Among the myriad business challenges facing cannabis companies, processing payroll ranks right up there. On top of the industry’s overarching banking and regulatory hurdles—not to mention prohibitive tax liability—its varied, sometimes unconventional pay models can fall outside the scope of traditional payroll processing.
Obviously, despite the many business issues clamoring for attention, the cannabis industry is powered by people—and for a business to succeed, employees must be paid accurately, legally, and on time.
While the industry is still evolving in many respects, there are steps cannabis businesses can take right now to ensure payroll is processed correctly and compliantly—including these four best practices.
1. Implement Foolproof Tracking Processes for Each Pay Model
In addition to salaried and hourly employees—who can be difficult to time-track, depending how they’re distributed—some growers pay bud trimmers by the ounce or pound of trimmed, manicured product. While such productivity-based compensation may make absolute sense for your business, most conventional time and attendance and payroll software isn’t equipped to administer this pay model.
As a result, some companies may resort to manual tracking—but that can create regulatory recordkeeping challenges of their own. The answer: flexible time and attendance software that allows companies to track employees’ time and/or productivity using a variety of data collection methods for different elements of the workforce. It may mean using conventional biometric time clocks at processing facilities and retail dispensaries…mobile time-tracking apps for gardeners and growers in the field…and versatile apps that track employee output by work order or piece rate, however your business chooses to define it.
Furthermore, regardless of how it’s collected, all that data needs to flow seamlessly into your payroll processing system, ensuring pay is calculated correctly for every pay model. The HR payroll software is out there, but you may need to look for it.
2. Verify that Your Payroll Provider Is Cannabis-Friendly
Perhaps you’ve heard horror stories of cannabis companies getting abruptly dropped by their software providers with a mere 30-days’ notice. Some leading HR payroll software companies have made seemingly overnight decisions to withdraw from servicing the cannabis industry, leaving employers struggling to pay their people. Who can implement new HR payroll software in 30 days?
Make sure your payroll provider is committed to serving the cannabis industry for the long haul. If the commitment isn’t there, start looking elsewhere. Beyond avoiding potentially damaging business disruptions, partnering with a software provider that actively services the cannabis industry will offer unique capabilities you may not find elsewhere.
3. Become an Expert on IRS Code 280e (COGS)
Thanks to section 280e of Internal Revenue code, state-compliant cannabis business cannot deduct business expenses except for the cost of goods sold (COGS).
The saving grace here for growers and processors: labor costs that are inventorial in nature are considered cost of goods sold. That includes the cleaning, trimming and curing of product, as well as packaging and inventory labor.
Therefore, for tax purposes, it’s critical to assign each employee a specific title and role within your operation. This is particularly important for vertically-integrated companies whose employees wear more than one hat.
Say, an employee works part time in cultivation and part time in your retail dispensary. You need to be able to track their work time and compensation separately—i.e., you need a time and attendance system that can track split shifts—and keep detailed records of what labor costs are and aren’t deductible.
4. Consider Integrated HR Payroll Software
Because of payroll challenges, many cannabis businesses are still piecing together disparate HR systems, such as applicant tracking, time and attendance, payroll and benefits. But when their integration isn’t flawless it can create the need for duplicate inputting and elaborate manual workarounds.
Furthermore, a patchwork software can stop businesses from accessing reports and analytics that inform decision-making and better position the company for growth—while also ensuring the company is in a position to provide whatever regulatory information may be required.
The answer: choose a payroll provider that offers complete, integrated HR payroll software—one that that can demonstrate its long-term commitment to serving the state-licensed cannabis industry.
For all of today’s growing acceptance and legitimacy with cannabis, the reality is that today’s operators – whether growers/producers or dispensary operators – still face risks in running their businesses. If, in the old days, a customer got deathly ill from cannabis contaminated with something from somewhere during the distribution chain, oh, well. But now that there’s a legal system of checks and balances; there’s recourse when issues arise.
The problem is that the business is so new that most people don’t know what they don’t know about mitigating those risks. And that, unfortunately, extends to many in the insurance business who need to be doing a better job helping put the right protections in place.
One grower bemoaned to me at a cannabis trade show, “I sure wish I could insure my crops.” What? “You can,” I told him. His old-school ag broker didn’t know any better and didn’t do him any favors with his ignorance. But it brought home the point: We have to start treating cannabis like the real business it is.
Reviewing the existing insurance policies of today’s cannabis businesses uncovers some serious gaps in coverage that could be financially crippling if not downright dangerous should a claim be triggered. Retail dispensaries, for example, are high-cash businesses, making banking and trusted employees a must-have.Today’s cannabis businesses need to understand there will be risks but they are a lot more manageable than in the old days.
And a close eye must be cast to lease agreements for hidden exposures, too. We know a Washington state grower that had no property insurance on its large, leased indoor growing facility. The company’s lease made its owners, not their landlord, responsible for any required building improvements. It was one of a variety of serious exposures that had to be fixed.
Today’s cannabis businesses need to understand there will be risks but they are a lot more manageable than in the old days. Rather than find themselves under-insured, they can start by learning what they probably have wrong about insurance. Dispelling three of the most common myths is a good place to start.
Myth #1: Nobody will insure a cannabis business.
Not remotely true. You can and should get coverage. Think property and casualty, product liability, EPLI and directors and officers, employee benefits and workers comp. Additionally, you should be educated on what crop coverage does and doesn’t cover. Depending on your business’ role in production and distribution, you might also consider cargo, stock throughput, auto, as noted, crime and cyber coverage. It pays to protect yourself.
