At first glance, the layout of a grow room and a factory production line might seem to have little in common. But whether a facility is producing plants or parts, adopting good manufacturing practices (GMP) can benefit plant quality, harvest consistency and production economics.
What is GMP?
Simply defined, GMP refers to a production system made up of processes, standards and safeguards designed to consistently meet a defined quality standard. In the grow house, establishing, documenting and implementing GMPs can help guard against problems ranging from plant contamination to inconsistent harvests. GMPs can be organized into five key categories, each which contribute to cultivation:
People: The people working in the grow house understand their responsibilities
Processes: Production processes are clearly documented and consistent across harvests
Procedures: Guidelines are documented and communicated to all employees
Premises: Grow rooms and equipment are clean and maintained
Products: Materials used in cultivation (fertilizers, lighting, growing media, etc.) are assessed
Optimizing each of these five P’s in production can help cultivators protect their business and their margins even as flower prices in both legacy and emerging states continue to trend downward. Below, we look at four GMP insights that can help cultivators coordinate the five Ps to achieve quality, consistency and economic objectives harvest after harvest, without massive investments in capital, even during turbulent market conditions.
#1 Know your numbers and their value
Avoid the temptation to lump production costs into very broad categories, i.e., “cost of goods.” Understanding the exact cost of all inputs that go into a grow is a precedent to cost-effective production. The price of the plant material, energy consumed, labor, nutrients, fertigation and other inputs involved in the grow should be calculated to determine the actual cost of a grow room. If rooms are set up consistently, you can multiply to get an aggregate production cost across the facility.
Growing media
Look beyond the price tag when calculating costs and consider the value each input brings to the grow. Nutrition is a good example. Understanding the concentration of specific nutrients in a product can be a better way of evaluating its value than simply looking at the cost of the goods. And consider whether added nutrients are actually adding value to the product produced. More isn’t always more. In most cases, simple salts will supply the plant with what it needs to grow.
Growing media is another opportunity to evaluate the cost/benefit of cultivation inputs. How much yield can be achieved with a particular medium compared to a different choice? For example, a bag of coco may initially appear to be the low-cost choice for cultivation. Upon a deeper evaluation, though, the cost per plant of coco is generally higher when you factor in the amount of media used for each plant (and that doesn’t even factor in the labor to fill the pots).
# 2 Reduce time waste
Among the various inputs in each growing cycle, labor represents a significant cost. Are labor hours being put to the best use and not wasted? American industrialist and innovator in mass production Henry Ford stated, “Time waste differs from material waste in that there can be no salvage. The easiest of all wastes and the hardest to correct is the waste of time, because wasted time does not litter the floor like wasted material.”
One way to see the cost of wasted labor dollars is to set up a camera and record a day of activity in the grow room during each step of a grow cycle. Or simply observe the responsibilities that are requiring workers’ time on a typical day. Watching employees’ work in the grow room may reveal how a room’s set-up is contributing to or hindering production. Are employees spending their time on tactics that add value or are they being slowed down by manual processes, such as filling containers, watering and relocating plants in the facility? Are there steps and process that could be automated, such as fertigation? Seeing how employees’ time is being used can identify opportunities to direct efforts toward functions that add value or cut costs. What would be the economic benefit of reducing a half-day of set-up time in the grow house or automating some processes?
Beyond better allocation of human capital, understanding how time is used in the growing operation can suggest changes to materials used in the grow. For example, selecting a growing media that comes in plugs and blocks with pre-drilled holes for efficiently dropping in new plants can reduce time spent filling pots or configuring containers. Automating functions like fertigation and watering can not only reduce labor time but increase the precision of delivery when it comes to water and nutrients.
#3 Introduce incremental improvements
Many manufacturers rely on pilot plants to mitigate risk before process scale-up takes place across an enterprise. The same approach can benefit the grow house. Resist the temptation to overhaul the system and instead focus on introducing one change at a time. This disciplined approach will allow you to evaluate if a change is actually delivering value and should be applied more broadly. The wisdom of a cautious approach to improvements is reflected in a quote by innovation magnate Steve Jobs, co-founder of Apple. Observing that not every innovation will be a win, Jobs stated, “Sometimes when you innovate you make mistakes. It is best to admit them quickly and get on with improving your other innovations.”
When introducing a new element into the grow, pilot it in one “sample” area before adding it to the entire operation. Then give the innovation time to be evaluated before deploying it more widely. This measured approach can help reduce the risk that accompanies making a change to processes and will allow you to evaluate the relative benefit of any change or innovation. And as changes are introduced one at a time, it is easier to determine which changes are contributing value.
#4 Satisfy the market, not just the spec
Regulatory bodies set the compliance criteria for purity or quality standards in manufacturing, but the ultimate mark of approval is awarded by customers in the marketplace. A harvest may meet all of the quality specs, but if customers don’t want to buy it, achieving GMP metrics is a moot effort. The marketplace will always have the final say on a product’s commercial viability.
Understand what the market wants and be able to replicate it consistently harvest after harvest. Manufacturing a product that meets the market’s desired performance attributes is essential to sustaining and growing operations. Production quality is only as good as the last harvest and any degradation in product quality will diminish buyers’ trust. History shows that the challenge of achieving consistent production quality and reliability isn’t just a problem for cultivators. Among several factors that doomed the short-lived Edsel sedan introduced in 1957 were problems arising from assembly workers having to use different tools and techniques. A lack of consistency in producing cars or cultivars can turn off customers and profitability.
