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Stratos: Quality, Expansion & Growth in Multiple Markets

By Aaron G. Biros
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Jason Neely founded Stratos in 2014, when he and a small group of people left the pharmaceutical industry in search of a new endeavor in the cannabis marketplace. The concept was straightforward: Apply pharmaceutical methodologyof production to cannabis products. Back then, Stratos offered a range of THC-infused tablets in the Colorado market.

Brenda Verghese, vice president of research & development

Brenda Verghese, vice president of research & development, was one of five people on staff when Stratos launched. Now they have about 30 team members. Consumers were looking for a cannabis product that would be consistent and reliable every time, taking the guesswork out of infused products dosage. That’s where Brenda Verghese found her skillset useful.

Transitioning to the pharmaceutical industry right out of college, Verghese started her career as a chemist and worked her way up to the R&D business development sector. “I specializedin formulations and taking a product from concept to commercialization in the pharmaceutical space,” says Verghese. “Jason Neely approached me with the idea of a cannabis company and focusing on making products as effective and consistent as possible, so really bringing pharmaceutical science into the cannabis space. In the matter of 4 years we grew substantially, mainly focusing on the efficacy of products.”

Behind the scenes at packaging and labeling Image credit: Lucy Beaugard

Soon after the success of their THC products became apparent, Stratos launched a CBD line, quickly growing their portfolio to include things like tinctures and topicals as well. According to Verghese, they are hoping that what’s been established on the THC side of their business as far as reproducibility and consistency is something that consumers will also experience on the CBD side. “Quality and consistency have definitely driven our growth,” says Verghese. “That is what consumers appreciate most- the fact that every tablet, tincture or swipe of a topical product is going to be consistent and the same dose every time.” This is what speaks to their background in the pharmaceutical sciences, FDA regulation has taught the Stratos team to create really robust and consistent formulations.

Quality in manufacturing starts at the source for Stratos: their suppliers. They take a hard look at their supply of raw materials and active ingredients, making sure it meets their standards. “The supplier needs to allow us to do an initial audit and periodic audits,” says Verghese. “We require documentation to verify the purity and quality of oil. We also do internal testing upon receipt of the materials, verifying that the COAs [certificates of analysis] match their claims.”

Process validation in action at the Stratos facility
(image credit: Lucy Beaugard)

Verghese says maintaining that attention to detail as their company grows is crucial. They implement robust SOPs and in-process quality checks in addition to process testing. They test their products 5-6 times within one production batch. Much of that is thanks to Amy Davison, director of operations and compliance, and her 15 years of experience in quality and regulatory compliance in the pharmaceutical industry.

Back in August of 2018, Amy Davison wrote an article on safety and dosing accuracy for Cannabis Industry Journal. Take a look at this excerpt to get an idea of their quality controls:

Product testing alone cannot assess quality for an entire lot or batch of product; therefore, each step of the manufacturing process must be controlled through Good Manufacturing Practices (GMP). Process validation is an aspect of GMPs used by the pharmaceutical industry to create consistency in a product’s quality, safety and efficacy. There are three main stages to process validation: process design, process qualification and continued process verification. Implementing these stages ensures that quality, including dosing accuracy, is maintained for each manufactured batch of product.

Fast forward to today and Stratos is looking at expanding their CBD products line significantly. While their THC-infused products might have a stronger brand presence in Colorado, the CBD line offers substantial growth potential, given their ability to ship nationwide as well as online ordering. “We are always evaluating different markets and looking for what suits Stratos and our consumer base,”says Verghese.

How a Cloud QMS Can Get Cannabis Startups ISO 9001-Certified

By Mike Hansen
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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
  • Constantly monitor quality management software performance
  • Address any risks that could result from changes
  • Perform internal audits and correct any issues
  • Continuously improve the QMS

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.

Document Traceability

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.