Myth #2: If my business isn’t doing edibles, I don’t have to worry about product liability insurance.
The reality is that product liability may be the biggest risk the cannabis industry faces, at every level on the supply chain. There’s a liability “trickle down” effect that starts with production and distribution and sales and goes down to labeling and even how the product is branded. Especially when a product is an edible, inhalable or ingestible with many people behind it, the contractual risk transfer of product liability is an important consideration. That means the liability is pushed to all those who play any role in the supply chain, whether as a producer or a retailer or an extractor. And all your vendors must show their certificates of insurance and adequate coverage amounts. Don’t make the mistake of being so excited about this new product that you don’t check out the vendors you partner with for this protection.
Myth #3: Any loss at my operation will be covered by my landlord’s policy.
As the example I cited early illustrated, that’s unlikely. Moreover, your loss might even cause your landlord’s insurance to be nullified for having rented to a cannabis business. It’s another reason to examine your lease agreement very carefully. You want to comply with your landlord’s requirements. But you also need to be aware of any potential liabilities that may or may not be covered. Incidentally, even if your landlord’s policy offers you some protection, your interests are going to be best served through a separate, stand-alone policy for overall coverage.
These are interesting times for the burgeoning legal cannabis business. Getting smart – fast – about the risks and how to manage them will be important as the industry grows into its potential.
Did you know that the use of personal vehicles for transporting cannabis products is one of the most frequent claims in the cannabis industry? It surpasses property, product liability and even theft. Businesses are either unaware of the risks involved in using personal vehicles for transporting cannabis, or they aren’t taking them seriously enough.
Considering the strict statutes many states have placed on transporting cannabis should be reason alone to be more diligent. For example, the California Bureau of Cannabis Control’s proposed regulations require cannabis business owners to ensure their drivers have designated permits to transport the product. The state’s current legislation mandates inspections at any licensed premises, and requires employers to provide detailed tracking and schedules on the transport of product. Further, the state prohibits using minors to transport cannabis, and considers it a felony to do so.
Regulatory concerns, combined with the potential liabilities that could come from driver behavior, are keeping insurers from offering auto coverage to the cannabis industry. In fact, just four insurers currently offer the industry auto coverage, with premiums running as high as $17,000 per auto on average. It is important to note that personal auto insurance falls short because it doesn’t cover cargo loss.
Alternatively, because the stakes are so high, many companies are using courier services to transport cannabis product. But cargo insurance is still an issue. Without it, the care, custody and control of someone else’s products, and insurance limits are lacking. Even when the courier has cargo coverage, because they are delivering for multiple companies, the claims payout would have to be split amongst all the customers – likely below the value of your loss.
Consider the following best practices when transporting cannabis:
Conduct background checks/review DMV records. Uncovering any potential driver issues prior to hiring is critical. Look for previous DUIs or drug related history. Employees who might use product before getting behind the wheel are a significant danger to other drivers and a major liability to the employer. Even after hiring, be on alert for signs that indicate poor driving performance. Use check-in/check-out processes for all drivers, and conduct regular vehicle walk-arounds to look for scratches, dents or other damage that otherwise might be unreported to the employer.First, and most importantly, assess your risk mitigation options. Then, put processes in place as soon as possible to eliminate risk.
Implement quarterly driver training. Educate employees on proper procedures. While minor fender benders and sideswipe accidents are most common, even these can be costly if not handled properly. Once law enforcement get involved in an accident the car’s transportation of cannabis could become a secondary issue. Teach drivers how to handle accidents while on the scene, including informing law enforcement about the cargo and the employer.
Use unmarked vehicles. Drivers carrying a significant amount of product and/or cash are tempting targets for thieves. Company cars used for transporting product should be newer, and have no fleet serial numbers or anything identifying the company.
Require increased personal liability limits. If an employee is using their own personal vehicle for business purposes, the business owner should require that person carry more than minimum limits of personal liability. Ideally, they should have $300,000 or more, at an absolute minimum $100,000.
Get started now
First, and most importantly, assess your risk mitigation options. Then, put processes in place as soon as possible to eliminate risk. Secure the right insurance coverage, and ask your broker/underwriter to provide any additional recommendations to best mitigate your transportation, delivery, and cargo exposures.
To reinforce the ideas in the article, Sanitation Starting Points: More Than Sweeping the Floors and Wiping Down the Table, the main goal of sanitation is to produce safe food and to keep consumers healthy and safe from foodborne illness. With the cannabis industry growing rapidly, cannabis reaches a larger, wider audience. This population includes consumers most vulnerable to foodborne illness such as people with immunocompromised systems, the elderly, the pregnant, or the young. These consumers, and all consumers, need and deserve safe cannabis products every experience.
Sanitation is not an innate characteristic; rather, sanitation is a trained skill. To carry out proper sanitation, training on proper sanitation practices needs to be provided. Every cannabis food manufacturing facility should require and value a written sanitation program. However, a written program naturally needs to be carried out by people. Hiring experienced experts may be one solution and developing non-specialists into an effective team is an alternative solution. Note that it takes every member of the team, even those without “sanitation” in their title, to carry out an effective sanitation program.