A tension exists between achieving production consistency and the opportunity to introduce changes that improve the grow. By integrating improvements into the production system one measured change at a time, cultivators can assess which improvements to continue and what needs to be tweaked. But as manufacturing has long demonstrated, continuous improvement is an ongoing journey.
As cultivators consider the 5 Ps of people, processes, procedures, premises and products, applying these four GMP insights can help growers in emerging and legacy markets navigate changing market conditions and drive continuous improvement.
Natural cannabinoid distillates and isolates are hydrophobic oils and solids, meaning that they do not mix well with water and are poorly absorbed in the human body after consumption. Cannabinoid oils can be formulated into emulsions to form a fine suspension in water to modulate bioavailability, stability and flavor.
Happy Chance is a cannabis infused products company offering better-for-you products to their customers. Happy Chance recently launched a low-glycemic index fruit bite line made from fresh ingredients, distinguishing them from traditional gummies. Splash Nano is a cannabis infused products ingredients company specializing in nano emulsions. Happy Chance utilizes Splash Nano technology in their fruit bites formulations.
We spoke with Katherine Knowlton, founder of Happy Chance, and Kalon Baird, co-founder and CTO of Splash Nano to learn more about their products and how they came to do business together. Prior to Happy Chance, Knowlton worked as a chef. Prior to Splash Nano, Baird was a consultant to the cannabis industry.
Aaron Green: Katherine, how did you get involved in the cannabis industry?
Katherine Knowlton, Founder of Happy Chance
Katherine Knowlton: I am a chef by trade. I went to culinary school in 2015. My partner also got into the cannabis space in 2017, which was right around the time when adult use cannabis became legal in California. As a chef, I am very passionate about cooking for optimal health and well-being. I noticed right away the abundance of candy- and sugar-laden products on the market. I set out to create a wellness driven product blending healthy, whole foods with a better value proposition, better-for-you and better-for-the-planet.
Green: Okay, great. Kalon, same question: how did you get involved in the cannabis industry?
Kalon Baird: I left a corporate job in 2011 and started cultivating in Southern California. I started to develop techniques for horticulture and developed a connection with the plant. I was a consultant for many years, and then decided to take a different path when legalization happened and got into the regulated manufacturing space. My goal was to bring new products to market to help satiate the demand for the infused category, the non-smokeable categories and to pursue niche product development.
Green: Tell me about your recent product development interests?
Kalon Baird, Co-Founder and CTO of Splash Nano
Baird: We’re interested in the research that comes out regarding cannabis minor constituents. We work with other research labs doing two-dimensional chromatography. We’re trying to figure out what compounds exist in the plant that aren’t just the major cannabinoids, and how to work with them in a pharmacological context so that they can be standardized and replicated at scale.
So, it’s not just about making a sugary THC gummy, it’s about seeing what minor cannabinoids, what minor terpenoids and what other unknown compounds can we explore, and then put back into products.
Green: That’s 2D GC-mass spec?
Baird: Yeah, it’s GC-by-GC and tandem mass spec. There are only a couple people that make that piece of equipment. The lab that we work with on that project is called Veda scientific. They’re one of the only people in the cannabis space that uses that machine. And they’re right in our backyard. The tech enables us to further quantify terpene profiles and helps to differentiate our products.
Green: I’d like to focus first on the Splash Nano technology and then we’ll dig into how you got to know each other, and then we’ll finish off with learning more about Happy Chance. So Kalon, tell me more about Splash Nano.
Baird: We employ nano emulsion technology. It’s essentially the science of making oil and water compatible and suspended in a way that reduces droplet size. With nano emulsions, you create an interfacial layer that enhances absorption and solves technical problems like being able to make cannabis oil compatible in water-based matrices, and sometimes in non-water-based matrices. The idea is that as we spread out the particles and as we change attributes of how they’re coated, they’re more bioavailable, and you get a more consistent and faster onset experience like you would in the pharmaceutical or alcohol industry. It’s bringing the industry standard up to the consumer package level and the pharmaceutical level, so that people aren’t waiting the typical hour-long timeframe to absorb that first dose.
Green: Tell me about your business model.
Baird: When we started out in 2018, we were going for a manufacturing license. In the meantime, we saw the drink category evolving and we wanted to be a part of that conversation in that ecosystem. We started developing our own nano emulsions that we knew would be useful when we got our license. We knew that we would sell the base material to co-packers who would put them into beverages. We didn’t want to co-pack the beverages ourselves. So, we developed a drink additive that was our proof of concept that had legs for the technology so that we could show people how to use it. That proof of concept spun off and became its own product and now it’s in the market under the brand name Splash Nano and comes in four distinct product SKUS using minor cannabinoids as differentiators.
The Splash Nano drink additive
Meanwhile, our bread-and-butter business was working with smaller brands, like Happy Chance that needed a path to market but couldn’t get the license or couldn’t go through that whole rigmarole of a two-year waiting period and a half a million dollars and all the other stuff. So, we started taking on all these smaller brands effectively licensing their brand IP and their ideas. In the process, we ended up learning a ton about product development and it became kind of a passion.
We have three core revenue streams. One of them is contract manufacturing, or private labeling. The other one is our own product Splash Nano which is a drink additive. And then the last is we open sourced the technology and sell that as a business-to-business platform so that people can infuse their own products with our fast-acting emulsions. We’re working on a licensing model that will allow other states to create that same consistency, where we send a black box model out to them, and then they infuse the cannabis and then turn that into a product.