Health Canada Issues Voluntary Cannabis Recall Guide

By Marguerite Arnold
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Last month, Health Canada published a Voluntary Recall Guide to help producers not only stay in compliance but run their operations better. While it will certainly prove to be a critically useful guide for Canadian LPs who are now subject to domestic regulations, it is also a highly useful document for others. Namely, newly legalizing U.S. states and even European countries now looking for guidance on how to shape, structure and regulate their own burgeoning domestic cultivation markets either underway now or about to start.

What Is Of Particular Interest?

While it may sound like a no-brainer, the guide lays out, albeit in very broad strokes, the kinds of procedures all licensed producers should be implementing anyway to efficiently run a compliant business.

It could be considered, on one level, a critical start-up business guide for those still looking for guidance in Canada (as well as elsewhere). Domestically, the document is clearly a handy template, if not something to create checklists from, in setting up a vital and at this point, mandatory part of a compliant cultivation facility in Canada.

The guide also covers not only domestically distributed product but that bound for export.

One of the more intriguing aspects of the guide is also how low tech it is. For example, the guide suggests that a license holder responsible for recall notices, plan on quick response methods that include everything from a self-addressed postcard to an email acknowledgement link.

That said, recalls must be reported to the government exclusively via an email address (no mail drop is listed). And suggestions about media outlets to which to submit recall notices are noticeably digitally heavy. Websites and social media platforms are suggested as the first two options of posting a recall. Posters at retailers is listed dead last.

What is also notable, not to mention commendable, is the inclusion of how to include supply chain partners in recall notices, as well as the mandate to do it in the first place.

Also Of Note

Also excellent is the attempt to begin to set a checklist and process about evaluating both the process of the recall itself and further identification of future best practices.Health Canada also expects companies to show proof of follow up efforts to reach non-responders all along the supply chain.

For example, the report suggests that LPs obtain not only feedback from both their supply chain and consumers involved, but elicit information on how such entities and individuals received the information in the first place. Further, the volume of responses (especially from end consumers) or lack thereof should be examined specifically to understand how effective the outreach effort actually was in reaching its target audience.

This is especially important because Health Canada also expects companies to show proof of follow up efforts to reach non-responders all along the supply chain.

Regulatory Reporting Guidelines

One of the reasons that this guide is so useful is that Health Canada also expects to receive full written reports touching upon all of the issues it lays out within 30 days of the recall announcement itself.

In turn, this is also a clear attempt to begin to start to document quality controls and attempts to correct the same quickly in an industry still plagued by product quality issues, particularly at home, but with an eye to overseas markets.

As such, it will also prove invaluable to other entities, far beyond Canadian LPs involved in the process this document lays out. Namely, it is a good comprehensive, but easy to follow and generally applicable guide for new states (in the case of the US) if not national governments in Europe and beyond who are now starting to look at regulating their own burgeoning industries from the ground up.

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Steep Hill Expands To New Jersey

By Aaron G. Biros
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steep-hill-labs-logo

steep-hill-labs-logoAccording to a press release published today, Steep Hill has signed a licensing agreement with Green Analytics East to open a new laboratory, Steep Hill New Jersey. “We are pleased to announce a licensee partnership with Green Analytics East to bring Steep Hill to New Jersey,” says Jeffrey Monat, chairman of the Steep Hill board of directors. “Since 2008, Steep Hill has developed and now employs cutting edge cannabis testing practices, providing analysis to ensure safe medicine and products. With Green Analytics East as our trusted partner, New Jersey patients and consumers can be confident that all Steep Hill-tested products will fully comply with public safety and regulatory standards.”

They haven’t obtained the local permits yet, but the press release states they expect to be open for business in the third quarter of 2019. Steep Hill began their cannabis laboratory testing business in California. Since their start in 2008, the company has grown rapidly, developing programs for regulatory compliance testing in medical and recreational cannabis markets. They have also ventured into research and development testing, licensing, genetics and remote testing.

The company has a history of expanding into new markets via licensing partnerships, including states such as Washington D.C., Pennsylvania, Maryland, Oregon, Hawaii, among others. As recently as May of last year, Steep Hill announced they will expand their international footprint as well, including opening locations in countries like Mexico, Germany, Spain, France, Italy, Switzerland and the United Kingdom, all through their Canadian branch.

