Affinity Bio Partners on Working with Zelira Therapeutics to Complete Enrolment for Diabetic Nerve Pain Drug Trial
It’s an exciting time in the medical cannabis community as Zelira, a global leader in the research, development and commercialization of clinically validated cannabinoid medicines, and Affinity Bio Partners, a leading, global clinical research organization, have completed enrollment for a diabetic nerve pain drug trial. The Institutional Review Board (IRB)-approved head-to-head trial read out is expected in Q1 of 2023. Two years in the making, the study’s clinical management, clinical trial site monitoring, subject recruitment, regulatory submissions and review and query of data have brought us to a pivotal point that could pave the way for how future clinical studies are conducted in the medical cannabis community. As someone who comes from traditional pharma and biotechnology industries, heading up a clinical study in the medical cannabis realm has been a significantly different, eye-opening and informative experience that reinforces the dire need for mainstream, medical cannabis education.
Difficulties of Enrolling Subjects in a Cannabinoid-Based Clinical Study
There are a number of reasons that enrolling a cannabinoid study is very challenging. One of the biggest challenges to overcome is creating educational clinical study material that will be approved by the Institutional Review Board while educating potential subjects who are interested in enrolling. In other words, one must fully understand the regulatory landscape that they’re operating in, and we all know cannabis is a tricky one, while still educating potential subjects.
When screening subjects, it is important to be able to thoroughly share facts regarding cannabinoids, terpenes and other ingredients utilized in the study material. Also, sharing information on the endocannabinoid system is important, and a must for subjects to understand. In addition, it is integral to share and contrast between the traditional pharmaceutical products versus the cannabinoid study drug. Meaning, most subjects understand and are familiar with pills and other treatments approved in the traditional FDA regulated pharmaceutical space. Therefore, you must ensure that you create a bridge between a study’s educational materials and the lack of mainstream education about cannabinoid-based therapies.
The Impact This Will Have on Future Cannabinoid-Based Clinical Studies
There is a lot of hope that by working on a study of this magnitude, that we will pave the way for many more companies to bravely enter the clinical trial space as it pertains to medical cannabis. Everything that is being performed in this Zelira clinical study is in accordance with all applicable laws and regulations. The team is utilizing an electronic patient reported outcomes and electronic data capture system to receive data directly from the clinical trial sites as they are seeing the patients. As more patients, groups, communities and organizations learn about this, we hope that other large players in the cannabis industry invest their money wisely and perform clinical studies on their formulated products. Companies are unable to make claims of product safety and efficacy legally without these clinical studies. As we approach 2023, it is time for us as an industry to begin forecasting future clinical studies that will help power the therapeutic benefits this plant has to offer in responsible, controlled settings.
By Brett Schuman, Jennifer Fisher, Jeremy Lateiner, Allyson McCain, Amy Arnelle, Whitney Williams No Comments
Five states voted on adult-use cannabis legalization. These results increase the number of states that have legalized cannabis for adult-use from 19 to 21. Similar ballot measures failed, however, in Arkansas, North Dakota and South Dakota. The continued expansion of legalized cannabis at the state level, combined with President Biden’s recent initiation of an administrative process to review expeditiously how cannabis is scheduled under federal law, is likely to increase pressure on Congress and the rest of the federal government to either decriminalize or legalize cannabis under federal law.
Here is a snapshot of the cannabis-related election results:
November 2022 Cannabis Referenda Results
Maryland
On November 8, 2022, Maryland voted to pass Maryland Question 4 (the Marijuana Legalization Amendment), by a margin of 65.5% to 34.5%. Maryland Question 4 amends the Maryland Constitution to add a new article, Article XX, which authorizes adults 21 years of age and older beginning in July 2023 to use and possess cannabis, and directs the Maryland legislature to pass laws for the use, distribution, regulation, and taxation of cannabis within the state.
Maryland legalized medical cannabis in 2014.
Interestingly, unlike most other ballot measures, Maryland Question 4 actually originated from the Maryland legislature. On April 1, 2022, the state legislature sent implementing legislation that was contingent upon the approval of the Marijuana Legalization Amendment to Governor Larry Hogan’s (R) desk. House Bill 837 (HB 837) was passed by the state House on February 25, 2022, by a vote of 92-37. The state Senate passed an amended version on March 31, 2022, by a vote of 30-15. The House concurred on April 1, with a vote of 89-41. Governor Hogan decided not to sign or veto the bill, allowing it to take effect upon approval of the amendment.
HB 837 temporarily expands decriminalization from January 1 to June 30, 2023. It decriminalizes the possession and use of up to 1.5 ounces of cannabis with a civil fine of up to $100. Before the passage of the Marijuana Legalization Amendment, the decriminalized amount was 10 grams. It also reduces the penalty for possession of more than 1.5 ounces but not exceeding 2.5 ounces to a civil fine of up to $250.
Beginning July 1, 2023, HB 837 legalizes the personal use and possession of up to 1.5 ounces or 12 grams of concentrated cannabis for individuals 21 years of age or older. It also legalizes the possession of up to two cannabis plants. It changes the criminal penalties for persons found possessing cannabis under the age of 21. The bill also automatically expunges convictions for conduct that is now legal, and individuals serving time for such offenses will be allowed to file for resentencing.
The bill also requires specific studies on the use of cannabis, the medical cannabis industry, and the adult-use cannabis industry. It also establishes the Cannabis Business Assistance Fund and the Cannabis Public Health Fund.
The Marijuana Legalization Amendment does not establish any licensing or regulatory framework for adult-use cannabis sales.
Missouri
On November 8, 2022, Missouri voters passed constitutional Amendment 3 by a margin of 53.1% to 46.9%, legalizing the purchase, possession, consumption, use, delivery, manufacture, and sale of cannabis for anyone over the age of 21. The law also imposes a 6% state tax on all cannabis sales and allows local governments to impose an additional tax of up to 3%. The law will go into effect December 7, 2022.
Missouri legalized medical cannabis in 2018.
Under Amendment 3, private residences may contain no more than twelve flowering plants at one time, and both the plants and any cannabis produced by such plants in excess of three ounces must be kept in a locked space and not be made available to the public. Individuals may obtain a license to cultivate up to six flowering plants, six non-flowering plants, and six clones.
In addition, those individuals currently serving a sentence for certain cannabis-related offenses are now able to submit a petition for release from incarceration and/or expungement of the offense, and those previously convicted of certain cannabis-related offenses may petition for expungement.
