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July 19, 2018

How to Protect Your Trademarks When You Can’t Protect Your Trademarks

By David Kluft

Federal trademark registrations are invaluable tools for emerging businesses. They put the world on notice of a company’s name; they can secure nationwide priority over others using similar names; they distinguish a product in the marketplace; they provide crucial advantages in trademark infringement lawsuits; and they are instrumental in building goodwill. But if you sell cannabis, a federal trademark registration will not do any of those things for you … because you can’t get one.

Someday, the USPTO policy may change and there could be a gold rush for federal cannabis trademark registrations.The United States Patent and Trademark Office (USPTO) continues to refuse to register federal trademarks for cannabis businesses, even if the sale of cannabis is legal in the state where the businesses are located. The USPTO’s reasoning goes something like this: federal trademark law allows for the registration of trademarks associated with goods in “lawful” commerce, which means that the goods are not illegal under federal law. Cannabis, and its psychoactive component, THC, remain Schedule I substances under the federal Controlled Substances Act (CSA). Therefore, irrespective of state laws to the contrary, and irrespective of whether the federal law is actually enforced, the manufacture and sale of cannabis is not “lawful” commerce.

This reasoning is of fairly recent vintage. In 2009, by which time about fifteen states had legalized medical cannabis, Attorney General Eric Holder announced that the Drug Enforcement Administration would cease raids on state-sanctioned medical cannabis facilities. The USPTO followed Holder’s lead in 2010 and created a new category of acceptable goods and services for marks related to “medical marijuana.” Within months, however, the USPTO had retreated from this “mistake” and changed its practice manual expressly to preclude such registrations.

David Kluft, partner in the Boston office of Foley Hoag, LLP

Many argue that the USPTO’s position is unjustifiable as a matter of public policy. Making it easier to infringe the trademarks of state-sanctioned businesses does not advance the purposes of the CSA, and it directly undermines a key goal of trademark law, which is to prevent the proliferation of confusingly similar trademarks. But the merits of these arguments have been lost on the USPTO, which continues to refuse to register marks for anything it perceives to be prohibited by the CSA.

So if you own a cannabis business, what can you do to protect your goodwill while the federal government maintains its current policy? Below are some ideas. Admittedly, none of them– individually or collectively – is a substitute for federal registration. But each of them is better than nothing, and all of them may help to establish your ownership and priority when and if the USPTO changes its policy.

State Trademark Registrations. Each state has its own trademark registration system. State registration may offer protection from infringers within the state, or at least within the parts of the state where the registrant operates, and for that reason alone it is probably worth the small cost involved. However, state registration will have little to no efficacy outside the state. You cannot use a State A registration to file a lawsuit in State B, or to stop infringement in State B, or even to prevent conflicting registrations in State B. Additionally, most state trademark registrants, unlike federal registrants, do not benefit from presumptions of validity and ownership in the litigation context.
Related Federal Registrations. Many cannabis businesses also pursue federal registrations for whatever aspects of their business are not prohibited by the CSA. For example, even though the USPTO refused the POWERED BY JUJU mark for cannabis vaporizers (because it was CSA-prohibited “paraphernalia”), it allowed the same company to register the same mark for “vaporizers for smoking purposes not for use with cannabis.” The USPTO has also allowed registrations for cannabis-related business consulting (e.g., CANNACARD; PRAIRIEJUANA); investment analysis (e.g., FORTUNE420); clothing (e.g., CANNABIS COUTURE, THE MARIJUANA COMPANY); and for CBD – as opposed to THC – derivatives (e.g., CBD LIQUID GOLD). Once the USPTO permits federal registrations for cannabis marks and the inevitable disputes over ownership arise, such federal registrations for these related products and services are likely to be highly persuasive evidence in the registrants’ favor. Moreover, even in the current legal climate, federal registrations (especially when cited in a demand letter) are of great practical use in convincing others not to use confusingly similar marks.
Common Law Unfair Competition. Unfair competition is a state common law cause of action that was a precursor to modern trademark law, and it is still available to protect commercial goodwill even in the absence of a state or federal trademark registration. However, unfair competition law has similar territorial restrictions as state registration. In some cases, the protected territory may be even narrower, limited only to the area within which the plaintiff can prove consumer recognition of the mark.
Other Intellectual Property Protection. Copyright law, unlike federal trademark law, has no “lawful” commerce requirement, and the U.S. Copyright Office regularly issues registrations for cannabis-related copyrights. While copyright will not protect a short phrase such as a business name, it will protect a creative logo design or original packaging, and can be very effective when it comes to getting infringing uses taken down from the internet. Note also that the USPTO does not appear to have the same qualms about legality when it comes to patents, and it often grants patent protection to useful, new and non-obvious inventions related to the cannabis industry.
Save stuff. Finally, if you do nothing else, save stuff. Document that first sale; keep a copy of that first shipping invoice; and save that file containing your original packaging design. Someday, the USPTO policy may change and there could be a gold rush for federal cannabis trademark registrations. Your lawyer is going to ask you for proof of your first uses of the mark, and you don’t want your response to be a glassy stare. So keep your eyes on the eventual prize and stay ready.

July 17, 2018

From The Lab

Quality Plans for Lab Services: Managing Risks as a Grower, Processor or Dispensary, Part 3

By Dr. Edward F. Askew

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Editor’s Note: The views expressed in this article are the author’s opinions based on his experience working in the laboratory industry. This is an opinion piece in a series of articles designed to highlight the potential problems that clients may run into with labs.

In the last two articles, I discussed the laboratory’s first line of defense (e.g. certification or accreditation) paperwork wall used if a grower, processor or dispensary (user/client) questioned a laboratory result and the conflicts of interest that exist in laboratory culture. Now I will discuss the second line of defense that a laboratory will present to the user in the paperwork wall: Quality Control (QC) results.

Do not be discouraged by the analytical jargon of the next few articles. I suggest that you go immediately to the conclusions to get the meat of this article and then read the rest of it to set you on the path to see the forest for the trees.

QC in a laboratory consists of a series of samples run by the laboratory to determine the accuracy and precision of a specific batch of samples. So, to start off, let’s look at the definitions of accuracy and precision.QC Charts can provide a detailed overview of laboratory performance in a well-run laboratory.

According to the Standard Methods for the Examination of Water and Wastewater:

Accuracy: estimate of how close a measured value is to the true value; includes expressions for bias and precision.

Precision: a measure of the degree of agreement among replicate analyses of a sample.

A reputable laboratory will measure the Accuracy and Precision of QC samples in a batch of user samples and record these values in both the analytical test report issued to the user and in control charts kept by the laboratory. These control charts can be reviewed by the user if they are requested by the user. These control charts record:

Accuracy (means) chart: The accuracy chart for QC samples (e.g., LRB, CCV, LFBs, LFMs, and surrogates) is constructed from the average and standard deviation of a specified number of measurements of the analyte of interest.

