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extraction equipment

Starting a Cannabis Extraction Lab? Here Are Some Key Considerations

By Martha Hernández
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extraction equipment

Cannabis sativa contains over 500 different bioactive compounds that can be separated through an extraction process. This is carried out in an extraction lab and the end result is the production of cannabis extracts with a high concentration of specific cannabinoids (such as THC or CBD) with up to 99% purity levels. Cannabis can get easily contaminated with pesticides, heavy metals, residual solvents or other contaminants and thereby pose a risk to the health and safety of consumers. In-house testing allows manufacturers to ensure that the cannabis products they put out to the market are not only potent but also are free of all sorts of contaminants.

The cannabis extraction market worldwide was valued at $9.7 billion in 2020. According to data from Grandview Research, the market size is expected to hit $23.7 billion by 2027, growing at a CAGR of 16.6%. While setting up a cannabis extraction facility can be cost-intensive at the start, the running costs are minimal, making this a profitable venture in the long run. However, you will need to consider these 7 important factors.

1. Location

7 Important Factors to Consider When Setting Up a Cannabis Extraction Facility
A schematic representation of the 7 important factors to consider when setting up a cannabis extraction facility (Figure courtesy of CloudLIMS)

Cannabis is a highly regulated industry, regardless of the country. In the U.S, it is illegal at the federal level, and therefore there’s a need for judicious selection of location to avoid run-ins with the federal government. If you are in the U.S, you will need to check the specific laws in your state. These rules dictate how close an extraction facility can be to a daycare facility, children’s park, school, residential areas, etc. The rules may also spell out how many cannabis facilities can be located in one area and how close to each other they can be. At the end of the day, you also want to ensure that the location that you settle for is readily accessible, secure and close to resources.

2. Regulatory Compliance

A cannabis extraction facility needs to meet regulations that apply to the manufacturing and production of consumable goods to ensure that the safety of workers and end consumers is guaranteed. Here are a few that are of priority:

current Good Manufacturing Practices (cGMP): The CGMP is a regulatory standard enforced by the FDA. It defines the creation, implementation and monitoring of manufacturing processes to meet the quality and safety threshold. It requires manufacturers to use technology and have systems in place to ensure product safety and effectiveness. Cannabis extraction facilities should be GMP certified for operational standardization and for performing transnational business.

National Fire Protection Association (NFPA): Extraction labs use flammable materials which can easily trigger fires. NFPA, which is a non-profit organization, has created standards and codes to minimize injuries, death, and economic losses attributable to fire accidents. The standard describes how labs should be set up and how flammable liquids should be stored and transported to prevent accidental fires.

Local Fire Codes: These are a set of codes/requirements that must be adhered to in all commercial and industrial buildings to prevent fires. They include the availability and proper use of the following:

  • Fire extinguishers
  • Extension cords
  • Smoke detectors
  • Fire exits
  • Fire signage
  • Fire assembly points
  • Sprinkler heads and pipes
  • Fire alarms

Here are some important fire codes that should be followed in a cannabis extraction facility:

  • NFPA 1: The Fire Code Handbook
  • NFPA 30: The National Code for Flammable and Combustible Liquids
  • NFPA 45: Fire Protection for Labs Using Chemicals
  • NFPA 70: The National Electrical Code
  • NFPA 58: The Liquid Petroleum Gas Code

Occupational Standards for Health and Safety (OSHA): Cannabis extraction facilities are compelled by federal law to comply with OSHA requirements for occupational health and safety, and specifically regarding biological and chemical compounds that lab staff may come into contact with during their work. OSHA standard 29CFR1910.1200 requires labs to have a written hazard safety standard for all chemicals, and the standard should be accessible to all employees at all times. Labs are required to have an inventory of all hazardous chemicals with associated details recorded in a Safety Data Sheet (SDS).

3. Staff Management

Lab staff need to train on all hazards in the facility and be given first aid measures in case of an accident. The staff will need to sign that they have received training on the same.

4. Waste Management

Cannabis waste in an extraction facility includes plant trimmings, leftover extraction chemicals, disposed of samples and other debris left behind. Waste needs to be segregated according to hazardous or non-hazardous categories and disposed of accordingly. The lab needs to put measures in place for proper waste segregation so that the waste does not get mixed.