Sanitation is a part of the Food and Drug Administration’s Code of Federal Regulations on current Good Manufacturing Practices (GMPs) in manufacturing, packing or holding human food (21 CFR 110). Sanitation starts at the beginning of a food manufacturing process; even before we are ready to work, there are microorganisms, or microbes, present on the work surfaces. What are microbes? At a very basic level, the effects of microbes can be categorized into the good, the bad, and the ugly. The beneficial effects are when microbes are used to produce cheese, beer or yogurt. On the other hand, microbes can have undesirable effects that spoil food, altering the quality aspects such as taste or visual appeal. The last category are microbes that have consequences such as illness, organ failure and even death.In a food manufacturing facility, minimizing microbes at the beginning of the process increases the chance of producing safe food.
Proper sanitation training allows cannabis food manufacturing facilities to maintain a clean environment to prevent foodborne illness from affecting human health. Sanitation training can be as basic or as complex as the company and its processes; as such, sanitation training must evolve alongside the company’s growth. Here are five key talking points to cover in a basic sanitation training program for any facility.
Provide the “why” of sanitation. While Simon Sinek’s TEDx talk “Start with why” is geared more towards leadership, the essential message that “Whether individuals or organizations, we follow those who lead not because we have to, but because we want to.” Merely paying someone to complete a task will not always yield the same results as inspiring someone to care about their work. Providing examples of the importance of sanitation in keeping people healthy and safe will impart a deeper motivation for all to practice proper sanitation. An entertaining illustration for the “why” is to share that scientists at the University of Arizona found that cellphones can carry ten times more bacteria than toilet seats!
Define cleaning and sanitizing. Cleaning does not equal sanitizing. Cleaning merely removes visible soil from a surface while sanitizing reduces the number of microorganisms on the clean surface to safe levels. For an effective sanitation system, first clean then sanitize all utensils and food-contact surfaces of equipment before use (FDA Food Code 2017 4-7).
Explain from the ground up. Instead of jumping into the training of cleaning a specific piece of equipment, start training with the foundational aspects of food safety. For example, a basic instruction on microbiology and microorganisms will lay down the foundation for all future training. Understanding that FATTOM (the acronym for food, acidity, temperature, time, oxygen and moisture) are the variables that any microorganism needs to grow supplies people with the tools to understand how to prevent microorganisms from growing. Furthermore, explaining the basics such as the common foodborne illnesses can reinforce the “why” of sanitation.
Inform about the principles of chemistry and chemicals. A basic introduction to chemicals and the pH scale can go a long way in having the knowledge to prevent mixing incompatible chemicals, prevent damaging surfaces, or prevent hurting people. Additionally, proper concentration (i.e. dilution) is key in the effectiveness of the cleaning chemicals.
Ensure the training is relevant and applicable to your company. Direct proper sanitation practices with a strong master sanitation schedule and ensure accountability with daily, weekly, monthly and annual logs. Develop sanitation standard operating procedures (SSOPs), maintain safety data sheets (SDS’s) and dispense proper protective equipment (PPE).
Overall, sanitation is everyone’s job. All employees at all levels will benefit from learning about proper sanitation practices. As such, it is beneficial to incorporate sanitation practices into cannabis food manufacturing processes from the beginning. Protect your brand from product rework or recalls and, most importantly, protect your consumers from foodborne illness, by practicing proper sanitation.
Sanitation is not just sweeping the floors and wiping down the table – sanitation has a wide-ranging function in a cannabis food manufacturing facility. For example, sanitation covers the employees (and unwanted pests), food-contact equipment (and non-food-contact equipment), trash disposal (including sewage), and more. Ultimately, sanitation systems maintain a clean environment to prevent foodborne illness from affecting human health. Fortunately, there are resources and tools to ease into establishing a robust sanitation program.
Overall, the main goal of sanitation is to produce safe food, to keep consumers healthy and safe from foodborne illness. With the cannabis industry growing and gaining legalization, cannabis reaches a larger, wider audience. This population includes consumers most vulnerable to foodborne illness such as people with immunocompromised systems, the elderly, the pregnant, or the young. These consumers, and all consumers, need and deserve safe cannabis products every experience.
1) General maintenance of the facilities: The buildings and fixtures of the food manufacturing facility cover a lot of ground – hiring a maintenance team will divide the responsibility, ensuring the entire facility can be maintained in a clean and sanitary condition. Furthermore, a team can build out a tool like a preventative maintenance program to restrict issues from ever becoming issues.
2) Control of the chemicals used for cleaning and sanitizing: Not all chemicals are equal – select the appropriate cleaning and sanitizing chemicals from reputable suppliers. Obtain the right knowledge and training on proper use, storage, and proper protective equipment (PPE). This ensures the safe and effective application of the chemicals in minimizing the risk of foodborne illness.
3) Pest control: Understand the environment within the facility and outside the facility. This will aid in identifying the most common or likely pests, in order to focus the pest control efforts. Keep in mind that internal pest management programs can be just as successful as hiring external pest control services.
4) Procedures for sanitation of both food-contact and non-food-contact surfaces: Developing sanitation standard operating procedures (SSOPs) provides guidance to employees on appropriate cleaning and sanitizing practices, to balance effective and efficient operations. A master sanitation schedule can control the frequency of indicated sanitation procedures.
5) Storage and handling of cleaned portable equipment and utensils: Cross contamination in storage can be minimized with tools such as controlled traffic flow, signage, training, color coding, and more.
6) Water supply, plumbing, and sewage disposal: Routine inspections of plumbing, floor drainage, and sewage systems prevent unintended water flow and damage.
7) Toilet facilities: Clearly defining standards for the toilet facilities and setting accountability to everyone who uses them will ensure that the toilet facilities are not a source of contamination for the food products.
