Tag Archives: standards

October 19, 2016

Q&A with Lezli Engelking: Why Are Standards Important?

By Aaron G. Biros, Lezli Engelking

Lezli Engelking founded the Foundation of Cannabis Unified Standards (FOCUS) in 2014 to protect public health, consumer safety, and safeguard the environment by promoting integrity in the cannabis industry through the use of standards. Standards are an agreed upon way of doing things and specify guidelines or requirements for producing goods or providing services, according to FOCUS.

Peter Maguire, committee chair of the FOCUS Cultivation Standard

Standards can take the form of a “reference document, which may include specifications, guidelines, conditions or requirements for products, operations, services, methods, personnel and systems on how to design, operate, manufacture or manage something.” Peter Maguire, VP of System Applications for Lighthouse Worldwide Solutions and committee chair of the FOCUS Cultivation standard, joined the organization wanting to make a positive impact on the industry that is in line with protecting people and medical patients. He sees so much variability in the industry and the need to homogenize standard operating procedures (SOPs). “I have worked with multiple cultivation facilities and a few of them have operating procedures in place but having them in place is only half the solution- it’s critical to have the right ones in place,” says Maguire. He has twenty years of experience in contamination control in manufacturing, before entering the cannabis industry.

The FOCUS cultivation standard was created by experts who have years of experience in both cannabis cultivation, good agricultural practices and in the tightly regulated pharmaceutical industry. “FOCUS created these guidelines as a sort of roadmap for success in business; You need to keep your employees healthy and your products safe to survive in the long term,” says Maguire. We sit down with Lezli Engelking to find out how the standards are created, what makes them significant and what businesses can gain by working with them.

CannabisIndustryJournal: Why are standards important?

Lezli: Standards are the international language for trade – they exist in every industry. “The U.S. Department of Commerce estimates that standards and conformity assessment impact more than 80% of global commodity trade.” FOCUS is not reinventing the wheel with what we are doing. We are simply adapting a business model the federal government already uses. In the 80s, when the heroin epidemic swept across the US, methadone clinics popped up in every state in the country within two years. The clinics were all operating under different state, city and county regulations – much like the cannabis industry is today. The federal government took a look at the situation and decided they needed a way to regulate these clinics in order to protect public health and safety. They released a Request For Proposal (RFP) looking for an organization to create voluntary-consensus standards and a third-party certification system for the methadone clinics. Commission on Accreditation of Rehabilitation Facilities (CARF) is the organization that answered and won that RFP. CARF continues to work with Health and Human Services to maintain the standards and provide third-party certification to the clinics today. FOCUS develops international, voluntary consensus standards and a third party certification program for the global cannabis industry based on the CARF model. This is extremely important, because of the National Technology Transfer and Advancement Act, (Public Law 104-115), signed into law March 7, 1996 by President Clinton. The act requires that all federal agencies use standards developed by voluntary-consensus standards bodies, instead of government-unique standards wherever possible. Perhaps even more importantly, the Act includes provisions that encourage federal agencies to partner with the private sector in the development of standards that not only help improve the efficiency and effectiveness of government, but also strengthen the U.S. position in the global marketplace.

CIJ: What exactly goes into developing a voluntary-consensus standard?

Lezli: Voluntary-Consensus refers to the type of standard and how it is developed. Everyone who participates in the development of voluntary-consensus standards does so on a voluntary basis. Committee members must come to a consensus on every point within the standard- down to every comma or semicolon. Once the development process is complete, the standards must undergo a 30-day public review period. The process for developing voluntary-consensus standards is designated by International Organization for Standardization (ISO). ISO has member agencies in 163 countries that participate in the development of standards. The American National Standards Institute (ANSI) is the American body for ISO. FOCUS follows all ISO/ANSI guidelines in the standards development process. This is extremely important because it means FOCUS standards are suitable for accreditation and adoption into regulations according to the National Technology Transfer and Advancement Act. All voluntary-consensus standards are developed under the principles of:

Openness| Participation in the standard development process is open to individuals with a stake in the standard who bring useful expertise along with the spirit and willingness to participate.
Balance| Focus stakeholder groups involve all stakeholder groups: industry, regulatory, quality assurance, medical, law enforcement, business, research, consumers, patients and the general public.
Voluntary-Consensus| Individual subcommittees of volunteers develop each area of the standard, offering their unique expertise to form a consensus. They are not paid for their participation.
Lack of Dominance| No party has dominant representation, or influence to the exclusion of fair and equitable consideration of other viewpoints.

CIJ: More specifically, how are the FOCUS standards developed?

Lezli: To create a baseline standard, FOCUS utilized World Health Organization (WHO) guidelines for Good Manufacturing Practices (GMP), Good Agricultural Practices (GAP), Good Laboratory Practices (GLP), Code of Federal Regulations (CFR) for pharmaceutical GMPs, nutraceutical GMPs, food safety standards, OSHA and HACCP. From there, applicable cannabis regulations from around the world were added. All of this information was compiled into auditor-style checklists. Each committee member was provided time to go edit, remove or add to items in the checklist on their own. Over the next two years, each of the eight committees had monthly meetings, going through and coming to a consensus on each line item of the standard. Once the committees completed development, the standards were open for a 30-day Public Review to collect comments and feedback. The first eight FOCUS standards, completed and ready for use, cover Cultivation, Retail, Extraction, Infused Products, Laboratory, Security, Sustainability and Packaging & Labeling.

FOCUS is currently recruiting committee members to begin development of five new cannabis standards later this year: Advertising/Marketing, Insurance, Banking/Finance, Patient Care and Research. Committees will receive a list of proposed suggestions for what should be considered in developing the standards. Each committee member will develop a list to select criteria they think should be included into the standard. FOCUS will compile the lists, then committees will go through the monthly standards development/vetting process for each line item in the standard.