Arkansas, North Dakota & South Dakota
Voters in Arkansas, North Dakota and South Dakota rejected adult-use legalization efforts in their respective states. Each state’s ballot measure would have allowed adults to possess up to one ounce of cannabis. In addition, among other things, Arkansas’ Issue 4 would also have expanded the state’s medical cannabis program to permit licensed businesses to sell to cannabis to adults; and North Dakota’s Initiated Statutory Measure 2 would have required the establishment and implementation of a program for the production and sale of adult-use cannabis by October 1, 2023.
Medical cannabis remains legal in Arkansas, North Dakota and South Dakota. Although there has been a trend in a number of states where legalization of adult-use cannabis follows prior legalization of medical cannabis and the establishment of a medical cannabis program in the state, that trend does not appear to hold true in these “red” states. For example, after North Dakota voters passed a ballot measure to legalize medical cannabis in 2016, they have now rejected ballot measures that would have legalized adult-use cannabis in both 2018 and 2022. In South Dakota, voters passed a ballot measure to legalize adult-use cannabis in 2020, which was later invalidated by South Dakota courts in response to a challenge brought by Governor Kristi Noem. Two year later, voter interest dwindled and a similar measure failed.
A Look Ahead to 2023
Oklahoma
On the horizon for 2023 is a second chance for Oklahomans to decide on State Question 820, which would legalize adult-use cannabis for individuals 21 years of age and older after the Oklahoma Supreme Court denied a chance for voters to decide on the measure this November.
Oklahomans for Sensible Marijuana Laws (OSML) petitioned State Question 820 for the November ballot on July 5th, submitting nearly 164,000 signatures one month in advance of the August 1st deadline. Despite the Secretary of State Brian Bringman’s office advising OSML that the counting and verification process for signatures typically takes 2 to 3 weeks to complete, the office took nearly seven weeks to certify that 117,257 signatures were valid – well over the required minimum of 94,911 signatures. The severe delay caused OSML to miss the August 26th deadline for the measure to complete a 10-day protest period, finalize the measure, and print State Question 820 on the ballot. The Oklahoma Supreme Court ruled on September 21, 2022 that the measure would have to be postponed until a future election. “At this point in time, SQ820 is not in full compliance. There is still a possibility of rehearing in two of the protests, which prevents this Court from fully resolving those objections in compliance with [state law]. That, in turn, prevents the Secretary of State and the Governor from taking their final steps in compliance with [state law].” Nichols v. Ziriax 2022 OK 76, ¶14.
On October 18, 2022, Governor J. Kevin Stitt issued an Executive Proclamation declaring a special election to vote on State Question 820 – a proposal to legalize adult-use cannabis, which will take place on March 7, 2023.
With an adverse regulatory environment, labor shortages, supply chain disruptions and the always-present threat of property damage and product recalls, cannabis operators are fighting an uphill battle to stay viable in today’s environment.
According to Politico, more than 20 of the largest publicly-traded cannabis companies lost about $550 million on revenues of nearly $4.5 billion in the first half of 2022. High taxes and barriers to interstate commerce continue to challenge the industry as well, while lenders and investors are demanding more detailed proof of future profitability. Those pursuing new capital must show how they will grow financially and present their risk management strategy for insuring themselves against losses.
Higher costs for fertilizer, building materials, packaging and more, along with rising inflation are hurting the industry’s bottom line as well, but the industry is hesitant to raise prices.
These challenges are expected to continue in 2023. However, the industry’s fast pace of growth, myriad opportunities for product development and increased access to insurance capacity offers the cannabis industry every reason for optimism.
Prioritize risk strategies
Cannabis facilities face hazards from the very components and systems required to cultivate plants, including high intensity discharge lighting, chemical exposures and butane in oil extractions. As a condition of insuring a property, underwriters are inspecting the equipment used in production and fire suppression systems.
Property policies typically don’t cover out-buildings for cannabis growers located near a hurricane or wildfire zone, and more carriers are limiting or excluding coverage for losses from large-scale natural disasters. Even coverage for crop losses from catastrophic events is limited and often prohibitively expensive.
Cannabis companies are shoring up their risk strategies and analyzing policies to ensure they’re aware of any gaps in coverage and planning how to address them. This includes adding cyber insurance, as cyber also remains a significant loss-driver in the industry.
Beware of new risks
The cannabis industry is introducing products to the market at a breakneck pace, causing new challenges to emerge. New products — such as THC-infused beverages, sugar-free cannabis tarts and cannabinoid-containing baking staples— require additional research and development for extraction, packaging, storage and distribution. And many products require refrigeration and bottling, adding complexity to distribution.
The continued growth of the cannabis edibles and beverages market is also driving companies to create new formulas, products, and strengths. But this innovation does add risk. States issued dozens of recalls in 2022 for marijuana edibles, including mislabeling and mold and salmonella contamination. These incidents have attracted the attention of plaintiffs’ attorneys, who have filed suits on behalf of consumers claiming injury from these mislabeled or contaminated products.
Invest in your staff
Although the number of jobs in the cannabis industry grew 33% between 2021 and 2022, and the need for new workers shows no signs of slowing, cannabis companies are experiencing high turnover rates and a skilled labor shortage. This is forcing operators to spend additional time and money to attract and retain employees.
Personalized benefits programs offer a partial answer. Personalizing benefits to meet individual employee needs results in positive employee experiences, helping build a workplace that attracts and retains workers. Many companies are adding health insurance and offering 401(k) plans, raising wages and adopting other worker-friendly practices to attract and retain workers.
Cannabis companies with solid risk management plans and advisors to help ensure their insurance policies cover exposures, will be well-positioned to overcome industry challenges, grow, and succeed in 2023. Here are four considerations to help develop a tailored strategy that will protect your bottom line, support your workforce, and build resiliency next year.
Be transparent with your broker. Let your broker know what changes you’ve made to the business, so there are no surprises during renewal. Review exposures and insurance needs at least 90 days prior to policy renewal, so your broker can identify the best options.
Prepare for a product recall. The odds of experiencing a product recall are high. Your first line of defense is your internal policies and procedures, and that includes thoroughly vetting your vendors and partners. Be thoughtful about the general liability and product liability coverage you purchase and ask your broker to clearly explain the differences in coverage.
Build resiliency within your company. With more carriers offering specialty coverages for the cannabis industry, now is the time to look at how best to protect your executives and build resiliency by insuring against director and officer liability claims, business interruptions and cyberattacks. Your broker can help identify the best policies for your company.
Establish solid employee benefits. The cannabis industry can have access to the same benefits as other industries, including 401(k) plans. Talk to your broker about taking your benefits program to the next level with highly personalized options that won’t break your budget.
Even amidst the challenges, there is every reason for optimism in the new year because of the industry’s fast pace of growth, myriad opportunities for product development and increased access to insurance capacity.