New Jersey Governor Phil Murphy
New Jersey Governor Phil Murphy

The news of Steep Hill moving into the New Jersey market comes at a time when Governor Phil Murphy and lawmakers in the state are in the midst of planning adult use legalization. According to Shannon Hoffman, director of operations of Steep Hill New Jersey, they are hoping lawmakers reach a decision soon. “We are excited to bring our focus of service, accuracy, and scientific knowledge and expertise to the New Jersey market,” says Hoffman. “We look forward to serving the licensed producers, the patient community, and hopefully soon, the adult use consumer.”

How To Choose The Right Cannabis Consultant For Your Company

By Martha Ostergar
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The cannabis industry is growing fast as more states implement legislation to legalize cannabis in different ways. If you’re trying to break in or keep your place in this new market, it can be difficult to understand and comply with ever-changing government regulations as you try and scale your business.

Cannabis businesses need to comply with a range of new local, state and federal regulations related to cannabis specifically, in addition to regulations already in place for the pharmaceutical and food industries to ensure their products are safe for public consumption. On top of that, there are the complexities of managing a supply chain, including growing, warehousing, transportation, food safety requirements, product labeling, business plans, marketing, selling and any other necessities that come with running a businesses.

This is a lot of new information when you’re vying for your place in the cannabis industry. That’s why some businesses are turning to consultants to help. Consultancy is a great and time-tested way to grow your businesses and keep a competitive edge. But just like every other industry, when you choose a consultant, there are specific things to look for and avoid.each party will have work to do in order to communicate clearly, define responsibilities and execute on a plan.

Understand the Role of Consultants

The expertise of  cannabis consultants can vary widely. Usually there’s no “one stop shop” for everything you need to run your business, meaning consultants often specialize in a specific area. Consultant expertise includes specialties such as cultivation, manufacturing, food safety, dispensary, transportation, legal, accountants, human resources and more, all within different regulatory compliance wrappers.

It’s important to remember that consultants are usually not responsible for setting goals for you, but the right consultant can help you refine, meet and even exceed your goals. However, each party will have work to do in order to communicate clearly, define responsibilities and execute on a plan.

Focus on Your Specific Needs

Identifying your specific needs and understanding what success looks like for you is a critical step to take before contacting any consultant. This prep work helps you identify what kind of consulting you actually need and what you’re willing to spend to get it. Some consultants can help you tackle more than one area, but most will specialize. In fact, choosing several specialized consultants (if you have many needs), may feel like it costs more up front, but it will likely save you frustration, headaches and money in the long run. Additionally, if a consultant claims they can do everything in several areas of expertise, they may be overpromising on what they can actually deliver to you as a customer.

Ask the Right Questions

When vetting a consultant, it’s your job to ask probing questions. Don’t hold back and don’t be put off by vague answers. If a consultancy avoids questions or can’t give clear answers, they may be overpromising or being less than honest about their skillset. Here are some general areas of discussion to help you get started when interviewing consultants:

Consultants can help you get through unfamiliar territory or help you to manage your team’s workload.
  • The consultant’s relevant experience.
  • Past or current client references.
  • Detailed discussion of your specific needs as a business.
  • How much time can the consultant dedicate to you as a client.
  • Detailed outline of the consultation plan, including a clear timeline.
  • Responsibilities of each party, deliverables and what success looks like for customer sign off.
  • Certifications and credentials if relevant to your consultation needs (e.g. legal, accounting, regulatory).
  • What is and is not included with their quoted fee, and what you may be charged for as an “add on” to your contract.
  • Any possible conflicts of interest, including how consultants separate work for clients who are competitors.

Avoid Red Flags

As with any burgeoning market, there will be consultants who get into the cannabis space that are more interested in making money than helping you as an individual client as businesses work to legitimize the industry as a whole. Doing your research and asking for referrals helps, but there are also red flags to look for. Some of these red flags may pop up due to inexperience and some may be a sign of bad actors in the consultant market.