Green: Moving on to Katherine here. Tell me about Happy Chance, and how you came up with the brand concept and the product idea.
Knowlton: Going back to what I touched on earlier, many traditional edibles in the space are brownies, cookies and candy type of products that do not contribute to wellness. I wanted to give the wellness driven consumer an option in cannabis. I wanted to create a powerhouse edible that was not only functional and complete but that elevated the consumer’s experience as a whole because of the ingredients we choose and the whole cannabis we source.
Some of the Happy Chance fruit bites
I’m someone who values better-for-you products that contribute to optimal health and well-being. So, I set out to make something. I didn’t really know what I wanted to make in the beginning. I bought a dehydrator and a food processor, and I started messing around with different applications in my kitchen. Over 100 variations later, the fruit bite was born.
The fruit bite is made with dates – a natural sugar that delivers nutritional power: a low glycemic index and high in vitamins, minerals and antioxidants. A sweet you can feel great about. And we use pumpkin seeds which have a lot of great protein. We are working with a company in California that takes imperfect fruits and vegetables and upcycles that back into the food supply chain. We utilize the whole fruits and vegetables as a dried intermediate, capturing all the flavor of nutrients. No added natural flavors and nothing from concentrate.
Green: How does the consistency differ from a gummy?
Knowlton: The consistency is similar to a Lara bar or an Rx bar. Essentially, it’s that same consistency in a bite form and so it’s very different than a gummy. It’s a low dose, low sugar alternative to the modern-day gummy.
Green: So, you’ve got this healthy concept for the fruit bite. You’re looking at suppliers and technologies to infuse the product. How did you finally decide on Splash Nano?
Knowlton: I watched my partner lose his company a few years ago to a larger vertically integrated company. The MSO promised the moon and the stars, and they got lost in the weeds of their eco-system, ultimately losing their company. That said, I was very sensitive when I first started on this journey. I even took on my own partners who didn’t work out either. I spoke with a lot of manufacturers in the selection process. Splash Nano was the tenth manufacturer I spoke with.
It was a very organic way of meeting. I am also based in Santa Barbara where Splash Nano is located. My partner’s brother shared an office space with Kalon, so we met through that connection. I learned right away that Splash was founded on wellness, much like Happy Chance. It was important to source clean cannabis, an aspect that Kalon and his team take pride in. We quickly discovered that Kalon’s Splash Nano technology was going to work in my product. Happy Chance immediately found a home, and it has been an organic evolution of realistic business and friendship.
Green: Kalon, I’d love to get your perspective as well. How do you think about partnering with brands?
Baird: Because of our contract manufacturing experience, we’ve been able to touch approximately 50 brands over our three-year tenure in this space. We’ve seen kind of everything from the multi-state operator to the owner-operator and everything in between. I developed a passion for working with these smaller brands for a lot of different reasons. This industry is built on the success of small mom and pops. Yes, the multi-state operators do have a place and they absolutely add a lot of value. But at the same time, they have their own natural challenges. You have essentially a culture of employees versus a business owner that’s making a lot of their own decisions.
There are advantages to somebody like Katherine, who’s in the trenches of business, and understands the ebbs and flows and ups and downs of this industry and be able to get through some of those challenges a lot more organically and a lot more sustainably. Katherine has such a deep pulse on her business and on her customer and on her own money. She tends to make a lot more calculated decisions, and I really appreciate that.
There’s a lot of waste that gets accumulated in this industry through packaging, through bad decisions, and over extensions of capital. It’s sad to watch and you see these people that have great potential, but it’s kind of lost in this sort of the framework of a large organization. Again, I like multi-state operators, they’re great. There’s nothing wrong with them, but it’s just a different flavor. I’m trying to highlight the fact that working with somebody that has a pulse on her business, and the passion for what she’s doing is wonderful. It’s not just about making money; it’s about adding value.
Green: Katherine, talk to me about sustainability and how you’ve woven that into your product.
Knowlton: We’re dedicated to supporting Product, People and Planet. That’s the whole mission and ethos of Happy Chance. As a chef, I wanted to be intentional about where our ingredients come from. We only source organic and upcycled ingredients – an essential recipe in sustaining a healthy, eco-friendly plant. Intention and integrity are always at the forefront of our products. We prioritize partnering with more transparent supply chains. We want to show the world how cannabis can promote positive lifestyle changes that support living more actively and consciously.
To reiterate, we are also not using anything from concentrate. We are using the entire strawberry, the entire blueberry and so it encapsulates all the flavor and all the nutrition that you would have from a fresh fruit into our products.
Green: How do you think about sustainability in product packaging?
Knowlton: As far as packaging goes in this industry, we’re very limited in what we can do. Compostable packaging isn’t really available, but we have partnered with a packaging company that definitely has mindfulness at the core of their mission. They have established their entire supply chain to ensure they are focusing on green practices and reducing waste each step of the way. Their energy efficient machinery creates a zero-waste manufacturing process to reduce their carbon footprint and they utilize soy and vegan inks to help reduce air pollution by minimizing toxic emissions in the air. My hope for the industry is that as it continues to evolve, we can become less wasteful as far as packaging goes.
Green: Rapid fire questions for both of you: What trends are you following in the industry right now?
Knowlton: As a chef and coming from the CPG world, I’m passionate about health and wellness. I think that it’s important to stay on trend with what we’re seeing in CPG. There’s definitely a market as far as people wanting these better-for-you products. I want to bring that into the cannabis space.