5. Worker Safety

Worker safety in an extraction facility is of paramount importance and should be based on the kinds of risks that each staff gets exposed to in the line of duty. This makes it necessary to have a Job Hazard Analysis (JHA) to assess hazards and put measures in place to avert accidents and injuries.

Laboratory Software for CBD/THC laboratories
A laboratory software for CBD/THC laboratories to schedule staff training and manage staff competency (Figure courtesy of CloudLIMS)

6. Equipment Selection and Management

Cannabis extraction equipment can cost anywhere between $5,000 to $100,000, depending on the type and scale of extraction. When choosing the equipment, you need to factor in the cost efficiency, output, and the final product. All equipment used in an extraction lab should be Underwriters Laboratories Listed (UL-Listed). The equipment also needs to undergo regular maintenance to ensure maximum efficiency and productivity, and to prevent accidents and minimize wear and tear. National Recognized Testing Laboratory (NRTL) certification is necessary to achieve this.

7. Supply Chain Management

Supply chain management refers to the strict monitoring of the entire workflow to ensure effectiveness, eliminate wastage, and boost productivity and profitability. This means tracking raw materials from the time they are received by the extraction facility to when they are released as cannabis extracts. A Laboratory Information Management System (LIMS) comes in handy to support supply chain management in an extraction facility.

Role of a LIMS in Setting Up a Cannabis Extraction Facility

A laboratory software for CBD/THC laboratories, also known as a Laboratory Information Management System (LIMS), helps automate workflows, and thereby improve efficiency and productivity in an extraction facility. A laboratory software for CBD/THC laboratories streamlines in-house testing processes and guarantees that the final extracts produced are potent and free of impurities. A LIMS also comes in handy in managing Standard Operating Procedures (SOPs) and human resources, tracking samples and lab inventory, scheduling equipment calibration and maintenance, and ensuring compliance with the necessary regulations.

When setting up a cannabis extraction facility, sufficient time needs to be allocated to the planning to ensure all-important considerations are in place. This starts with finding an ideal and compliant location, ensuring regulatory compliance, ensuring worker safety, efficiently managing staff, inventory, and waste, and the careful selection of equipment. A laboratory software for CBD/THC laboratories ties these factors together to ensure a smooth workflow and maximum productivity of the facility.

One Month In: New Jersey Market Starts Growing

By Cannabis Industry Journal Staff
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Just over a month ago, a handful of dispensaries in New Jersey began selling cannabis to adults over the age of 21. The state issued licenses for adult use sales to seven alternative treatment centers (ATCs), otherwise known as medical cannabis businesses already established in the state. In total, thirteen dispensaries in the state started selling cannabis to adults over 21.

The seven companies awarded adult use licenses were Ascend, Curaleaf, GTI, Acreage, Verano, Columbia Care and TerrAscend. The state’s roll out created a lot of controversy over allowing already established, larger medical cannabis businesses and multi state operators to begin adult use sales before smaller businesses and social equity applicants get licensed.

Sales totals in the first month of New Jersey’s adult use market

Earlier this week, the New Jersey Cannabis Regulatory Commission (CRC) held a public meeting where regulators discussed progress, sales totals so far, conditional license applications and more. According to the meeting notes, between April 21 and May 21, retailers in New Jersey did $24,201,875 in cannabis sales with 212,433 transactions. During the meeting, regulators considered 46 conditional license applications and four testing lab license applications.

According to NJ.com, six new dispensaries were awarded licenses to begin adult use sales. Of the six new retail locations, Curaleaf opened their Edgewater location to adult use customers and Ayr Wellness received approval to begin adult use sales at all three of their medical locations in Eatontown, Union and Woodbridge. Ascend and TerrAscend also received approval to begin adult use sales act their locations in Montclair and Lodi, respectively.

About two weeks ago, the CRC testified before the state’s Senate Judiciary Meeting to share progress on the legal cannabis market, just over a year after the CRC was established. Jeff Brown, executive director of the CRC, discussed the agency’s goals and some challenges ahead of them. Brown says the CRC will be focusing on additional rules for adult use, modernizing the medical rules, enforcing regulatory compliance and information sharing in the near future. He also mentioned a couple challenges the industry is currently facing that they wish to address, including: expanding access to capital for entrepreneurs , removing impediments to finding real estate, educating municipalities to open up opportunities for applicants and ensuring medicinal cannabis access is unimpeded by recreational sales.