  • Asking for equity as payment.
  • Refusing to provide references.
  • Avoiding questions or giving unclear answers.
  • Unwilling to track time and itemize costs on bills.
  • Overpromising AKA “this sounds too good to be true.”
  • Dominating the process instead of treating you like a partner.

Build a Strong Relationship

To get the most out of a consultancy experience, it’s important for both parties to work at building a strong business relationship. You know you’re hitting the sweet spot in business relationships when you have well-oiled communication and feedback loops, including honesty around expectations and frustrations from both parties. A great consultant wants feedback so they can improve their process, therefore they will actively listen to and address your concerns. Additionally, it’s important for you as a client to also be open to feedback and ready to make changes to your process to get the best return on your investment.

Marguerite Arnold

Countries Take Lessons From Others On Legalizing Cannabis

By Marguerite Arnold
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Marguerite Arnold

As the German bid fiasco proves, and in spades, there is no easy transition out of prohibition. As of this April, it will be two years since the German Cannabis Agency issued its first cultivation bid. Since then, the first attempt went down in legal flames (in court) and the agency in charge, BfArM took an embarrassing hit for committing a “technical fault.” As of April, the second issuance gets its day in court. And then presumably, hopefully, cultivation can start to get going.

However, the German cultivation bid is far from the only time that government officials and regulators have created canna Frankensteins. In every legalizing market so far, in fact, from Colorado’s recreational start in 2014 to Canada, lawsuits, flubs and mistakes have been the order of the day.

There is a growing debate in Europe over how the cannabis industry should be allowed to flourish.States throughout the US continue to model their legalization frameworks off of states that have already done so. No wonder, then that as legalization rolls on, other countries are beginning to study the early movers- for tips on what to do and what to avoid.

New Zealand Takes A Look At Portugal

New Zealand is widely expected to become either the “next” country (or the one after that) to fully legalize recreational cannabis. Further it plans to do so during a national election (presumably ahead of the U.S. but that will be interesting to watch). New Zealand has jumped the gun already and put it on the electoral agenda.

That leaves the Kiwis with at least another 18 months to consider how they might pull it off. Don’t forget, it took the Canadians that long, with one failed initiation date last summer that was pushed to the fall. And that was with a medical market that was already three years old.

As of this month at least, New Zealanders are looking at several options, Portugal being one of them. Portugal gained distinction by decriminalizing all drugs at the turn of the century and has not looked back.

The country has seen a steady decline in all the bad stuff associated with the black market. Overdoses, drug crime, teen use and HIV infections have all dropped dramatically.

That said, for all Portugal’s forward motion, nobody else, yet, has quite followed suit.

Decriminalization, it should be pointed out, is also only one of the many issues facing a national change in policy. As Canada knows well.

Luxembourg Takes A Look At Canada

The Greens in Luxembourg certainly made news last year when they announced that recreational cannabis legalization was on their five-year legislative plan. In a tip to both U.S. and Canadian discussions about how legalization can increase tax revenues, Luxembourgers are also clearly looking at how to follow suit.

Auroraaurora logo cannabis so far has the only distribution agreement inked with the country to provide medical supplies, but it is unknown at this point whether Luxembourg will be content to merely import or grow its own.

One of the biggest problems Europeans will encounter immediately in looking at the Canadian transition to recreational use is that the government literally had to mandate an additional five-year period for medical use after the beginning of the recreational market. So far, at least, Luxembourgians appear to want to do this the other way around. They have already created a multi year test and study program for medical uses of the drug.

A Big Difference In Approaches

There is a growing debate in Europe over how the cannabis industry should be allowed to flourish. On one end of the discussion who see no issues with the North American model of public companies, in particular, having the greatest influence over the shape of the industry. But this is not the only discussion in the room at this point, particularly given the huge head start the Canadian public companies now have in the rest of the world.

In places like Spain and Thailand, for example, politicians are also starting to bring other models to the fore- including protectionist policies around domestic cannabis production.