Precision (range) chart: The precision chart also is constructed from the average and standard deviation of a specified number of measurements (e.g., %RSD or RPD) for replicate of duplicate analyses of the analyte of interest.

Now, let’s look at what should be run in a sample batch for cannabis analyses. The typical cannabis sample would have analyses for cannabinoids, terpenes, microbiological, organic compounds, pesticides and heavy metals.

Each compound listed above would require a specific validated analytical method for the type of matrix being analyzed. Examples of specific matrixes are:

Cannabis buds, leaves, oil
Edibles, such as Chocolates, Baked Goods, Gummies, Candies and Lozenges, etc.
Vaping liquids
Tinctures
Topicals, such as lotions, creams, etc.

Running QC analyses does not guarantee that the user’s specific sample in the batch was analyzed correctly.

Also, both ISO 17025-2005 and ISO 17025-2017 require the use of a validated method.

ISO 17025-2005: When it is necessary to use methods not covered by standard methods, these shall be subject to agreement with the customer and shall include a clear specification of the customer’s requirements and the purpose of the test and/or calibration. The method developed shall have been validated appropriately before use.

ISO 17025-2017: The laboratory shall validate non-standard methods, laboratory-developed methods and standard methods used outside their intended scope or otherwise modified. The validation shall be as extensive as is necessary to meet the needs of the given application or field of application.

Validation procedures can be found in a diverse number of analytical chemistry associations (such as AOACand ASTM) but the State of California has directed users and laboratories to the FDA manual “Guidelines for the Validation of Chemical Methods for the FDA FVM Program, 2nd Edition, 2015”

The laboratory must have on file for user review the following minimum results in an analytical statistical report validating their method:

accuracy,
limit of quantitation,
ruggedness,
precision,The user must look beyond the QC data provided in their analytical report or laboratory control charts.
linearity (or other calibration model),
confirmation of identity
selectivity,
range,
spike recovery.
limit of detection,
measurement uncertainty,

The interpretation of an analytical statistical report will be discussed in detail in the next article. Once the validated method has been selected for the specific matrix, then a sample batch is prepared for analysis.

Sample Batch: A sample batch is defined as a minimum of one (1) to a maximum of twenty (20) analytical samples run during a normal analyst’s daily shift. A LRB, LFB, LFM, LFMD, and CCV will be run with each sample batch. Failure of any QC sample in sample batch will require a corrective action and may require the sample batch to be reanalyzed. The definitions of the specific QC samples are described later.

The typical sample batch would be set as:

Instrument Start Up
Calibration zero
Calibration Standards, Quadratic
LRB
LFB
Sample used for LFM/LFMD
LFM
LFMD
Samples (First half of batch)
CCV
Samples (Second half of batch)
CCV

The QC samples are defined as:

Calibration Blank: A volume of reagent water acidified with the same acid matrix as in the calibration standards. The calibration blank is a zero standard and is used to calibrate the ammonia analyzer

Continuing Calibration Verification (CCV): A calibration standard, which is analyzed periodically to verify the accuracy of the existing calibration for those analytes.

Calibration Standard: A solution prepared from the dilution of stock standard solutions. These solutions are used to calibrate the instrument response with respect to analyte concentration

Laboratory Fortified Blank (LFB): An aliquot of reagent water or other blank matrix to which known quantities of the method analytes and all the preservation compounds are added. The LFB is processed and analyzed exactly like a sample, and its purpose is to determine whether the methodology is in control, and whether the laboratory is capable of making accurate and precise measurements.

Laboratory Fortified Sample Matrix/Duplicate (LFM/LFMD) also called Matrix Spike/Matrix Spike Duplicate (MS/MSD): An aliquot of an environmental sample to which known quantities of ammonia is added in the laboratory. The LFM is analyzed exactly like a sample, and its purpose is to determine whether the sample matrix contributes bias to the analytical results. The background concentrations of the analytes in the sample matrix must be determined in a separate aliquot and the measured values in the LFM corrected for background concentrations (Section 9.1.3).Laboratories must validate their methods.

Laboratory Reagent Blank (LRB): A volume of reagent water or other blank matrix that is processed exactly as a sample including exposure to all glassware, equipment, solvents and reagents, sample preservatives, surrogates and internal standards that are used in the extraction and analysis batches. The LRB is used to determine if the method analytes or other interferences are present in the laboratory environment, the reagents, or the apparatus.

Once a sample batch is completed, then some of the QC results are provided in the user’s analytical report and all of the QC results should be recorded in the control charts identified in the accuracy and precision section above.

But having created a batch and performing QC sample analyses, the validity of the user’s analytical results is still not guaranteed. Key conclusion points to consider are:

Laboratories must validate their methods.
Running QC analyses does not guarantee that the user’s specific sample in the batch was analyzed correctly.
QC Charts can provide a detailed overview of laboratory performance in a well-run laboratory.

The user must look beyond the QC data provided in their analytical report or laboratory control charts. Areas to look at will be covered in the next few articles in this series.

July 17, 2018

Tree of Knowledge Inc. Acquires 5% of NYSK Holdings

By Marguerite Arnold

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The Canadian cannabis community has just gotten a new member. Tree of Knowledge, Inc. just became Canada’s newest public cannabis company. The company is also planning on raising $10 million in private placement capital. According to the company’s most current pitch deck, the planned use of proceeds includes $6.5 million for new capex expenditures in Canada and Macedonia plus new product development. The rest is slated for patient and doctor outreach including via social media, new hires and working capital.

Who Is Tree of Knowledge Inc.?

Founded originally in Washington State in 2015, today TOK has a global market presence with CBD products on three continents and is already positioning itself to run with the big boys on the international scene, just on its CBD footprint. In the online marketplace, they are doing business as EVR CBD. That includes state markets in the United States, Europe, South America, Australia and China.

The company also has a distinguished board that includes doctors to former professional sports stars. As of April, the company engaged in a reverse merger with Courtland Capital, a Nevada subsidiary company.

And as of July 2018, the company purchased 5% of NYSK Holdings – a rapidly establishing Macedonian start-up with an eye to the European market – starting with Germany.

Who Is NYSK Holdings?

NYSK Holdings is absolutely on an upward trajectory. The company, founded by Americans with strong ties to the home country along with local partners, broke ground in Skopje, Macedonia last year.

Company principals have been exploring entry into the European market ever since (Macedonia may be in the Balkans, but it is technically not part of the EU). Significantly, this also means that producers there are used to meeting European specs for import purposes, if not hopeful EU inclusion.

Like other EU partners in the west however, (notably Spain and Portugal) labour rates are also much lower than in Germany. This creates a new avenue into the EU and the German market, which is now going to be an import-dominant one until 2020.

