In a few short weeks, the regulations in California’s cannabis market will expand to include more laboratory testing. The previous exemption for selling untested product will be eliminated come July 1st, meaning that every product on dispensary shelves will have to be tested for a number of contaminants.
Pesticide testing, expanded residual solvent testing and foreign materials testing will be added come July 1st.
According to William Waldrop, chief executive officer and co-founder of EVIO Labs, the state is currently finalizing a revision to the existing emergency rules, which is designed to target the potential supply bottleneck situation. “To help alleviate the bottleneck, the state is eliminating the field duplicate test on every batch of cannabis or cannabis products,” says Waldrop. “This will give the labs additional bandwidth to process more batches for testing.” So one test per batch is the rule now and batch sizes will remain the same. This, of course, is contingent on the state finalizing that revision to the emergency regulations.
William Waldrop, chief executive officer and co-founder of EVIO Labs
In addition to that change, the state will expand the types of testing requirements come July 1st. New mandatory pesticide testing, expanded residual solvent testing and foreign materials testing are added in addition to the other tests already required.
With July 1st quickly approaching, many in California fear the rules could lead to a major market disruption, such as the previously mentioned bottleneck. Waldrop sees the elimination of duplicate testing as a preventative measure by the state. “It is a good move for the industry because it allows labs to test more batches, hopefully reducing the bottleneck come July,” says Waldrop. Still though, with only 26 licensed laboratories in the state as of March, testing facilities will have to meet higher demand, performing more tests and working with more clients.
EVIO Labs is preparing for this in a number of ways. They already have a lab in Berkeley and are working to expand their capacity for more analyses. In addition to their lab in Berkeley, the company is working to get three more locations operational as quickly as possible. “Right now, EVIO Labs is expanding through the identification of new market locations,” says Waldrop. “We have announced the acquisition of a facility in Humboldt and we are outfitting it for state-mandated testing. We have secured a location in LA, and licensing for LA just began as of June 1stso we are going through the local licensing process at this time. We are still moving through the licensing process for our facility in Costa Mesa as well.”
Labs will soon have to deal with higher demand, meaning more samples and more clients
“In the meantime, we have expanded capacity of personnel in our Berkeley facility to support our client base until these other locations come online,” says Waldrop. “We are refining our business, bringing on additional equipment and more resources.” While the rules haven’t been implemented yet, Waldrop says he’s seen an uptick in business with licensed operators requesting more testing for the new July 1st standards.
While some might feel a bit panicky about how the new standards could disrupt the market, Waldrop says his clients are looking forward to it. “Our clients are very happy with the proposed new rules, because it reduces the cost of testing per batch, which will inherently reduce wholesale costs, making cannabis more affordable for patients and recreational users.”
Pennsylvania’s medical cannabis program may be young, but the industry in that state is off to a burgeoning start. Back in 2016, the state legalized medical cannabis. In 2017, the PA Department of Health began accepting applications for licenses and announced the first 12 winning applications. On February 15th, 2018, medical cannabis became available for more than 17,000 patients that registered in the program.
In March of this year, Governor Tom Wolf announced two more dispensaries were approved to operate as well as another grower/processor licensee. At that time, the press release indicated more than 21,000 patients have registered to participate in the medical cannabis program.
Then in April, Governor Wolf announced Phase Two of their medical cannabis program, allowing the industry to grow even more. That allowed for 13 new grower/processor permits and 23 new primary dispensary permits, according to a press release, which moved the total up to 25 grower/processors licensees and 50 dispensary licensees.
On May 15th, Governor Wolf approved eight universities to participate in a groundbreaking program, allowing Pennsylvania to take the first steps towards clinical research for medical cannabis. This research program would be the first of its kind in the country, allowing research institutions to explore the drug. The excitement was put on hold, however, when a Pennsylvania judge halted the program with an injunction. A handful of growers and dispensary owners in PA filed suit to stop the program on grounds that it violated the original intent of the law. State Representative Kathy Watson from Bucks County, the author of the research program, called the suit “pathetic because it’s all about the money.” We’ll follow closely with any new developments as they come.
Steve Schain, Esq. practicing at the Hoban law Group
Steven Schain, Esq., senior attorney at Hoban Law Group, a global cannabis law firm, represents multiple cannabis-related businesses in Pennsylvania. He says the program’s roll out has been fast with solid growth. “Within two years of the legislation’s enactment, Pennsylvania’s medical marijuana program has exceeded expectations with controlled, sustainable and quality growth,” says Schain. “The Pennsylvania Department of Health established ambitious goals, which they met timely and created a statewide program servicing over 10,000 patients in record time. Looming ahead is New Jersey’s adult use program, the anticipated robustness of which could undermine vigorous sales in southeastern Pennsylvania’s marijuana-related businesses.”
On May 30th, Philadelphia welcomed their first medical cannabis dispensary, with a location opening up their doors to patients in Fishtown. Now reports are coming in that say more than 37,000 patients have registered to date, with over 16,000 who have received their ID cards and medical cannabis at a dispensary.
Even though the research program might be on hold for now, Pennsylvania’s medical cannabis program is growing at a fast pace. The market there has blossomed in just a few short months to a whopping 37,000-registered patients, according to a press release form Governor Wolf’s office. Some say an additional 200,000 patients could qualify. With the second phase in sight, it seems Pennsylvania is on track to become a hotbed for business and research, developing into a massive medical cannabis marketplace soon. Stay tuned for more updates.