8) Hand-washing facilities: Good manufacturing practices (GMPs) include proper hand washing and proper hand washing starts with suitable hand-washing facilities. For example, frequent checks on running water, hand soap, and single use towels ensure that all hands are clean and ready to produce safe food.
9) Trash disposal: While trash can be a source of cross contamination, trash can also attract and harbor pests. Scheduling regular trash disposal and controlling traffic flow of waste are two ways to minimize the risk of cross contamination from trash.
Even after meeting these requirements, sanitation programs can be more sophisticated. An example is to institute an environmental monitoring program to verify and validate that the sanitation program is effective. Another example is in identifying and measuring key performance indicators (KPIs) within the sanitation program that can improve not just the sanitation processes, but the operations as a whole. Principally, sanitation is cleanliness on the most basic level, but waste management can encompass sanitation and grow into a larger discussion on sustainability. All in all, sanitation programs must reshape and evolve alongside the company growth.
Sanitation is interwoven throughout the food manufacturing process; sanitation is not a single task to be carried out by a sole individual. As such, it is beneficial to incorporate sanitation practices into cannabis food manufacturing processes from the beginning. Protect your brand from product rework or recalls and, most importantly, protect your consumers from foodborne illness, by practicing proper sanitation.
When it comes to compliance for cannabis startups, the ISO 9000 family of standards reigns supreme. Providing the guidelines for the concepts that make up a quality management system (QMS), the ISO family is composed of five standards: ISO 9000, 9001, 9002, 9003 and 9004. Outside of ISO 9001, ISO 9000 is the most important because it creates the foundation that guides all of the other standards.
ISO 9000 is split into two sections: fundamentals and vocabulary. Fundamentals covers the basic principles of quality management and the vocabulary section is a dictionary of quality management terminology. ISO 9000 is crucial because it provides direction on proper QMS implementation that will lead to achieving an ISO 9001 certification.
While the entire ISO 9000 family is focused on quality management systems that aim to help organizations “ensure that their products and services consistently meet customer’s requirements and that quality is consistently improved,” ISO 9001 is the only standard that lists actual requirements and requires certification.Cloud-based quality management software provides the flexibility and scalability, that cannabis startups need to comply with ISO 9001
Quality Management Systems (QMS)
When conceptualizing “quality management,” it is best to think of it as an organization’s definition of how it will meet the quality requirements of customers and other stakeholders who are affected by its work. Implementing this requires an extensive alignment of company processes and procedural governance.
It’s easiest to think of a QMS as the facilitator of outlined processes that are required to fulfill ISO 9001 requirements. For example, if an organization has defined a change request process, it could use a cloud-based QMS to put that process in place. However, the benefits of a cloud-based QMS don’t have to end at ISO 9001. It can also help organizations comply with other regulations like GxP.
ISO 9001 Requirements
ISO 9001 requirements can sound very generic because they’re meant to be applied to any organization, big or small, in any industry. The key to ISO 9001 is the concept of continuous improvement, which is why specific requirements for what “quality” is are not defined. Rather, companies must create objectives and work toward improving processes to meet those objectives. That said, a certified QMS still must do the following:
Meet the requirements of other stakeholders, for example, customer requirements and regulatory standards
Ensure that employees receive training outlining the quality requirements
Determine and document the processes, their interactions and their results
Be able to produce records to prove that system requirements have been met
From creation to disposal, document protocols must be clear and properly followed.With that in mind, ISO 9001’s purpose is to evaluate whether or not a QMS does a good job of managing processes while also being able to help organizations identify areas that need improvement. In simple terms, ISO 9001 helps companies who were making an excellent product most of the time, make an excellent product every time.
How can cloud quality management software help you get your ISO 9001 certification? Once you create processes that adhere to ISO 9001 quality management standards, you have to put them into practice. Enter: quality management software. But, how exactly does it help?
Optimal Time to Value
First, cloud-based software is the most cost-efficient to implement. Secondly, since a QMS needs to be accessible to every employee regardless of whether they work at HQ or on-site, cloud QMS are built to be mobile-friendly and easily accessed from any location.
Automated Document Lifecycles & Version Control
From creation to disposal, document protocols must be clear and properly followed. As up-to-date documents are an important factor in maintaining high levels of quality, the most recent versions of approved documents should be readily available while previous editions should be hidden away.
With cloud quality management software, workflows can automate the review and approval processes by automatically sharing documents with the right reviewers. Then, after the document has been approved, the changes will automatically be applied to the master document while the obsolete version is archived, helping to remove any chance of it being accidentally used after the update.
Easy Document Location & Metadata
According to ISO 9001, searching through an organization’s documents should be as easy as searching with Google. It’s an added bonus when the quality management software enables users to add custom metadata to documents. Metadata is just extra information that helps to define a document (like file size, type, date modified). With certain cloud-based QMS’, you can add custom metadata fields to make documents easier to find. For example, you can add an “expiration date” field that allows you to look up policies based on when they are set to expire.With the growing number of data breaches happening every year, it’s important to address the security components of a QMS.
In order to pass any ISO 9001 audit, there needs to be a complete audit trail for every document, including active documents and the earlier archived versions. While this might seem like a big ask, cloud quality management software helps make this simple. Every single change to a document, regardless of whether it’s the current or past version, is tracked. When combined with automated workflows, you’re able to produce a precise log of every change made by every user.
Advanced User Permissions & Central File Ownership
With the growing number of data breaches happening every year, it’s important to address the security components of a QMS. Many of these issues can be resolved with user permissions, which is generally related to managing users’ editing and sharing access. The proper view, edit, and approval rights go a long way to reducing the risk of human error.