Regardless, compare and contrast is a trend that is still in its infancy as the market leaders struggle with the implications of half-baked policies and those who follow seek to emulate the successes but avoid the mistakes.

2nd Annual Cannabis Labs Virtual Conference Announced

By Cannabis Industry Journal Staff
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The 2ndAnnual Cannabis Labs Virtual Conference is set to take place on Tuesday, April 2, 2019, starting at 12:00 Noon and concluding at 4:00 PM EDT. This complimentary series of webinars will take a deep dive into a variety of subjects related to cannabis testing and the laboratory industry.

The virtual event will help attendees better understand some of the more technical aspects of starting and operating a laboratory. Topics discussed will include pesticide testing, cannabinoid and terpene testing, the new ISO 17025:2017 accreditation and a lesson in starting a laboratory in a new market.

Attendees registering for this complimentary series of webinars will get access to four veterans of the cannabis lab testing industry, who are available for Q&A after each presentation. In addition to getting the opportunity to chat with these subject matter experts on April 2, a recording of the presentations will be made available to all who register.

Charles Deibel, President & CEO – Deibel Labs, Inc.

Here is a snapshot of the agenda:

Pesticide Testing: Methods, Strategies & Sampling
Charles Deibel, President & CEO – Deibel Labs, Inc.

Pesticides represent the number one area for batch failures in the US cannabis market. These are concerns not only for consumers, but are a very big concern for cultivators and manufacturers of cannabis products. remediation of the pesticides, once they are in the product are not always feasible From the lab level, they are also the hardest test to run in the laboratory, even one equipped with state-of-the-art equipment. The best instruments on the market are very expensive and there are no standardized methods, meaning lab to lab variability has happened.

  • What are the pesticides in cannabis and are there any that are the “main concerns” or ones that stand out as particularly damaging?
  • What is a basic breakdown of the testing and methods used for pesticide testing?
  • What are the best strategies for the sampling of cannabis products?

    Chris Martinez
    Chris Martinez, Co-Founder & President, EVIO Labs FL

Building a Lab in an Emerging Market
Chris Martinez, Co-Founder & President, EVIO Labs FL

  • Will present a discussion of the genesis of EVIO Labs Florida, how to start a lab in a new market
  • Challenges in how we navigated changing regulations in a state with newly legalized cannabis
  • Expanding a lab to a second location – logistics, hiring, training, consistency.

Cannabinoid & Terpene Testing: Methods, Strategies & Standardization

Dr. Cindy Orser, Chief Science Officer, Digipath Labs

  • Appreciation of “measurement uncertainty” in cannabis testing

    Dr. Cindy Orser, Chief Science Officer, Digipath Labs
  • Standardization of testing methods is a high priority
  • Terpenes are the distinguishing chemicals in cannabis sensory perception and chemotaxonomy

Benefits of Accreditation to the ISO 17025:2017 Standard
Jane Weitzel, Independent Consultant

  • The ISO/IEC 17025:2017 standard is now being used to accredit cannabis testing laboratories. From this presentation you will learn the key new aspects of the standard. This includes risk-based thinking. Many aspects of this risk approach require the use of measurement uncertainty. This means the measurement uncertainty must be adequately evaluated. You will be introduced to evaluating and using measurement uncertainty.
  • The 2017 standard emphasizes conflict of interest and impartiality. Procedures and practices to achieve impartiality will be shown. This reduces the risk of potentially damaging leaks of information or the risk of people not working to the best interests of the laboratory and its clients.

    Jane Weitzel, Independent Consultant
  • The 2017 standard is a valuable and useful business tool that can save the laboratory resources, effort and money. Are you doing too much testing? Are you doing too little testing? When you evaluate the measurement uncertainty you can use it to learn the steps in your test method that need enhancement to reduce the risk of making mistakes. You can also use the measurement uncertainty to focus on the significant steps and stop wasting time on steps and activities that are insignificant.
  • These benefits of laboratory accreditation will be demonstrated with examples from the cannabis industry.