In Part 3 of this series on HACCP, Critical Control Points (CCPs), validation of CCPs and monitoring of CCPs were defined. When a HACCP plan identifies the correct CCP, validates the CCP as controlling the hazard and monitors the CCP, a potential hazard is controlled in the manufacturing and packaging of cannabis-infused edibles. The food industry is big on documentation. If it’s not documented, it did not happen. The written hazard analysis, validation study and monitoring of CCPs create necessary records. It is these records that will prove to a customer, auditor or inspector that the edible is safe. Here in Part 4, more recordkeeping is added on for deviation from a CCP, verification and a recall plan.
Take Corrective Action When There Is a Deviation from a Critical Control Point
Your food safety team conducts a hazard analysis, identifies CCPs and decides on monitoring devices, frequency and who is responsible for monitoring. You create an electronic or paper record of the monitoring for every batch of edible to document critical limits were met. Despite all your good efforts, something goes wrong. Maybe you lose power. Maybe the equipment jams. Nothing is perfect when dealing with ingredients, equipment and personnel. Poop happens. Because you are prepared before the deviation, your employees know what to do. With proper training, the line worker knows what to do with the equipment, the in-process product and who to inform. In most cases the product is put on hold for evaluation, and the equipment is fixed to keep running. The choices for the product include release, rework or destroy. Every action taken needs to be recorded on a corrective action form and documents attached to demonstrate the fate of the product on hold. All the product from the batch must be accounted for through documentation. If the batch size is 100 lb, then the fate of 100 lb must be documented.
Verify Critical Control Points Are Monitored and Effective
First, verification and validation are frequently confused by the best of food safety managers. Validation was discussed as part of determining CCPs in Part 3. Validation proves that following a CCP is the right method for safety. I call validation, “one and done.” Validation is done once for a CCP; while verification is ongoing at a CCP. For example, the time and temperature for effective milk pasteurization is very well known and dairies refer to the FDA Pasteurized Milk Ordinance. Dairies do not have to prove over and over that a combination of time and temperature is effective (validation), because that has been proven.
I encourage you to do as much as you can to prepare for a recall.A CCP is monitored to prove the safety parameters are met. Pasteurization is an example of the most commonly monitored parameters of time and temperature. At a kill step like pasteurization, the employee at that station is responsible for accurate monitoring of time and temperature. The company managers and owners should feel confident that CCPs have been identified and data are being recorded to prove safety. Verification is not done by the employee at the station but by a supervisor or manager. The employee at the station is probably not a member of the food safety team that wrote the HACCP plan, but the supervisor or manager that performs verification may be. Verification is proving that what was decided by the food safety team is actually implemented and consistently done.
Verification is abundant and can be very simple. First, every record associated with a CCP is reviewed by a supervisor or manager, i.e. someone who did not create the record. This can be a simple initial and date at the bottom of the record. Every corrective action form with its associated evaluation is verified in the same way. When HACCP plans are reviewed, that is verification. Verification activities include 1) testing the concentration of a sanitizer, 2) reviewing Certificates of Analysis from suppliers, 3) a review of the packaging label and 4) all chemical and microbiological testing of ingredients and product. The HACCP plan identifies CCPs. Verification confirms that implementation is running according to the plan.
Verification is like a parent who tells their child to clean their room. The child walks to their room and later emerges to state that the room is clean. The parent can believe the word of the child, if the child has been properly trained and has a history of successfully cleaning their room. At some frequency determined by the parent, the room will get a parental visual check. This is verification. In the food industry, CCP monitoring records and corrective action must be reviewed within seven days after the record is created and preferably before the food leaves the facility. Other verification activities are done in a timely manner as determined by the company.
Product recalls due to manufacturing errors in sanitation cause mistrust among consumers.
Write a Recall Plan
In the food industry, auditors and FDA inspectors require a written recall plan. Mock recalls are recommended and always provide learning and improvement to systems. Imagine your edible product contains sugar, and your sugar supplier notifies you that the sugar is recalled due to glass pieces. Since you are starting with the supplier, that is one step back. Your documentation of ingredients includes lot numbers, dates and quantity of sugar.You keep good records and they show you exactly how much of the recalled lot was received. Next you gather your batch records. Batches with the recalled sugar are identified, and the total amount of recalled sugar is reconciled. You label every batch of your edible with a lot code, and you identify the amount of each affected lot and the customer. You have a press release template in which you add the specific information about the recall and affected lots. You notify every customer where the affected edible was shipped with a plan to return or destroy the edible. When you notify your customers, you go one step forward.
How would your company do in this situation? I have witnessed the difficulties a company faces in a recall when I was brought in to investigate the source of a pathogen. Food safety people in my workshops who have worked through a recall tell me that it was the worst time of their life. I encourage you to do as much as you can to prepare for a recall. Here are two good resources:
If anyone (read Auslanders) had any illusions that the German take on medical cannabis was going to be casual or unscientific if not painstakingly documented, think again.
Techniker Krankenkasse (or TK as it is referred to by the locals) is one of Germany’s largest public health insurance companies. In other words, it is a private company that is required to provide so called “statutory” health insurance which covers 90% of Germans.