Baird: We’re seeing the inclusion of minor cannabinoids, terpenoids, standardized recipes and faster- or slower-acting delivery systems. So, I’m following trends in advanced drug delivery systems paired with minor cannabinoids.
Green: What are you most interested in learning about?
Knowlton: I’m most interested in how I can take what I’ve learned in the food space and help bring that into the world of cannabis through Happy Chance. Ultimately cannabis is plant medicine. So, how can we educate people that the ingredients we choose to make products should be good for us too. I think that there’s a lot that can be done with it from a from a health and wellness standpoint.
Baird: I’m interested in learning more about the analytical overlay between quantifying and standardizing entheogens and plant medicines like cannabis into the product development process in CPG. I’m thinking of ways to blend the two worlds of traditional science and New Age medicine.
Green: Awesome, that concludes the interview. Thank you both, Katherine and Kalon.
It wasn’t that long ago that cannabis was underground, sometimes literally, and operators protected what was theirs any way they knew how. Before legalization, cannabis operators needed to secure their plants, cash, supplies and equipment not just from people who wanted to steal them, but also from law enforcement. The legacy cannabis market is now transitioning into a legal one, and licensed operators are joining the industry at an incredible rate, but security is still part of the success equation. Like before, operators need to protect plants, products, equipment and cash, but they now also need to protect records, privacy and data, and do so in a manner that complies with state regulations.
Cannabis regulatory authorities set security guidelines that cannabis business owners must follow in order to obtain and renew operational licenses. For instance, there are state-specific security regulations regarding video surveillance, camera placement, safes, ID verification, and more. While security measures help protect the business, they also protect the public. It’s a win-win for everyone involved. Here are five best practices and techniques to protect cash, records, products and people.
Hybrid cloud storage
State regulations call for reliable video surveillance footage that is accessible, in most cases, 24/7 and upon demand by cannabis regulatory authorities and local law enforcement acting within the limits of their jurisdiction. SecurityInfoWatch.com reports that video data is the industry’s next big investment, meaning there will be an increased demand and need to store video surveillance footage. Most states require video surveillance footage to be retained for a specific amount of time, often 45-90 days or longer if there is an ongoing investigation or case that requires the footage. While some businesses only retain video data for the state-required length of time, others choose to keep it longer.
Storing data on-site can become expensive and precarious. Best practices call for a hybrid cloud storage solution model as it provides on-site and both public and private cloud data storage solutions. This model provides users with the ability to choose which files are stored on-site and which files live in the cloud. Doing so improves file accessibility without impacting or compromising on-premises storage. In addition, it’s helpful to have two methods of digitizing data, for safety’s sake. In the event an on-site storage method crashes—though hopefully this won’t ever happen—there’s a version available off-site via the cloud. That said, with cloud-based storage solutions come cybersecurity threats that must be managed.
Cybersecurity
Dispensaries are prime targets for burglary. Defending a storefront requires a comprehensive security plan
Due to the ongoing COVID-19 pandemic, more businesses are online than ever before. Unsurprisingly, cyberthreats are on an upward trend, including in the cannabis industry. Earlier this year, MJBizDaily reported that a data breach exposed personal information of current and former employees of Aurora Cannabis. The incident involved “unauthorized parties [accessing] data in (Microsoft cloud software) SharePoint and OneDrive”. Although this breach involved only employees, confidential customer information is also at risk of being compromised during a data breach.
On a separate occasion, an unsecured Amazon S3 data storage bucket caused a large-scale database breach that impacted almost 30,000 people across the industry, according to the National Cannabis Industry Association. The breach included scanned versions of government-issued ID cards, purchase dates, customer history and purchase quantities. Unlike the Aurora Cannabis breach, this one included customer data.
Just like other more established industries, the cannabis industry needs to protect and secure confidential data. If you don’t have a cybersecurity expert on your team, consider hiring a consultant to evaluate your risk or partnering with a credible cybersecurity technology company to implement proactive solutions. Before signing a contract, do your due diligence. Does the consultant and/or technology company understand the compliance regulations specific to the cannabis industry? Do their solutions meet the regulations in the state(s) where your facility operates? Taking the time to protect your company’s data before a breach occurs is proactive, smart business.
Smart Safes
A smart safe like this one can helps secure cash handling
Smart safes help secure cash handling, which given the difficult banking environment for cannabis companies, means they’re on the list of best practice security technology products. What is a smart safe? A smart safe is a device that securely accepts, validates, records and stores cash and connects to the other cash management technology solutions such as point of sale systems. They connect to the internet and provide off-site stakeholders visibility into a facility’s cash position.
A high-speed smart safe counts cash by hand faster than a human and is an overall more secure way to deliver cash bank deposits. At the end of the night, making a deposit at a physical bank location can be dangerous, exposing your cash and the individuals responsible for making the deposit to unsecured threats. Using a smart safe reduces that threat and also helps cannabis operators comply with financial recordkeeping and documentation requirements. Due to federal cannabis prohibition, many cannabis businesses lack enough insurance to fully cover their exposure to cash theft, which has led to a trending industry-wide investment in smart safes.
Advanced access control
Best practice access control means more than a ring of keys hanging off the facility manager’s belt. Advanced access control gives cannabis business owners and managers the ability to manage employee access remotely via the cloud. This feature can limit access areas within a facility, enabling an individual to revoke access instantly from a remote location making it a useful tool in the event of a facility lockdown or emergency. A mobile app and/or website can be used to lock or unlock secure doors, monitor access in real time and export access logs.
Advanced access control devices aren’t a standard in the industry yet. Although many state regulators don’t require cannabis businesses to utilize advanced electronic access control, using this technology is a best practice and may be required in the future.
