Tag Archives: Pesticide

Food processing and sanitation

Sanitation Starting Points: More Than Sweeping the Floors and Wiping Down the Table

By Ellice Ogle
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Food processing and sanitation

Sanitation is not just sweeping the floors and wiping down the table – sanitation has a wide-ranging function in a cannabis food manufacturing facility. For example, sanitation covers the employees (and unwanted pests), food-contact equipment (and non-food-contact equipment), trash disposal (including sewage), and more. Ultimately, sanitation systems maintain a clean environment to prevent foodborne illness from affecting human health. Fortunately, there are resources and tools to ease into establishing a robust sanitation program.

Overall, the main goal of sanitation is to produce safe food, to keep consumers healthy and safe from foodborne illness. With the cannabis industry growing and gaining legalization, cannabis reaches a larger, wider audience. This population includes consumers most vulnerable to foodborne illness such as people with immunocompromised systems, the elderly, the pregnant, or the young. These consumers, and all consumers, need and deserve safe cannabis products every experience.

FDAlogoTo produce safe food, food manufacturing facilities in the United States must at least follow the Food and Drug Administration (FDA)’s Code of Federal Regulations Title 21 Chapter I Subchapter B Part 117, current good manufacturing practice, hazard analysis, and risk-based preventive controls for human food. Although cannabis is currently not federally regulated, these regulations are still relevant for a cannabis food manufacturing facility since the same basic principles still apply. Also, these regulations are a good resource to simplify a comprehensive sanitation program into more manageable components, between sanitary operations and sanitary facilities. With more manageable components, the transition is smoother to then identify the appropriate tools that will achieve a thorough sanitation program.

Sanitary operations

1) General maintenance of the facilities: The buildings and fixtures of the food manufacturing facility cover a lot of ground – hiring a maintenance team will divide the responsibility, ensuring the entire facility can be maintained in a clean and sanitary condition. Furthermore, a team can build out a tool like a preventative maintenance program to restrict issues from ever becoming issues.

Figure 1: Dirty Cloth Towel in Dirty “Sanitizer” Solution
Dirty Cloth Towel in Dirty “Sanitizer” Solution (an example of what NOT to do)

2) Control of the chemicals used for cleaning and sanitizing: Not all chemicals are equal – select the appropriate cleaning and sanitizing chemicals from reputable suppliers. Obtain the right knowledge and training on proper use, storage, and proper protective equipment (PPE). This ensures the safe and effective application of the chemicals in minimizing the risk of foodborne illness.

3) Pest control: Understand the environment within the facility and outside the facility. This will aid in identifying the most common or likely pests, in order to focus the pest control efforts. Keep in mind that internal pest management programs can be just as successful as hiring external pest control services.

4) Procedures for sanitation of both food-contact and non-food-contact surfaces: Developing sanitation standard operating procedures (SSOPs) provides guidance to employees on appropriate cleaning and sanitizing practices, to balance effective and efficient operations. A master sanitation schedule can control the frequency of indicated sanitation procedures.

5) Storage and handling of cleaned portable equipment and utensils: Cross contamination in storage can be minimized with tools such as controlled traffic flow, signage, training, color coding, and more.

Sanitary facilities

6) Water supply, plumbing, and sewage disposal: Routine inspections of plumbing, floor drainage, and sewage systems prevent unintended water flow and damage.

7) Toilet facilities: Clearly defining standards for the toilet facilities and setting accountability to everyone who uses them will ensure that the toilet facilities are not a source of contamination for the food products.

Food processing and sanitation
PPE for all employees at every stage of processing is essential

8) Hand-washing facilities: Good manufacturing practices (GMPs) include proper hand washing and proper hand washing starts with suitable hand-washing facilities. For example, frequent checks on running water, hand soap, and single use towels ensure that all hands are clean and ready to produce safe food.

9) Trash disposal: While trash can be a source of cross contamination, trash can also attract and harbor pests. Scheduling regular trash disposal and controlling traffic flow of waste are two ways to minimize the risk of cross contamination from trash.

Bonus

Even after meeting these requirements, sanitation programs can be more sophisticated. An example is to institute an environmental monitoring program to verify and validate that the sanitation program is effective. Another example is in identifying and measuring key performance indicators (KPIs) within the sanitation program that can improve not just the sanitation processes, but the operations as a whole. Principally, sanitation is cleanliness on the most basic level, but waste management can encompass sanitation and grow into a larger discussion on sustainability. All in all, sanitation programs must reshape and evolve alongside the company growth.

Sanitation is interwoven throughout the food manufacturing process; sanitation is not a single task to be carried out by a sole individual. As such, it is beneficial to incorporate sanitation practices into cannabis food manufacturing processes from the beginning. Protect your brand from product rework or recalls and, most importantly, protect your consumers from foodborne illness, by practicing proper sanitation.

The Need for Standardization in Medical Cannabis Testing

By Andrew James
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There has been a move towards the legalization of cannabis for medical and/or recreational use across many countries and US states in recent years, leading to greater demand for accurate potency and safety testing. Despite this, there are currently no standardized regulations between states or countries for quality control including content, composition, adulterants, potency or levels of toxic residues. As such, in many cases where regulations are in place, testing is generally carried out at a small number of approved independent testing laboratories.