Another feature that may seem like common sense is central file ownership. When the organization owns all of its documents, there’s no need to worry that important files will be lost or deleted. With one owner, the damage that can be inflicted by malicious third-parties is also limited.
Cloud-based quality management software provides the flexibility and scalability, that cannabis startups need to comply with ISO 9001. With the cloud as a foundation, these systems will continue to be assets for the cannabis industry as it gains momentum and expands more.
To say that there has been explosive growth in the cannabis edibles market is an understatement. In the next 5 years, edibles are expected to become a $5.3 billion industry according to the Brightfield Group, a cannabis market research firm. Skyrocketing demand for cannabis infusion in food and beverage products, both recreational and medical, has prompted concern for the health and safety of consumers due to the lack of federal legality and regulatory guidelines for these products. Edibles consumers assume the same level of safety and quality present in other food and beverage products in the market. Progressive cannabis operations are opting to follow current food safety guidelines to mitigate hazards despite not being legally required to do so. Utilizing these guidelines, as well as incorporating an industry-specific ERP solutionto automate processes, enables cannabis businesses to provide quality, consistent products and establish standards to support the eventuality of federal cannabis legalization.
Edibles consumption has grown not only in a recreational capacity but also for medicinal use to treat chronic pain, relieve epilepsy symptoms, decrease nausea, combat anxiety and other health issues. Cannabidiol (CBD) infused products take many forms including candies, baked goods, chocolate, oils, sprays, beer, soda, tea and coffee. Their popularity is partly due to their more socially acceptable use, creating an appeal to a wider audience. While the Food and Drug Administration (FDA) is responsible for overseeing food and beverage safety for products sold in the United States, their regulations are not enforced in the cannabis-infused marketplace. Without federal regulatory standards, there exist inherent food safety concerns that create risks to consumers. The average cannabis edibles customer is likely unaware of the “consume at your own risk” nature of the products.
There are many consequences of not addressing food safety hazards, as the possibility of food-borne illnesses resulting from unsafe and unsanitary manufacturing facilitieshave become increasingly likely in an unregulated market. In addition to these concerns, problems particular to cannabisgrowing and harvesting practices are also possible. Aflatoxins (mold carcinogens) on the cannabis bud, pesticide residue on plants, pest contamination, improper employee handling and training and inaccurate levels of CBD all contribute to the risk of outbreaks, hefty fines, recalls or business closure. To mitigate the risk of exposure, it is recommended that edible manufacturers employ a proactive approach of observing proper food safety standards that encompass the growing, manufacturing, packaging, handling, storing and selling of products. With a focus on safety, cannabis edible manufacturers utilizing an ERP solution and vendor with experience in food safety management will reap the benefits that food and beverage businesses have experienced for decades.
Following established food safety protocols and guidelines of the food and beverage and dietary supplement industry, allows manufacturers of cannabis-infused edibles to implement a proactive approach by focusing on safety and reducing the risk to their operations. Food and beverage manufacturing best practices include: maintaining supplier list, quality control testing, sanitary handling of consumables, maintaining clean facilities and mitigating cross-contamination. Successful food and beverage manufacturers also incorporate a food safety team, preventative controls, and a food safety plan (FSP) including a detailed recall plan into their safety initiatives.
Establishing and maintaining a supplier list with approved quality ingredients is an essential building block for reducing food safety hazards and can be easily maintained within an ERP. Documentation of vendor information and recording of stringent testing results ensures that specific quality standards are met. Conducting extensive research regarding the source of the ingredients for use in cannabis edibles allows companies to confirm that raw ingredients were processed in a safe environment. The importance of supply chain visibility cannot be understated, as suppliers are in control of potential hazards. Quality processes and regularly performed testing is automated through the workflow of an ERP solution in the manufacturing facility – enabling noncompliant raw materials to be quarantined and removed from production. The ERP solution allows for management of critical control points to catch non-compliance issues and set-up of alternate suppliers in case of supplier-related issues. Maintaining approved supplier lists is an industry best practice that provides current and accurate information in the event of possible consumer adverse reactions.
Following current Good Manufacturing Practices (cGMPs) should underlie efforts to address food safety concerns in the cannabis edibles industry. An ERP solution assists with documenting these quality initiatives to ensure the safe and sanitary manufacturing, storage and packaging of food for human consumption. This includes evaluating equipment status, establishing cleaning and sanitation procedures and eliminating allergen cross-contamination. Employee training is conducted and documentation maintained in the ERP solution to ensure hygienic procedures, allergen awareness, illness reporting and required food or cannabis handling certifications.
Cannabis businesses can benefit from establishing a food safety team tasked with developing a Hazard Analysis Critical Control Points (HACCP) plan to provide effective procedures and protect consumers from the hazards inherent in edible cannabis products – including biological, chemical and physical dangers. Automating processes within an ERP solution prevents and controls hazards before food safety is compromised. Since HACCP plans have historically been used by food and beverage manufacturers to ensure a safe product for the consumer, cannabis edibles manufacturers can apply the lessons from these food safety protocols and procedures in their initiatives.By utilizing food safety best practices partnered with an ERP solution, cannabis businesses can avoid the negative consequences resulting from failure to address food safety hazards in manufacturing, storage and packaging.