Compliance software
Understanding the ramifications and keeping up with state-mandated compliance is challenging. While state regulations can be found online, they’re often in pieces, leaving operators unsure about whether or not they have them all. Once an operator is confident that they have the most current version of all the laws, rules, and regulations that apply to their cannabis business, making way through the dense legal jargon can be exhausting. Even after multiple readings, it can be unclear about how to apply these guidelines to the operator’s cannabis business, which is one reason cannabis businesses work with a trusted legal counsel to meet compliance requirements. For trusted advisors and cannabis business licensees and operators alike, cannabis compliance software solutions are designed to not just check boxes for a cannabis business, but to help everyone involved understand how the regulations apply to the operation. These solutions improve accessibility so that employees at all organizational levels understand the rules and requirements of their position and the products they work with.
In addition, compliance software can help licensees and operators establish and implement best practice SOPs to meet regulatory requirements. Because the cannabis industry is young and many operators are moving fast, many cannabis businesses are vulnerable to security breaches and threats. Prioritizing security and compliance can help cannabis leaders protect against potential threats. Investing in the latest and most innovative security technology solutions—beyond what is required by state regulations—can help operators outsmart those who seek to steal from them and position their companies as industry leaders that prioritize safety and compliance, protecting not just cash and products, but the people who work in their facilities and the customers who purchase their products.
The cannabis industry is growing and evolving at an unprecedented pace and regulators, consumers and businesses continually struggle to keep up.
Cannabis businesses: How do you maintain an edge on the market, avoid costly mistakes?
Case Study: Costly Facility Build Out Oversights
David Vaillencourt will be joining a panel discussion, Integrated Lifecycle of Designing a Cultivation Operation, on December 22 during the Cannabis Quality Virtual Conference. Click here to register. A vertically integrated multi-state operator wants to produce edibles. The state requires adherence to food safety practices (side note – even if the state did not, adherence to food safety practices should be considered as a major facility and operational requirement). They are already successfully producing flower, tinctures and other oil derivatives. Their architect and MEP firm works with them to design a commercial kitchen for the production of safe edibles. The layout is confirmed, the equipment is specified – everything from storage racks, an oven and exhaust hoods, to food-grade tables. The concrete is poured and walls are constructed. The local health authority comes in to inspect the construction progress, who happens to have a background in industrial food-grade facilities (think General Mills). They remind the company that they must have three-compartment sinks with hot running water for effective cleaning and sanitation, known as clean-out-of-place (COP). The result? Partial demolition of the floor to run pipeline, and a retrofit to make room for the larger sinks, including redoing electrical work and a contentious team debate about the size of the existing equipment that was designed to fit ‘just right.’
Unfortunately, this is just one more common story our team recently witnessed. In this article, I outline a few recommendations and a process (Quality by Design) that could have reduced this and many other issues. For some, following the process may just be the difference between being profitable or going out of business in 2021.
The benefits of Quality by Design are tangible and measurable:
Reduce mistakes that lead to costly re-work
Mitigate inefficient operational flow
Reduce the risk of cross-contamination and product mix-ups. It happens all the time without carefully laid out processes.
Eliminate bottlenecks in your production process
Mitigate the risk of a major recall.
The solution is in the process
Regardless of whether you fall in the category of a food producer, manufacturer of infused products (MIP), food producers, re-packager or even a cultivator, consider the following and ask these questions as a team.
People
By standardizing and documenting safety procedures, manufacturers mitigate the risk of cannabis-specific concerns
For every process, who is performing it? This may be a single individual or the role of specific people as defined in a job description.
Does the individual(s) performing the process have sufficient education and training? Do you have a diverse team that can provide different perspectives? World class operations are not developed in a vacuum, but rather with a team. Encourage healthy discourse and dialogue.
Process
Is the process defined? Perhaps in a standard operating procedure (SOP) or work instruction (WI). This is not the general guidance an equipment vendor provided you with, this is your process.
How well do you know your process? Does your SOP or WI specify (with numbers) how long to run the piece of equipment, the specification of the raw materials used (or not used) during the process, and what defines a successful output?
Do you have a system in place for when things deviate from the process? Processes are not foolproof. Do not get hung up on deviations from the process, but don’t turn a blind eye to them. Record and monitor them. In time, they will show you clear opportunities for improvement, preventing major catastrophes.
Materials
What are the raw materials being used? Where are they coming from (who is your supplier and how did you qualify them)?
Start with the raw materials that create your product or touch your product at all stages of the process. We have seen many cases where cannabis oils fail for heavy metals, specifically lead. Extractors are quick to blame the cultivator and their nutrients, as cannabis is a very effective phytoremediator (it uptakes heavy metals and toxins from soil substrate). The more likely culprit – your glassware! Storing cannabis oil, both work in process or final product in glass jars, while preferred over plastic, requires due diligence on the provider of your glassware. If they change the factory in which it is produced, will you be notified? Stipulate this in your contract. Don’t find yourself in the next cannabis lead recall that gets the attention of the FDA.
Savings is gained through simple control of your raw materials. Variability in your raw material going into the extractor is inevitable, but the more you can do to standardize the quality of your inputs, the less work re-formulating needs to be done downstream. Eliminate the constant need to troubleshoot why yields are lower than expected, or worst case, having to rerun or throw an entire batch out because it was “hot” (either too much THC in the hemp/CBD space or pesticides/heavy metals). These all add up to significant downstream bottlenecks – underutilized equipment, inefficient staff (increase in labor cost) all because of a lack of upstream controls. Use your current process as a starting point, but implement a quality system to drive improvement in operational efficiency and watch your top line grow while your bottom-line decreases.