The need for self-regulation has led to the growth of portable gas chromatography (GC) being used in the field of cannabis testing.This lack of clarity makes it difficult for consumers to make informed decisions about what they are purchasing, an issue which could be damaging to the industry’s changing reputation. As it stands, producers of cannabis and cannabis-derived products can supply goods with potentially harmful contaminants such as fungi or pesticide residues, which are potentially threatening to human health. Most cannabis products sold legally in the US are required to be tested and labelled for THC, the chemical responsible for most of cannabis’s psychoactive effects. A US study found that as few as 20% of recreational cannabis products are accurately labelled with only 17% of products reviewed accurately labelled for THC content (i.e. within 10% of the labeled value). It also found 23% were under labelled, and 60% were over labelled.

If cannabis were to be categorized as a regulated pharmaceutical drug, it would be rigorously tested to comply with stringent rules and regulations regarding quality and safety of the product, as are all other drugs. However, as there is currently no centralized regulatory body that oversees this, the responsibility of quality assurance falls to the grower, manufacturer and sometimes the consumer.

The Need for Cannabis Analysis

The most common requirement when testing cannabis is positive identification and quantification of the total THC:CBD ratio. In a highly competitive marketplace, this information is important, as cannabis consumers tend to equate THC levels with price. In many instances, lower THC products are cheaper and higher THC concentrations make products more expensive. Without robust systems in place for sufficient testing, this information cannot be accurately determined, meaning the customer often cannot make an informed decision.

Pesticide use is surprisingly common in the cannabis cultivation industry

In addition to potency testing, one of the core issues facing the industry and by extension, the end consumer, is the prevalence of pesticides in cannabis products. In the Netherlands, the Ministry of Environment and Health reported that over 90% of cannabis plants tested had pesticides on them. While steps have been taken to tackle this, the lack of cohesion in testing standards combined with the onus on individual labs to carry out testing, has led to some issues within the industry.

Many individual retailers in the U.S. and internationally are self-testing for impurities such as pesticides, heavy metals and microbials. While there is a clear need for standard testing across all locations, the need for self-regulation at present has led to the growth of portable gas chromatography (GC) being used in the field of cannabis testing.

Using GC as an analytical tool 

With the increased need for quality control and quality assurance in the largely unregulated cannabis industry, technology is now more accessible to smaller companies and to people with minimal laboratory experience. There are a range of cannabis testing packages available for smaller individual labs which offer more mobile testing with affordable packages. The lower entry price makes GC analysis affordable for more laboratories while still delivering reliable, high quality results.

Portable GC instruments can offer high quality potency testing, pesticide screening, terpene and flavor profiling, and residual solvents analysis. These instruments can give growers and processors an accurate result of cannabinoid percentages, a fundamental piece of information for growers and dispensaries. Systems can be configured for manual injection or a range of autosampler options can be added.

The structure of cannabidiol (CBD), one of 400 active compounds found in cannabis.

GC enables the rapid and accurate identification and quantification of the THC:CBD ratio. This is important for companies which are carrying out self-testing as it allows their customers to have assurances in the short term over the quality of their product, as well as reducing any potential risks to public health.

An example of this in practice is the use of GC by Dutch company Shamanics which carries out testing service for coffee shops in the Netherlands. The company conducts terpene analysis and potency testing to assure the quality of the products it supplies, with a portable GC, which offers the flexibility required without any established guidelines on testing in place.

When testing for potency using the GC, they look for total THC and CBD by converting the acidified versions of the cannabinoids into neutral forms within the heat of the GC injector. The process has flexibility which means that if they need to see both the acidified and neutral versions, they can do this by derivatizing the sample. The accuracy of this process is crucial to Shamanics and similar companies within the industry so that they can accurately judge the quality of a product, and relay this information to retailers and consumers.

The future of GC in standardized testing

While the growing availability of portable GC instruments and the increasing sophistication of individual labs means more companies are able to self-test products, there is still a significant hurdle to overcome in terms of standardising and regulating both the medical and recreational cannabis markets. Where regulation is brought in it should be consistent across states and countries and most importantly, it should be monitored and enforced. In the meantime, responsible producers are using the technology available to them to provide consumers with guarantees that their cannabis products are safe and of a high quality.

HACCP

Implementing a HACCP Plan to Address Audit Concerns in the Infused Market

By Daniel Erickson
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HACCP

The increasing appeal and public acceptance of medical and recreational cannabis has increased the focus on the possible food safety hazards of cannabis-infused products. Foodborne illnesses from edible consumption have become more commonplace, causing auditors to focus on the various stages of the supply chain to ensure that companies are identifying and mitigating risks throughout their operations. Hazard Analysis and Critical Control Points (HACCP) plans developed and monitored within a cannabis ERP software solution play an essential role in reducing common hazards in a market currently lacking federal regulation.

What are cannabis-infused products?

Cannabis infusions come in a variety of forms including edibles (food and beverages), tinctures (drops applied in the mouth), sprays (applied under the tongue), powders (dissolved into liquids) and inhalers. Manufacturing of these products resembles farm-to-fork manufacturing processes common in the food and beverage industry, in which best practices for compliance with food safety regulations have been established. Anticipated regulations in the seed-to-sale marketplace and consumer expectations are driving cannabis infused product manufacturers to adopt safety initiatives to address audit concerns.