As such, they are also on the front lines now of the medical cannabis debate. Approximately one year after the new law requiring public health insurance companies like TK to reimburse cannabis claims went into effect, the company has just issued what would surely be a best-seller if it were being sold.All of the medical cannabis now being prescribed and reimbursed is coming from abroad.
The Cannabis Report, as it is titled, produced with the help of professors at the University of Bremen, is also the first of its kind. In its pages, along with the corporate summary produced for the recent press conference in Berlin, are several fascinating snapshots of what is going on.
By the numbers.
The Cannabis Report
For those who cannot understand German, this summary by Business Insider is quite educational. Here are the major takeaways: There are now almost 16,000 German patients who are receiving some kind of medical cannabis by prescription. From a doctor. These patients are also paying about $12 for their monthly supplies – even if they have to wait for reimbursement. This is in contrast to the 1,100 patients who managed to obtain cannabis by prescription and pay for it themselves before the law changed last spring.
Do the math and that is a 1,450% uptick. Add in the additional 15,000 left out of this report who are getting cannabis prescribed but their claims turned down, and that is an even more amazing story.
Here is the next obvious fact: All of the medical cannabis now being prescribed and reimbursed is coming from abroad. A significant amount is still coming from Holland. The rest? Canada.
For that reason, the cost of medical cannabis is a major concern, along with the medical efficacy of cannabis and the authors’ frustrations about dosing.
The most interesting takeaway? Chronic pain and spasticity arehigh on the list of prescriptions (MS is currently the only condition which is “on label” for cannabis). So is Epilepsy and AIDS. Most interestingly are the high numbers for ADD. This is also highly significant in a country where amphetamine prescriptions for the same are almost unheard of.
TK, like the other health insurers who have started to provide numbers, also approved approximately two thirds of the requests they received. And it has cost them $2.7 million. That bill will begin to reduce as Germany cultivates medical cannabis domestically. However, the tender bid, which now apparently includes 11 contenders, is still undecided, with growing apparently pushed off now until (at the earliest) sometime next summer.
The bottom line, however, in the report from Socium, a university-based think tank that focuses on social inequality, is that cannabis is a drug that should also be treated like any other medication. Even though study authors conclude that so far, they do not find cannabis to be as “effective” as other drugs, they clearly state that the drug does help patients.
An Equally Interesting Industry Snapshot
Flip to page 20, however, and the authors also confirm something else. The top companies providing medical cannabis to German publicly insured patients who are getting reimbursed are Bedrocan, Aurora andCanopy. Aurora’s brands clock in at the highest percentage of THC, although their German importer Pedianos, clearly offers a range of products that start at less than 1% and increase to 22%. MedCann GmbH (renamed Spektrum last year) is essentially providing the rest, and ranges of THC at least, that go from 5.4%-16.5%. They also provide the products with the highest percentages of CBD.
Page 20 of the Cannabis Report produced by TK
Unlike the other companies, Canopy’s “brands” are also showing up in ostensibly both medical and government reports (Houndstooth, Penelope, Princeton and Argyle). This is interesting primarily because the German government (and regulatory requirements) tends to genericize medications as much as possible.
Dosing, Impact, Results
The next page of the report is also fascinating. Namely a snapshot of what kind of cannabis is being prescribed and at what doses. Patients who are obtaining cannabis flower are getting up to 3 grams a day. Dronabinol, in stark contrast (which is still the only form of the drug many German patients are able to get), is listed at 30mg.
Unlike any corporate report so far, the study also discusses consumption methods (including, charmingly, tea). It is impossible to forget, reading this, how German and structured this data collection has clearly been. There are several fairly stern referrals to the fact that cannabis should not just be prescribed for “vague” (read psychological) conditions but rather aspecific symptomology (muscle spasms and severe pain).
There is also great interest in how flower differs from pills. And how long the effects last (according to the authors, effects kick in about 2-15 minutes after dosing and last for 4 hours). This is, of course, an accurate picture of what happens to just about every patient, in every country. What is striking, particularly to anyone with an American perspective, is how (refreshingly) clinical much of this basic data collection and discussion is.
And no matter how much the authors call for more research, they clearly have observed that cannabis can have positive, and in many cases, dramatic impacts on patients. According to the handy graphs which are understandable to English speakers, study authors find significant evidence that the drug significantly helps patients with severe pain and or muscle spasms – see MS and Epilepsy, AIDS patients with wasting syndrome and paraplegics (wheelchair bound individuals). Authors list the “strong possibility” that the drug can help with Tourette’s and ADHD. Fascinatingly, however, so far, German researchers are not impressed with the efficacy of the drug for Glaucoma. “Psychological” and psychiatric conditions are also low on the list.
Regardless, this is an important line in the sand. As is the clear evidence that cannabis has efficacy as medication.
The great German cannabis science experiment, in other words, is well underway. And further, already starting to confirm that while many questions remain, and more research is required, this is a drug that is not only here to stay, but now within reach of the vast majority of the population.
The stage is set: cannabis legalization is rolling out around the world. With legalization comes regulations and smart companies will adapt to make new requirements work for them. In the end, our shared goal (as industry, consumers and government) is the same: provide safe, high-quality, reliable products. This is where traceability comes in.
If a cannabis product isn’t safe (cannabis is vulnerable to the same kinds of hazards as most food products), the reputation of the entire industry suffers. Earning public trust is the first step toward favorable government regulations. With upcoming decisions that will decide taxation and distribution, it’s more important than ever that cannabis producers can react quickly if recalls should occur – and that means taking traceability seriously.