Cannabis cultivators across the U.S. are confronting plummeting wholesale prices and tighter profit margins. Operators in Pennsylvania say flower prices have fallen from around $4,000 a pound to around $3,000, on average, and prices in the more mature markets of California, Oregon and Colorado have experienced extreme volatility. Prices in those states are averaging around $700 per pound but of course, that’s an average. There are whispers that prices are as low as $150, revealing how bad the situation really is.
Oversaturation of legal cannabis affects commercial growers everywhere. For example, when Oklahoma opened its free-wheeling medical cannabis program with unlimited business licenses, the pipeline of cannabis from legacy markets in California was disrupted and a glut of flower from the gray market began to influence pricing within the state’s legal market. Although cannabis is not federally legal and interstate commerce is banned, what happens in one state definitely affects what happens in another.
Competition in legal markets has also increased dramatically in recent years as multistate operators expand their footprint and consolidation proliferates. Vertically integrated cultivation, manufacturing and retail is becoming unsustainable for many mom-and-pop businesses, while MSOs can leverage their cash and resources to weather the current storm.
Economic Viability Meets High Quality Production
All of this news is not necessarily negative, but it’s a definite cautionary tale: Being complacent opens opportunities for others. Growing cannabis is complex. It is working with a living and breathing machine. Some businesses fail because operators are not able to find the perfect blend of horticulture, plant science and manufacturing efficiency necessary for success. Some see it simply as a manufacturing concern, others a scientific endeavor, and still others as an artform. An understanding of growing cannabis as a blend of all three is paramount.
Just like the LED evolution, other new cultivation technology is here to stay and should not be brushed off as just experimental
Squeezing more high-quality product out of existing facilities is essential. Costs for labor and electricity are relatively fixed, so operators must turn to technology to improve yield, quality, consistency and plant health without increasing operating expenses.
Over the years, growers have often resisted change surrounding what they view as “the way” or “the best,” but with the industry in such distress, the time is now to address facility inefficiencies.
Much like the evolution of LED use, there might be an initial skepticism at the cost and real value of new cultivation technology, but the economics are too compelling to ignore. The majority of all indoor grows now use LED. The progression from single-ended bulbs, to double-ended HPS, to LED is analogous to plants on the floor of a grow facility, to rolltop benches, and now to vertical farming using racks.
Vertical Cultivation Science
Crop steering applies plant science directly to commercial production. The methodology is based on the idea that plants can be manipulated to grow and perform a certain way. For cannabis plants, the science really comes into play with inter-canopy airflow.
When airflow occurs under the surface of the leaf of the plant, the stomata opens and gas exchange increases as water vapor and oxygen are released and carbon dioxide is absorbed. The micro-barrier of air trapped against the leaves is broken and the exchange of gasses and energy in the cultivation environment is improved, enabling the entire grow to increase its yield. And while CO2 supplementation is widely used and has been for years with positive effect, the under-canopy airflow provides greater efficiency relative to the operating expense of pumping CO2 into the grow room. Money can be saved by applying science to encourage the plant to uptake the extra CO2 that has been naturally released.
Proper Drainage Is Also Key
Controlling the space with proper drainage will keep a host of problems at bay
Drainage issues like the puddling of water in vertical farming are detrimental to the efficiency of a cultivation facility. Even when growers use precision irrigation techniques to give the plants pinpointed irrigation volumes over different time periods, rack systems can still suffer from drainage issues. That means that affected plants are not receiving the precision irrigation strategy and the entire purpose of the scientific application is defeated.
Precise drainage is critical because standing water opens the door to root born disease, pests, and microbial issues. Spray regimes can address this problem, but they cost money. The key is to reduce dependency on mitigation efforts by better controlling the agricultural space and improving outcomes with a scientifically approached plan.
Greenhouses, warehouses and vertical farming facilities all have potential environmental issues that reduce their economic viability, but with proper vertical air movement, drainage equipment and an understanding of microclimates and how to address them scientifically, efficiency and product quality are enhanced.
Time to Embrace Change
As with any industry, there is resistance to adopting new technology in cannabis cultivation. The original and legacy players will always claim they know how to best grow their plants, but the reality is that the business needs must be addressed.
As canopies increase within a facility, advancements like robotics, LEDs and advanced airflow technology define how the industry operates and continues to improve. Efficiency keeps business alive—cannabis growers must continually assess their operations and make the capital investments that will pay off as wholesale prices continue to decline.
Jason Vegotsky, Chief Executive Officer, Petalfast
Current cannabis distribution models make it hard for emerging cannabis beverage brands to launch and scale their businesses successfully. Instead, the wine & beverage sector could provide a model that would allow these brands to build relationships with retailers, foster competition, and improve brand diversity for consumers. In this presentation, Jason Vegotsky will delve into the cannabis sales and distribution model, examine how current models hurt emerging brands and products, and analyze how other CPG models, specifically in food & beverage industries, can be applied to cannabis to build relationships and improve sales.
Track-and-Trace Technology: Building Resilience in the Cannabis Supply Chain
Michael Johnson, CEO, Metrc
Building resilience in supply chains is a goal for all parties involved in a given market. Governments have an interest in protecting the health of consumers while safeguarding the flow of goods; businesses want to stay compliant while efficiently moving products; and consumers want and should expect that the products they buy are safe and effective. With heightened awareness around transparency and consumer safety in the cannabis industry, track-and-trace technologies have been central to building broad trust by ensuring more secure supply chains. In this presentation, Michael Johnson will discuss how these tools will continue to be deeply transformational in the sector.
Improve Your Operations through Cannabis Industry Analytics – CannaSpyGlass Sponsored Tech Talk
Adam Hutchinson, Co-Founder, CannaSupplyGlass
As new markets legalize and additional business licenses are distributed, competition between cannabis operators is intensifying in every stage of the supply chain from seed-to-sale. It is now tougher than ever to carve out a piece of this increasingly saturated market and cannabis operators aiming to succeed must incorporate industry analytics into their decision-making process. With data analytics, cannabis is no longer an industry of trial and error, and in this session, cannabis operators will learn how to obtain and utilize data analytics to improve their businesses and sustain long-term growth.
Quality and Safety and the Edibles Supply Chain
Steven Gendel, Ph.D., Principal, Gendel Food Safety
As the number and variety of cannabis and hemp-containing edibles continues to increase, the supply chains for these products have become complex and diverse. This means that manufacturers must understand how to develop and apply supply chain controls that protect consumers and ensure product quality and safety. For example, a simple cannabis-infused baked product might contain more than 20 non-cannabis ingredients sourced from multiple suppliers. The manufacturer of this product must ensure that each of these ingredients meets specifications every time a new batch or lot is received and used. Unfortunately, there is little guidance available to the cannabis industry (especially those who are not familiar with food manufacturing) on how to identify and evaluate supply chain risks or on what controls will be most effective in mitigating these risks. This talk will look at the steps that cannabis manufacturers can take to evaluate their supply chain, monitor and control identified risks, and respond to changes in the industry landscape.