What are auditors targeting in the cannabis space?

The cannabis auditing landscape encompasses several areas of focus to ensure companies have standard operating procedures (SOP’s) in place. These areas include:

  • Regulatory compliance – meeting state and local jurisdictional requirements
  • Storage and product release – identifying, storing and securing products properly
  • Seed-to-sale traceability –  lot numbers and plant identifiers
  • Product development – including risk analysis and release
  • Accurate labeling –  allergen statements and potency
  • Product sampling – pathogenic indicator and heavy metal testing
  • Water and air quality –  accounting for residual solvents, yeasts and mold
  • Pest control – pesticides and contamination

In addition, auditors commonly access the reliability of suppliers, quality of ingredients, sanitary handling of materials, cleanliness of facilities, product testing and cross-contamination concerns in the food and beverage industry, making these also important in cannabis manufacturers’ safety plans.

How a HACCP plan can help

HACCPWhether you are cultivating, harvesting, extracting or infusing cannabis into edible products, it is important to engage in proactive measures in hazard management, which include a HACCP plan developed by a company’s safety team. A HACCP plan provides effective procedures that protect consumers from hazards inherent in the production and distribution of cannabis-infused products – including biological, chemical and physical dangers. With the lack of federal regulation in the marketplace, it is recommended that companies adopt these best practices to reduce the severity and likelihood of compromised food safety.

Automating processes and documenting critical control points within an ERP solution prevents hazards before food safety is compromised. Parameters determined within the ERP system are utilized for identification of potential hazards before further contamination can occur. Applying best practices historically used by food and beverage manufacturers provides an enhanced level of food safety protocols to ensure quality, consistency and safety of consumables.

Hazards of cannabis products by life-cycle and production stage

Since the identification of hazards is the first step in HACCP plan development, it is important to identify potential issues at each stage. For cannabis-infused products, these include cultivation, harvesting, extraction and edibles production. Auditors expect detailed documentation of HACCP steps taken to mitigate hazards through the entire seed-to-sale process, taking into account transactions of cannabis co-products and finished goods at any stage.

Cultivation– In this stage, pesticides, pest contamination and heavy metals are of concern and should be adequately addressed. Listeria, E. coli, Salmonella and other bacteria can also be introduced during the grow cycle requiring that pathogenic indicator testing be conducted to ensure a bacteria-free environment.

Harvesting– Yeast and mold (aflatoxins) are possible during the drying and curing processes. Due to the fact that a minimal amount of moisture is optimal for prevention, testing for water activity is essential during harvesting.

Extraction – Residual solvents such as butane and ethanol are hazards to be addressed during extraction, as they are byproducts of the process and can be harmful. Each state has different allowable limits and effective testing is a necessity to prevent consumer exposure to dangerous chemical residues.

Edibles– Hazards in cannabis-infused manufacturing are similar to other food and beverage products and should be treated as such. A risk assessment should be completed for every ingredient (i.e. flour, eggs, etc.), with inherent hazards or allergens identified and a plan for addressing approved supplier lists, obtaining quality ingredients, sanitary handling of materials and cross-contamination.

GMPFollowing and documenting the HACCP plan through all of the stages is essential, including a sampling testing plan that represents the beginning, middle and end of each cannabis infused product. As the last and most important step before products are introduced to the market, finished goods testing is conducted to ensure goods are safe for consumption. All information is recorded efficiently within a streamlined ERP solution that provides real-time data to stakeholders across the organization.

Besides hazards that are specific to each stage in the manufacturing of cannabis-infused products, there are recurring common procedures throughout the seed-to-sale process that can be addressed using current Good Manufacturing Practices (cGMP’s).  cGMPs provide preventative measures for clean work environments, training, establishing SOPs, detecting product deviations and maintaining reliable testing. Ensuring that employees are knowledgeable of potential hazards throughout the stages is essential.Lacking, inadequate or undocumented training in these areas are red flags for auditors who subscribe to the philosophy of “if it isn’t documented, it didn’t happen.” Training, re-training (if necessary) and documented information contained within cannabis ERP ensures that companies are audit-ready. 

Labeling

The importance of proper labeling in the cannabis space cannot be understated as it is a key issue related to product inconsistency in the marketplace. Similar to the food and beverage industry, accurate package labeling, including ingredient and allergen statements, should reflect the product’s contents. Adequate labeling to identify cannabis products and detailed dosing information is essential as unintentional ingestion is a reportable foodborne illness. Integrating an ERP solution with quality control checks and following best practices ensures product labeling remains compliant and transparent in the marketplace.

Due to the inherent hazards of cannabis-infused products, it’s necessary for savvy cannabis companies to employ the proper tools to keep their products and consumers safe. Utilizing an ERP solution that effectively manages HACCP plans meets auditing requirements and helps to keep cannabis operations one step ahead of the competition.

Soapbox

Cannabis Pioneers vs. Cannabis Innovators: Who Has the Advantage?

By Jeff Arbour
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In today’s innovation marketplace, everybody wants to be the first. Tech and non-tech companies alike are racing to raise capital for crypto, blockchain and AI, yet these sectors and technologies are still not even close to mass adoption.