A comprehensive FSP, as required by the FDA’s Food Safety Modernization Act (FSMA), identifies food safety hazards and guides the development of a company-specific, validated plan. This plan documents processes throughout the manufacturing, processing, packaging and storage stages of the operation. ERP software provides real-time, forward and backward lot traceability from seed-to-sale with the ability to track materials, document recipes and accurately label products. This detailed level of traceability provides an automated system that implements and documents food safety policies throughout the manufacturing process. With a trained Preventative Control Qualified Individual (PCQI) implementing the FSP, preventative controls, recall plans and employee training records are maintained in an integrated system.
The cannabis market’s tremendous growth has driven edibles manufacturers to follow the same guidelines as mainstream food and beverage companies to ensure safety is afforded equally to consumers of cannabis edibles. By utilizing food safety best practices partnered with an ERP solution, cannabis businesses can avoid the negative consequences resulting from failure to address food safety hazards in manufacturing, storage and packaging. At the end of the day, it’s up to cannabis manufacturers to be proactive in ensuring cannabis edibles are safe to consume until regulations are mandated.
New cannabis businesses must demonstrate proof of compliance to myriad laws and regulations as part of the initial license application process. And once a license is issued, it is easy to prioritize day-to-day business operations over ongoing compliance reporting requirements especially when sales are booming and compliance requirements are multi-layered, vague or obscured in non-cannabis specific programs and regulations.
But seemingly benign neglect of some minor reporting requirements can have major consequences to new and established businesses alike.
This article explores five compliance reporting requirements that cannabis businesses may not know about, and suggests ways to maintain a strong compliance posture across all regulatory agencies.
All licensed growers are required to prove compliance to state pesticide usage regulations. However, expectations on how and when to provide that proof of compliance vary greatly from state to state. Furthermore, the responsibility of education and enforcement for pesticide usage in the cannabis industry often falls to non-cannabis specific agencies such as state departments of agriculture or environmental compliance.
For example in California, cultivators must report detailed monthly pesticide use reports via the State’s Agriculture Weights/Measures Division reporting portal, while Washington State regulators simply expect cultivators to keep records locally on site and provide them when requested.
With so many places to look, the best place to start your pesticide reporting requirement search is with your local agriculture department. They should be able to answer your questions and provide you with a list of resources to help you better understand how to comply with state pesticide usage and reporting regulations.
Hazardous Materials Reporting
Like pesticide use and reporting, hazardous waste handling and reporting requirements are complex and vary state to state. In fact, there may even be nuanced variations in handling requirements at the county level. The best approach to ensure compliance with a complicated set of regulations is to start by consulting your local county fire department. They will have the most specific set of rules for hazardous materials handling and reporting and can help you develop a site-specific compliance plan.
Two OSHA reporting requirements
Depending on how your cannabis business is classified, you may be required to keep injury and illness incident records and provide reports to the Occupational Health and Safety Organization (OSHA) for specific time periods.
Contact your business insurance provider’s loss prevention representative for more information about how your business is classified, which specific OSHA reporting requirements apply to you, and how to stay in compliance with applicable OSHA requirements.
A note of caution here: OSHA non-compliance penalties can be steep and “I didn’t know I was supposed to do that” is not an acceptable defense when it comes to explaining any OSHA violations.
Labor Law Notification Requirements
Federal labor law requires that you notify employees of their rights. At a minimum, you post information regarding wages and hours, child labor, unemployment benefits, safety and health/workers’ compensation and discrimination in a conspicuous place where they are easily visible to all employees. Some states requires additional information be posted in a similar manner, so it’s important to be sure that those notices are posted along with the federal requirements.
This is a simple, yet easily overlooked, requirement for all businesses, regardless of industry. Ask your insurance provider for a copy of the notice to print and post right away (if you have not already) for a quick compliance win!
These five reporting and notification requirements may seem tedious, overly complicated and burdensome in the face of day-to-day business operations, but compliance to these requirements not only protects your business and employees, it also enhances the overall reputation of the industry. The good news is that regulatory agencies welcome a proactive approach and are happy to work with cannabis businesses to provide guidance and information for developing compliance plans.
No matter the size of your cannabis greenhouse operation, keeping your plants alive and healthy requires the best possible growing environment. This means greenhouse managers and personnel must frequently monitor the status of environmental conditions and equipment. The sooner someone discovers extreme temperature fluctuations, rising humidity or equipment failure, the more inventory you can save.
That’s why integrating a remote monitoring system into your greenhouse operation can save you time, money and anxiety. Monitoring systems that use cloud-based technology let you see real-time status of all monitored conditions and receive alerts right on your mobile device.
Installing a monitoring system and sensors can be easier than you might think. Here are answers to ten questions to ask before installing a cloud-based monitoring system:
What is required to use a remote monitoring system?
Most remote monitoring systems require an internet or WiFi connection and access to an electrical outlet. Programming is done through a website, so it’s easiest to use a computer for the initial setup. If you don’t have an internet connection at your location, you’ll want to choose a cellular system. Make sure that there’s sufficient signal strength at your site, and check the signal quality in the area before purchasing a cellular device.
2. How do we determine what kind of monitoring system and sensors we need?
A reputable manufacturer will have a well-trained support team that can assess your needs even without a site visit to determine which products are best for your application. If you feel you need them to check out your greenhouse operation,many companies can set up a video conference or FaceTime chat to substitute for being on site.
You will want to provide details about the scope and purpose of your cannabis growing operation. Important factors to discuss include:
Skeletal structure of the greenhouse (metal, plastic, wood, etc.) and the covering material (glass or plastic).
Floor space square footage and height of each of your greenhouses.
Number of greenhouse structures in your operation.