To learn more about this complimentary series of webinars, click here to look at the agenda and register.

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Hemp Products & Confusion Over FDA Remains

By Charlotte Peyton
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Hemp

The hemp industry is the marijuana industry’s half-sister. Both are variations of the plant Cannabis sativa and both were made illegal in 1937 with the passing of The Marijuana Tax Act. Despite this federal status, in recent years 33 individual states have legalized some type of medicinal marijuana use and 11 states now allow legal recreational marijuana within their borders. This prompted congress to modify the legality of hemp which was addressed in The Agricultural Act of 2014, but it only allowed hemp to be used for research purposes. The Agriculture Improvement Act of 2018 (known as the 2018 Farm Bill) that was signed into law on December 20, 2018 was a huge step forward for public access to hemp and hemp products. The 2018 Farm Bill legalized the growing of hemp in states with a state-mandated hemp program and removed hemp and its derivatives from Drug Enforcement Administration (DEA) Schedule I status. Schedule I drugs, substances, or chemicals are defined as drugs with no currently accepted medical use and a high potential for abuse. Some examples of Schedule I drugs are heroin, lysergic acid diethylamide (LSD), 3,4-methylenedioxymethamphetamine (ecstasy), methaqualone, and peyote. Consumers and the cannabis industry alike were very excited about this legalization of hemp…. but that was when the confusion began.

FDA & Hemp

FDAlogoWithin two hours of the 2018 Farm Bill being signed, the Commissioner of the FDA, Dr. Scott Gottlieb, issued a statement reiterating the FDA stance on cannabis products and cannabidiol (CBD) in products for human and animal consumption: “Congress explicitly preserved the agency’s current authority to regulate products containing cannabis or cannabis-derived compounds under the Federal Food, Drug, and Cosmetic Act (FD&C Act) and section 351 of the Public Health Service Act.” Currently the FDA only permits CBD products submitted as an Investigational New Drug (IND) Application as a pharmaceutical. There is only one such accepted CBD product, Epidiolex, manufactured by G.W. Pharma. All other CBD products are illegal for interstate shipment.

Every product for sale in the US which is either ingested or applied to a human or animal body has a regulatory category in the FDA. Hemp-derived CBD products will have to fit into one of those categories or it will not be legal. Many hemp manufacturing companies will argue with the illegality of CBD products, but it will get them nowhere. If you manufacture and sell hemp products inside of a state with a state mandated hemp program, you are legal and protected under state laws, but the minute you sell across state lines, it becomes the jurisdiction of the federal government and, more specifically, the FDA. Section 10113 of the 2018 Farm Bill states that (c) Nothing in this subtitle shall affect or modify:

  • (1) the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.);
  • (2) section 351 of the Public Health Service Act (42 U.S.C. 262); or
  • (3) the authority of the Commissioner of Food and Drugs and the Secretary of Health and Human Services- ‘‘(A) under- ‘‘(i) the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.); or ‘‘(ii) section 351 of the Public Health Service Act (42 U.S.C. 262); or ‘‘(B) to promulgate Federal regulations and guidelines that relate to the production of hemp under the Act described in subparagraph (A)(i) or the section described in subparagraph (A)(ii).”

There is nothing unclear about this issue. The same 2018 Farm Bill that hemp manufacturing companies use to justify the legality of hemp and CBD products is the same bill that spells out the authority of the FDA in this matter.

The mission of the FDA is “to ensure the safety, effectiveness, and security of human and veterinary drugs, vaccines and other biological products for human use, and medical devices.” The agency also is responsible for “the safety and security of our nation’s food supply, cosmetics, dietary supplements, products that give off electronic radiation, and for regulating tobacco products.” Health or medical claims not supported by clinical proof will not be tolerated. An unsafe, unclean or untested product will also not be tolerated in the marketplace.

CBD Oil vs. Isolate

The structure of cannabidiol, one of 400 active compounds found in cannabis.

