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Facility Considerations for Cultivation & Manufacturing: A Case Study

By David Vaillencourt
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The cannabis industry is growing and evolving at an unprecedented pace and regulators, consumers and businesses continually struggle to keep up.

Cannabis businesses: How do you maintain an edge on the market, avoid costly mistakes?

Case Study: Costly Facility Build Out Oversights

David Vaillencourt will be joining a panel discussion, Integrated Lifecycle of Designing a Cultivation Operation, on December 22 during the Cannabis Quality Virtual Conference. Click here to register. A vertically integrated multi-state operator wants to produce edibles. The state requires adherence to food safety practices (side note – even if the state did not, adherence to food safety practices should be considered as a major facility and operational requirement). They are already successfully producing flower, tinctures and other oil derivatives. Their architect and MEP firm works with them to design a commercial kitchen for the production of safe edibles. The layout is confirmed, the equipment is specified – everything from storage racks, an oven and exhaust hoods, to food-grade tables. The concrete is poured and walls are constructed. The local health authority comes in to inspect the construction progress, who happens to have a background in industrial food-grade facilities (think General Mills). They remind the company that they must have three-compartment sinks with hot running water for effective cleaning and sanitation, known as clean-out-of-place (COP). The result? Partial demolition of the floor to run pipeline, and a retrofit to make room for the larger sinks, including redoing electrical work and a contentious team debate about the size of the existing equipment that was designed to fit ‘just right.’

Unfortunately, this is just one more common story our team recently witnessed. In this article, I outline a few recommendations and a process (Quality by Design) that could have reduced this and many other issues. For some, following the process may just be the difference between being profitable or going out of business in 2021.

The benefits of Quality by Design are tangible and measurable:

  1. Reduce mistakes that lead to costly re-work
  2. Mitigate inefficient operational flow
  3. Reduce the risk of cross-contamination and product mix-ups. It happens all the time without carefully laid out processes.
  4. Eliminate bottlenecks in your production process
  5. Mitigate the risk of a major recall.

The solution is in the process

Regardless of whether you fall in the category of a food producer, manufacturer of infused products (MIP), food producers, re-packager or even a cultivator, consider the following and ask these questions as a team.

People

Food processing and sanitation
By standardizing and documenting safety procedures, manufacturers mitigate the risk of cannabis-specific concerns

For every process, who is performing it? This may be a single individual or the role of specific people as defined in a job description.

Does the individual(s) performing the process have sufficient education and training? Do you have a diverse team that can provide different perspectives? World class operations are not developed in a vacuum, but rather with a team. Encourage healthy discourse and dialogue.

Process

Is the process defined? Perhaps in a standard operating procedure (SOP) or work instruction (WI). This is not the general guidance an equipment vendor provided you with, this is your process.

How well do you know your process? Does your SOP or WI specify (with numbers) how long to run the piece of equipment, the specification of the raw materials used (or not used) during the process, and what defines a successful output?

Do you have a system in place for when things deviate from the process? Processes are not foolproof. Do not get hung up on deviations from the process, but don’t turn a blind eye to them. Record and monitor them. In time, they will show you clear opportunities for improvement, preventing major catastrophes.

Materials

What are the raw materials being used? Where are they coming from (who is your supplier and how did you qualify them)?

Start with the raw materials that create your product or touch your product at all stages of the process. We have seen many cases where cannabis oils fail for heavy metals, specifically lead. Extractors are quick to blame the cultivator and their nutrients, as cannabis is a very effective phytoremediator (it uptakes heavy metals and toxins from soil substrate). The more likely culprit – your glassware! Storing cannabis oil, both work in process or final product in glass jars, while preferred over plastic, requires due diligence on the provider of your glassware. If they change the factory in which it is produced, will you be notified? Stipulate this in your contract. Don’t find yourself in the next cannabis lead recall that gets the attention of the FDA.

Savings is gained through simple control of your raw materials. Variability in your raw material going into the extractor is inevitable, but the more you can do to standardize the quality of your inputs, the less work re-formulating needs to be done downstream. Eliminate the constant need to troubleshoot why yields are lower than expected, or worst case, having to rerun or throw an entire batch out because it was “hot” (either too much THC in the hemp/CBD space or pesticides/heavy metals). These all add up to significant downstream bottlenecks – underutilized equipment, inefficient staff (increase in labor cost) all because of a lack of upstream controls. Use your current process as a starting point, but implement a quality system to drive improvement in operational efficiency and watch your top line grow while your bottom-line decreases.

Consistency in quality standards requires meticulous SOPs

Have you tested and confirmed the quality of your raw material? This isn’t just does it have THC and is it cannabis, but is it a certain particle size, moisture level, etc.? Again, define the quality of your raw materials (specifications) and test for it.