The cannabis supply chain has pitfalls and landmines that can severely hurt a business if navigated improperly. The balance between branding, packaging, growing, distribution, testing, and quality is difficult to achieve. If one of aforementioned topics fails to deliver, it can mean huge financial losses or the death of a brand. In this presentation, we will cover how managing cash flow throughout the supply chain is critical to running a successful operation. There will be several case studies in improperly managed supply chains and their consequences on the balance sheet. There will also be an exploration of what the ideal supply chain would look like in the California market, how that correlates to other adjacent industries, and how it manifests into liquidity.
That said, between the 38 states, there’s plenty of differences and those show up in the nitty-gritty details that appear on the product label – health warnings, regulatory statements, THC symbols, THC limits and more.
Planning for packaging & labeling in advance will help maintain brand integrity, control costs, and ensure compliance across states.
This fragmented regulatory environment creates confusion, cost and risk. It also challenges brand owners and licensees to be thorough in their discussions around costs and responsibilities. Planning for packaging & labeling in advance will help maintain brand integrity, control costs, and ensure compliance across states. Here are some of the nitty-gritty details to consider:
Brand Design/Logo
Building a successful brand starts with giving it a name and designing a distinctive look that speaks to your target market. Are you selling in one state or do you plan to expand? Commonly, state regulations prohibit images of humans, cartoons and children as well as any resemblance to commercially available non-cannabis consumer food, beverage or candy products. But what about images of fruit? Be careful. Be prepared to adapt. In Massachusetts and Illinois, images of apples, lemons and berries on the package are fine, but in Maine and Maryland they’re not. Some states regulate colors and layout.
Font Specifications
Within labeling regulations, some states specify easy-to-read fonts (e.g., Arial, Helvetica, Times Roman), font style (e.g., bold, all capitals), and font size (e.g., 1/16” is the minimum in some, 1/12” in others). Illinois relies on reasonable judgment – “Warning statements should be of a size that is legible and readily visible to a consumer inspecting a package.” If you may have any questions on legibility, think about what an inspector may say.
Warnings & Regulatory Statements
Edible products need to contain nutrition facts, ingredients, allergens and more.
Warnings printed on cannabis labels differ from state-to-state but all contain verbatim statements regarding health risks, pregnancy, breastfeeding and emergency instructions. Most advise caution though some say “impairment” while others say “intoxicating” and “illegal.”
Regulatory statements, like warnings, are usually provided verbatim. The statements can be age requirements, health authority disclaimers or testing disclaimers. Always required is the manufacturer name, contact information and a version of “keep away” from children and animals.
Edible Requirements
Edible labels are regulated the same as consumer packaged foods so must include ingredients, allergens, nutritional values, but some states require more or different information. For example, depending on the state, consumers are warned that edible “effects may be delayed.” In Massachusetts, Illinois, New Jersey and Maryland, the label specifies the delay could be “2 or more hours.” In Maine, New York, the warning says “4 hours or more.” Other states simply warn without a quantitative measure, or fail to mention it.
THC Symbol
One of the more obvious examples of differing labeling requirements between states is the THC symbol. Starting with CA and CO, each state that legalized cannabis chose to design and adopt a unique THC symbol (with the exception of ME, VT and MA, which share one). In 2020, Doctors for Cannabis Regulation proposed a universal THC symbol, the “International Intoxicating Cannabis Product Symbol (IICPS)”. In 2022, ASTM International recognized the symbol and published the Standard Specification for International Symbol for Identifying Consumer Products Containing Intoxicating Cannabinoids and it’s starting to take hold in the U.S.
Batch Specific Information
This is the label that is printed on site and applied to a finished package. Again, requirements may differ between states but typically, at a minimum, this label will include a batch number, product identifier, manufacture date, weight, package date, test date and cannabinoid potency values, and more.
A growing segment of consumers are becoming more educated and seeking to make informed decisions about the cannabis products they are inhaling, ingesting or applying. Beyond THC and CBD potency, they want to know about other cannabinoids, terpenes and flavonoids. For them, QR codes that link to this information are highly valued. Is this part of your brand strategy?
When designing the package for any one state, it’s important to create a template batch label and specify on the label artwork where it will be applied. This way, you will avoid stickers covering your beautiful branding or worse, obscuring regulatory content.
And Finally,The Container
Cannabis packaging suppliers offer a wide range of containers designed to meet federal child resistance regulations. (Request certification documentation for your records.) Other considerations are the brand strategy. What’s the “look and feel”? Simple for the budget-conscious, premium for the luxury buyer? Will you be offering single servings, multiple servings, how many flavors/strains?
In addition to the usual variables such as volume, price and delivery, cannabis manufacturers also need to have an eye on state regulations when making procurement decisions. Some states are considering aligning sustainability goals with cannabis packaging requirements. For example, within New York’s proposed adult-use regulations is a provision for manufacturers to incorporate at least 25% post-recycled consumer content into their packaging. While the law as written may not get adopted, the movement for states to consider sustainability in cannabis packaging regulations has begun.
The variation in labeling regulations between 38 states is in the nitty-gritty details. Brand owners & licensees that take a strategic approach to expansion will minimize cost of goods, maintain brand integrity and ensure compliant labeling in each state they sell.
For commercial cannabis growers, consistent crop yields are vital to maintaining product profitability, as well as durable profitability. Since cannabis thrives under certain conditions, the more control a cultivator has over those conditions, the easier consistent harvests become.
While factors like humidity, light exposure and water may be easy enough to control in any indoor environment, other influential factors can be more difficult to control, such as mold or other contaminants. Growing in a controlled cleanroom environment ensures healthy, high-quality cannabis by mitigating some harder-to-control threats. For these reasons, growing cannabis in a cleanroom environment is rapidly becoming the gold standard in the industry.
A Closer Look at the Cleanroom Environment
A cleanroom facility is a specially designed room or modular addition designed to support a tightly controlled grow environment for crops. The design of the cleanroom relies on several design features to deter issues with pollutants, such as insects, mold, airborne microbes and dust. Even though cleanroom environments are often affiliated with cultivating certain types of crops, these facilities are also valuable in other industries, such as medicine, biology and pharmaceuticals.
Cleanrooms can be conservatively sized or massive. They can be configured to accommodate different processes, and they can be built to suit a specific grower’s preferences. However, several features are key, such as:
Preventing contamination can save a business from extremely costly recalls.