“We have made great strides in all of these efforts, and when we look at how New Jersey compares against other states, we fair pretty well,” Brown told lawmakers. “Beginning recreational sales on 4/21/22 was an important milestone. But it doesn’t mark the end of the process, it marks an important step in a multi-year effort to establish New Jersey as the premier cannabis market on the East Coast.”

Thinking of Starting a Cannabis Delivery or Transport Business? Here’s What You Need to Know

Ask any cannabis connoisseur, and theyll likely tell you that cannabis delivery services have been around for a long, long time. Given the distancing requirements of the COVID years, the increasing number of medical cannabis patients who need or would like cannabis delivered to their door and the surge in recreational adult use sales, cannabis delivery is coming out of the shadows and into the legal cannabis industry.

Proponents of cannabis delivery say that creating a legal structure and guidelines that allow cannabis home delivery encourages people to buy from legal sources rather than the legacy market. In some cases, its a way to entice legacy cannabis delivery operators to transition to the licensed and regulated market. While many states remain hesitant to allow adult use cannabis delivery, some do, and others have taken the first step, allowing delivery to registered medical cannabis patients and caregivers.

Where is Cannabis Delivery Legal?

According to Cannabis Business Times, states that permit medical cannabis delivery as part of another license type, retail, for example, or with a specific delivery license include: Arizona, Arkansas, California, Colorado, Maine, Maryland, Massachusetts, Michigan, Nevada, New Mexico, New York, Oregon, Rhode Island and Vermont. Complex reports that delivery service is legally available without any restrictions to anyone 21 years or older in California, Nevada and Oregon.

Medical or adult use, there are restrictions on where cannabis can be delivered, even within states that allow it. For instance, you cant legally deliver cannabis to college or university campuses. Although many people still discreetly deliver and receive cannabis products on campuses, its illegal to do so since cannabis is a federally controlled substance and higher education institutions that receive federal funding must prohibit its use and distribution.

It’s noteworthy that some states without legal cannabis delivery regulations have a loophole” through which some delivery businesses operate. Gifting, for example, is an established, though not entirely legal, delivery practice. According to NJ.com, New Jersey falls into the gifting loophole category:

Licenses to sell legal weed are still months away, but theres a handful of entrepreneurs coming into the scene through a possible legal loophole — “gifting” cannabis. Its a scheme popular in other states and particularly in Washington, D.C. A company lets you buy cookies, snacks or brownies that come with sticker shock of $50 or more. But when they make the delivery, it comes with a suggested gift: maybe a cannabis edible or an ounce of flower.

 Although many underground businesses thrive in the Garden States in-between” market, NJ.com also reports that gray market operators have faced legal penalties and even jail time.

Why Are Cannabis Delivery Services Popular? 

Cannabis delivery services have a rich cultural history in the underground market. Rather than making a transaction in public, home delivery provides a more intimate and secure way of selling cannabis to consumers. 

Cannabis delivery has skyrocketed in popularity due to the COVID-19 crisis. MJBizDaily reports that online cannabis orders boomed during the pandemic, increasing the need for cannabis delivery services. 

Historically, cannabis delivery services also help registered medical cannabis patients receive access to their medicine since their disability or chronic condition might prevent them from leaving the house and visiting a dispensary. This can be especially true for seniors, even if they arent a registered patient, but live in a state with adult use cannabis.

Whats the Difference Between Cannabis Delivery and Transport Licenses?

There is real confusion surrounding the differences between delivery and transport licenses.  Basically, delivery licenses are B2C (business to consumer), and transport licenses are B2B (business to business).

Cannabis delivery and courier licenses allow licensees to deliver cannabis products directly to patients, caregivers, and in some states, consumers. While the name of the license differs depending on the state in which you seek to operate, delivery licenses tend to allow operators to act as a retailer without a traditional bricks and mortar location. Delivery licensees purchase and store wholesale cannabis products and sell them via the delivery model. Couriers, however, are traditionally hired by retailers as their delivery arm. In this model, the retailer takes the order, and the courier delivers, like Door Dash or Uber Eats. One key difference between a delivery and courier license is the significantly lower cost of entry for couriers as they dont have facility, inventory, or storage costs, and generally have lower operational expenses.