Today’s entrepreneurs are obsessed with disruption. While this is obvious in the world of tech, it may soon be overshadowed by the nascent cannabis industry in the United States. Every time a new state opens an application submission period for a new cannabis dispensary, hundreds of companies apply. Each new market and state have pre-existing demand. Until recently, obtaining cannabis was difficult for many and illegal.

Often, the latecomers who learn from pioneers’ mistakes are the ones who earn the greatest successes.

Most of these companies apply in good faith, only to run into unforeseen problems as the regulatory landscape changes. This is part of the risk inherent to pioneering and disrupting industries. Often, the latecomers who learn from pioneers’ mistakes are the ones who earn the greatest successes.

The Difference Between Pioneering and Innovating

In the world of commerce, paving the way for a new product to hit the market is usually a thankless, time-consuming task. It exposes the weaknesses of the market’s operators and invites newcomers to disrupt the already unstable status quo.

Although household names like Levi’s and Wells Fargo owe their success to the California Gold Rush, historians pay relatively little attention to the hundreds of thousands of casualties the Gold Rush caused. Pioneers paved the way, and innovators – like Levi Strauss – profited from the result.

Similarly, when it comes to cars, Peugeot and Tatra are not household names like Ford and Honda. Henry Ford’s assembly line innovations and Honda’s unbeatable factory flexibility led to those younger companies becoming far more successful than their older counterparts.

Pioneers change the way an industry operates. Airbnb did not succeed because it offered superior service compared to the powerful and deep-pocketed hotel industry. It succeeded because it improved the model that HomeAway and VRBO launched years prior – and did so in a way that undermined the hotel’s typical strengths while capitalizing on their weaknesses.

Pioneering disruption is not equal to innovation, and the cannabis industry will follow the same course.

Although pioneering the creation of new business models is an admirable thing to do, it’s not for everyone. Airbnb has been fighting regulators since the very beginning. The company has been forced to pay fines and taxes that simply didn’t exist until Airbnb’s business model came into being.

Uber’s regulatory troubles regularly make headlines around the world. Although it successfully disrupts every market it enters, established taxi companies and newcomers like Taxify often get the last laugh when they implement Uber-like functionality into existing business models. Uber found it too difficult to compete in China and sold its business to local newcomer Didi Chuxing.

All of these cases demonstrate that being the first or early to introduce a business concept comes with many challenges. Pioneering disruption is not equal to innovation, and the cannabis industry will follow the same course.

Cannabis Industry Pioneers vs. Innovators

In the cannabis industry, being the first often meant living in constant fear of being arrested. During the early years of medical cannabis legislation, it was unclear whether federal authorities would raid and prosecute cannabis cultivators and dispensaries.

Every new cannabis market offers important, expensive lessons to future cannabis entrepreneurs:

  • California changed its cannabis product packaging laws several times before its market went live.
  • Oregon’s lack of state inspectors led to a laboratory testing bottleneck and an upsurge in black market cannabis diversion that the state’s last audit called “currently unstoppable.”
  • The two largest medical marijuana cultivation facilities in Illinois cost about $40 million to build, yet they compete over a market of less than $10 million.
  • Major pioneers like Medmen have paid enormous sums of money to gain entrance into regulatory environments they can’t accurately predict profits from.

Newer cannabis industry entrepreneurs are taking notice of all these obstacles and implementing plans to overcome them. It’s likely that the next generation of medical and recreational dispensaries will have far greater success than today’s biggest names, primarily due to this fact.

Consider the fact that all three of the S&P’s biggest cannabis industry companies have valuations far in excess of their actual sales. It is possible that these large, deep-pocketed organizations will generate enough revenue to justify their valuations, but in the meantime, newer players will enter the picture with greater responsiveness and startup efficiency.

Newcomers to the cannabis industry are setting themselves up for success with highly targeted business objectives, strong executive teams and high-impact advisors. They are navigating the regulatory landscape with more agility than early cannabis pioneers can muster, obtaining lower price-to-sales ratios in the process.

Cannabis entrepreneurs need to be creative in their assessment of the opportunities these new environments create.

This is the hallmark of innovation. While disruptions and inventions typically take the form of new products or services, innovations expand marketplaces and lay the groundwork for new interactions between economic actors in those marketplaces.

What Tomorrow’s Cannabis Innovators Can Do Now

States like Pennsylvania, New York, and New Jersey are currently leaning towards recreational marijuana legislation like those currently in place in Colorado and California. Cannabis entrepreneurs need to be creative in their assessment of the opportunities these new environments create.

Opening a cannabis company is no small task. As regulators gradually come to agree on the requirements each state will ask its business owners to meet, the next generation of pioneering cannabis entrepreneurs will have to adapt. At the same time, a relatively small contingent of innovators – the new generation of Levi Strauss’s – will coincide to provide much-needed products and services to the incoming rush.

These innovators will not be limited to one side of the industry. Innovation thrives on integration, and tomorrow’s cannabis entrepreneurs are going to develop streamlined solutions for tackling today’s inefficiencies in ways that simply are not possible right now. These lean, sophisticated startups will use that path paved by the first generation of cannabis industry incumbents.