One fundamental requirement of a cleanroom is to control the introduction of contaminants into the space. Contaminants can be carried in on the people who visit the space. Therefore, cleanroom implementation must come along with strict protocols when it comes to employee entry into the room. For example, air showers, special gowns, masks and other measures may be required.
The Benefits of Cleanroom Environments for Cultivators
On the surface level, cleanrooms make it possible to achieve a well-controlled environment for cannabis cultivation. However, while this is undeniably important in terms of consistent crop yields and profitability, cleanrooms pose a number of broader advantages for cultivators and end customers.
Meet Laboratory Testing Guidelines and Protocols
For now, states create product testing regulations for cannabis. Most states that have legalized medical or adult use cannabis have created protocols for lab-testing products for pesticides and microbes. When batches of cannabis product do not meet state lab-testing standards, the product can be recalled or destroyed. In 2016, Steep Hill published an alarming study that showed they detected pesticides in roughly 70% of the samples they received and up to one third of all samples would have failed to meet regulatory standards. Cleanrooms reduce a grower’s reliance on pesticides.
Negate the Risk of Fungal Contamination
Cleanrooms negate the risk of fungal contamination through proper ventilation, particulate control and positive pressure.
Cannabis is prone to certain types of fungal spores that can cause severe illness in end customers. For example, Aspergillus moldspores are common in cannabis and can lead to cases of chronic pulmonary aspergillosis. In large doses, Aspergillus mold spores may even cause liver failure due to the carcinogenic mycotoxins the spores produce in the body. Cleanrooms negate the risk of fungal contamination through proper ventilation, particulate control and positive pressure.
Create a Safer Work Environment for Employees
Employees who work in cultivation facilities in the cannabis industry face various occupational hazards. Many of these hazards are related to being in contact with fungicides, mold spores and chemical fertilizers. The exposure can result in issues such as allergic reactions, respiratory irritation and other physical threats. Cleanrooms and how they function can deter many of these risks. For example, the lack of need for fungicide use automatically lowers the risks due to lacking exposure. Further, because protective gear is required to maintain the integrity of the cleanroom, there is less of a chance an employee’s skin or respiratory system is exposed to irritants.
Cleanrooms: The Potential Future of Cannabis Cultivation
As cannabis becomes a more robust industry and regulations become more clearly defined, growing standards are bound to change. As speculations of national regulations veer closer to reality, growing cannabis industrially may even mean required cultivation facility upgrades. Cleanroom environments give growers firm control over the health of their crops while ensuring clean products for customers. Therefore, these innovative and health-forward implementations could easily become the norm in the cannabis industry in the future.
As the former CEO of Partner Colorado Credit Union (PCCU), Sundie Seefried has been in the credit union space for 39 years. Established in 2015, Safe Harbor Financial is now a leading provider for banking and financial services in the cannabis industry.
Seefried founded Safe Harbor as a cannabis banking program for PCCU, and since then it has withstood scrutiny of 16 separate federal and state exams. Entering its ninth year as a cannabis banking program, they have almost 600 accounts in 20 states and have processed over $14 billion in transactions for the cannabis market. In September, Safe Harbor began trading on Nasdaq under the symbol SHFS. The company has also announced a definitive agreement to acquire Abaca, an industry-leading cannabis financial technology platform.
Seefried has seen it all in the cannabis banking world. We wanted to get her thoughts on some current events, the future of cannabis banking and lending, and what the next few years might hold in store for an industry ready to grow.
Cannabis Industry Journal:Tell us a bit about yourself. What is your background and how did you find yourself in the cannabis industry? How did you get to become president and CEO of SHF?
Sundie Seefried, President & CEO of Safe Harbor Financial
Sundie Seefried: I’ve been in banking in the credit union space since 1983. I became CEO of Partner Colorado Credit Union in 2001 and stayed there for 21 years. Everything I do, I have a very conservative nature just from being in the banking world and doing things methodically and building good foundations that endure long term. In 2014 when FinCen issued guidance, I was supposed to retire, and I had dinner with some old friends that were attorneys who couldn’t get bank accounts for their clients in the cannabis industry. They asked me to help and I looked into it for them. I assumed the regulator would shut me down but he didn’t; he actually encouraged me to move forward and look further into things. As I educated the board, we saw just how unsafe Colorado was and the serious need for the community to figure things out with respect to banking and cannabis. Coming from that credit union perspective, I said I think we can do this, let’s try and I’ll go through the third parties necessary. And that’s how we got into this, just looking to try and help solve Colorado’s problems and get banking access for cannabis companies.
CIJ: Tell me about your company’s mission. What is your financing strategy in cannabis and of the companies you do business with, what do you look for most?
Seefried: Our mission remains the same, and that is to normalize banking in the cannabis industry as much as possible. Because the black market still exists, the issue becomes sorting the legal entities out from the illicit actors in the industry. We know that the illicit market is trying to hide amongst the legal environment, which really makes things difficult for upstanding cannabis businesses. We can normalize banking by making sure we help legitimize the compliant entities and sort out the bad actors. We really only want to work with legitimate players with licenses, who are fulfilling expectations on the regulatory level and have no problems with compliance. We have been able to do that on the depository side.
We have always been a low-cost provider and our clients count on that. As we move into the lending part of the industry, we’re looking to do the same thing. There are lenders who charge one-to-three percent per month, 18 to 36 percent per year. We, on the other hand, are targeting more of an eight to thirteen percent annual rate. More of a conservative approach. Real debt underwriting. No extremely high interest rates. We look for the collateral, we look for well-organized businesses and solid documentation. Those are the businesses we are trying to bring into the fold and offer them normal loans. Cannabis will always have a premium on it simply because it is illegal at the federal level and there are additional hoops we have to jump through. Because of the potential forfeiture and seizure, if there are bad actors, etc., it really behooves any clients coming to us to also place their depositary services with us so we can prove their legitimacy and provide loans to them.
CIJ: Let’s talk about the Canopy Growth news. They announced they are pulling the trigger on acquiring Wana Brands, Acreage Holdings and Jetty Extracts, under the Canopy USA holding company and ahead of federal legalization. On the surface, it looks like they are bypassing a lot of the hurdles American cannabis companies currently face with financial red tape. As a foreign company trading on the NASDAQ dealing with a schedule 1 substance, do you expect Canopy to have a significant, some would say unfair, competitive advantage with their early entry? Or is this perhaps more of a rising tide lifting all boats scenario? What effect will this have on the current market landscape?