But what about transport licensees? Rather than delivering to individuals, transport licensees typically deliver cannabis products between licensed cannabis facilities, such as a cultivator or manufacturer to a retail dispensary or testing facility.

In Massachusetts, there are three delivery and transport licenses (courier, delivery operator, and transporter) as well as a delivery endorsement that allows certain licensees to deliver directly from a licensed establishment to consumers.

The first step to operate a cannabis delivery or transport business is determining whether you want to deliver for retail establishments, buy product and deliver directly or transport cannabis between licensed cannabis businesses. Each model has its plusses and minuses, just depends on what you want. Its important to note that Massachusetts delivery operator licenses are currently reserved for social equity participants, as reported in the Milford Daily News:

The new “marijuana delivery operator” licenses…will be available exclusively to participants in the CCC’s social equity program and economic empowerment applicants for the first three years.”

Once you decide which type of license you want, the next steps are first to familiarize yourself with your states cannabis rules and regulations, and then to complete and submit a license application.

How to Apply for a Cannabis Delivery or Transport License

While the delivery and transport license application process looks different in each state that allows them, all states require applicants to be 21 years of age or older and most require operators to be current residents of the state where they intend to operate. There are also required, non-refundable application and licensing fees. While these fees are not insignificant, the good news is that they tend to be lower than the fees required for other cannabis business license applications.

Since compliance with state rules and regulations is a condition of licensure, licenses are awarded to some or all applicants that meet the application and regulatory requirements. Once awarded, cannabis delivery and transport licensees must maintain compliance or risk hefty fines and/or face a temporary or permanent shut down. One regulatory example is that delivery operators must digitally verify any and every customers photo ID before and when a cannabis product is delivered to a recipient; missing this critical step can put your businesses at serious risk of legal and financial consequences.

How to Maintain Compliance Once Youre Licensed

Maintaining compliance for any cannabis business can be challenging. There are strict guidelines on marketing and advertising, security, employee training, inventory management and more. Additionally, there are restrictions specific to cannabis delivery services, particularly limits on how much product can be delivered per order/transaction.

What does cannabis compliance specifically look like for cannabis delivery licensees? For one, all merchants must verify ID before an order is fulfilled. In states with medical cannabis, this would require medical card ID verification. Otherwise, for adult use markets, a drivers license or other state-issued photo ID with a valid birthdate is acceptable. Some states require recipients to sign a manifest or receipt acknowledging that they accepted the cannabis order and for the licensee to maintain a record of that acknowledgement for a specified number of years.

There are many other regulations that delivery operators must adhere to and many ways to stay up to date and compliant. Tasking a staff member to handle all things compliance is one option. Another is hiring a compliance professional to set up and oversee a compliance operating system and/or partnering with a compliance software solution provider.

Cannabis delivery services can be very profitable. In comparison to other cannabis licenses, they dont require as much finance capital to get started. Once a license is obtained, your priority will turn to maintaining compliance. Too many delivery services exist in a precariously legal gray area; dont let yours be one of them.

The Do’s and Don’ts of Cannabis Labeling

By Jon Bernard
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As more states legalize the use of cannabis for both medicinal and adult use, the market is growing exponentially. For growers and dispensaries, that means bringing their ‘A’ game when it comes to marketing their cannabis products – and that includes labels.

Not only do your cannabis labels need to be compliant with regulations, but you also need to make sure they stand out from the competitors. However, while creating a label seems like it should be easy, it can be a challenge to navigate the complex and murky legal landscape.

But don’t worry, we’ve got your back! Let’s take a look at the key federal regulations you need to be aware of, what NOT to put on cannabis labels and expert advice to help you find the perfect label material for your brand. Let’s get started.

Cannabis Labeling Requirements: What You Need to Know 

As of now, cannabis has not been ruled legal in all 50 states. However, states where cannabis is legalized determine their own set of rules and guidelines. These legislative guidelines are constantly being updated and revised for the labeling and packaging of cannabis products, so staying compliant can be challenging for dispensaries and manufacturers.

