Warehouse and office lighting should be adequately maintained so that employees are able to inspect equipment, by-products and finished goods and conduct their jobs effectively.
  3. Sanitary Operations – Physical facilities and all equipment must be maintained in clean and sanitary conditions and kept in good repair to prevent food and beverages from becoming contaminated. Cleaning processes should protect ingredients, work in progress, finished goods and workspaces from potential contamination.
  4. Sanitary Facilities and Controls – Effective control of water, plumbing, sewage disposal and drainage are essential. Staff must have access to adequate handwashing and restroom facilities and employee changing rooms. Restrooms and break rooms should be clean and stocked at all times, while garbage is handled properly and disposed of in a timely manner.
  5. Equipment and Utensils – Properly cleaning and maintaining vats, conveyor belts, shrink wrap machines, blenders, etc. to avoid contamination and allergen cross-contact ensures safe procedures are being followed. A robust sanitation program with defined cleaning schedules should be followed for the sanitizing of utensils and equipment.
  6. Processes and Controls – The manufacturing of edible products should be done in accordance with best practices established in the food and beverage industry, taking account of sanitation, quality control and protection from allergens and contamination. Ongoing testing is conducted to identify sanitation failures and contamination occurrences and ensure items are discarded properly.

    control the room environment
    Personal Protective Equipment (PPE) can reduce the risks of contamination
  7. Warehousing and Distribution – Establishing proper storage and transportation processes protects the products from contamination, allergen cross-contact and container deterioration – ensuring proper handling procedures throughout the growing, manufacturing and distribution steps.
  8. Defect Action Levels – Quality control is used to minimize defects by requiring an action response when a problem is discovered. An established response plan demonstrates the proper procedures to follow when defects occur during production.
  9. Holding and Distribution of By-products for use as Animal Food (if applicable) – This applies to food and beverage facilities that either donate or sell a by-product for use as animal food. By-products used for animal consumption that are managed properly remain free from contamination. Accurate labeling should identify by-product by the common or usual name and denote not for human consumption when distributed.

Cannabis-specific ERP solutions efficiently provide the structure, integration and processes to follow cGMP’s to address food safety concerns in all phases of growing, manufacturing and distribution. By automating the documentation of audit trails, edibles companies are equipped with the same tools that food and beverage manufacturers have utilized for decades. Validated procedures and best practices incorporate safety initiatives from cannabis cultivation to the sale of edible products and beyond, offering greater efficiency than manual methods. Since cGMP’s provide a foundation for Hazard Analysis Critical Control Points (HACCP) planning, edibles manufacturers are able to take advantage of incorporating control points into the ERP solution to prevent and control hazards before they affect food safety. Having a HACCP Plan, along with proper implementation and adherence to cGMP’s, helps to minimize food safety hazards for edibles manufacturers in the cannabis industry.

Quality and safety in the cannabis edibles market is an area that cannot be ignored, as the consequences for failing to handle hazards are potentially devastating. Savvy cannabis companies are employing best practices of food and beverage manufacturers, including the 9 addressed above, in tandem with an ERP software solution, to effectively navigating this highly competitive market. Paving the way with their commitment to quality and in delivering safe and consistent products to the market demonstrates to customers and investors alike their preparedness for growth.

Canadian Cannabis 2.0: Going Beyond GPP

By Lindsay Glass
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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.

HACCPCompanies 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.