Cannabis innovators will need to develop solutions for minimizing the costs and complications of setting up companies in highly regulated environments. This can mean anything from developing superior seed-to-sale tracking POS integrations to building a more efficient supply chain and a path to the consumer.

With luck, the next generation of cannabis entrepreneurs will look to the past when informing their strategic decisions for the future.

Matt Engle
Soapbox

Insurers Must Play Catch-Up to Meet Cannabis Industry Needs

By Matt Engle
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Matt Engle

As the cannabis industry continues to grow, demand for insurance products is also increasing. While insurers have been cautious about entering a market that carries the stigma of a Schedule I drug, the cannabis industry is clamoring for insurance coverage options tailored to meet the needs of key players— distributors, growers, processors and retail dispensaries.

The escalating need for insurance products tailored to these cannabis business sectors has not expedited an increase in coverage offerings. The slow entry of insurance carriers into the cannabis sector can be tied to a reluctance to insure an industry with emerging and often unknown risks. This will begin to change as more information becomes available on what loss ratio trends look like in the cannabis industry.

For now, there is a wait-and-see stance held by insurance carriers. This presents a major concern for cannabis-related businesses that are subject to risk at every stage of the supply chain, with particular exposure for theft, general liability, crop loss, and product liability.some degree of crime and theft coverage is needed for these enterprises to help manage the risks associated with a cash-based business

Theft

For cannabis companies, the use of paper currency is a huge part of their risk exposure. Federal banking regulations have limited these businesses to dealing mostly in cash, which makes them a prime target for crime and fraud. Currently, only one carrier will insure coverage for cash and theft risk, and the policy is limited to $1 million for most risks. This is inadequate coverage since many operators have more than that amount on-site.

In states with legislation legalizing cannabis, the cannabis sector will be able to move away from operating in cash if Congress passes the Secure and Fair Enforcement (SAFE) Banking Act, which would protect financial institutions from liability for federal prosecution that could arise from servicing cannabis-related businesses authorized under state law. Until banking regulations give the cannabis industry the ability to operate as legitimate businesses with the stability and safety that would deter criminal activity, some degree of crime and theft coverage is needed for these enterprises to help manage the risks associated with a cash-based business.

General Liability

Cannabis-related businesses need the same general liability coverage as other businesses to protect their premises and operations from lawsuits involving public contact. However, standard general liability policies—which exclude Schedule I substances from coverage—were not created with cannabis businesses in mind. It is still difficult for these businesses to obtain adequate general liability as a result of the legal uncertainty associated with the industry.

Product Liability

Product liability exposures for cannabis businesses encompass a wide range of areas, including edibles, vaporizers, pesticides, mold/fungus, misrepresentation, label claims, breach of warranty, deceptive practices, and failure to warn.

A major area of exposure concerns accidents resulting from impairment. A cannabis cultivator, processor, distributor, or retailer potentially may be considered liable in the event a product defect results in injury after reasonable use or when label defects fail to warn users that a product may have psychoactive effects.

Another area of risk exposure involves products that contain THC, the psychoactive compound that gives cannabis users a high. As the number of THC-containing products such as edibles and tinctures increases, so does the potential exposure to product liability claims for manufacturers and retailers.

The California Cannabis Track-and-Trace (CCTT) system also has implications for product liability. The CCTT is a statewide system used to record the inventory and movement of cannabis and related products through the commercial supply chain. All state cannabis licensees, including those with licenses for cultivation, manufacturing, retail, distribution, testing labs and microbusinesses, are required to use this system. The product liability impact lies in its capacity to determine responsibility along the supply chain from seed to sale.

For example, if a plastic vape pen explodes, a product liability lawsuit could have repercussions for many touch points across the supply chain beyond the manufacturer of the pen–all of which can be identified through CCTT. Entities that touch cannabis products such as soil suppliers or delivery persons also have product liability risk exposure. Personal injury attorneys can find incident-related parties easily and determine liability. This makes it particularly important to add these parties to the policy as additional insureds to help reduce claims exposure.

Crop Loss

Another area of concern for risk exposure is crop loss. Crop insurance is generally hard to obtain due to the significantly different nature of cannabis crops compared to traditional crops like corn or soybeans.

Fires in Sonoma County devastated cannabis crops in Northern California back in 2017.

An indoor crop insurance policy covers cultivators when there is loss resulting from threats such as fire, theft, and sprinkler leakage. However, crop insurance policies generally do not cover losses resulting from mold, rot, disease, changes in climate, or fertilization issues. Many growers forgo this coverage and instead elect to absorb losses and regrow their crops.

Outdoor crop coverage is generally unavailable, or the cost is prohibitive. Any potential for writing outdoor crop insurance for the cannabis industry essentially disappeared as a result of the recent wildfires in California. These devastating fires highlighted the pressing need for property damage and business interruption coverage for growers and dispensaries and other downstream businesses whose supply was disrupted. This lack of available outdoor crop insurance is one of the more notable gaps in available cannabis business insurance coverage.

While cannabis businesses operating in states that have legalized medical and/or recreational cannabis use have challenges getting adequate insurance coverage, there is some good news on the insurance front for those in California. Last year, California’s insurance commissioner announced approval for carriers to offer insurance coverage specifically to cannabis businesses. The state also approved a cannabis business-owners policy (CannaBOP) program that provides a package policy containing both property and liability coverage for qualifying dispensaries, distributors, manufacturers, processors and storage facilities. Colorado is on the verge of being the second state to approve its version of a CannaBOP program.