Consistency in quality standards requires meticulous SOPs
Have you tested and confirmed the quality of your raw material? This isn’t just does it have THC and is it cannabis, but is it a certain particle size, moisture level, etc.? Again, define the quality of your raw materials (specifications) and test for it.
Remember – ranges are your friend. It is much better to say 9-13% moisture than “about 10%”. For your most diligent extractor, 11% will be unacceptable, but for a guy that just wants to get the job done, 13% just may do!
Test your final product AFTER the process. Again, how does it stack up against your specifications? You may need to have multiple specifications based on different types of raw material. Perhaps one strain with a certain range of cannabinoids and terpenes can be expected for production.
Review the data and trend it. Are you getting lower yields than normal? This may be due to an issue with the equipment, maybe a blockage has formed somewhere, a valve is loose, and simple preventive maintenance will get you back up and running. Or, it could be that the raw biomass quality has changed. Either way, having that data available for review and analysis will allow you to identify the root cause and prevent a surprise failure of your equipment. Murphy’s law applies to the cannabis industry too.
You are able to predict and prevent most failures before they occur
You increase the longevity of your equipment
You are able to predict with a level of confidence – imagine estimating how much product you will product next month and hitting that target – every time!
Business risks are significantly mitigated – a process that spews out metal, concentrates heavy metals or does not kill microbes that were in the raw material is an expensive mistake.
Your employees don’t feel like they are running around with their hair on fire all the time. It’s expensive to train new employees. Reduce your turnover with a less stressed-out team.
Takeaways
Maintaining a competitive edge in the cannabis industry is not easy, but it can be made easier with the right team, tools and data. Our recommendations boil down to a few simple steps:
Make sure you have a chemical or mechanical engineer to understand, optimize and standardize your process (you should have one of these on staff permanently!)
Implement a testing program for all raw materials
Test your raw materials – cannabis flower, solvents, additives, etc. before using. Work with your team to understand what you should and should not test for, and the frequency for doing so. Some materials/vendors are likely more consistent or reliable than others. Test the less reliable ones more frequently (or even every time!)
Test your final product after you extract it – Just because your local regulatory body does not require a certain test, it does not mean you should not look for it. Anything that you specified wanting the product to achieve needs to be tested at an established frequency (and this does not necessarily need to be every batch).
Repeat, and record all of your extraction parameters.
Review, approve and set a system in place for monitoring any changes.
Congratulations, you have just gone through the process of validating your operation. You may now begin to realize the benefits of validating your operation, from your personnel to your equipment and processes.
The drug war has harmed communities of color since its inception. For decades and decades, BIPOC (Black, Indigenous, and other People of Color) have been nearly six times more likely to be arrested for drug use than White Americans, despite similar rates of use.
Over the years that legalized cannabis has proliferated across the country, the same trends of market consolidation have emerged in every state that has legalized the plant. BIPOC communities already impacted by the drug war have less access to capital and therefore less access to the cannabis industry. Cannabis market consolidation has always led to white people taking a greater market share while BIPOC communities are left behind.
The legal cannabis industry currently lacks representation of BIPOC executives, business owners, and professionals. Ernest Toney, former global marketing and partnerships manager at Marijuana Business Daily, wants to change that. He founded the BIPOC Cannabis Business Network – a membership community that is working to make the cannabis industry more accessible and profitable for BIPOC professionals and business owners.
BIPOCANN is a place to meet cannabis industry leaders, a place to exchange goods, services and ideas that promote BIPOC economic growth in cannabis, an innovation hub for unique voices and perspectives, and it’s all BIPOC-owned and managed.
In this interview, we sit down with Ernest Toney to hear about BIPOCANN and ask him some questions about what the future of the cannabis industry could look like.
Cannabis Industry Journal: Tell me about your background- how did you get involved in the cannabis industry?
Ernest Toney: I grew up in Virginia and went to James Madison University where I studied kinesiology, and sports management in graduate school. That led me to pursue a career in sports administration, beginning as a sales and marketing director for a large YMCA in the southwest, followed by a stint as a sales consultant for the Arizona Diamondbacks in Major League Baseball. Immediately prior to joining the cannabis industry, I worked at USA Ultimate – the national governing body for the niche sport of ultimate (frisbee) in the United States. During that time, I managed and scaled adult programs and events across the country. A big part of my job required collaborating with national stakeholders and creating and enforcing policies to grow the sport by making it more accessible to diverse demographics. We also worked hard to increase the commercial visibility of the sport through mainstream media, including ESPN, with gender equity being a major focus area. It was cool because looking back, I learned a lot of things during that five-year period that is directly applicable to the work I’m doing to support the cannabis industry.
Ernest Toney, founder of BIPOCANN
But my interest in the cannabis industry became strong when I moved to Denver in 2011, a year before Amendment 64 passed. When Colorado became the first adult use cannabis market in the USA, it was an exciting time. I have always been curious about economics and how policies can impact people’s lives. I was interested in what was going to happen when the new market opened.
Early on, I followed the industry trends very closely. Living in downtown Denver, I saw firsthand the effects the cannabis industry was having on day-to-day life, like increased tourism, a housing market boom, a lot of new start-ups, dispensaries opening everywhere. It was just something I knew I wanted to learn more about.