Comprehensive Traceability for Cannabis Means More Than Legality
A crucial key to producing safe and high-quality cannabis products is detailed traceability. Many states require cannabis businesses to use systems like Metrc, a technology that uses RFID tags to track cannabis from seed to sale to ensure nothing is diverted to the black market. However, Metrc focuses only on the chain of custody, not on the safety or quality of the product.
Ensuring a secure supply chain is only one piece of the cannabis puzzle. Public health hazards like toxic chemical contamination, mold growth and pathogenic contamination introduced by pests or improper employee handling need to be controlled in order to earn public trust and comply with regulations. State-mandated traceability systems don’t address these imperatives, so an effective safety technology that includes traceability, in addition to mandated systems like Metrc, is absolutely necessary to complete the cannabis picture.
Automation Technology Supports Cannabis Companies’ Growth and Helps With Audits
Cannabis professionals are aware of the regulatory scrutiny the industry is under and many have turned to automation technology to help stand up to this scrutiny, as well as collect and manage all the data necessary for compliance. Automating data collection pays off in several ways. For one, interconnected, real-time IoT technologies that are accessible to the entire facility 24/7 are giving cannabis businesses the tools they need to create the best possible products now, as well as providing them with the data they need to make their products even better. Since frequent audits are a part of the legalization transition, automation also makes preparing for audits and inspections a matter of minutes instead of days.
Ron Sigman, chief executive officer of marijuana compliance consulting firm Adherence Corp. and former investigator for the Marijuana Enforcement Division (MED) in Colorado, lists the most common violations for cannabis businesses that he found during more than 200 audits in an interview for Marijuana Business Daily. These violations include:
Metrc issues, especially accounting not matching inventory (too many plants or ounces of marijuana on the premises);
Security issues like lack of sufficient camera coverage;
Failure to upgrade licenses;
Improper or incomplete training of new employees.
Adopting safety and traceability concepts that the food industry developed over many decades can yield huge benefits for cannabis businessesA proper cannabis traceability technology mitigates these problems by providing notifications of inventory inconsistencies, certification expirations and more. Traceability for cannabis must be able to handle the complexities of procedures like terpene extraction and injection. With the rapid growth of the industry, it must be able to set targets and track actuals. It should track, not just cannabis plants and related derivatives, but also every other ingredient, material and packaging material used during production. There must be monitoring at each stage of production and a system in place to ensure all employee training is up to date. Preventative maintenance must be scheduled and tracked and hazards must be identified and controlled. In the event of an audit or recall, precise mass-balance calculations must be available to account for every gram of product, including non-cannabis ingredients like coconut oil and packaging materials like pouches and labels.
Detailed traceability can make the difference between a cannabis business keeping their license or being shut down. “You have to make a diligent effort to stay compliant 365 days out of the year, because you never know when a regulatory agency is going to come knocking on your door,” says Sigman. Knowing exactly what went wrong when and where allows a company to make changes so failures don’t happen again.
Higher Standards Will Be Demanded
The standard sought by most in the cannabis industry is only GMP (Good Manufacturing Practice) certification, which is actually the lowest level of certification possible in food production. With the public demand for edibles and concentrates on the rise and major retailers scrambling for seats at the table, the demand for transparency from growers and manufacturers will increase. Cannabis companies will soon find that GMP compliance simply won’t be enough to earn trust and expand their market share, especially when it comes to edibles and concentrates.
“Every day, patients express interest and assurance of wanting to know that the foods and medicines they consume are safe and of the best quality available,” says Lindsay Jones, president of Curaleaf Florida, the first medical cannabis company in Florida to achieve SQF Certification. Safe Quality Food (SQF) certification ensures a company meets the highest levels of safety and quality on a reliable basis. Curaleaf has set a new bar in the industry that others will be compelled to follow and they should be congratulated for their proactive vision.
Adopting safety and traceability concepts that the food industry developed over many decades can yield huge benefits for cannabis businesses, but it will be interesting to watch the technology evolve to accommodate the specific needs of retailers and consumers. Imagine a traceability system that ensures safety and quality while also tracking consistency and potency.
The Future of Cannabis Is Bright
The emerging cannabis industry is facing challenging hurdles on its path to widespread legalization and acceptance but the forecast is sunny – for companies who are prepared.
According to a press release, the Steep Hill team announced they are expanding internationally in a big way on Monday. Steep Hill, a well-known cannabis lab-testing and research company with roots in California, announced plans for licensing agreements in Mexico, Germany, Spain, France, Italy, Switzerland and the United Kingdom.
Photo credit: Steep Hill- a petri dish of mold growth from tested cannabis
The Canadian branch of the company, Steep Hill Canada, will lead the expansion efforts into Mexico and the six European Union countries. According to Martin Shefsky, chief executive officer of Steep Hill Worldwide, they are actively looking for other operating partners in new areas as well. “I’m extremely pleased at the opportunity to partner with Steep Hill to bring safe cannabis and scientific integrity to emerging international markets,” says Shefsky. “I anticipate that before long, full legalization will be implemented throughout the European Union and our presence will enable growers, producers, processors, and retailers – to offer standardized tested cannabis for patients and consumers across the European Union, while also enabling us to create a platform to share scientific and technology developments throughout the global cannabis market.”