It’s important to follow general federal regulations for your product, such as the nutrition facts section (Image: TEKLYNX)

Since packaging laws vary by state, it’s important to follow general federal regulations for your product, as well as check your state for cannabis-specific label requirements.

At the very least, you should understand and follow cannabis labeling regulations in accordance with the Federal Food, Drug, and Cosmetics Act (FDCA). Let’s dive right into the basic elements that FDCA requires when labeling cannabis products.

  • Name and Location of Business: It is critical to always include the name and location of your business on both the inner and outer information panel. In doing so, customers always have a way to contact you for any questions. If you are worried about taking up too much space, a QR code is a great way to offer additional information.
  • Product Identity: Is your product meant to be used for adult or medicinal use? You must include what your cannabis product is or does on the Product Display Panel (PDP) so it’s easy for customers to locate.
  • Net Quantity of Contents: Net quantity refers to the total weight or volume of a finished product (excluding packaging) and is federally mandated on labels. For packaged liquid cannabis products, net quantity should be labeled in fluid measure. Meanwhile, packaged solid, semi-solid and viscous cannabis products should be labeled in dry weight.
  • Warning Statements: Since cannabis is still listed as a Schedule 1 Controlled Substance, it’s recommended to include warning statements for the specific product types. For example, the warning statement should stay “for medical use only” for all medical cannabis products.
  • List of Ingredients: You must include a complete declaration of all ingredients in your cannabis product. This must be listed on the informational panel on the outer packaging. If there is no outer packaging, then it must be placed on the product package itself.
  • Disclosure of Critical Facts: In general, this includes critical information that customers would want to know when buying your product. This can include:
    • Suggested use for the product
    • Application instructions
    • Expiration date 

What NOT To Put On a Cannabis Label

Proper cannabis labeling can ensure you remain compliant with regulations and legal requirements. Without compliance, you won’t be able to sell your products and could lead to a hefty fine – and nobody wants that! Here are the things you should stay away from adding to your label:

Unapproved Health Claims: As of now, both federal law and state laws do not recognize cannabis as a dietary supplement or substance that can help prevent, cure or treat serious diseases. For that reason, your safest bet is to stay away from making any false health claims on labels and websites.

An example of a cannabis flower label in Oregon with all of the required information.

Obscured Fonts: Text and font issues can muddle the look of your cannabis label and land you into compliance issues. Most states require cannabis labels to have a font and text size that is prominent, clear and easy to read for information panels. Therefore, it is critical to find typography that showcases your brand while maintaining compliance with federal and state regulations.

Faulty Ingredient List: Cannabis labels must accurately include the types of compounds present, it’s percentage and dosage found in the product. Plus, it is required that all cannabis products include cannabinoid profiles and provide a list of any active ingredients.

Considerations for Labeling Materials

To cut through the noise in a highly competitive retail environment, it’s critical to carefully consider the label materials for your cannabis product. Here are some things to consider.

Label Material Choice: Polypropylene or Paper

Take into account what your cannabis product is (tincture, gummies, etc.) when choosing your label material. For example, if it’s a liquid cannabis product, your label can come into contact with the liquid itself, causing damage and risk the label falling off over time. For that reason, the polypropylene label would be the better choice because it’s waterproof, oil-resistant and offers more durability. On the other hand, if your cannabis product does not require a lot of protection and you are looking for a more affordable option, then paper labels would be the better option.

Coating Choice: Matte or Glossy

Choosing between matte or glossy finish depends on your preferred brand aesthetic. If you are looking to dazzle some customers and have a vibrant design on your cannabis label, then it’s best to choose a glossy finish because it holds the ink better. As a result, your label design will appear striking and crisp when printed! But, maybe that’s not the vibe of your cannabis brand so you’re looking for something more traditional. If so, a matte finish is a better choice because it absorbs some of the ink – producing that vintage, distressed look!

Final Thoughts

Your cannabis products deserve to stand out and shine in this booming market. But your product won’t even make it to the market if you are not following label requirements. Proper cannabis labeling ensures that the product is compliant, builds trust with your customers and boosts your credibility within the space. Since requirements are constantly evolving in this new industry, you must always triple-check with both federal and state regulations for the most up-to-date information in regards to cannabis product labeling. In doing so, you’ll be able to design an enticing package with proper labels that will earn heart eyes from consumers, while providing essential information about your product.