What is even more interesting about NYSK? They produce GMP-certified product – both THC and CBD. They have been looking for partners for most of this year. They also had a booth at the ICBC in Berlin, an experience that they found highly satisfactory.

Their strategic importance to TOK is also large. NYSK brings, for the first time, THC products and high-tech processing capacity adjacent to the European Union to a firm with a global footprint.

They might, in other words, have been Europe’s most under-priced production facility. Don’t expect that to last long.

What Is Interesting About The Move

One glance at TOK’s founders, board, andadvisors is enough to establish that this is a company of mostly older Gen X and younger Boomer heavy hitters from other industries who are pooling resources and knowledge to step into a global medical cannabis space. Smartly.

For example, the focus on dosing control, trials and an operational, GMP-certified production facility in Macedonia, plus their Canadian footprint, makes TOK and their partners well suited for “European invasion.” So does their first product – a CBD-based sleep aid.

The cultivation of cannabis at the NYSK facility in Macedonia

This creates, in other words, a company with Canadian and Macedonian production, American entry and global reach, including into countries other cannabis companies have so far not breached (see China), with an interesting, low-cost, lower risk entry profile. Their expanded market entry is also occurring right at a time when Europe, including the about to be Brexited UK, is now moving forward on medical reform sans very much local production.

Perhaps this comes from the experience of the principals. TOK Cofounder Michael Caridi started his involvement in the cannabis industry in Washington State in 2014 after a successful real estate and promotions career on the East Coast (New York) and experience in ex-im. However, Caridi rapidly grew disillusioned with the state’s focus if not an obsessionon a more recreational space than medical users. He and Brian Main, now president of US operations, founded TOK a year later. Current CEO, John-Paul Gaillard, has a history that includes the creator of the Marlboro Classics brand and a stint as the CEO of Nestle Nespresso who put the idea on the map if not kitchen counters globally.

No newbies here when it comes to global market strategies, penetration and experience.

Both companies to watch, for sure.

July 17, 2018

From The Lab

Centrifugal Partition Chromatography Paves the Way for Safer, More Standardized Cannabidiol Drugs

By Lauren Pahnke

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Imagine this: you are taking medication for cancer pain. One day, it works perfectly. The next, you feel no relief. On some days, you need to take three doses just to get the same effect as one. Your doctor can’t be completely positive how much active ingredient each dose contains, so you decide for yourself how much medication to take.

Doesn’t seem safe, right? It is crucial that doctors know exactly what they are prescribing to their patients. They must know that their patients are receiving the exact same dose of medication in their prescription each time they take it, and that their medication contains only the intended ingredients.

consistency is key to creating products that are safe for consumers.In the cannabis industry, lack of certainty on these important factors is a major problem for drug manufacturers as they attempt to incorporate cannabidiol (CBD), a compound found in cannabis that has no psychoactive effects but many medical benefits, into pharmaceutical drugs.

When using these compounds as medications, purity is essential. Cannabis contains a wide variety of compounds. Delta-9 tetrahydrocannabinol (THC) is the most well-known compound and its main psychoactive one¹. Safety regulations dictate that consumers know exactly what they are getting when they take a medication. For example, their CBD-based medications should not contain traces of THC.

The cannabis industry greatly needs a tool to ensure the consistent extraction and isolation of compounds. In 2017, the cannabis industry was worth nearly $10 billion, and it is expected to grow $57 billion more in the next decade². As legalization of medical cannabis expands, interest in CBD pharmaceuticals is likely to grow.

If compounds such as CBD are going to be used in pharmaceutical drugs, consistency is key to creating products that are safe for consumers.

CBD’s Potential

CBD is a non-psychoactive compound that makes up 40 percent of cannabis extracts¹. It is great for medical applications because it does not interfere with motor or psychological function. Researchers have found it particularly effective for managing cancer pain, spasticity in multiple sclerosis, and specific forms of epilepsy³.

Figure 1: The chemical structure of cannabidiol.

Other compounds derived from cannabis, such as cannabichromene (CBC) and cannabigerol (CBG), may also be beneficial compounds with medical applications. CBC is known to block pain and inflammation, and CBG is known for its use as a potential anti-cancer agent¹.

Along with these compounds that provide medical benefits, there are psychoactive compounds that are used recreationally, such as THC.

“It will definitely be an advantage to have cannabis-based medications with clearly defined and constant contents of cannabinoids,” says Kirsten Müller-Vahl, a neurologist and psychiatrist at Hannover Medical School in Germany.

Creating a Standard Through Centrifugal Partition Chromatography

To obtain purified compounds from cannabis, researchers need to use technology that will extract the compounds from the plant.

Many manufacturers use some sort of chromatography technique to isolate compounds. Two popular methods are high performance liquid chromatography (HPLC) and flash chromatography. These methods have their places in the field, but they cannot be effectively and cost-efficiently scaled to isolate compounds. Instead, HPLC and flash chromatography may be better suited as analytical tools for studying the characteristics of the plant or extract. As cannabis has more than 400 chemical entities⁴, compound isolation is an important application.

This method is highly effective for achieving both high purity and recovery.Although molecules such as CBD can be synthesized in the lab, many companies would rather extract the compounds directly from the plant. Synthesized molecules do not result in a completely pure compound. The result, “is still a mixture of whatever cannabinoids are coming from a particular marijuana strain, which is highly variable,” says Brian Reid, chief scientific officer of ebbu, a company in Colorado that specializes in cannabis purification.

Currently, there is only one method available to researchers that completely allows them to isolate individual compounds: centrifugal partition chromatography (CPC).

The principle of CPC is similar to other liquid chromatography methods. It separates the chemical substances as the compounds in the mobile phase flow through and differentially interact with the stationary phase.

Where CPC and standard liquid chromatography differs is the nature of the stationary phase. In traditional chromatography methods, the stationary phase is made of silica or other solid particles, and the mobile phase is made of liquid. During CPC, the stationary phase is a liquid that is spun around or centrifuged to stay in place while the other liquid (mobile phase) moves through the disc. The two liquid phases, like oil and water, don’t mix. This method is highly effective for achieving both high purity and recovery. Chemists can isolate chemical components at 99 percent or higher purity with a 95 percent recovery rate⁵.

“CPC is ideal for ripping a single active ingredient out of a pretty complex mixture,” says Reid. “It’s the only chromatographic technique that does that well.”

The Need for Pure Compounds

High levels of purity and isolation are necessary for cannabis to be of true value in the pharmaceutical industry. Imagine relying on a medication to decrease your seizures, and it has a different effect every time. Sometimes there may be traces of psychoactive compounds. Sometimes there are too much or too little of the compound that halts your seizures. This is not a safe practice for consumers who rely on medications.“It’s hard to do studies on things you can’t control very well.”