In 2016, Steep Hill announced new licensing agreements to expand into Washington D.C. and Pennsylvania. In August of 2017, they expanded to Hawaii and several months later announced their expansion into Oregon. “It is an exciting time for us and our investors, as we pursue this first-mover advantage in anticipation of new global cannabis import-export markets,” says Jmîchaeĺe Keller, chief executive officer and chairman of the board of Steep Hill, Inc.
“In unregulated markets, we want to be on the ground supporting the legalization and regulatory process, helping regulators avoid making the mistakes that other jurisdictions have made in the past,” Keller says. “We believe that our role as the industry standard, allows us to leverage our world-class scientific knowledge and state of the art technology to help regulators provide confidence in the marketplace that the cannabis patients consume, is both safe and effective. We look forward to collaborating closely with Martin and his group to strive for this gold standard, across all international borders.”
Last month, the Cannabis Control Commission, the regulatory body overseeing Massachusetts’ newest industry, finalized their regulations for the market. At the beginning of this month, the state began accepting applications for business licenses. Now with the full implementation of adult-use sales on the horizon, businesses, regulators, consumers and local governments are preparing themselves for the legalization of adult-use cannabis. Sales are expected to begin June 1st.
On March 29th, the Cannabis Control Commission announced their finalized rules were filed, published and took effect. Leading up to the filing, the Commission reports they held 10 listening sessions, received roughly 500 public comments and conducted 7 hearings for roughly 150 policy decisions. The license categories that businesses can apply for include cultivator, craft marijuana cooperative, microbusiness, product manufacturer, independent testing laboratory, storefront retailer, third-party transporter, existing licensee transporter, and research facility, according to the press release.
What separates Massachusetts’ rules from other states’ rules are a few of the license categories as well as environmental regulations, as Kris Kane highlights in this Forbes article. Experimental policies, like the microbusiness and craft marijuana co-op licenses, Kane says, are some tactics the Commission hopes may help those affected by the drug war and those who don’t have the capital and funding required for the larger license types.This is a groundbreaking reform previously unseen in states that have legalized cannabis.
The Commission will also establish a Social Equity Program, as outlined in the final rules (section 17 of 500.105). That program is designed to help those who have been arrested of a cannabis-related crime previously or lived in a neighborhood adversely affected by the drug war. “The committee makes specific recommendations as to the use of community reinvestment funds in the areas of programming, restorative justice, jail diversion, workforce development, industry-specific technical assistance, and mentoring services, in areas of disproportionate impact,” reads one excerpt from the rules (section 500.002) identifying the need for a Citizen Review Committee, which advises on the implementation of that Social Equity Program.
This is a groundbreaking reform previously unseen in states that have legalized cannabis. Massachusetts may very well be the first state to actively help victims of the prohibition of cannabis.Some municipalities are hesitant and skeptical, while others are fully embracing the new industry with open arms.
For environmental rules, Kane notes the Commission is taking unprecedented steps to address energy usage in the cultivation process, pushing the industry to think about environmental sustainability in their bottom line and as part of their routine regulatory compliance. He says the Commission mandates a 36 watts-per-square-foot maximum for indoor cannabis cultivators.
On Monday, April 2nd the state began accepting applications for businesses seeking licensure. Within a few days, nearly 200 businesses have applied. That number is expected to grow significantly over the next few weeks.
While businesses continue applying for licenses, local governments are preparing in their own way. Some municipalities are hesitant and skeptical, while others are fully embracing the new industry with open arms.
A couple weeks ago, the City Council of Springfield, Massachusetts passed a six-month moratorium on cannabis sales, citing the need for more time to draft local regulations for businesses first. “I believe the moratorium is in place to make sure that we get it right the first time,” Councilor Adam Gomez, chairman of the council’s Economic Development Committee told MassLive. “We don’t have a chance to get it right the second time. The residents of Springfield supported this.” There are also talks of a potential temporary ban in Truro, MA.
Meanwhile in the city of Attleboro, ABC6 News reports Mayor Paul Heroux is “working to make his city marijuana friendly as city councilors work to draft regulation ordinances.” In Peabody, two businesses just received approval to begin operating as medical dispensaries.
HACCP is a food safety program developed in the 1960s for the food manufacturing industry, mandated for meat, seafood and juice and adopted by foodservice for the safe serving of meals at restaurants. With state requirements for the safe production of cannabis-infused products, namely edibles, facilities may be inspected against HACCP principles. The cannabis industry and state inspectors recognize the need for safe edible manufacture. Lessons can be learned from the food industry, which has advanced beyond HACCP plans to food safety plans, starting with procurement and including the shipment of finished product to customers.
In my work with the food industry, I write HACCP and food safety plans and deliver training on food safety. In Part 1 of this series, I wrote about the identification of hazards, which is the first step in HACCP plan development. Before we continue with the next HACCP step, I will discuss Good Manufacturing Practices (GMPs). GMPs are the foundation on which HACCP is built. In other words, without GMPs in place, the facility will not have a successful HACCP program. GMPs are required in the food, dietary supplement and pharmaceutical industries, all under the enforcement of the federal Food and Drug Administration (FDA). Without federal regulation for cannabis edible manufacture, there may not be state-mandated requirements for GMPs. Let me warn you that any food safety program will not succeed without proper control of GMPs.