Outdoor climate to determine if you rely more on heating or air conditioning and the level of humidity control needed.
Space dedicated to phases of growth (cloning and propagation, vegetative, flowering) and the microclimates needed for each.
Types of lighting, ventilation and irrigation systems.
Level of technological automation versus manual operation in place.
The monitoring system representative will then determine the type of system that would best serve your operation, the number of base units you will need and the types of sensors required.
The representative should also be able to provide tips on the placement of the sensors you’re purchasing. For example, to ensure thorough air temperature coverage, place sensors throughout the greenhouse, next to the thermostat controlling the room temperature and in the center of the greenhouse out of direct sunlight.
Note that there shouldn’t be a cost for a demo, consultation or assistance throughout the sales process. Be sure to ask if there are any fees or licenses to keep using the monitoring equipment after you purchase it.
3. Are sensors included with the monitoring system?
In most cases, sensors are sold separately. The sensors you select depend upon the conditions you want to monitor and how many you can connect to your base unit. Certainly, temperature is critical, but there are many other factors to deal with as well, such as humidity, CO2, soil moisture, water pH, power and equipment failure, ventilation and physical security.
For example, humidity has a direct impact on the photosynthesis and transpiration of plants. High humidity can also cause disease and promote the growth of harmful mold, algae and mildew. Sensors can detect changes in humidity levels.
Like any other plant, cannabis needs CO2 to thrive, so it’s a good idea to include a CO2 sensor that will signal to the monitoring device when readings go out of the preset range. There are even sensors that you can place in the soil to measure moisture content to help prevent over- or underwatering, budget water usage costs, promote growth and increase crop yield and quality.
Of course, all the critical systems in your growing facility—from water pumps to irrigation lines to louvers—rely on electrical power. A power outage monitoring sensor detects power failure. It can also monitor equipment for conditions that predict if a problem is looming, such as power fluctuations that occur at specific times.
Ventilation systems not only help control temperature, they also provide fresh air that is critical to plant health. Automated systems include features like vented roofs, side vents and forced fans. Sensors placed on all these systems will send personnel an alert if they stop running or operate outside of preset parameters.
To monitor the physical security of your greenhouses, you can add sensors to entrance doors, windows, supply rooms and equipment sheds. During off hours, when no staff is on duty, you can remain vigilant and be alerted to any unauthorized entry into your facility.
4. Do monitoring systems only work with the manufacturer’s sensors?
Not necessarily. For example, certain monitoring units can connect with most 4-20mA sensors and transmitters regardless of the brand. When selecting sensors, you might have a choice between ones that are designed by the manufacturer to work specifically with the monitoring system or universal components made by a third party. If the components aren’t made by the system manufacturer, you’ll want to find out if they have been tested with the monitor you are choosing and if you need to work with another vendor to purchase the parts.
5. Is a monitoring system easy to set up, or do we need to hire an electrician?
Many monitoring systems are quick and easy to install, and users can often set them up without hiring an outside expert. Look for one that requires only a few simple physical installation steps. For example:
Mount the device to the wall or somewhere secure;
Plug it into an electrical outlet and an internet connection;
Connect the sensors.
You connect the sensors to the base unit’s terminal strip using wire, which is included with many sensors. The range of many wired sensors can be extended up to 2,000 feet away from the base unit by adding wire that can be easily purchased at any home store. It’s a good idea to hire an electrician if you need to run wires through walls or ceilings.
Usually, once you plug in the device and connect the sensors, you then create an account on the manufacturer’s designated website and begin using your device. There should be no fee to create an account and use the site.
If the manufacturer doesn’t offer installation services, ask if they can recommend a local representative in your area who can set up your system. If not, make sure they provide free technical support via phone or email to walk you through the installation and answer any questions you might have about programming and daily usage.
6. Is there a monthly fee to access all the functionality of a monitoring device?
Many web- or cloud-based systems provide free functionality with some limitations. You might have to purchase a premium subscription to unlock features such as text messaging, phone call alerts and unlimited data logging access.
7. Should we get a system that is wired or wireless? Will we need to have a phone line, cable, internet or something else?
Wireless can mean two different things as it relates to monitoring: how the system communicates its data to the outside world and how the sensors communicate with the system.
The most popular systems require an internet or WiFi connection, but if that’s not an option, cellular- and phone-based systems are available.
A hardwired monitoring system connects the sensors to the base device with wires. A wireless system uses built-in radio transmitters to communicate with the base unit. Some monitoring systems can accommodate a combination of hardwired and wireless sensors.
8. Can one system monitor several sensor inputs around the clock?
Once the monitoring system is installed and programmed, it will constantly read the information from the sensors 24/7. Cloud-based systems have data logging capabilities and store limitless amounts of information that you can view from any internet-connected device via a website or app.
If the system detects any sensor readings outside of the preset range, it will send an alarm to all designated personnel. The number of sensors a base unit can monitor varies. Make sure to evaluate your needs and to select one that can accommodate your present situation and future growth.
When a monitoring system identifies a change in status, it immediately sends alerts to people on your contact list. If you don’t want all your personnel to receive notifications at the same time, some devices can be programmed to send alerts in a tiered fashion or on a schedule. Multiple communications methods like phone, email and text provide extra assurance that you’ll get the alert. It’s a good idea to check the number of people the system can reach and if the system automatically cycles through the contact list until someone responds. Some systems allow for flexible scheduling, so that off-duty personnel don’t receive alerts.
9. Do monitoring systems have a back-up power system that will ensure the alarming function still works if the power goes out or if someone disconnects the power?