Researchers working with cannabis desperately need a technology that can extract compounds with high purity rates. It is hard to run a study without knowing the precise amounts of compounds used. Reid uses a Gilson CPC 1000 system at ebbu for his cannabinoid research. With this technology, he can purify cannabinoids for his research and create reliable formulations. “Now that we have this methodology dialed in we can make various formulations —whether they’re water-soluble, sublingual, inhaled, you name it —with very precise ratios of cannabinoids and precise amounts of cannabinoids at the milligram level,” says Reid.

Kyle Geary, an internist at the University of Illinois at Chicago, is currently running a placebo-controlled trial of CBD capsules for Crohn’s disease. This consistent isolation is helpful for his research, as well. “Ideally, the perfect study would use something that is 100 percent CBD,” says Geary. “It’s hard to do studies on things you can’t control very well.”

The State of the Industry

While CBD is not considered a safe drug compound under federal law in the United States⁶, 17 states have recently passed laws that allow people to consume CBD for medical reasons⁷. Half of medicinal CBD users solely use the substance for treatment, a recent survey found⁸. As the industry quickly grows, it is crucial that consumer safety protocol keeps pace.

In June, the US Food and Drug Administration (FDA) approved the first drug that contains a purified drug substance from cannabis, Epidiolex⁹. Made from CBD, it is designed to treat Dravet Syndrome and Lennox-Gastaut syndrome, two rare forms of epilepsy. FDA Commissioner Scott Gottlieb said in the news release that although the FDA will work to support the development of high-quality cannabis-based products moving forward, “We are prepared to take action when we see the illegal marketing of CBD-containing products with serious, unproven medical claims. Marketing unapproved products, with uncertain dosages and formulations can keep patients from accessing appropriate, recognized therapies to treat serious and even fatal diseases.”

The industry should be prepared to implement protocols to ensure the quality of their CBD-based products. The FDA has issued warnings in recent years that some cannabinoid products it has tested do not contain the CBD levels their makers claim, and consumers should be wary of such products¹⁰. It’s hard to know when or if the FDA will begin regulating CBD-based pharmaceuticals. However, for pharma companies serious about their reputation, there is only one isolation method that creates reliable product quality: CPC.

References:

Lab Manager. (2018, January 3). Cannabinoid Chemistry Infographic. Retrieved from http://www.labmanager.com/multimedia/2017/07/cannabinoid-chemistry-infographic#.WzT2e1MvyMI
BDS Analytics. (2018, February 26). NEW REPORT: Worldwide spending on legal cannabis will reach $57 billion by 2027. Retrieved from https://bdsanalytics.com/press/new-report-worldwide-spending-on-legal-cannabis-will-reach-57-billion-by-2027/
National Institute on Drug Abuse. (2015, June 24). The Biology and Potential Therapeutic Effects of Cannabidiol. Retrieved from https://www.drugabuse.gov/about-nida/legislative-activities/testimony-to-congress/2016/biology-potential-therapeutic-effects-cannabidiol
Atakan, Z. (2012). Cannabis, a complex plant: Different compounds and different effects on individuals. Therapeutic Advances in Psychopharmacology,2(6), 241-254. doi:10.1177/2045125312457586
Gilson. (n.d.). Centrifugal Partition Chromatography (CPC) Systems. Retrieved from http://www.gilson.com/en/AI/Products/80.320#.WzVB2lMvyMI
Mead, A. (2017). The legal status of cannabis (marijuana) and cannabidiol (CBD) under US law. Epilepsy & Behavior, 70, 288-291.
ProCon.org. (2018, May 8). 17 States with Laws Specifically about Legal Cannabidiol (CBD) – Medical Marijuana – ProCon.org. Retrieved from https://medicalmarijuana.procon.org/view.resource.php?resourceID=006473
Borchardt, D. (2017, August 03). Survey: Nearly Half Of People Who Use Cannabidiol Products Stop Taking Traditional Medicines. Retrieved from https://www.forbes.com/sites/debraborchardt/2017/08/02/people-who-use-cannabis-cbd-products-stop-taking-traditional-medicines/#43889c942817
U.S. Food & Drug Administration. (2018, June 25). Press Announcements – FDA approves first drug comprised of an active ingredient derived from marijuana to treat rare, severe forms of epilepsy. Retrieved from https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm611046.htm
U.S. Food & Drug Administration. (2017). Public Health Focus – Warning Letters and Test Results for Cannabidiol-Related Products. Retrieved from https://www.fda.gov/newsevents/publichealthfocus/ucm484109.htm

July 17, 2018

Food Safety: Do You Know What Is In Your Water?

By Radojka Barycki

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Water is essential for life and it is an important part of agriculture and food manufacturing. Water has many uses in the cannabis industry. Among the most common uses are irrigation, ingredient/product processing and cleaning processes.

Water can be the carrier of pathogenic microorganisms and chemicals that can be transferred to food through agriculture and manufacturing practices. Poor quality water may have a negative impact in food processing and potentially on public health. Therefore, development and implementation of risk management plans that ensure the safety of water through the controls of hazardous constituents is essential to maintain the safety of agricultural and manufactured food or cannabis products.

Chemicals can enter the water stream through several sources such as storm water, direct discharge into fields and city water treatment plans.Although there no current regulations regarding the water used in cannabis cultivation and processing, it is highly recommended that the industry uses potable water as standard practice. Potable water is water that is safe for drinking and therefore for use in agriculture and food manufacturing. In the United States, the Environmental Protection Agency (EPA) sets the standards for water systems under the Safe Drinking Water Act (SDWA.)The regulations include the mandatory levels defined as Maximum Contaminant Levels (MCLs) for each contaminant that can be found in water. Federal Drinking Water Standards are organized into six groups: Microorganisms, Disinfectants, Disinfection Byproducts, Inorganic Chemicals, Organic Chemicals and Radionuclides. The agriculture and food manufacturing industry use the SDWA as a standard to determine water potability. Therefore, water testing forms part of their routine programs. Sampling points for water sources are identified, and samples are taken and sent to a reputable laboratory to determine its quality and safety.

Microbiological Testing

Petri dish containing the fungus Aspergillus flavus.
Photo courtesy of USDA ARS & Peggy Greb.

Determining the safety of the water through microbiological testing is very important. Pathogens of concern such as E. coli, Salmonella, Cryptosporidium parvum and Cyclospora sp. can be transmitted to food through water. These pathogens have been known to be lethal to humans, especially when a consumer’s immune system is compromised (e.g. cancer patients, elderly, etc.) If your water source is well, the local state agency may come to your facility and test the water regularly for indicator organisms such as coliforms. If the levels are outside the limit, a warning will be given to your company. If your water source is the city, regular testing at the facility for indicator microorganisms is recommended. In each case, an action plan must be in place if results are unfavorable to ensure that only potable water is used in the operations.