GMPs cover all of your programs and procedures to support food safety without having a direct, instant control. For example, when brownies are baked as edibles, food safety is controlled by the time and temperature of baking. A written recipe and baking procedure are followed for the edible. The time and temperature can be recorded to provide documentation of proper baking. In the food industry, this is called a process preventative control, which is critical to food safety and is part of a HACCP plan. Failure of proper time and temperature of baking not only leads to an unacceptable product in terms of quality, but results in an unsafe product that should not be sold.
Back to GMPs. Now think of everything that was done up to the steps of mixing and baking. Let’s start with personnel. Facilities for edibles have hiring practices. Once an employee is hired, the employee is trained, and training will include food safety procedures. When working at the job after training, the employee measuring ingredients will demonstrate proper grooming and hand washing. Clean aprons, hairnets, beard nets and gloves will be provided by the facility and worn by the employee. The same goes for the employee that bakes and the employee that packages the edible. One category of GMPs is Personnel.
Edibles facilities are not foodservice; they are manufacturing. A second GMP category is cleaning and sanitizing. Food safety is controlled through proper cleaning and sanitizing of food contact surfaces (FCS). The edible facility will have in place the frequency and methods for cleaning all parts of the facility- outside, offices, restrooms, break room and others. GMPs cover the general cleaning procedures and procedures for cleaning receiving, storage; what we would consider processing to include weighing, process steps and packaging; finished product storage and shipping. Management of the facility decides the methods and frequency of cleaning and sanitizing with greater care given to processing. Without proper cleaning and sanitizing, a facility cannot achieve food safety.
I could go on and on about GMPs. Other GMPs include water safety, integrity of the buildings, pest control program, procurement, sewage disposal and waste disposal. Let’s transition back to HACCP. In Part 1 of this series, I explained identification of hazards. Hazards are one of three types: biological, chemical and physical.
At this point, I am not surprised if you are overwhelmed. After reading Part 1 of this series, did you form a food safety team? At each edibles facility, there should be at least one employee who is trained externally in food safety to the standard that foodservice meets. Classes are offered locally and frequently. When the facility is ready, the next step of training is a HACCP workshop for the food industry, not foodservice. Edibles facilities are not foodservice; they are manufacturing. Many colleges and associations provide HACCP training. Finally, at the least, one employee should attend a workshop for Preventive Controls Qualified Individual.
To institute proper GMPs, go to ConnectFood.com for a GMP checklist. Did you draw up a flow diagram after reading Part 1? With a flow diagram that starts at Receiving and ends at Shipping, the software at ConnectFood.com takes you through the writing steps of a HACCP or food safety plan. There are many resources out there for GMPs, so it can get overwhelming. ConnectFood.com is my favorite resource.
The next step in HACCP development after identification of hazards is to identify the exact step where the hazard will be controlled. Strictly speaking, HACCP only covers process preventive controls, which typically start with a weigh step and end with a packaging step. A facility may also have a step where temperature must be controlled for food safety, e.g. cooling. In HACCP, there are commonly two process preventive controls:
Biological hazard of Salmonella and Escherichia coli: the heat step
Physical hazard of metal: metal detector
Strictly speaking, HACCP does not include cleaning, sanitizing and supplier approval for procurement of ingredients and packaging. I hope you see that HACCP is not enough. There have been hundreds of recalls and outbreaks due to problems in non-processing steps. The FDA requires food manufactures to go beyond HACCP and follow a written food safety plan, which includes hazards controlled at these steps:
Biological hazard of Listeria monocytogenes: cleaning and sanitizing of the processing environment and equipment
Physical hazards coming in with ingredients: supplier approval
Physical hazard of glass and hard plastic: Here I am thinking of glass breaking or plastic pieces flying off buckets. This is an internal hazard and is controlled by following written procedures. The written document is a Standard Operating Procedure (SOP).
Chemical hazard of pesticides: supplier approval
Chemical hazard of mycotoxins: supplier approval
Chemical hazard of allergens: supplier approval, label check at Receiving and product labeling step
Does a cannabis edible facility honestly not care or not control for pesticides in ingredients because this is not part of HACCP? No. There are two ways for procurement of ingredients in which pesticides are controlled. Either the cannabis cultivation is controlled as part of the samebusiness or the facility works with a supplier to confirm the ingredient meets pesticide tolerances. Strictly speaking, this control is not part of HACCP. For this and many other reasons, HACCP is a good place to start the control of food safety when built on a solid foundation of GMPs. In the same way the food industry is required to go beyond HACCP with a food safety plan, the cannabis industry must go beyond HACCP.
My thoughts will be shared in a webinar on May 2nd hosted by CIJ and NEHA. I encourage you to listen in to continue this discussion.Please comment on this blog post below. I love feedback!
California’s regulated adult use cannabis market has been up and running for around four months now and rumors of a potential supply bottleneck on the horizon are beginning to circulate. There are a number of factors that could have an impact on the cannabis supply in the market, most of which stem from changes in the distribution channels now that the state is implementing new regulations.
Those include a slow rollout in licensing cannabis businesses, new testing requirements, the supply carryover period prior to January 1stas well as new labeling and packaging regulations. In this piece, we are going to examine some of those rumors, see if there might be some truth to them and provide some guidance for what businesses can do to prepare for this.