The safest choice is a cloud-based system that comes with a built-in battery backup that will last for hours in the event of a power failure. Cloud-based units constantly communicate a signal to the cloud to validate its online status. If the communication link is interrupted—for example by a power outage or an employee accidently switching off the unit—the system generates an alarm indicating that the internet connection is lost or that there is a cellular communications problem. Users are alerted about the disruption through phone, text or email. All data collected during this time will be stored in the device and will be uploaded to the cloud when the internet connection is restored.
If you opt for a cloud-based monitoring system, make sure the infrastructure used to create the cloud platform is monitored 24/7 by the manufacturer’s team. Ask if they have multiple backups across the country to ensure the system is never down.
10. What should we expect if we need technical support or repairs to the system?
Purchase your system from a reputable manufacturer that provides a warranty and offers full repair services in the event the product stops working as it should. Also, research to make sure their tech support team is knowledgeable and willing to walk you through any questions you have about your monitoring system. Often, support specialists can diagnose and correct unit setup and programming issues over the phone.
It helps to record your observations regarding the problem, so the tech team can look for trends and circumstances concerning the issue and better diagnose the problem. Ideally, the manufacturer can provide loaner units if your problem requires mailing the device to their facility for repair.
In A Culture of Food Safety: A Position Paper (2018), the Global Food Safety Initiative (GFSI) defines food safety culture as the “shared values, beliefs, and norms that affect mind-set and behavior toward food safety in, across, and throughout an organization.” In other words, food safety culture in your workplace is the “this is how we do things around here.”
A food safety culture needs to be relentlessly communicated – everyone needs to know it is his or her job, not just a dusty slogan on the wall or a whisper down the halls.Building a strong food safety culture is particularly relevant to the cannabis workplace because of the unique history of the workers and the unique needs of the consumers. The cannabis industry is special in that it was an industry before it became regulated. As such, there are many workers in the industry who have a deep passion for cannabis products, but with experience rooted in working within only a few official standards. Thus, the behavior and mind-set of workers in the cannabis industry must adjust to new regulations. However, even currently, standards are ever changing and vary from state to state; this causes further confusion and inconsistency for you and your workers. On top of that, now that cannabis is legalized in certain pockets, cannabis reaches a larger, wider audience. This population includes consumers most vulnerable to foodborne illness such as people with immunocompromised systems, the elderly, the pregnant or the young. These consumers in particular need and deserve access to safe cannabis products every experience. Therefore, it is that much more important to develop a strong food safety culture in the workplace to promote safe, quality cannabis large-scale production for the larger, wider audience.
To achieve a food safety culture, GFSI emphasizes the vision and mission of the business, the role of the leaders in the organization, and the continuity of communication and training. GFSI also emphasizes that these components are interrelated and all are needed to strengthen a food safety culture. Food safety culture components can be simplified into: 1) things you believe, 2) things you say, and 3) things you do.“this is how we do things around here.”
Things You Believe
Food safety culture starts from the top, with the executive team and senior managers. It is this group that dictates the vision and mission of the business and decides to include food safety and quality as a part of this guiding star. Moreover, it is this group that commits to the support for food safety by investing the time, money and resources. The message then has to spread from the executive team and senior managers to an interdepartmental team within the workplace. That way, the values of food safety can be further shared to front-line workers during onboarding and/or continuous training. To restart a food safety culture, a town hall can be a useful tool to discuss priorities in the workplace. Overall, it is important to have every worker believe in producing safe food and that every worker is a part of and has ownership of contributing to the food safety culture at your workplace (GFSI, 2018).
Things You Say
A food safety culture needs to be relentlessly communicated – everyone needs to know it is his or her job, not just a dusty slogan on the wall or a whisper down the halls. The Food and Drug Administration (FDA) has a saying that “if it’s not written down, it didn’t happen.” Thus, the guidelines for a food safety culture need to be embedded in the policies, programs and procedures; and these guidelines need to be a part of training from day one and supplemented with periodic reminders. For effectiveness, make the communication engaging, relevant and simple – use your workers to pose for posters, use digital tools such as memes. In his presentation at the 2015 Food Safety Consortium, Frank Yiannas, vice president of food safety at Walmart, says “How many of you created training videos that you show the desired behavior once? You should probably show the behavior more than once and by a few different employees so that when they see it, they see multiple people in the video doing it and that’s the social norm.” By sending a consistent message, a food safety culture can flourish in your workplace.A food safety culture does not happen once; a food safety culture is a long-term commitment with continuous improvement.
Things You Do
A food safety culture does not happen once; a food safety culture is a long-term commitment with continuous improvement. Periodic evaluation of food safety metrics and alignment with business goals contribute to maintaining a food safety culture – it is useful to learn from successes as well as mistakes. In the same presentation mentioned above, Yiannas discusses “Learning from the wrong way [mistakes] lessens the likelihood that we will become complacent” where he defines complacency as “a feeling of quiet security, often while unaware of some potential danger or defect that lurks ahead.” Without the constant commitment, businesses can falter in their food safety and cause costly mistakes – whether that be recalls or illnesses or worse. By not becoming complacent and emphasizing constant accountability, a food safety culture can thrive at your workplace and make your workplace thrive.
With the regulated cannabis industry still in its infancy, the time is now for every cannabis workplace to instill a food safety culture. Before being mandated, the cannabis industry can rally for food safety because it is the right thing to do. With participation from each workplace, the industry as a whole can be united in producing safe product and be better positioned to change stigmas.
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