Seefried: I find it a very interesting move on their part. Certainly, they have a big advantage in comparison to other companies. The consolidation in the industry is moving so quickly. Other players will keep up with this just as fast as Canopy is moving in. That’s my opinion in terms of what I see in the consolidation area of the market. I think what it really hurts is small businesses. My heart goes out to them. So many of them worked so many years to build excellent small companies with boutique shops, and this whole move will really change that part of the industry.
I see a lot of these small players, non-vertically integrated companies, being impacted in a negative way due to such mass consolidation and the entry of foreign businesses. We need to get more competitive on a global level in order for our companies to grow and thrive. This happened back in 2018, when so many companies started doing those reverse takeovers onto the Canadian Securities Exchange and suddenly, they were putting tens of millions of dollars into the U.S. market. People didn’t see that as a competitive disadvantage for American companies, but now this move by Canopy may really show that we have to look at things more globally.
CIJ: Biden’s announcement regarding the scheduling review for cannabis has a lot of industry folks very hopeful that federal legalization is closer to a reality than before. Do you share their optimism?
Seefried: Closer than before, yes. But how close? I am not convinced it will happen quickly. If they are really going to consider rescheduling or descheduling, everything happens in Washington very incrementally. Eight years and seven attempts at the SAFE Banking legislation and still no movement on that front. Tomorrow, we’re going straight to legalization? I have a hard time swallowing that one. I just don’t see that big of a jump all at once. I think it is interesting coming just before the midterms and votes are really needed now more than ever.
What Biden did was a great start. Especially for those people in prison for possession. The interesting part of it is, we are very serious about people who have used it, but the people who have sold it and are in prison might be in the same situation. Given how the laws worked for so long, just based on the amount of cannabis you had could get you automatically labeled as a dealer, which isn’t the case for a lot of incarcerated folks.
The fact is, the social equity and justice issue, who do you free or who do you not free from prison, is a very difficult issue to get through. I think it is a great step forward and it will help some people who were treated unjustly, but there is still a lot of work to be done.
“I believe we’ll start seeing pressure from the global market on the United States to move things along a little faster in our own country.”As far as rescheduling, if they go from a Schedule I drug to a Schedule II drug, that will do no good, but it certainly is a bone to throw to the industry if you want to look like you are making some progress. Schedule II is still subject to 280E tax code so it will only do so much. If they want to make things more equitable and actually level the playing field, they have to do something about the 280E issue hindering every cannabis business in the country.
As far as full legalization, I am not optimistic because of all the players that need to be involved. Full legalization will require a change to the IRS tax code 280E as well as other tax issues. I think there are too many players: The DOJ, FinCen, the DEA, the FDA, the IRS. All of these agencies will have to agree on full legalization and moving forward in unison. The DEA is trying to fight illicit actors and illicit drugs. FinCen is trying to follow the money to find illicit actors. As long as there is an illicit market it will make their job tough, and on top of all of that, we have politics in play. That is just my take on legalization. It is going to be a much more complex problem than just legalizing the plant and moving on. Rescheduling seems like lower hanging fruit, but they will have to move it higher than a Schedule II.
CIJ: With the midterm elections here, there are a number of legalization measures in a handful of states, along with political control of Congress on the ballot. How do you think a Republican or Democrat controlled Congress will affect cannabis legalization progress?
Seefried: I just finished doing some lobbying in September in DC and spoke to some Senator offices in person, and I heard a lot of interesting topics being discussed. One of the things that keeps popping up is that social equity and justice is a huge issue. If we can’t solve this injustice in our system that has been going on for decades and decades, maybe they’ll hold banking legislation hostage. You can’t correct 50-60 years with one piece of legislation. Everything has to be incremental, unfortunately, so there will be some give and take there. I think that was a primary focus, especially with the Democrats and I do think it is a worthy cause.
On the Republican side, economically improving our competitive advantage as a country. They are starting to see the jobs being created and the tax revenue coming in and the growth of the industry. They will have to make that decision at some point in time whether they are going to leave the American cannabis industry behind or allow them to compete on a global level. I really think everything will move slowly and continue as it has happened in the past.
I believe we’ll start seeing pressure from the global market on the United States to move things along a little faster in our own country.
CIJ: As we inch closer to 2023, what do you expect the next year to offer for the cannabis financing market?
Seefried: I would say, with or without legislation, they’re finding greater access to banking. And the reason they are getting better access to banking is because none of us have been prosecuted for simply engaging in cannabis banking. I think we have set a precedent over the past eight years, not only us but other service providers in the industry and that we are not being prosecuted.
I see more financial institutions entering the market slowly. The second reason access to capital and banking will increase is because every financial institution in the country wants that lending relationship. In order to get there, they want to start with the depository relationship, and they don’t want smaller players presently doing it and getting all of those relationships before they enter the market. I think the competitive nature of the financial industry to land that lending relationship is going to force them into the game sooner than later.
The cannabis laboratory testing market has undergone a lot of changes in the past ten years. With those growing pains so common in such a new industry, come plenty of challenges driven by market dynamics, new regulations and scientific advancements.
Julie Kowalski, a cannabis testing consultant at JA Kowalski Science Support, has seen these changes firsthand. For twelve years, she worked at Restek as a senior chemist, helping to provide expertise and develop analytical solutions for their cannabis testing partners. She also worked as chief scientific officer for Trace Analytics, a cannabis testing lab in Spokane, Washington. Between being an advisor, consultant, trainer and accreditation assessor, she wears many different hats in the space. We sat down with Kowalski to learn more about the evolution of the marketplace, the importance of product safety and some of the common challenges that labs face.
Greg Kozadjian: Tell us a little about yourself and how you came to be working as a consultant in the cannabis and hemp testing industry?
Julie Kowalski, Owner of JA Kowalski Science Support
Julie Kowalski: I began working on gas chromatographs when I was about 20 years old, added liquid chromatography to my repertoire in my early 20’s, and have been in the lab nearly every day since then.
My consulting business launched in early 2020 after I received numerous requests from my network for help and advice regarding cannabis testing. I am passionate about helping people, talking science, and promoting growth and innovation in the cannabis industry.
Speaking with individuals and businesses who potentially received conflicting advice or felt somewhat overwhelmed by the complex and rapidly evolving cannabis industry, I realized I could help. So, I decided to utilize my experience and knowledge to promote trust and expertise within the cannabis industry and champion science over profit.
Kozadjian: Why do you think it’s crucial to test cannabis and hemp-based products in today’s market?
Kowalski: The way I look at it is that cannabis and hemp-based products are like any other product in that the consumer has the right to have some assurance that these products are safe, and that the labeling information is accurate.
Then, there are the increasing number of people seeking to use cannabis for medicinal reasons. Again, the industry should be able to assure them that the products they are using are safe to help them with their health issue.