While more insurance carriers are beginning to write cannabis coverage, the limited insurance options and policies with restrictive plans currently offered todaydo not meet the needs of the cannabis industry. Insurers must catch up to the coverage requirements of this sector by offering more options tailored to growers, retail dispensaries, processors and distributors with better terms and better pricing.

Water Policy in California: Six Key Takeaways from the State Water Board’s New Cannabis Cultivation Policy

By Amy Steinfeld
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Cannabis is the most highly regulated crop in California, and the state just added another layer of regulation. This article breaks down the State Water Resources Control Board’s (SWRCB) recently updated Cannabis Cultivation Policy – Principles and Guidelines for Cannabis Cultivation (“Policy”) into six key takeaways.1 These guidelines impose new rules on cannabis cultivation activities that have the potential to impact a watercourse (stream, creek, river or lake). Most of these rules apply to cultivation of sun-grown cannabis, which is currently allowed in some form in 12 counties. Compliance with these new requirements will be implemented through the CalCannabis Cultivation Licensing Program.

  1. When developing farmland, hillsides should be avoided and erosion must be controlled.

The Policy provides specific rules for growing pot on undisturbed land. To prevent erosion, numerous limitations are placed on earthmoving and activities in sensitive areas, and cultivators are not allowed to grade hillsides that exceed a 50% slope.2

Cultivation prepping activities must minimize grading, dust, soil disturbance, erosion, and impacts on habitat, especially during the winter season.3 No vehicles or heavy equipment may be used within a riparian setback4 or watercourse,5 and cultivators must avoid damaging native riparian vegetation6 and oak woodlands.7 All farm equipment, fuel, and hazardous materials must be carefully stored away from creeks and sensitive habitat.8 The Policy also governs road construction.9

  1. Cultivators should avoid work in or near a surface waterbody.10

If a cultivator’s activities impact a river, stream, or lake, they must consult with the California Department of Fish and Wildlife (CDFW).11 Cultivators must maintain minimum riparian setbacks for all cannabis activities, including grading and ancillary farm facilities. Before grading land, a biologist must identify any sensitive flora or fauna, and if any is located, consult with CDFW and provide a report to the Regional Board.12 No irrigation runoff, tailwater, chemicals or plant waste can be discharged to a waterbody.13 Diversion facilities for the irrigation of cannabis may not block fish passage, upstream or downstream, and must be fitted with a CDFW-approved fish screen; new facilities are subject to all applicable permits and approvals.

  1. During the dry season, cultivators may not use surface water.

The use of surface water supplies in California requires a valid water right and the use of water for cannabis cultivation is no different.14 Anyone seeking to appropriate “water flowing in a known and defined channel” or from a watercourse must apply to the SWRCB and obtain a permit or license.15 Alternatively, a landowner whose property is adjacent to a watercourse may have a riparian right to divert the water for use on her land. Riparian users do not need permission from the SWRCB to divert water, but they must report water use annually.16

The biggest obstacle that growers face under this Policy is that they cannot divert anysurface water during the dry season—the growing season (April 1 through Oct. 31). It should be noted:

  • The seasonal prohibition of surface water diversion applies regardless of the nature of the water right or what has been historically used to irrigate other crops.
  • During the dry period, cultivators may only irrigate using stored water (see no. 5 below) or groundwater.
  • It remains to be seen whether a legal challenge will be brought against the state for their draconian prohibitions on irrigating cannabis during the six-month growing season. Because this prohibition applies to all watersheds in California, singles out one low-water use crop, and ignores established water rights, it is overly broad and may constitute a constitutional “taking” of property rights.
  1. During the wet season, surface water diversions must be monitored closely.

Cannabis-specific restrictions also apply during the wet season. From Nov. 1 to March 31, cultivators must comply with instream flow requirements and check in with the state daily. All surface water diversions for cannabis are subject to “Numeric and Narrative Instream Flow Requirements,” to protect flows needed for fish migration and spawning. To ensure diversions do not adversely impact fish flows, cultivators must also “maintain a minimum bypass of at least 50% of the streamflow.”17,18

While valid appropriative right holders may divert more than 10 gal./min. for cannabis irrigation during the wet season, riparian right holders are not allowed to exceed that diversion rate.19 All cultivators (including small diverters <10 acre-feet (“AF”)/yr) are required to employ water-saving irrigation methods, install measuring devices to track diversions daily, and maintain records on-site for at least five years.20 Cultivators must inspect and repair their water delivery system for leaks monthly,21 and inspect sprinklers and mainlines weekly to prevent runoff.22

  1. Cannabis cultivators may obtain a new water storage right for use during the dry season.

To address dry season irrigation limitations, cultivators are urged to store water offstream during the wet season, including rainwater, for dry season use. Growers may not rely on onstreamstorage reservoirs, except if they have an existing permitted reservoir in place prior to Oct. 31, 2017.23 Alternatively, small growers (storage is capped at 6.6 AF/yr) may benefit from the new Cannabis SIUR Program, an expedited process for cultivators who divert from a surface water source to develop and install storage offstream. Only diverters with a valid water right that allows for diversion to storage between Nov. 1 and March 31 qualify.