A Slow Start to Licensing
This one is perhaps the most obvious factor to impact the supply chain in California. Much of the delays in licensing cannabis businesses came from the issue of local control, where businesses needed to get approval from their municipality before getting a state license. In the first month of the new market, it took Los Angeles weeks longer than other counties to begin licensing dispensaries. Whereas San Diego retailers saw a massive influx of customers right away, forcing them to buy up product to meet the high demand. Smaller producers also had trouble getting licenses as quickly as some of the larger ones.
Basically it all boils down to a slow start for the new market, according to Diane Czarkowski, co-founder of Canna Advisors. “The state is requiring businesses to get their local licenses before they can get their state license and that will create a delay in operators being able to bring products to market,” says Czarkowski. She says this is pretty typical of new markets, or when a market experiences dramatic changes quickly. “It could be a brand-new market, like in Hawaii, where the operators were ready with product, but there were no labs to test the products, which caused delays.” In addition to the licensing roll out being slow to start, the temporary licenses initially awarded to businesses are set to expire soon, by the end of April.
Stricter Rules to Come
The same logic goes for the testing regulations. New testing and labeling requirements, according to the Bureau of Cannabis Control regulating the market, will be phased in throughout 2018.
California’s plan for phasing in testing requirements.
The state has already phased in cannabinoids, moisture content, residual solvent, pesticide, microbial impurities and homogeneity testing to some extent. On July 1st, the state will add additional residual solvent and pesticide testing as well as foreign material testing. At the end of 2018, they plan on requiring terpenoids, mycotoxins, heavy metals and water activity testing. All of those tests cost money and all of those tests could impact suppliers’ ability to bring product to market. “Oftentimes regulations require different types of testing to be done to products without recognizing that adequately completing those tests requires different methods, equipment, and standards,” says Czarkowski. “Most labs do not have all of the necessary components, and they are very costly. Producers could wait weeks to get test results back before they know if they can sell their products.”
Back when we spoke with Josh Drayton, deputy director of the California Cannabis Industry Association, about the upcoming changes to the California market, he voiced his concerns with the coming testing rules. “A lot of testing labs are concerned they are unable to test at the state’s threshold for some of these contaminants and pesticides; the detection limits seem very low,” says Drayton. “The testing portion will take years to work out, I am sure we will remove and add different pesticides and contaminants to the list.” California’s testing industry is, however, capable of adapting to changing rules, as they’ve done in the past on more than one occasion. It should be noted that many labs in the state are on the cutting edge of testing cannabis, working with The Bureau to implement the new rules.
Roy Bingham, CEO of BDS Analytics
Cannabis products made prior to December 31st, 2017, did not need to comply with the stricter testing rules that are coming in the next few months. This carryover period allowed dispensaries to have products on the shelves when the new market launched in the beginning of 2018. Retailers knew this rule meant they needed to stockpile product in the event of a supply bottleneck, and it appears much of that product is now sold and running out, according to Roy Bingham, founder and chief executive officer of BDS Analytics. “The true impact of licenses is starting to be felt since the carryover from December buying prior to the licensed market has been sold,” says Bingham. “Some of the major brands have consciously not applied for licenses. Some of that has to do with the flexibility the government has given them to wait.”
A fourth reason for a potential bottleneck could also come from packaging and labeling rules. “There will have to be many modifications to products to ensure they follow the new potency regulations, and many formulations will have to be modified in order to meet new regulations,” says Czarkowski. Distributor licenses, according to The Bureau, have a number of compliance documentation requirements, such as arranging for all product testing, quality assurance and packaging and label accuracy. Everything has to be packaged before it gets to a dispensary, which is a new rule California businesses need to comply with.
Pricing is the Indicator
There are a handful of reasons why prices could increase; some of them are more defined than others, the biggest factor being the tax burden passed on to consumers, where reports showed up to a 40% increase from last year. A price increase in the future could also come from The Bureau implementing testing regulations throughout 2018, as mentioned previously.
If prices were to surge enormously and very quickly, that might be an indicator that a shortage is fast approaching. A dramatic increase in price over this year could squeeze margins for smaller producers, forcing retailers to pass that burden on to consumers as well.“So yes, the rumors are true.”
According to Roy Bingham, there has been a significant increase in pricing in all categories at the retail level. “In January and February, we are seeing about 10% increases per month in average retail prices,” says Bingham. “If we look at concentrates in California during 2017, they averaged about $34 by the end of the year, whereas it was about $31 at the start of 2017. So in January, prices have increased up to $38, which is a bit above trend, but in fact we were seeing a trend upwards before January 1st as well.” Comparing that with edibles pricing, Bingham says we see a clear jump at the start of 2018. “It was basically flat in 2017, averaging $14 roughly almost straight-line across, dipped in December, then in January it jumped to $17 and then to $18 in February, a big increase and significantly more than concentrates,” says Bingham. He also says flower was hovering around $9 per gram in December 2017, but surged above $10 in February 2018.
According to Cannabis Benchmarks, the California wholesale averages surged in the summer of 2017 up to $1,631 by September, then reached their lowest point in December, with their spot index at $1,368. The Cannabis Benchmarks report underlines some important reasons for the changes in pricing, but they also attribute it to the new licensing system.
“Increasing operating expenses for businesses preparing to enter California’s licensed system in 2018 were key to propping up supply side rates in the first six months of 2017. New compliance requirements were being instituted to varying degrees by local governments, while market participants warily eyed draft regulations from state officials for guidance as to how to prepare their sites and facilities to meet under-construction regulatory mandates.”