Chemical Testing (Disinfectants, Disinfection Byproducts, Inorganic Chemicals, Organic Chemicals and Radionuclides)

Chemicals can enter the water stream through several sources such as storm water, direct discharge into fields and city water treatment plans. Although, there are several regulations governing the discharge of chemicals into storm water, fields and even into city water treatment plants, it is important that you test your incoming water for these chemicals on a regular basis. In addition, it is important that a risk assessment of your water source is conducted since you may be at a higher risk for certain components that require testing. For example, if your manufacturing facility is near an agricultural area, pesticides may enter the surface water (lakes, streams, and rivers) or the aquifer (ground water) through absorption into the ground or pollution. In this case, you may be at higher risk for Tetrahalomethanes (THMs), which are a byproduct of pesticides. Therefore, you should increase the testing for these components in comparison to other less likely to occur chemicals in this situation. Also, if your agriculture operation is near a nuclear plant, then radionuclides may become a higher risk than any of the other components.

Finally, in addition to the implementation of risk management plans to ensure the safety of water, it is highly recommended that companies working in food manufacturing facilities become familiar with their water source to ensure adequate supply to carry on their operations, which is one of the requirements under the 21 CFR 117. Subpart B – Current Good Manufacturing Practices (cGMPs) for food manufacturers under the Preventive Controls for Human Foods Rule that was enacted under the Food Safety Modernization Act in 2015. Also, adequate supply is part of the Good Agricultural Practices (GAP) The EPA has created a program that allows you to conduct a risk assessment on your water source. This program is called Source Water Protection. It has six steps that are followed to develop a plan that not only protect sourcing but also ensures safety by identifying threats for the water supply. These six steps are:

Delineate the Source Water Protection Area (SWPA): In this step a map of the land area that could contribute pollutants to the water is created. States are required to create these maps, so you should check with local and/or state offices for these.
Inventory known and potential sources of contamination: Operations within the area may contribute contaminants into the water source. States usually delineates these operations in their maps as part of their efforts to ensure public safety. Some examples of operations that may contribute to contaminants into the water are: landfill, mining operations, nuclear plants, residential septic systems, golf courses, etc. When looking at these maps, be sure that you verify the identified sources by conducting your own survey. Some agencies may not have the resources to update the maps on a regular basis.
Determine the susceptibility of the Public Water Source (PWS) to contaminate sources or activities within the SWPA: This is basically a risk assessment. In here you will characterize the risk based on the severity of the threat and the likelihood of the source water contamination. There are risk matrices that are used as tools for this purpose.
Notify the public about threats identified in the contaminant source inventory and what they mean to the PWS: Create a communication plan to make the State and local agencies aware of any findings or accidents in your operation that may lead to contamination of the PWS.
Implement management measures to prevent, reduce or eliminate risks to your water supply: Once risks are characterized, a plan must be developed and implemented to keep risks under control and ensure the safety of your water.
Develop contingency planning strategies that address water supply contamination or service interruption emergencies: OSHA requires you to have an Emergency Preparedness Plan (EPP). This plans outlines what to do in case of an emergency to ensure the safety of the people working in the operation and the continuity of the business. This same approach should be taken when it comes to water supply. The main questions to ask are: a) What would we do if we find out the water has been contaminated? b) What plan is in place to keep the business running while ensure the safety of the products? c) How can we get the operation back up and running on site once the water source is re-stablished?

The main goal of all these programs is having safe water for the operations while keeping continuity of the business in case of water contamination.

July 13, 2018

German Authorities Will Issue New Cannabis Cultivation Bid

By Marguerite Arnold

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According to Kermit the Frog, it’s never easy being green. It is also tough to be “first” in the cannabis biz. Anywhere.

One of the most remarkable features of the first years of state-level legalization in the U.S. was the sheer number of mistakes by the authorities in issuing licenses and bids for state-sanctioned cultivation and dispensation once the voters had forced legalization. There were several state-level “redos” and lots of legal mumbo jumbo thrown around as the green-rush kicked off at the state level.The real news? There is going to be a completely new one.

Fast-forward a couple of years and it is clear this is not just an issue of the confused state of legalization in the U.S.

Canada too, on a federal recreational level, has moved forward in fits and starts. And even though a fall start date to the market has now been enshrined into law, the continued moving target of the same has been a topic of fraught conversations and bargaining ever since the country decided to move ahead with full Monty recreational.

Across the pond, things are not going smoothly on the cannabis front. In the first week of July, the much stalled medical cultivation bid in Germany finally came to a limpid end. It remains to see if there will be any legal “bangs” as it whimpers away.

The real news? There is going to be a completely new one.

A Do-Over

According to documents obtained by Cannabis Industry Journal, the Bundesinstitut für Arzneimittel und Medizinprodukte (or BfArM) issued letters to original bid respondents in the first week of July. The letters appear to have been sent to all parties who originally applied to the first bid – far from the final top runners.

The translation, from German reads:

“We hereby inform you that we have withdrawn the above-mentioned award procedure…and intend to initiate a new award in a timely manner.”

The letter cited the legal decision of March 28 this year by the Düsseldorf Higher Regional Court as the reason the agency cannot award the contract. Specifically, because of “necessary changes to the tender documents…inparticular with regard to time, we have decided to cancel the procedure altogether and initiate a new award procedure.”

Per the letter, the new procedure will be published in the Official Journal of the EU. No date was mentioned.

An Expensive Surprise and a Global Response

Conventional wisdom in the industry about the fate of the first bid has been mixed since last September when the first hint of lawsuits against the procedure began to circulate. Highly placed sources within the industry have long had their doubts about the bid’s survivability, although nobody will talk on the record. The bid process is supposed to be secret.However, it is clear that another bid will be issued

Furthermore, for the last 9 months, BfArM has maintained that the agency would go full-steam ahead with the original tender. None of the major firms contacted by CIJ about this notification would confirm that they had received a similar letter, nor would they comment.

However, it is clear that another bid will be issued. Further, this time, it is also obvious to the extent that it was not before, the applicants will indeed hail from all points of the globe. On top of that, those who are qualified to respond and who missed it last time are unlikely to sit the bid out this time around.

It remains unclear of course, what the response of the finalists to the first bid will be. Including, theoretically,legal action forpotential damages. BfArM was, technically, held at fault by the court. This means that all the companies who made it to the previous “final round” have now suffered at a minimum, an expensive time delay where other outlays of cash were also required. That includes the leasing and retrofitting of high security real estate, but of course,is not limited to the same. If any of these firms do not obtain the bid in the second go around, will they sue?

At press time, there were no cannabis industry companies willing to comment on the matter as this is still a “secret” process – even if it now apparently has come to an end for this round.

Who Is Likely To Be a Major Contender This Time?