Around 2016, I started making industry connections, but didn’t pursue opportunities until a few years later. Eventually, I was hired in 2018 by MJBizDaily to focus on new business initiatives. Some of my past successes with scaling programs, national and international event management, and community-building aligned with what they were looking for.
I started as the company’s first international marketing manager. In that role, I was responsible for driving marketing campaigns to increase the company’s global readership, event registrations, and business conference presence in foreign markets. After the first year, I transitioned to identify and manage marketing partnerships for the company – which included international and domestic media, event, and affiliate partnerships within and outside of cannabis.
I felt compelled to make a change amidst the social unrest this summer. I was doing my own protesting and volunteer advocacy in Denver, but started to see more broadly, in the cannabis industry, that cannabis executives and companies were bringing attention to the fact that the War On Drugs has been problematic for minorities and communities of color. There was greater talk about social equity programs and how they are not as effective as they should be. There was greater attention to the fact that over 40,000 people are still incarcerated for the plant that others are profiting from – and that the people behind bars are predominantly coming from communities of color. I was in a position that afforded me the opportunity to see what the composition of the global cannabis industry looked like, and I could see minority representation was lacking in business ownership, leadership positions, and more.
I thought – what is the best way for me to use my talents, insights, and knowledge to affect and change this narrative? Ultimately, I decided to start my own business. Not only was this an opportunity for me to “walk the walk,” being a black man starting a business in this industry where there is a lack of black ownership, but more importantly I was uniquely positioned to be able to educate and let people know about the opportunities to be a part of the booming industry. So, I did some brainstorming and came up with a company, which is called BIPOCANN and it stands for connecting BIPOC communities to the cannabis industry.
The work I have been doing for the last quarter includes directly recruiting people into the industry. If you are curious and want to learn more about the industry, then BIPOCANN can be the entry point. We figure out what your goals are and use the network and our resources to get you connected and figure out where you want to go. Likewise, if you are a service provider, like a graphic designer, accountant, marketer or business owner for example, that sees opportunities for your business to play a role and support it from an ancillary standpoint, BIPOCANN can be an entry point for you too.
The other component to it is working with existing businesses who are trying to make the industry more accessible. I work with existing companies and brands to create platforms that amplify voices and make BIPOC folks more visible, seen and heard within the cannabis industry. We are also helping businesses increase their profitability through diversification tactics and marketing tactics that contribute to their bottom line.
CIJ: Tell me about BIPOCANN- what is it, what are your goals with this project and how has it been received so far?
Ernest: The prohibition of cannabis has disproportionately impacted communities of color in the Americas. I alluded to this earlier, but there are more than 40,000 people behind bars in the U.S. for cannabis possession and use. There’s evidence suggesting that Black Americans are up to six times more likely to get arrested for cannabis use than White Americans despite use rates being the same. And when you look at the makeup of the professional industry, there is poor representation of business ownership by people of color. The Cannabis Impact Fund references that only 4.3% of dispensaries are Black or Latinx-owned. These problems intersect in a lot of ways.
BIPOCANN is a small business working to make the cannabis industry more accessible and profitable for BIPOC professionals and business owners. Now, I know that one company cannot change 100 years of cannabis prohibition and how policy works. But if you want to make this industry more accessible, inclusive, and profitable for those who do not have the access then there are a lot of levers to pull. Policy is one. But BIPOCANN is using more direct strategies. We actively recruit people to come in and be a part of this industry, through employment, entrepreneurship, consulting, and collaborations.
We have also created the BIPOC Cannabis Business Network, a community where members can exchange services, network, and collaborate. It’s all about creating more opportunities for BIPOC professionals and business owners, and it’s a safe space to share your experiences and to ideate. Similar to your Cannabis Quality Virtual Conference, where there was a dedicated space for BIPOC folks to be seen and heard and tell their story through your virtual panels, we use our resources and network to help advocates for equity and access be seen, heard, and find opportunities to thrive as a business owner or professional.
CIJ: How do you hope BIPOCANN will be embraced by the cannabis community?
Ernest: I think it has been received well in its first quarter of business. We have had opportunities to share our story across a lot of platforms, including multiple cannabis industry conferences, podcasts, and interviews with varied media outlets. We are in startup mode, so currently we are about building a brand, being seen, and helping people understand what we are trying to achieve. We are working towards that right now. We have had some success and folks are supporting our vision and goals.
I am hoping the cannabis industry will look at BIPOCANN as another important resource within the social equity, business development, and networking landscape. I don’t want to be seen as a competitor to the organizations and individuals who have been doing similar work in this space, for much longer, but as an ally. Some of our approaches to bring new people into the industry will include strategically aligning communities and markets where we have strong ties – such as state governments, national nonprofits, and global cannabis networks.
CIJ: Where do you see the cannabis industry making progress with respect to diversity and including people of color?
Ernest: When I look at the types of conversations and coverage the industry is having, even compared to last year, it seems like more conferences, media entities, brands, and individual leaders are tuned in and trying to figure out how they can contribute to making this industry better, more equitable and more accessible. I am seeing a lot of more attention, attempts to understand where the gaps are and what to do about it.
When I take a step back to think of all the virtual conferences that have made dedicated conference tracks or even entire programs – like the National Association of Cannabis Business’ Social Equity Conference, the Emerge Canna Conference, the Cannabis Sustainability Symposium, and the Cannabis Industry Journal’s post-election social justice panel – or weekly segments from Black leaders like Dasheeda Dawson (She Blaze) and Tahir Johnson (The Cannabis Diversity Report) — those are good signs. They are creating opportunities for voices representing underserved communities in cannabis to share their perspectives and be advocates for change.