Then there is the matter of CBD as either a full spectrum oil vs. an isolate…Unlike marijuana flower which is a very popular product, hemp flower is very rarely sold at the retail level. Full spectrum oil is extracted from the plant, and depending on the solvent used, produces an oil with the same, or close to the same, naturally occurring chemicals from the plant. The oil therefore, includes all the cannabinoids present along with any terpenes, lipids or other compounds present in the plant. Full spectrum oil is a botanical extract and is a dark thick oil. Isolate is produced by separating the constituents of the full spectrum oil by molecular weights or boiling points to have very pure chemicals in the 95%+ purity range. CBD isolate is a white crystalline substance and bears the greatest resemblance to a synthetic raw material and at its purest form cannot be distinguished as coming from a plant in the dirt or a synthesized chemical. Epidiolex is produced from hemp isolate and was approved by the FDA as a pharmaceutical. Full spectrum hemp oil is a botanical extract, often as an ethanol extraction. Full spectrum oil bears the greatest resemblance to a botanical dietary supplement. It remains to be seen what the FDA will allow in the future.

Product Labeling

The FDA has made it abundantly clear in numerous warning letters issued to the cannabis industry that drug claims (articles intended for use in the diagnosis, cure, mitigation, treatment or prevention of disease) regarding CBD, oil or isolate, cannot be made without pharmaceutical approval of the Drug Facts (Epidiolex) lest there be enforcement consequence.

An excerpt of an FDA warning letter sent to a CBD company in November of 2017

The labeling of other types of products are less clear. Dietary supplements are a category of foods with the FDA and as such both the labeling of dietary supplements and foods are dictated in 21 CFR 111, Food Labeling. Botanical dietary supplements frequently call out a chemical constituent within a particular botanical material or extract on the Supplement Facts Panel: Milk thistle seed extract containing standardized and labeled silymarin is such an example. Is this strategy acceptable for CBD with the FDA? What about “naturally occurring” CBD? Food claims are indicated in the Nutrition Facts, what can these be for CBD? Cosmetic product claims can only address articles intended to be applied to the human body for cleansing, beautifying, promoting attractiveness, or altering the appearance without affecting the body’s structure or functions. What is the purpose of CBD in a cosmetic?

FDA guidance would be very beneficial in all of these labeling areas, and there is hope. The FDA is promising public hearings this spring to discuss a path forward for having hemp food and dietary supplements. The FDA will ask for public comment and hopefully, there will be a lot of public comments provided to them. The public’s huge demand for CBD products will bear pressure on the FDA to at least listen and consider.

cGMPsRegulatory compliance will be difficult, and it will be expensive.

Those currently in the hemp manufacturing industry should pay attention and take the FDA seriously. If the FDA allows hemp products with CBD to be sold in the future, it will be the FDA who makes those regulations and those products will have to fit into an already existing FDA category: human food, animal food, dietary supplement, pharmaceutical or cosmetic. If you are a hemp product manufacturer, you must learn the applicable requirements for Current Good Manufacturing Practices (cGMPs) by hiring experienced FDA compliance personnel, and/or seeking out FDA regulatory consultants, to develop and implement a quality system accordingly:

  • 21 CFR 117, Current Good Manufacturing Practice, Hazard Analysis, and Rick-Based Preventative Controls for Human Food
  • 21 CFR 507, Current Good Manufacturing Practice, Hazard Analysis, and Rick-Based Preventative Controls for Food for Animals
  • 21 CFR 111, Current Good Manufacturing Practice in Manufacturing, Packaging, Labeling, or Holding Operations for Dietary Supplements
  • 21 CFR 210, Current Good Manufacturing Practice in Manufacturing, Processing, Packing, or Holding of Drugs; General
  • 21 CFR 211, Current Good Manufacturing Practice for Finished Pharmaceuticals
  • FDA Draft Guidance for Industry, Cosmetic Good Manufacturing Practice, June 2013