German firms who were sleeping the last time this opportunity arose (or brushed it off as a “stigmatized” opportunity) are not likely to sit the second tender offer out. Especially given advancements in legalization if not the industry both in Europe and globally in the period of time the bid has stalled.

Add to that Canadians, Dutch, Israeli and Uruguayan firms, and the mix of applicants this time is likely to be the who’s who of the global cannabis industry. Americans are still not qualified to participate (with experience at least). Why? No federal reform.Domestic cannabis will not be harvested in Germany until at least 2020.

It is also likely to be even more expensive. Not to mention require easy and quick access to European-based or at least easily confirmable pools of cash. It is conceivable that successful applications this time around will not only have to prove that they have a track record in a federally legal jurisdiction but will also have to be able to quickly access as much as 100 million euros. And there are not many cannabis companies, yet, who can do that, outside of the presumed top 10 finalists to the bid.

Will Bid Respondents Be Limited To “Just” the Cannabis Industry?

It is, however, absolutely possible that this time around the bid could include a more established pharmaceutical player or two who realizes that the medical market here has absolutely proved itself. Within the space of a year, according to the most recent “market report” on the industry (from the perspective of one of the country’s largest statutory insurance companies – Techniker Krankenkasse), there are now just over 15,000 patients.

Cannabis, in other words, is no longer an “orphan drug.” It is also still, however, considered a narcotic. For that reason, seasoned European and German players may upset the market even more with an entry via this tender bid.

Here is what is certain for now. Domestic cannabis will not be harvested in Germany until at least 2020. And until that time, it will be a growing, but import-based market.

July 11, 2018

Soapbox

Collaborative Health Model to Advance Cannabis Research

By Rob Adelson

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The projected growth of the legal cannabis market is astounding. According to a report from BDS Analytics, the industry is expected to grow from $9.2B to $47.3B in 2027 in North America, with medical cannabis contributing 33% of that overall growth. While this number is impressive for an industry still in its infancy, I have reason to believe it can be much higher.

In the pharmaceutical industry, treatment of pain and insomnia represent an annual revenue exceeding $140B; concurrently, studies have shown cannabis to be an effective treatment for both conditions. If medical cannabis can capture 10% of that revenue over the next ten years, it essentially doubles the current estimates mentioned above.

So, what stands in our way? Education.

To gain acceptance from the medical community, physicians need to better understand the plant and its therapeutic benefits. To do so, they need more substantial data to prove cannabis’ efficacy before prescribing it to their patients. However, federal illegalities have prevented government-mandated clinical studies, but I believe there’s another way.

By adopting a collaborative health care model, patients and caregivers can work together to track the effectiveness of their cannabis treatments and share their learnings with the larger medical community. With the right tools in place, we can fast-track the research process and provide physicians and politicians with the information they need to make this medicine more approachable and accessible to those who could benefit from it.

By harnessing the power of the community, we can apply learnings from one patient’s cannabis use to help countless others.The Spine Patient Outcomes Research Trial (SPORT) was a five-year study consisting of approximately 2500 patients with back and spine conditions. Participants entered qualitative data into an online portal, including post-surgical results and patient outcomes, to provide a comprehensive insight into treatment methods and their efficacy. Today, others suffering with those same conditions can enter their personal information into an online calculator and receive a prospective treatment plan. Together, patients and their doctors can view results and build a customized plan using more informed decisions about the available treatment options.

Another example comes from OpenNotes– an exploratory study that provides patients with full access to their medical files and the opportunity to input comments about their doctor visits and prognosis and make corrections related to the care they received. Results showed that this process helped patients retain a better understanding of their condition which improved their decision making and resulted in increased adherence to treatment plan protocols because they had greater trust with their doctors.Not only will this improve the patient experience by providing a safer, more sustainable treatment option, it also provides a very significant financial opportunity.

I believe the cannabis industry can take a leadership role in empowering patients to become active participants in their own treatment, while also sharing knowledge with the larger patient and physician communities. In fact, this core belief was the reason I founded Resolve Digital Health. Data-empowered patients not only make better decisions but also enjoy a greater feeling of control over their treatment. The power of collaborative healthcare grows exponentially when the data is shared to educate a broader group. By harnessing the power of the community, we can apply learnings from one patient’s cannabis use to help countless others.

Businesses within the cannabis industry can also leverage this data to create new products and services. For example, insights as to what products work best for certain conditions can help LP’s improve their product offerings and guide recommendations from dispensaries. Through product innovation, companies can make cannabis more accessible to a larger group of patients, who may be currently taking pharmaceuticals. Not only will this improve the patient experience by providing a safer, more sustainable treatment option, it also provides a very significant financial opportunity.

Ultimately, knowledge is power. When patients are empowered to make educated decisions about their health care and doctors are more tuned into the patient-tested cannabis treatment options, it’s a win-win for everyone.

July 11, 2018

Soapbox

Which Safety Standards Work Best for the Cannabis Industry?

By Steven Burton

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Now that governments are legalizing cannabis around the world, the question looms for cannabis businesses seeking legitimacy in the new industry: what safety standards should apply? This question is more difficult as different jurisdictions grapple with defining and implementing legal requirements and struggle to keep up with the pace of growth.

For visionary cannabis business, it makes sense to anticipate requirements – not only from governments, but also from consumers and partners. Most regulations currently focus on security and basic health issues but, in the long-term, the industry that may offer the best model for cannabis businesses isn’t pharmaceuticals, but food. Cannabis (especially edibles) share similar hazards and traceability challenges with food products, so taking the lead from the food industry will be much more applicable and could offer greater benefits.

marijuana buds drying in racks biotrackthc — Dried cannabis curing with RFID tags as part of a traceability system.

Companies that achieve the highest and most flexible certification will enjoy a crucial competitive advantage when it comes to winning market share, popularity and consumer trust. Let’s take a quick look at the different options of food safety (and quality) certifications that cannabis businesses may consider. But first, let’s clarify two important definitions that are necessary to understand the food industry.

Basic Concepts from the Food Industry

The first acronym you should be aware of is GFSI, the Global Food Safety Initiative. GFSI is a food industry-driven global collaboration body created to advance food safety. When it comes to understanding GFSI, the important part to note is that certifications recognized by GFSI (like SQF, FSSC 22000, and BRC) are universally accepted. Companies operating under GFSI-recognized certifications open the most doors to the most markets, providing the highest potential for growth. For this reason, cannabis companies should be aware of and seriously consider seeking GFSI certifications

Secondly, many food safety programs are built around Hazard Analysis Critical Control Points, or HACCP. While many people may talk about HACCP like it’s a certification in and of itself, it is not actually a certification like the others on this list, but rather a methodology that helps companies systematically identify and control biological, chemical, and physical hazards that may arise during food production, handling, and distribution. Companies that adopt this methodology end up with a HACCP plan, which must then be followed at all times to avoid and address health and safety issues. It’s often required for food businesses and is generally required in most of the world, except where ISO 22000 is more common, primarily in Europe and countries whose primary export market is European. Since HACCP plans are also incorporated into most of the other achievable certifications, developing a HACCP program early will build a strong foundation for higher levels of certification.