Kozadjian: How has the market evolved over the last five years to meet the current testing regulations, and which of those regulations focus more on the safety of cannabis and hemp-based products?
Kowalski: In the past five years, more states have been coming online domestically. So, we are dealing with a regulatory environment where different states may have different regulations, a situation that will continue to exist for the foreseeable future. There have been efforts on the regulatory side, if not to coordinate efforts directly, to at least connect and communicate, and hopefully, out of those communications comes increased coordination.
I am hopeful that scientists, myself included, can do our part and provide additional data and information about testing that works, testing that doesn’t work, and that the regulators will consider and incorporate much of that information into changes in current and future regulations.
It is important to note that many state agencies were put in the position of creating a regulatory system that they were perhaps not familiar with, or accustomed to doing, particularly from the testing standpoint. There are no federal programs to model against, so programs are being developed from scratch and need to address all aspects of the market. It is a complicated task. It made sense to borrow from similar existing markets, but there is now the opportunity to use what we have learned to improve regulations.
For example, adopting certain criteria and practices from environmental, food, and agricultural testing was a great place to start. Now, we better understand some of the unique challenges associated with cannabis testing, it is time to set our fit-for-purpose best practices.
I hope that we, as an industry, can increasingly provide more data to help guide the regulators so that their goals are achieved and based on a growing body of data. I am optimistic that there will be much more interaction and coordination between regulators and scientists. This would greatly help with some of the struggles some cannabis labs are feeling in the current market.
Kozadjian: What are some of the challenges that testing labs face?
Kowalski: The cannabis and hemp-based products market is competitive with multiple sources of pressure. A definite challenge has been the gold rush mentality. Folks want to enter the cannabis business, and establishing a testing lab is attractive and perhaps perceived as more comfortable because it is not directly growing or producing a product.
There is a burden to set up a lab and open as quickly as possible because while the lab is being set up no money is being made. It can be stressful, and sometimes shortcuts are taken while developing technical programs. These shortcuts can ultimately cause disruption, stress, and risk. I saw this ten years ago, I saw this five years ago, and I am still seeing it now. I am still waiting for people to come into the industry with more realistic expectations of what it takes to establish functional technical programs and laboratories.“There are fundamental knowledge gaps that this market as a whole needs to address.”
Inadequate technical programs resulting from poorly vetted and insufficiently validated methods do not function well in the real world, changing regulations, as well as changing matrices, can result in chaos in the lab. A lab will fight fires daily if it does not plan for and build well-vetted, robust methods. Unfortunately, I have seen many new testing labs rush through development, and then when they open their doors for business, they realize their methods do not function properly.
Daily, they may be faced with deciding whether they should pass a sample batch because technically, it did not meet the criteria, but the client is waiting. Or labs constantly needing to retest may lose confidence in their ability. This is a high-stress situation, and quite a few labs are probably operating in this mode in the market right now. Substandard testing is becoming riskier as we see scrutiny, mainly due to test lab shopping increasing. I do want to make it clear and be fair to point out that the economics of cannabis testing is challenging. Pricing in most markets is too low to allow high-quality testing.
Kozadjian: How do you think this testing era will evolve in the next five years?
Kowalski: I think we will start to see more involvement and recognition of standards organizations like the AOAC, USP, ASTM. They have existed and have been working for at least a few years, and now are publishing methods, guidance documents, and providing education. That will be very helpful, and I invite testing labs to join in and participate in these efforts. Your voice is critical. We need more knowledge in the market, whether it is knowledgeable people entering the market, or people currently in the market who are willing to invest the time to learn analytical chemistry, for example. There are fundamental knowledge gaps that this market as a whole needs to address.
As the cannabis industry continues to grow, regulations will only get more onerous and complex, and enforcement will ramp up. In order to survive, it’s imperative for cannabis business owners and the ancillary companies that support them – such as banks, insurance agencies, law firms and marketers – to keep on top of regulations.
Due to cannabis’ fractured regulatory environment, confounding state and local laws, and the fact that regulations are constantly changing, keeping track of it all can nearly seem impossible at times. But companies don’t need to reinvent the wheel and handle compliance on their own.
There are a host of tools on the market today that can help cannabis related businesses (CRBs) streamline their operations. RegTech solutions can drastically reduce the challenges of navigating compliance, saving companies significant time and money so they can focus on their core competencies. Here, let’s take a look at five of the main reasons everyone in the cannabis ecosystem should seriously consider adopting RegTech solutions today.
1. Simplify the Complex
The heart of RegTech solutions is taking out the guesswork when tackling compliance while mitigating risk. Besides there being a vast number of regulations that vary by state, they’re also not easy to understand – they’re really written for lawyers, can be hundreds of pages long, and don’t offer implementation guidance. Thankfully through RegTech, operators and ancillary companies are alerted when regulations change and are given easy-to-follow implementation and remediation guidelines that can be as easy as checking a box.
Beyond just simplifying compliance, RegTech can substantially increase operational efficiency.
As the cannabis industry has been rapidly growing and maturing, we’ve been seeing a major uptick in M&A activity – M&A activity tripled in the sector from 2020 to 2021 – and with each new state a company enters, comes a host of new regulatory challenges. When expanding to a new state, RegTech solutions provide updates in real time, making sure, for example when you expand to Ohio, it’s not at the expense of complying with regulations in your core market of Illinois. Also, from an operations strategy perspective, RegTech solutions can be incredibly useful in helping companies decide what markets to pursue, as they can offer regulatory snapshots that compare tax laws, average margins, consumer segments, product stipulations, marketing restrictions and more. Thus besides simplifying compliance, RegTech can substantially increase operational efficiency.
Since cannabis is such a highly regulated industry, there are a ton of documents an operator has to keep on hand and be able to produce in a moment’s notice. Through RegTech, operators can store and organize all documents that are applicable to them electronically. So, when an inspector comes into a dispensary for a surprise inspection, rather than sweating bullets and digging through six filing cabinets trying to locate say a visitor log from three years ago, using RegTech a manager can quickly search records electronically, download and print the needed document, pass the inspection and go back to work.
2. Save Costs by Streamlining Compliance
While adopting RegTech solutions has a cost, the cost savings companies yield from RegTech way exceed the investment. RegTech providers have teams of dedicated analysts constantly tracking regulations and providing updates, making it so companies don’t need to hire much more costly lawyers to track regulations and amend policies and procedures. Rather, they can tap into RegTech solutions and leverage decades of experience and lean on the best regulatory experts in the field, while saving a lot of money.