Rememberranges are your friend. It is much better to say 9-13% moisture than “about 10%”. For your most diligent extractor, 11% will be unacceptable, but for a guy that just wants to get the job done, 13% just may do!

Test your final product AFTER the process. Again, how does it stack up against your specifications? You may need to have multiple specifications based on different types of raw material. Perhaps one strain with a certain range of cannabinoids and terpenes can be expected for production.

Review the data and trend it. Are you getting lower yields than normal? This may be due to an issue with the equipment, maybe a blockage has formed somewhere, a valve is loose, and simple preventive maintenance will get you back up and running. Or, it could be that the raw biomass quality has changed. Either way, having that data available for review and analysis will allow you to identify the root cause and prevent a surprise failure of your equipment. Murphy’s law applies to the cannabis industry too.

  1. You are able to predict and prevent most failures before they occur
  2. You increase the longevity of your equipment
  3. You are able to predict with a level of confidence – imagine estimating how much product you will product next month and hitting that target – every time!
  4. Business risks are significantly mitigated – a process that spews out metal, concentrates heavy metals or does not kill microbes that were in the raw material is an expensive mistake.
  5. Your employees don’t feel like they are running around with their hair on fire all the time. It’s expensive to train new employees. Reduce your turnover with a less stressed-out team.

Takeaways

Maintaining a competitive edge in the cannabis industry is not easy, but it can be made easier with the right team, tools and data. Our recommendations boil down to a few simple steps:

  1. Make sure you have a chemical or mechanical engineer to understand, optimize and standardize your process (you should have one of these on staff permanently!)
  2. Implement a testing program for all raw materials
    1. Test your raw materials – cannabis flower, solvents, additives, etc. before using. Work with your team to understand what you should and should not test for, and the frequency for doing so. Some materials/vendors are likely more consistent or reliable than others. Test the less reliable ones more frequently (or even every time!)
  3. Test your final product after you extract it – Just because your local regulatory body does not require a certain test, it does not mean you should not look for it. Anything that you specified wanting the product to achieve needs to be tested at an established frequency (and this does not necessarily need to be every batch).
  4. Repeat, and record all of your extraction parameters.
  5. Review, approve and set a system in place for monitoring any changes.

Congratulations, you have just gone through the process of validating your operation. You may now begin to realize the benefits of validating your operation, from your personnel to your equipment and processes.

german flag

A Snapshot of The German Cannabis Market: Year 3

By Marguerite Arnold
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german flag

Despite the limitations and privations caused by the COVID-19 pandemic, Germany’s market is “up” in terms of sales and overall insurance approvals. For all the victories however, there are still many kinks along the way. That is of course, not just on the medical front (where flower is yet again in short supply this summer), but also in the CBD space.

There is also clearly a drumbeat for more reform afoot in a country which has bested the COVID-19 pandemic like few others in the world. And like France as well as other countries in Europe, the conversation across the region has turned to including cannabis in recovery efforts, and in multiple ways. That includes not only relying on a new crop and industry for economic revitalization, but also of course, on the topic of further reform.

A Brief Overview Of The “Modern” German Cannabis Market
Germany kicked off the entire cannabis discussion in a big way in Europe in the first quarter of 2017. The government got sued by patients and changed the law mandating that public insurers had to reimburse the drug. They also kicked off a cultivation tender bid which promptly became mired in several rounds of lawsuits and squabbles. The first German grown cannabis will hit pharmacies this fall, but it is not clear when, and the unofficial rumour is that the pandemic will delay distribution. The German distribution tender has been delayed three times so far this year.

In the meantime, the German market has developed into the world’s most lucrative target for global exporters, particularly (but not limited) to GMP and other certifiable high-grade cannabis (and in all its forms).

The German Parliament Building

Other Issues, Problems and Wrinkles

Nothing about cannabis legalization is ever going to be easy, and Germany has been no exception.

The first problem on the ground is that the supply chain here has had several major hits, from the beginning. This is even though the supply has come from ostensibly otherwise reliable sources. Companies in Canada and in Holland have all had different kinds of problems with delivery (for different reasons) throughout this period.

Right now, there is a major reorganization afoot in Holland which may also be affecting the recent decision on the Dutch side to reorganize how the government picks (private) German narcotics distributors. Aurora also had product pulled last fall because of labelling and processing issues. But these, no matter how momentous momentarily, are also just waves in a cannabis ocean that is still choppy. Domestic sales continue to expand and foreign producers can still find a foothold in a still fairly open market.

As a result, even with a new dronabinol competitor, Israel, Australia and South Africa as well as multiple European countries now in advanced export schemes, the supply problem is still a thorny one, but not quite as thorny as it used to be.