  1. Groundwater is less regulated, but cultivators should avoid drilling or using wells near waterbodies.

Groundwater is generally the recommended water supply for cannabis because, unlike surface water, it may be used during the dry season and is not subject to many of the restrictions listed above. It should be noted however:

  • Many groundwater basins are now governed by California’s Sustainable Groundwater Management Act (“SGMA”), which requires water agencies to halt overdraft and restore balanced levels of groundwater pumping from certain basins. Thus, SGMA may result in future pumping cutbacks or pumping assessments.
  • In some counties, moratoriums and restrictions on drilling new wells are on the rise.
  • Under this Policy, the state may step in to restrict groundwater pumping in the dry season in watersheds where there are large numbers of cannabis groundwater, wells located close to streams, and areas of high surface water-groundwater connectivity.24

In short, groundwater pumpers are at risk of cutback if the state deems it necessary to maintain nearby creek flows.Noncompliance can bring lofty fines, revocation of a grower’s cultivation license, or prosecution

Final Takeaways

This cannabis policy presents one of California’s most complex regulatory schemes to date. Before investing in a property, one must understand this Policy and have a robust understanding of the water rights and hydrology associated with the cultivation site. Growers looking to reduce permitting time and costs should invest in relatively flat, historically cultivated land with existing wells and ample groundwater supplies, or alternatively, grow indoors.

This article attempts to synthesize the maze of water supply and water quality regulations that make compliance exceedingly difficult; more detailed information can be found here. Noncompliance can bring lofty fines, revocation of a grower’s cultivation license, or prosecution. Growers are encouraged to contact a hydrologist and water lawyer before making major investments and to designate a water compliance officer to monitor and track all water diversions and water used for irrigation. Growers should also consult with their local jurisdiction regarding water use restrictions and stream setbacks before moving any dirt or planting cannabis.


References

  1. The Policy is available at: https://www.waterboards.ca.gov/water_issues/programs/cannabis/cannabis_policy.html (will go into effect on or before April 16, 2019.)
  2. Policy, Appendix A, Section 2, Term 4. The Policy defines “Qualified Professional” as a: California-Licensed Professional Geologist, including Certified Hydrogeologist and Certified Engineering Geologist, California-Licensed Geotechnical Engineer, and Professional Hydrologist. (Policy, Definition 72, p. 11.)
  3. Policy, Appendix A, Section 2, Terms 4 and 10.
  4. Policy, Appendix A, Section 2, Term 3.
  5. Policy, Appendix A, Section 2, Term 40.
  6. Policy, Appendix A, Section 2, Term 33.
  7. Policy, Appendix A, Section 2, Term 34.
  8. Policy, Appendix A, Section 2, Term 7.
  9. Policy, Appendix A, Section 2, Terms 15 to 29.
  10. Policy, Appendix A, Section 1, Term No. 41.
  11. Policy, Appendix A, Section 1, Term No. 3; see also 1602.
  12. Policy, Appendix A, Section 1, Term No. 10.
  13. Policy, Appendix A, Section 1, Term No. 326.
  14. Policy, Appendix A, Section 2, Term 69.
  15. Wat. Code §1225; See alsoWat. Code §1201 [providing that the state shall have jurisdiction over, “[a]ll water flowing in any natural channel” except water that is appropriated or being used for beneficial purpose upon land riparian to the channel.”]
  16. Wat. Code §§ 5100–02.
  17. Policy, p. 12.
  18. Policy, Attachment A, pp. 60, 63.
  19. Policy, Section 2, Term 78.
  20. Policy, Section 2, Term 82.
  21. Policy, Section 2, Term 95.
  22. Policy, Section 2, Term 99.
  23. Policy, Section 2, Term 79.
  24. Policy, p. 11.

Introducing the Cannabis Quality Conference & Expo

By Aaron G. Biros
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An educational and networking event for cannabis safety and quality solutions: Innovative Publishing and Cannabis Industry Journal are pleased to present the first annual Cannabis Quality Conference & Expo (CQC). The conference will take place October 1-3, 2019, hosted at the Renaissance Schaumburg Convention Center in Schaumburg, Illinois.

The inaugural CQC will consist of two separate tracks: The Cannabis Labs track, focused on all things cannabis lab testing, and the Cannabis Quality track, focusing on quality in cannabis product manufacturing.

Sharing an exhibit hall and meeting spaces right alongside the Food Safety Consortium Conference & Expo, the CQC allows cannabis professionals to interact with senior level food quality and safety professionals, as well as regulators. Visit with exhibitors to learn about cutting-edge solutions, explore two high-level educational tracks for learning valuable industry trends, and network with industry executives to find solutions to improve quality, efficiency and cost effectiveness in a quickly evolving cannabis marketplace.

The CQC will be hosted at the Renaissance Schaumburg Convention Center in Illinois (just outside of Chicago)

With the cannabis industry in the Midwest growing at a rapid pace, the CQC offers attendees, exhibitors and sponsors unparalleled access to explore these emerging markets, their regulations, opportunities for business growth and best practices from the more established food industry.