RegTech providers have teams of dedicated analysts constantly tracking regulations and providing updates,
Just to give a small example of the cost savings RegTech can provide, on average a CRB spends over $20,000 to produce a new SOP package when using an attorney and nearly $8,000 when updating an SOP package using an attorney. Compare that to Simplifya’s fully customizable SOP package, where a CRB spends on average less than $1,600 to produce a new SOP package and less than $650 to update an SOP package – a 92% savings.
When considering costs, it’s important to think holistically and anticipate potential problems that could come up. One of the biggest pain points for companies starting up operations or entering new markets is complying with confusing tax codes – no industry is taxed to the degree cannabis is, and it’s easy to lose sight of tax obligations when planning operations. Unanticipated withholding requirements can create serious cash flow problems. RegTech solutions clearly outline requirements, as well as track updates, which help companies plan operations and expansion plans and prevent nasty tax surprises from creeping up, and they’re a much cheaper alternative to hiring tax lawyers.
While there are tremendous growth opportunities in cannabis, the industry is also facing significant headwinds, including the high cost of capital, supply and demand misalignments, and shrinking margins, and as we head towards recession, cost efficiency will become more and more important. Not only can RegTech help companies survive by helping ensure they stay compliant and don’t get fined or even shut down for breaching regulations, they also help companies run more efficiently and save major costs on operations.
3. Hold Your Employees Accountable
In addition to using RegTech to stay on top of compliance, it can be a powerful HR tool as well. Companies can utilize RegTech platforms to make and track assignments and tasks for employees. If you’ve already spent the time and money to create SOPs, RegTech tools are essential to making sure they’re actually being followed correctly.
As many cannabis companies are expanding rapidly and bringing new employees into their fold – particularly those that are engaging in M&A – it can be difficult to get employees up to speed and following SOPs. RegTech automation and tracking solutions help flatten the learning curve and ensure employees are completing tasks on time, boosting efficiency and preventing problems that may arise – and if problems do arise, the tools help pinpoint where and when for efficient remediation. And if you’re an MSO or a SSO with multiple locations, RegTech allows employers to keep track of their dispersed employees without having to be in 10 places at once. This holds employees accountable for their actions for smooth operations while reducing growing pains.
4. Identify Issues Before They Become an Issue
The most compelling reason for having strict regulations in the cannabis industry in the first place is to protect consumer and patient health. Given the long, brutal history of cannabis prohibition, where lies and misconceptions about cannabis consumption being “dangerous” were perpetuated in the mainstream, the last thing the industry needs is people consuming products that are in any way contaminated. If you skirt the rules and manage to put out compromised products without a regulator catching and dinging you first, consumers may get sick. This can lead to a recall and tarnish a brand’s reputation. Competition is steep in this industry and even one incident can be irrecoverable. If consumers have reason to believe you’re not putting out consistent, safe products, they’ll buy from your competitor instead.
RegTech helps companies track all processes and procedures so that they can spot problems before they occur and ensure nothing dangerous makes its way to the public, which in turn shields brand reputation. Also, it’s important to note – in the cannabis ecosystem, every company you work with has to be licensed. If you work with an entity that’s not, you are very liable. Tracking licensing information is burdensome, especially for retailers and ancillary businesses like lenders and insurers who work with many vendors. Luckly, RegTech providers have already done the heavy lifting, pulling APIs into state databases and creating tracking systems of licenses that make it easy for companies to ensure every entity they work with is operating with a valid license. This saves companies from having to hire people to track licensing information on a weekly or even daily basis, which can be very costly, and more importantly, keeps them compliant and prevents slip ups that could jeopardize consumer and patient health.
5. Looking Towards the Future, Regulations will Only Become more Complex – Only the Compliant Will Survive
A common misconception people have about the cannabis industry is thinking that federal policies like SAFE banking will be a catch-all to their banking woes, opening up the floodgate to institutional investment. The fact of the matter is, however, SAFE banking would be ineffective without RegTech. Cannabis companies need to demonstrate reliability and a history of compliance in order to attract investors and accumulate capital, and they do this through using RegTech platforms. Conversely, financial institutions also use RegTech to verify licenses, ensure legitimacy and assess lending risks based on the locations in which their borrowers operate. After SAFE banking is finally enacted, since larger institutional investors have so much on the line, they’re going to be particularly careful and only invest in those companies that can comprehensively demonstrate a history of compliance. This will also be the case for major CPG companies looking to acquire cannabis companies – they’ll want companies that have used RegTech to show compliance and optimize operations, since those companies will be more trustworthy and transitioning them under new management will be easier. In every major industry other than cannabis, RegTech solutions have been adapted. This is where cannabis is headed, and the companies that adopt solutions and demonstrate compliance will come out ahead.
Cannabis companies need to demonstrate reliability and a history of compliance in order to attract investors and accumulate capital
The other major misconception some people have about the cannabis industry is that once cannabis is legalized on a federal level, state and local regulations will somehow just go away, so current RegTech solutions may become ‘obsolete.’ This couldn’t be further from the truth. In no world is there going to a federal legalization system that says states can no longer create their own rules around cannabis. Think about the alcohol or gambling industries. Alcohol and gambling are federally legal, but every state – and even some counties and cities within those states – can have very different rules. Federal legalization will just mean additional regulations will be piled on and thus RegTech will only become more important.
While many companies in the cannabis space have already adopted RegTech solutions, there are still many others that have taken a reactive rather than proactive approach towards compliance. When major legislation like SAFE banking or federal legalization is approved, there will be a paradigm shift and RegTech will be deemed more essential quickly. Those who have implemented RegTech will have distinct advantages. To survive and thrive in the industry going forward, it’s prudent to proactively handle compliance and adopt RegTech solutions today.
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There are a number of reasons that enrolling a cannabinoid study is very challenging. One of the biggest challenges to overcome is creating educational clinical study material that will be approved by the Institutional Review Board while educating potential subjects who are interested in enrolling. In other words, one must fully understand the regulatory landscape that they’re operating in, and we all know cannabis is a tricky one, while still educating potential subjects.
There is a lot of hope that by working on a study of this magnitude, that we will pave the way for many more companies to bravely enter the clinical trial space as it pertains to medical cannabis. Everything that is being performed in this Zelira clinical study is in accordance with all applicable laws and regulations. The team is utilizing an electronic patient reported outcomes and electronic data capture system to receive data directly from the clinical trial sites as they are seeing the patients. As more patients, groups, communities and organizations learn about this, we hope that other large players in the cannabis industry invest their money wisely and perform clinical studies on their formulated products. Companies are unable to make claims of product safety and efficacy legally without these clinical studies. As we approach 2023, it is time for us as an industry to begin forecasting future clinical studies that will help power the therapeutic benefits this plant has to offer in responsible, controlled settings.