But there is still much to do and that includes greater education about the realities, histories, and challenges BIPOC and other minority communities are facing. Going back to the NACB, they recently drafted a social equity standard for state legislatures to use as a baseline for crafting policies and provisions for social equity programs. That and resources from organizations like the Minority Cannabis Business Association, Supernova Women, Cannaclusive, Minorities for Medical Marijuana, and the Massachusetts Recreational Consumer Council, for example are some useful resources for the industry.
Wana Brands is also continuing to do good work, and it was exciting to see them become the first sponsor of the inaugural Black CannaConference by the Black CannaBusiness Magazine. That was a great example of an industry leader using their dollars, marketing resources, and company values to support an event specifically dedicated to creating, developing, and enhancing Black entrepreneurs and businesses in the cannabis industry.
“It is hard to know what even a year from now will look like.”On the policy front, we just saw on election day cannabis having a ton of success at the polls, passing in every single state where there was a ballot measure.
Arizona did a good job with having social equity provisions directly included in the language on their ballot measure. I think for the states that have yet to draft a social equity program, they can look at what has worked well in some other states and also look at what has not worked well, like loopholes that invite predatory behaviors.
I’m excited to see that Governor Ralph Northam and the Virginia Marijuana Legalization Working Group are already identifying the best ways to make a recreational market a beneficial and sustainable one, and tackling how to incorporate social equity, racial equity, and economic equity into a future legalization bill. I am looking forward to learning more after an upcoming meeting with a Working Group member. Eventually, I hope to contribute towards any social equity efforts that will benefit my home state and hometown (a high poverty community that has been at the crossroads of America’s major civil rights movements, with a correctional facility that houses an inmate population equivalent to nearly 10% of the town population).
CIJ: Where do you see the industry moving in the next five years?
Ernest: Ha-ha! It is hard to know what even a year from now will look like.
Just this week the United Nations rescheduled cannabis, which is a big deal! We also saw the U.S. House of Representatives pass the MORE Act. We are inching closer towards federal legalization in the US and I think it will happen within that five-year timeframe, and it will be contentious. There will be compromises on things some folks don’t want compromises on, there will be more big money influencing the outcomes of the industry, and there will be unforeseen or unintended consequences to whatever the federal legislation looks like. I recently moderated a panel of social equity license holders, who felt that federal legalization would harm the disproportionately impacted areas (by the War on Drugs) even more! Their preference was to see cannabis de-scheduled and remain under state control.
I think federal legalization will bring another wave of major mergers and acquisitions, similar to what the Canadian market experienced in 2019, benefiting big business over small business.“We need folks who are educated and informed about these matters to be at the policymaking level to have a fighting chance.”
CIJ: Do you think we can change that?
Ernest: There are so many things at play. The legislators need to have diverse perspectives and representation from the folks in the industry, especially people of color who can speak to the impact that a century of prohibition policies have had on their communities. Those voices and stories need to be heard, but that type of representation is grossly lacking on Capitol Hill…which is all the more reason we need leaders from the aforementioned communities to have a seat at the table when decisions are made.
I say that because a lot of time there are unforeseen consequences when policies are created, so decision makers at the federal level can learn from those of us already doing the work on the local level. I recently had a conversation with a former journalist and colleague who is currently in a cannabis regulatory role. We were talking about how policy and operations intersect with social equity. He made the points that “many markets implement license caps, which are intended to prevent oversaturation of cannabis business (the idea being that density of outlets impacts use rates, and particularly youth use rates); in theory, that’s a good policy – but it comes with very real consequences for social equity applicants (because those licenses often go to the wealthiest applicants). License caps also artificially inflate the cost of those licenses (for a transfer of ownership), which also harms social equity applicants. Lotteries are also generally the result of policy and usually have disastrous results for the social equity applicant.”
So yeah – the rare opportunity to define a new industry that doesn’t just do business as usual, that can right its historical wrongs, and that will reward the communities that have been most harmed by cannabis enforcement, is now. And we need folks who are educated and informed about these matters to be at the policymaking level to have a fighting chance. The optimist in me says “we can do it!” The pessimist in me reminds me that it is 2020 and people still believe the Earth is flat. I’ll keep pushing for change, but I also won’t be surprised if this perfect opportunity to get it right goes wrong.
CIJ: How can people get involved in BIPOCANN?
Ernest: The best way to get involved is to visit www.bipocann.com and support our efforts by becoming an individual member or business member. Not only does that give you the opportunity to connect directly with other members in our business network, but it gives you the chance to be the first to be notified about the latest projects, events, and opportunities we’re working on to change the industry, how we can. By joining, you also directly support BIPOCANN’s goals, contribute to the operating budget of a black-owned business in cannabis, and support the nonprofit partners who we allocate a percentage of monthly sales towards.
You can also get involved by subscribing to our monthly newsletter through the website or by following our social media accounts @bipocann. We are also available for speaking, media, or consulting projects that support social equity, diversity, and inclusion in cannabis. For those types of inquiries, please contact ernest@bipocann.com.
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Beyond better allocation of human capital, understanding how time is used in the growing operation can suggest changes to materials used in the grow. For example, selecting a growing media that comes in plugs and blocks with pre-drilled holes for efficiently dropping in new plants can reduce time spent filling pots or configuring containers. Automating functions like fertigation and watering can not only reduce labor time but increase the precision of delivery when it comes to water and nutrients.