However, On The CBD Front…

Things have gotten even more complicated since the repeated decisions on Novel Food at the EU level. Namely, last year’s decision that the only CBD extract that is not “Novel” is extracted from seeds, has thrown the entire industry into a major fluff. Especially when such decisions begin to filter down via a federal and regional approach. This has begun to happen. Indeed, the city of Cologne, in Germany’s most populous state just banned all CBD that is not labelled per an EU (although admittedly) non-binding resolution on the issue.

This in turn is leading to a renewed push for the obvious: recreational cannabis.

Where Is the Recreational Discussion Auf Deutschland?
The recreational movement, generally, has been handed several black eyes for the last three years. Namely, that greater reform was not preserved in the first cannabis legalization that passed, albeit unanimously, in the German Parliament in 2017. However, as many recognized, the first, most important hurdle had just been broached. And indeed, that cautious strategy has created a steadily increasing, high quality (at least for the most part) medical market that is unmatched anywhere in the world except perhaps Israel.

german flag
Photo: Ian McWilliams, Flickr

Now, however, there are other issues in the room. The CBD discussion is mired in endless hypocrisy and meddling at both the state country level and the EU. There are many Germans who are keen to try cannabis beyond any idea of cannabis as therapy. Remember that Germany has largely managed to contain the outbreak, despite the emergence of several recent but isolated hotspots of late. In Frankfurt, for example, with the exception of more people on kurzarbeit (which is not visible), most street traffic proceeds apace these days with masks on, but with that exception or two, feels pretty much back to “normal.” And of course, economic development in the form of exports is one of Germany’s favorite pastimes.

Beyond that, the needle has absolutely moved across Europe. Several countries, including Greece and Portugal as well as the UK’s Channel Islands, have already jumped on the cannabis economic development bandwagon, and this is only going to encourage the Germans as well as other similar conversations across the region. It has even showed up in France.

And of course, it is not like the implications of Luxembourg and Switzerland as well as recent efforts in Holland to better regulate the recreational industry there, have not been blatantly obvious to those in Europe’s largest medical market.

Look for new shoots and leaves, in other words of the next stage of cannabis reform to take hold auf Deutschland. And soon. It is inevitable.

Soapbox

Tips to Shrink your Shrinkage

By Carl Silverberg
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I had dinner last night with a friend who is a senior executive at one of the largest automobile companies in the world. When I explained the industry-accepted rate of 25-30% shrinkage in horticulture he said, “Are you kidding me? Can you imagine the story in the Wall Street Journal if I gave a press conference and said that we were quite content to throw away three out of every ten cars we manufactured?”

Yet, for all growers, operators and investors who complain about shrinkage, it’s an accepted part of the business. What if it wasn’t; what if you could shrink your shrinkage by 60% and get it down to 10% or less? How much more profitable would your business be and how much easier would your life be?

Let’s take the floriculture industry as our first example. You propagate chrysanthemums in February, they get repotted at the end of April and by the end of June, you might start to see some buds. In a very short time span your job changes from being a grower who manages 10,000 square feet of chrysanthemums to being an order taker. Over a period of eight weeks, you have to unload as many of those mums as possible. The sales team at Macy’s has more time to move their holiday merchandise than you do.

If you’re like most operations, your inventory tracking system consists of Excel spreadsheets and notebooks that tell you what happened in previous years so you can accurately predict what will happen this year. The notebooks give you a pretty accurate idea of where in the greenhouses your six cultivars are, how many you planted and which of the five stages they are in. You already have 30 different sets of data to manage before you add on how many you sell of each cultivar and what stage they were in.

The future of the industry is making data-driven decisions that free up a grower to focus on solving problems, not looking for problems.Then your first order comes in and out the window goes any firm control of where the mums are, what stage they’re in and how many of each cultivar you have left. A couple of hours after your first order, a second comes in and by the time you get back in touch, check your inventory, call back the buyer and she’s able to connect with you, those 2837 stage 3 orange mums are moving into stage 4. Only she doesn’t want stage 4 mums she only wants stage 3 so now you frantically call around to see who wants stage 4 orange mums very soon to be stage 5 mums.

And, the answer is often no one. What if you didn’t have your inventory count exact and now you have 242 yellow mums that you just found in a different location in your greenhouse and had you known they were there, you could have sold them along with 2463 other mums that you just located in various parts of your greenhouse.

It doesn’t have to be like that. We had a client in a similar situation, and they are on track to reduce their shrinkage to just a shade over 10%. The future of the industry is making data-driven decisions that free up a grower to focus on solving problems, not looking for problems.

And don’t think that shrinkage is an issue only in the purview of floriculture. It’s an even bigger problem for cannabis because of the high value of each crop. The numbers don’t sound as bad because unlike floriculture, you don’t have to throw out cannabis that’s not Grade A. You can always sell it for extract. But extract prices are significantly less per pound than flower in the bag.