Certifications for the Cannabis Industry

Now that we understand the basics of GFSI and HACCP, we can see how the certifications that have been developed by and for the food industry may apply to cannabis companies – and which you should consider necessary for your business.

GMP: Good Manufacturing Practice Certification

GMP (or sometimes cGMP) certification requires that companies abide by a set of good manufacturing processes for food and beverage products, pharmaceuticals, cosmetics, dietary supplements and medical devices. Since it really only covers basic sanitation and employee hygiene, it is considered the lowest level of certification in the industry. It is not recognized by GFSI, but GFSI does require all the standard benchmarks of a GMP be met before granting GFSI certification.

While GMP certification is often required, it is far below the standard that should be upheld by any serious businesses. It doesn’t cover many of the different types of hazards associated with food production – that I have argued will become increasingly relevant to cannabis producers – and doesn’t provide a systematic approach to identifying and controlling hazards like a HACCP program would. It’s really just about providing the basic procedures and checks to ensure that the facility is clean and that employees aren’t contaminating the products.

Final Verdict: Recommended, but as the bare minimum. GMP is not sufficient on its own to adequately control the risk of recalls and foodborne illness outbreaks, and it limits a company’s market potential because it lacks the GFSI worldwide stamp of approval.

Some companies consider GMP certification a good place to start if you’re on a tight deadline for distribution in markets where only GMP is required by regulators. I would argue that striving for the minimum standards will be costly in the long run. Health, safety and quality standards are the foundations upon which winning companies are built. It’s critical to develop a corporate culture that will lead to GFSI-recognized programs without major organizational overhaul. Start on the right foot and set your sights higher – obtain a certification that will stand the test of time and avoid the pain and risks of trying to change entrenched behaviors.

SQF: Safe Quality Food Program Certification

SQF is my number one recommendation as the best certification for the cannabis industry. One of the most common certifications in North America, SQF is a food safety management system recognized by retailers and consumers alike. It is administered by the Food Marketing Institute (FMI) and, importantly, recognized by GFSI, which gives companies a huge competitive edge. SQF focuses on the whole supply chain.

SQF was also the first to develop a cannabis program and is currently the leader in this market segment. It is also the scheme that best integrates food safety with quality. Since it is recognized worldwide, SQF provides the greatest leverage to accelerate a company’s growth. Once obtained, products with SQF certification can often jump the queue to enter different regulatory markets.

Final verdict: Highly recommended. A cannabis company with an SQF certification has the greatest advantage because it offers the broadest worldwide reach and keeps companies a step ahead of competitors. It’s also achievable – just this past April, Curaleaf Florida ostensibly became the first cannabis company to achieve SQF certification. It is tough, but fair and practical.

Other Certification Standards

SQF is the top certification that should be considered by cannabis companies, especially outside of Europe. However, the food industry has several other major types of standards that, at this time, have limited relevance to the cannabis industry today. Let’s take a quick look.

When considering GFSI-recognized programs, the main choice for food companies is between SQF, which we’ve covered, and BRC (the British Retail Consortium Certification). BRC has the most in common with SQF but, while SQF was originally developed for processed foods, BRC was developed in the UK for meat products. Today, they are quite similar, but BRC doesn’t focus quite as much on the quality component as SQF does. While BRC could be a good option, they don’t have a program for cannabis and, thus far, do not appear to be as friendly toward the cannabis industry.The food industry has a lot to offer cannabis companies that are anticipating future regulatory changes and market advantages

Across the pond, there are a few other certification standards that are more common than SQF. One of these is ISO 22000, which is the certification for the food-related standard created by the International Organization for Standardization (ISO) in Europe. It is not recognized by GFSI but is the primary system used in Europe. If your market is exclusively in the EU, it might be a good choice for you in the future. However, to date, there is no indication that any cannabis company has achieved ISO 22000 certification. Some cannabis companies have attained certification for other ISO standards like ISO 9001:2015, which specifies requirements for quality control systems, and ISO/IEC 17025 for laboratory testing. These are generally more relevant for the pharmaceutical industry than food and beverage, but still apply to cannabis.

There is the perception that cannabis is more accepted in EU countries like the Netherlands, but the regulatory attitude to cannabis is complicated. In the Netherlands, for example, cannabis isn’t actually legal – “coffee shops” fall under a toleration policy that doesn’t include regulation. Medical cannabis in the Netherlands is all produced by one supplier and several countries in the EU allow for licensed distribution and import, but not domestic production. Various EU countries are trying to keep up with the legalization trend, however. The Czech Republic, Germany, and others all recently introduced legislation for domestic production of cannabis for medical use. For companies with their eye on the EU, it is crucial to watch which regulatory requirements will be implemented in each market and how.

The last certification standard to mention is the result of a compromise between ISO and the more HACCP oriented programs like SQF. FSSC 22000 (Food Safety System Certification) tries to address the gaps between ISO 22000 and GFSI-recognized certifications by introducing another component called PAS 220. Since it is recognized by GFSI, FSSC 22000 is starting to get more traction in the food industry because it makes products a bit easier to export to the EU. FSSC 22000 satisfies the EU ISO standards but isn’t as closely tied to HACCP. We will be keeping an eye on this one.

Final Takeaway

The food industry has a lot to offer cannabis companies that are anticipating future regulatory changes and market advantages – but it’s difficult for cannabis companies to understand all the options available and how each apply to their specific products. While markets adjust beyond the preliminary issue of legality, it’s crucial for companies to look forward and comply with safety and quality standards like SQF. Companies who strive for SQF certification (or other GFSI-recognized certifications as they become available) will find themselves far better prepared to seize market share as cannabis markets blossom.

June 26, 2018

FDA Approves GW Pharma’s Epidiolex

By Aaron G. Biros

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According to a press release, the U.S. Food and Drug Administration (FDA) approved GW Pharma’s drug Epidiolex for the treatment of rare forms of epilepsy. Just a few months ago, news broke of a very encouraging FDA panel assessment, which indicated a positive outlook for the drug’s approval.