I believe in this industry and I am rooting for the pioneers who have taken all the risk thus far, but the level of denial of the FDA’s authority that I am hearing in the hemp industry community is disturbing to me because those companies will not manage the transition to a regulated future. Most don’t understand it and they don’t think it applies to them or their products. Regulatory compliance will be difficult, and it will be expensive. The hemp pioneers deserve to benefit from their labor and the risk they have taken. For those hemp product companies that do not think compliance is worth the effort or cost, there are many FDA-compliant human food, animal food, dietary supplement, pharmaceutical, or cosmetic companies that are waiting to take your business…

Editor’s Note: While Cannabis Industry Journal typically does not use the term ‘marijuana,’ the author here is speaking from a regulatory point of view and creates an important distinction. Peyton chose the word “marijuana” instead of “cannabis” because the FDA has chosen “cannabis” to refer to both marijuana and hemp. 

Food Safety Hazards for the Cannabis Industry: ERP Can Help

By Daniel Erickson
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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 solution to automate processes, enables cannabis businesses to provide quality, consistent products and establish standards to support the eventuality of federal cannabis legalization.

FDAlogoEdibles 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.

The structure of cannabidiol (CBD), one of 400 active compounds found in cannabis.

There are many consequences of not addressing food safety hazards, as the possibility of food-borne illnesses resulting from unsafe and unsanitary manufacturing facilities have become increasingly likely in an unregulated market. In addition to these concerns, problems particular to cannabis growing 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.HACCP

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.

GMPFollowing 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.

Marguerite Arnold

Italian Canapar Moves On European Hemp Extraction

By Marguerite Arnold
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Marguerite Arnold

Canapar SL, an Italian organic hemp producer has just announced it is breaking ground on what it is being billed as “Europe’s largest hemp processing facility.”

Located on Sicily, Canapar is already established as a manufacturer and processor of CBD oil and concentrates. On its roadmap already is to become a leader in the CBD-infused cosmetics, skincare and beauty industry with the additional benefit of bearing the “Made in Italy” imprimatur. In addition to the upscale export market of course, Italy is Europe’s fourth largest consumer of such products.

Canopy Rivers now owns 49% of the company.

Why Is This Significant?

There has been much noise made about the CBD market in Europe, which even surprised experts by the end of year when it reached a magical 1-billion-euro sales cap.

However, things are not all smooth sailing on this front, no matter how much the market exploded. With the success of CBD, in Switzerland, Spain and beyond, regulators in Europe began looking at how the entire enchilada was regulated.

CBD isolates are falling into a very strange gray territory at the present across the continent. Why? As a plant extract, extracted CBD from cannabis absolutely falls into territory ruled “novel food” in the EU. In effect, what this means is that anything with CBD distillates that do not come from hemp, now requires an expensive licensing process to prove they are not harmful. In places like the UK, Spain and Austria, this became so contentious that police raided Spanish stores over health food products. The UK is now requiring tighter licensing and labelling for these products. Last December, the Austrians banned the entire industry. Take that, Switzerland!

CBD distillate made from hemp, however, seems, for now, to have survived this battle, which is why the strategic investment of Canopy last December was also so intriguingly timed. Why? It appears to be the loophole in the EU in which CBD producers will have to hang their hats until the broader CBD question is answered satisfactorily at both the UN and EU level.

Producing hemp distillate on the Italian island of Sicily also represents an interesting step for the entire cannabis industry as it develops in the country. There have been many efforts to legalize cannabis because this will then end the direct involvement of the Mafia. Perhaps the multi million investment from Canopy will be enough foreign capital to start to do the trick if not turn the tide.

But Won’t CBD Just Be “Rescheduled” By the UN?

There are many reasons why this is a strategic move for Canopy (if not producers moving in similar waters). Yes, CBD is likely to be descheduled by the UN at some point in the near future, but this still will not solve the larger question of “novel food” issues until the EU formally issues regulations on the same. Until then, EU will be a state by state hop for CBD, much as the United States has been so far. And will be, until that debate is settled across the EU at least, sourced from hemp.

With Italian food products export just behind things like cosmetics, Canapar is clearly moving into strategic and potentially highly lucrative territory.