Here’s how one grower explained it. “Because of the high value of the crop, and the only other crop I’ve worked with that high is truffles, you’re playing a much higher stakes game with shrinkage. Even if you try and salvage a bad crop by using all of the parts of the cannabis plant. Listen, the difference between Grade A and Grade C could be $1,000 for A while a pound of B/C is less than $400. If you produce a standard 180 to 200 pounds in your grow rooms, you’ve really screwed up. No operator is going to keep you if you just cost them $120,000.”

Disposable Gloves: The Unregulated Cannabis Threat

By Lynda Ronaldson
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Today in the states where medical and recreational cannabis is legal, cannabis products purchased from licensed facilities are required to have undergone testing by accredited labs. The compliance testing verifies advertised potency levels and checks for microbial contamination, herbicides, pesticides, fungicides and the presence of mold and mildew, among other potential contaminants.

Until recently, little attention has been given to disposable gloves and their possible involvement in the contamination of the products they handle.  What factors should you consider when purchasing gloves?

Disposable Gloves Facts

Disposable gloves, like cannabis products, are not made of equal quality. There are several different types of disposable gloves on the market, and huge variations in glove quality and chemical compositions exist between and within each glove type.

Recent scientific studies have revealed how gloves produced in factories with poor manufacturing standards and raw material ingredients can contaminate the products they handle. High-level toxins in disposable gloves were found to affect lab results, toxins in gloves contaminated the food they touched, and pathogen contamination of unused disposable gloves has been proven. Should the cannabis industry take more interest in the disposable gloves they are using? With so much at stake if compliance test results are compromised, we think so!

Glove Procurement: Factors to Consider

What factors should you consider when purchasing gloves?

  1. Industrial grade gloves- There is no such thing as an industrial grade glove certification, although it does give an incorrect impression that gloves are strong and resilient. Industrial grade means they have not been subjected to inspection nor have passed any specific testing requirements.
  2. Food contact gloves are certified under FDA Title 21 CFR Part 177, which states the components of the glove comply with the FDA regulations and the gloves consist of “substances generally recognized as safe for use in food or food packaging.” Few controls exist for glove manufacturing relating to the reliability of raw materials and manufacturing processes, and costs can be reduced with the use of cheap, toxic materials.
  3. Medical grade gloves have to pass a series of technical tests in order to meet the safety requirements specified by the FDA. Gloves are tested for puncture and abrasion resistance, must meet tension and elongation tests and are also tested for chemical substance resistance. Manufacturers of these gloves must receive 510k certification. As this study shows, even medical gloves can contain high levels of toxic ingredients, affecting laboratory test results.
  4. The Acceptable Quality Level (AQL) refers to a quality standard for measuring pinhole defects- the lower the AQL, the less defects the gloves have. There are no AQL requirements for food grade or industrial grade gloves, meaning there are no guidelines for the number of failures per box. Medical grade gloves must have an AQL of 2.5 or less, meaning 2.5 failed gloves per 100 gloves is an acceptable level.
  5. For Californian cannabis companies, are your disposable gloves Prop. 65 compliant? Accelerator chemicals, such as 2-Mercaptobenzothiazole (MBT) found in some nitrile gloves, have recently been added to the Prop. 65 chemicals known to cause cancer.

How Gloves Can Contaminate Products

Physical, chemical and microbiological hazards have been identified in disposable glove supply chains. Gloves of any grade are not tested for cleanliness (microbial and bioburden levels), raw material toxicity and chemical composition, or pathogen contamination.

100% of glove factories supplying the United States are based in Southeast Asia. These factories are generally self­-regulated, with FDA compliance required for a rough outline of the ingredients of the gloves rather than the final product. Few controls are required for glove manufacturing relating to the reliability of raw materials, manufacturing processes and factory compliance or conditions. A clear opportunity exists for accidental or intentional contamination within the glove-making process, especially to reduce costs.

In order to safeguard their customers from product contamination, a selection of tests and certifications, some of which are unique within the glove industry, are being implemented by glove supplier Eagle Protect. These tests make sure Eagle’s gloves coming into the United States are made in clean, well run factories, free of any type of contamination and are consistent in material makeup to original food safe specifications. This glove Fingerprint testing program, consists of a number of proprietary risk reduction steps and targeted third-party testing methods, includes gas chromatography combined with mass spectroscopy (GC/MS); surface free energy determination; in vitro cytotoxicity analysis; and microbial viability-linked metagenomic analysis.

With a great deal of faith placed on a glove supplier’s ability to deliver disposable gloves sight unseen, we believe these tests are essential to further reduce risks or pathogen contamination associated with them, keeping your cannabis products safe.