Their report highlights some very important aspects of the supply chain. “Again, it is likely that the increased costs faced by operators up and down the supply chain exert some upward pressure on wholesale rates, preventing them from steep year-over-year declines that were observed in some of the other major Western markets,” reads the Cannabis Benchmarks report.
So How Can Businesses Prepare?
Well to start, producers should make sure their operations and product are clean and safe. Making sure your product will pass a pesticide test should be top of mind. Dispensaries should also be wise in selecting their suppliers, performing supplier quality audits or some form of verification that they meet your standards is key in a consistent supply chain.
Dr. Jon Vaught, chief executive officer of Front Range Biosciences, believes tissue culture could be a viable solution for some California producers. Using tissue culture, as a form of propagation instead of mothers and clones can be cleaner, cheaper and more efficient, thus allowing growers to keep up with demand and prevent a shortage.
Dr. Jon Vaught, CEO of Front Range Biosciences
Dr. Vaught says growers could look to tissue culture as a means to “mitigate risk to their supply chain and mitigate the risk of potential loss and improve their ability to efficiently grow their plant.” Maintaining a disease-free, sterile environment is a huge advantage in the cannabis market. “The real use of tissue culture is to provide disease free, clean, certified material, that has gone through a QA program,” says Dr. Vaught. “In greenhouses, the ability to control your environment is also critical because your margin of error is high. Variations in sunlight, weather, humidity all of these things have an impact in your plants. Technology can help monitor this.”
We’ve covered the basics of tissue culture previously on CIJ, with Dr. Hope Jones chief science officer of C4 Laboratories. She echoes many of Dr. Vaught’s points, firmly believing that, having existed for decades, tissue culture is an effective propagation tool for advanced breeders or growers looking to scale up.It is a complex supply chain that requires systems thinking.
It is important to note they don’t think growers should try this at home. Work with professionals, get the necessary funding, the training and facilities required if this is a project that interest you. “There’s a pretty big barrier to entry there,” Dr. Vaught urges. “The ability to manage thousands or millions of plants in a greenhouse increases risk, whereas in the lab, you’ve got a safe, secure, sterile environment, reducing risk of disease, making things easier to manage. The producers most successful at large scale are controlling those variables to the T.”
Ultimately, one segment of the market can’t prevent a bottleneck. It is a complex supply chain that requires systems thinking. Regulators need to work with producers, manufacturers, retailers, distributors, patients, consumers and laboratories to keep an eye on the overall supply chain flow.
Diane Czarkowski says the California market should prepare for this now if they haven’t already. “We have seen supply issues in every market going through a change. Other potential bottlenecks will occur because former distribution channels will be required to change,” says Czarkowski. “So yes, the rumors are true.”
Earlier this week Capitol Analysis Group, a cannabis-testing laboratory based in Lacey, Washington, announced they are conducting a “data-driven Lab Transparency Project, an effort to improve accuracy of cannabis testing results in the state through transparency and a new third-party auditing process,” according to a press release. They plan to look through the state’s traceability data to find patterns of deviations and possible foul play.
The project launch comes after Straightline Analytics, a Washington cannabis industry data company, released a report indicating they found rampant laboratory shopping to be present in the state. Lab shopping is a less-than-ethical business practice where cannabis producers look for the lab that will give them the most favorable results, particularly with respect to higher potency figures and lower contamination fail rates.“Lab shopping shouldn’t exist, because it is a symptom of lab variability,”
According to the press release, their report “shows that businesses that pay for the highest number of lab tests achieve, on average, reported potency levels 2.71% higher than do those that pay for the lowest number of lab tests.” They also found labs that provide higher potency figures tend to have the largest market share.
The Lab Transparency Project logo
The goal of The Lab Transparency Project is to provide summaries of lab data across the state, shining a light in particular on which labs provide the highest potency results. “Lab shopping shouldn’t exist, because it is a symptom of lab variability,” says Jeff Doughty, president of Capitol Analysis. “We already have standards that should prevent variations in lab results and proficiency testing that shows that the labs are capable of doing the testing.” The other piece to this project is independent third party auditing, where they hope other labs will collaborate in the name of transparency and honesty. “Problems arise when the auditors aren’t looking,” says Doughty. “Therefore, we’re creating the Lab Transparency Project to contribute to honesty and transparency in the testing industry.”
Dr. Jim McRae, founder of Straightline Analytics, and the author of that inflammatory report, has been a vocal critic of the Washington cannabis testing industry for years now. “I applaud Capitol Analysis for committing to this effort,” says McRae. “With the state’s new traceability system up and running following a 4-month breakdown, the time for openness and transparency is now.” Dr. McRae will be contributing to the summaries of lab data as part of the project.
According to Doughty, the project is designed to be a largely collaborative effort with other labs, dedicated to improving lab standards and transparency in the industry.
This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
Strictly Necessary Cookies
Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.
We use tracking pixels that set your arrival time at our website, this is used as part of our anti-spam and security measures. Disabling this tracking pixel would disable some of our security measures, and is therefore considered necessary for the safe operation of the website. This tracking pixel is cleared from your system when you delete files in your history.
We also use cookies to store your preferences regarding the setting of 3rd Party Cookies.
If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.