In the press release, FDA Commissioner Scott Gottlieb, M.D appeared to indicate an open willingness to explore the medical benefits of cannabis. “This approval serves as a reminder that advancing sound development programs that properly evaluate active ingredients contained in marijuana can lead to important medical therapies,” says Gottlieb. “And, the FDA is committed to this kind of careful scientific research and drug development.” He went on to add:

Controlled clinical trials testing the safety and efficacy of a drug, along with careful review through the FDA’s drug approval process, is the most appropriate way to bring marijuana-derived treatments to patients. Because of the adequate and well-controlled clinical studies that supported this approval, prescribers can have confidence in the drug’s uniform strength and consistent delivery that support appropriate dosing needed for treating patients with these complex and serious epilepsy syndromes. We’ll continue to support rigorous scientific research on the potential medical uses of marijuana-derived products and work with product developers who are interested in bringing patients safe and effective, high quality products. But, at the same time, we are prepared to take action when we see the illegal marketing of CBD-containing products with serious, unproven medical claims. Marketing unapproved products, with uncertain dosages and formulations can keep patients from accessing appropriate, recognized therapies to treat serious and even fatal diseases.

According to the press release, the drug was studied in three randomized, double-blind, placebo-controlled clinical trials with 516 patients who have either Lennox-Gastaut syndrome or Dravet syndrome, the two rare forms of epilepsy the drug is now approved to treat. Epidiolex is an anti-epilepsy drug, taken in a syrup form, with the main active ingredient being cannabidiol (CBD), and less than 0.1 % THC.

June 19, 2018

From The Lab

Quality Plans for Lab Services: Managing Risks as a Grower, Processor or Dispensary, Part 2

By Dr. Edward F. Askew

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In the previous article, I discussed the laboratory’s first line of defense (e.g. certification or accreditation) when a grower, processor or dispensary (user) questions a laboratory result. Now let us look behind this paperwork wall to the laboratory culture the user will encounter once their complaint is filtered past the first line of defense.

It is up to the client (processor, grower or dispensary) to determine the quality of the lab they use.In an ISO 17025 (2005 or 2017) and TNI accreditation, the laboratory must be organized into management, quality and technical areas. Each area can overlap as in the ISO 17025-2017 standard or be required to remain as separate sections in the laboratory as in the ISO 17025-2005 or TNI 2009 standards. ISO 17025 standards (e.g. 2005 and 2017) specifically require a separation of monetary benefits for laboratory results as it applies to the technical staff. This “conflict of interest” (CoI) is not always clearly defined in the laboratory’s day-to-day practices.

One example that I have experienced with this CoI separation violation goes back to my days as a laboratory troubleshooter in the 1990s. I was called into a laboratory that was failing to meet their Department of Defense (DoD) contract for volatile organic hydrocarbon analyses (VOAs) of soil samples by purge trap-gas chromatography-mass spectroscopy. I was required to “fix” the problem. What I determined was:

The analytical chemists performing the VOAs analyses were high school graduates with no coursework in chemistry or biology.
There was no training program in place for these analysts in instrument use, instrument troubleshooting and interpretation of the analytical results.
The only training the analysts received was for simple instrument set-up and basic instrument computer software use. (e.g. Push this button and send results to clerks)
Clerks with a high school degree and no analytical chemistry training in the business office generated the final reports and certified them as accurate and complete.

None of the staff was technically competent to perform any in-depth VOAs analytical work nor was the clerical staff competent to certify the results reported.

When I pointed out these discrepancies to the laboratory management, they declined to make any changes. The laboratory management had a direct monetary interest in completing all analyses at the lowest costs within the time limit set by DoD. If the laboratory did not complete the analyses as per the DoD contract, DoD would cancel the contract and not pay the laboratory.

The DoD, in a “Double Blind” test sample, later caught this laboratory.. A Double Blind test sample is used to check to see if the laboratory is performing the tests correctly. The laboratory does not know it is a test sample. So if the laboratory is cheating, they will be caught.This does not mean that all laboratories have staff or management issues

Once the laboratory was caught by DoD with the Double Blind, laboratory management claimed they were unaware of this behavior and management fired all analytical staff performing VOAs and clerical staff reporting the VOAs results to show DoD that it was a rogue group of individuals and not the laboratory management. The fired staff members were denied unemployment benefits as they were fired with cause. So, the moral to this story is if the analytical staff and specifically the clerical staff had wanted to hold the laboratory management accountable for this conflict of interest, they may have been fired, but without cause. The staff would have kept their reputation for honesty and collected unemployment benefits.

I have witnessed the “CoI above repeatedly over the last 30+ years both in laboratories where I have been employed and as a consultant. The key laboratory culture problems that lead to these CoI issues can be distilled into the following categories:

Financial CoI: In the financial CoI, the laboratory management must turn out so many analytical test results per day to remain financially solvent. The philosophical change that comes over management is that the laboratory is not producing scientific results, but is instead just churning out tests. Therefore, the more tests the laboratory produces, the more money it makes. Any improvement in test output is to be looked upon favorably and anything that diminishes test output is bad. So, to put this in simple terms: “The laboratory will perform the analyses quickly and get the report sent to the user so the laboratory can be paid. Anything that slows this production down will not be tolerated!” To maximize the Return on Investment (RoI) for the laboratory, management will employ staff that outwardly mirrors this philosophy.
I Need This Job CoI: This is the CoI area that poor quality lab technical staff and clerical staff most readily falls into. As outlined in the example above, both the analytical staff and clerical staff lacked the educational credentials, the technical training to be proficient in the use of the analytical instruments, ability to identify problems performing the analytical methods or complications in reporting analytical results. That means they were locked into the positions they held in this specific laboratory. This lack of marketable skills placed pressure on these staff members to comply with all directives from management. What happened to them in the end was regrettable, but predictable. Management can prey on this type of staff limitation.
Lack of Interest or Care CoI: This form of CoI is the malaise that infects poor quality laboratories, but can reach a level in management, quality and technical areas as to produce a culture where everyone goes through the moves, but does not care about anything but receiving their paycheck. In my many years of laboratory troubleshooting this type of CoI is the most difficult to correct. Laboratories where I had to correct this problem required that I had to impress on the staff that their work mattered and that they were valued employees. I had to institute a rigorous training program, require staff quality milestones and enforce the quality of work results. During my years of laboratory troubleshooting, I only had to terminate three laboratory staff for poor work performance. Unfortunately after I left many of these laboratories, management drifted back to the problems listed above and the laboratory malaise returned. This proves that even though a laboratory staff can achieve quality performance, it can quickly dissolve with lax management.

So, what are the conclusions of this article?

Laboratory culture can place profit over scientific correctness, accuracy and precision.
Laboratory management sets the quality of staff that determines the analytical results and report quality the user receives.
Laboratory quality can vary from acceptable performance to unacceptable performance over the lifetime of the laboratory depending on management.
This does not mean that all laboratories have staff or management issues. It is up to the client (processor, grower or dispensary) to determine the quality of the lab they use.

The next article in this series will introduce the user to the specific Quality Control (QC) analyses that an acceptable laboratory should perform for the user’s sample. These QC analyses are not always performed by accredited laboratories as the specific state that regulates their cannabis program does not require them. The use of these QC samples is another example of how laboratory’s with poor quality systems construct another paper work wall.