For information on speaking opportunities and to submit an abstract, click here to view the Call for Proposals. The CQC will be accepting abstracts for consideration until June 3, 2019. For information on exhibiting, as well as additional sponsorship opportunities, contact RJ Palermo, Sales Director, rj@innovativepublishing.net, (203) 667-2212.

Take advantage of this chance to connect with cannabis industry and food safety professionals in the Greater Chicago Area. Don’t miss this opportunity to network with hundreds of industry stakeholders, get the latest on regulatory developments and see the newest technology disrupting the cannabis space.

The 9th CannaGrow Expo

The ultimate weekend dedicated to the art & science of growing cannabis.
The CannaGrow Expo is open to all, 18+, and is intended for cannabis growers, grow managers, extractors, and grow enthusiasts to explore the latest cannabis cultivation technology, tools, and techniques. CannaGrow Palm Springs will feature a selection of 35+ cultivation-focused educational sessions lead by world-class growers over two action-packed days, endless networking with cultivators from around the globe, and a 125+ booth expo hall packed with the latest tools & technology for growing and extracting cannabis.

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Third-Party Cannabis Safety Audits & How to Prepare in 7 Steps

By Tyler Williams
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Unlike the food industry, the cannabis industry is still in its infancy. Which means there is not a push from retailers demanding cannabis farmers, extractors or manufacturers to get third-party audits. In fact, most grow operations supply into their own dispensaries. So why should a cannabis farmer, extractor or manufacturer get a third-party audit? Third-party audits are crucial to maintaining product safety and quality by providing a third set of eyes to verify what is working and what is not. Besides regulatory requirements and customers requiring your facility to get a third-party audit, there are numerous other benefits to receiving an audit. Some of these benefits include:

  • Improvement to product safety
  • Improvement to product quality and consistency
  • Meeting regulatory compliance
  • Eliminating potential risks and possible recalls
  • Marketing advantages over competitors who are not audited by a third-party
  • Improvement to consumer confidence and an increase to brand loyalty

How to Prepare for a Third-Party Audit

Working for a certification body, I am in the unique position to see numerous sites go through the certification process. In this position I have seen both extremes: Sites that spend 6-8 months and a lot of resources preparing for an audit, as well as sites that wait until the day before to even look at the audit standard. Unfortunately, the latter is almost always going to fail the audit. Here are seven steps for preparing for your next third-party audit.“By failing to prepare, you are preparing to fail.”– Benjamin Franklin

  1. Start Preparing Early

Think of your third-party audit as a college exam one month away. You could start studying for the exam now and get a real understanding of the material or you could wait until the day before to start your no-sleep, energy drink-fueled, 24-hour cram session. We all know which preparation method will get a better score on the exam. Now let’s apply that same strategy to your third-party audit. Once you have decided what audit is best for your site and have those specific standards in your hand, the clock starts ticking and you should already be preparing for the audit, whether it is one month or six months away.

  1. Get Management Commitment

It is essential to the entire cannabis safety and quality system to have commitment from top down. Without this, the site will not get the resources (people, equipment, money, time, etc.) they need to pass a third-party audit. Management commitment is so important that it is often seen as its own section in most modern audit standards. It is very easy for third-party auditors to identify when there is a lack of management commitment in a site. Therefore, if you don’t get management commitment, then you are already starting off the audit on a bad note.

  1. Create a To-Do-ListGMP

Think of the entire audit checklist or standard as your long to-do list. Some things, like attaining a certificate of analysis (COA) from a supplier, may only need to be done annually. While other things, such as ensuring employees are following Good Manufacturing Practices (GMPs), will need to be done continuously throughout day to day operations. Go through the audit checklist and separate what needs to be done annually, semiannually, quarterly, monthly and continuously throughout day to day operations. This will give you a list with all of the frequencies of each different requirement.

  1. Teamwork“Teamwork makes the dream work, but a vision becomes a nightmare when the leader has a big dream and a bad team.” – John C. Maxwell

The preparation of an audit should never rest on the shoulders of one person. Yet this is something I tend to see too often in both food and cannabis facilities alike. Your site should establish a cannabis safety and quality team of multidiscipline personnel that have an impact on product safety and quality. Once the team is established, various tasks from the to-do-list can be disbursed among all the members of the team. Collaboration is key to successfully preparing for a third-party audit, especially when the timelines are very stringent.

  1. Training

Training is essential to preparing for your third-party audit. This is what closes the gaps between what the safety and quality department have developed and what your front-line employees are applying. All employees should know what part of the audit standard applies to them. Additionally, employees should be trained on interview questions that the auditor might ask them during the audit. Helping them prepare for these types of questions will help ease their nerves and allow them to answer the questions with self-assurance when it comes time to the actual audit.

  1. Conduct Internal Audits

Conducting internal audits is not only a great way to prepare for your third-party audit, it’s a requirement. You should always use the audit checklist to observe your documents and facility to see where there are gaps. If possible, the person or team conducting the internal audit should never review their own work. Additionally, all issues or non-conformances should be noted, evaluated, corrected and closed out.

  1. Third-Party Pre-Assessment or Mock Audit (Optional)

A third-party pre-assessment or mock audit is the closest thing you can get to an actual audit. This is where a company would come in and evaluate your site to the specific standards and give a formal report over any deficiencies found during the assessment and how to fix them. This is a great way to test your preparedness before the actual audit.