CIJ: So what does a business have to gain by adopting a FOCUS standard?

Lezli: Compliance becomes easily manageable with the FOCUS software platform, integrating standards, training and SOPs into the everyday operations of the business. FOCUS certified clients could expect to reduce costs, reduce risk and reduce liability by assuring they are producing safe, quality and consistent products. FOCUS certification allows a business to differentiate themselves from their competitors, and prove to their patients and customers they can trust their products. Certification also allows businesses to access reasonable insurance rates and drives interest from investors.

FOCUS is here to partner with cannabis businesses. We are there to hold their hand, by providing guidance and assistance along every step of the way. Unlike state mandated audits that delineate what a business is doing right or wrong, FOCUS is an on-going compliance management system. We are here to make sure a business runs as efficiently as possible and take the guesswork out of compliance. Under FOCUS certification, a business receives ongoing consulting, customized SOPs, employee training and a documentation management software system to track and prove compliance.

CIJ: Can you give us an update on FOCUS’ progress in 2016?

Lezli: A large milestone for FOCUS this year, aside from completing version one of the standards, is choosing an appropriate software platform, (Power DMS) to house the standards and provide an ongoing compliance management system for our clients. Power DMS also houses regulatory standards for law enforcement; health care, federal aviation and fire departments, so most agencies in public health are already familiar with it. The familiarity and access to this platform is a huge benefit on the regulatory side. It allows first responders to access the schematics of a FOCUS certified client in the event of an emergency. This is crucial in the event of an explosion from extraction equipment, or a fire in a cultivation facility, as without first identifying where the hazards are, they will not access the facility. The FOCUS software platform allows first responders access to all pertinent information through computers in police cars, ambulances, or fire trucks.

For the industry, the FOCUS software platform is equally as impressive. Not only does the platform house the standards and all SOPs, it is also complete compliance management system. FOCUS certified clients have a simple management tool that houses all training and documentation, assuring all required compliance documentation can be easily accessed at any time. The platform also allows FOCUS certified clients to provide access to governing bodies in advance of state audits –streamlining the process and minimizing time and interruption caused by state audits. The FOCUS platform tracks all changes to required documents, provides real time updates on employee training, creates appropriate traceability logs, and provides updates on regulatory changes, including which SOPs need to be changed to maintain compliance. The platform allows FOCUS to be way more than an auditing company. FOCUS is a partnership in compliance for cannabis companies wanting to maintain good business practices and stay compliant with regulations.

We have about 140 new committee members that will assist existing committees with standards updates and participate in the development of the next set of FOCUS standards for advertising/marketing, banking/finance, research, patient care and insurance. All committees will convene before 2017.

March 31, 2016

A Case for Compartmentalization: Problems with Perpetual Harvest Models in Cultivation, Part II

By Adam Koh

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In the first part of this series, I presented some issues with perpetual harvest models for cultivation with respect to inefficiencies in technology and environmental monitoring. I made the case for compartmentalizing cultivation facilities to not only increase energy efficiency, but also to mitigate contamination and control risks for pest incursions. In the second part of this series, I will elaborate on how compartmentalizing your facility can help you stay compliant with pesticide use regulations and promote worker safety.

Problems with Pesticide Use and Worker Safety Regulations

Where there are pests there are pesticides, whether they are low-toxicity materials derived from natural sources or chemical products that are illegal to use on cannabis. Even in the case of growers that are following current pesticide guidelines and using only products approved by their state department of agriculture, perpetual harvest models present issues in ensuring that the workplace is safe for employees and compliant with pesticide use regulations.

One obvious difficulty is the impossibility of containing drift from pesticides applied as foliar sprays. At this point, due to the lack of research performed on pesticides and cannabis, there are currently no defined pre-harvest intervals (PHI), even for products allowed for use on cannabis. A pesticide’s PHI is the number of days that must pass between the time of the last application of a pesticide and when the crop is cut for harvest. While no official, research-based PHIs have been outlined for pesticide use on cannabis, most conscientious cultivators refrain from spraying their crops with anything once flowers have emerged, as the resinous, sticky buds and their many crevices would presumably retain a great amount of any material applied to them. However, flowers do not generally emerge fully until the third week of the flowering process, and many growers apply preventative applications in the first two weeks of flower. In a perpetual harvest facility, what is to stop drift from applications made early in flower from contacting plants close to harvest? One could simply not spray in flower at all, but eliminating early-flower preventative treatments could increase the chances of a pest incursion, which, as discussed above, can be seemingly intractable in this type of facility.

It is important to consider the restricted entry interval (REI) when dealing with pesticide use. The REI of a pesticide is the period of time after an area is treated during which restrictions on entry are in effect to protect people from exposure to hazardous levels of pesticide residues. Most of the products and materials approved for use on cannabis in Colorado have no REI or a relatively short one. At the time I left my former facility, the longest REI for any product in use was twelve hours (for Evergreen Pyrethrum Concentrate), though most had REIs of four hours or less. This issue could be avoided in a perpetual harvest facility by simply always scheduling pesticide applications at the end of the workday; if a product is sprayed at 6 PM, for example, then the treated area should be safe for entry by the following morning when employees arrive. However, what is to be done if a pest incursion is discovered in the middle of the day and an immediate treatment is necessary to prevent its spread? Would the management or ownership of such a facility be willing to clear out the entire perpetual harvest area for 4-12 hours, potentially leaving other tasks unperformed or incomplete, so that a few plants could be sprayed? Even if operators went to such lengths to observe REIs properly, instances such as the hypothetical described above would create massive interruptions in daily workflows and scheduled tasks that are highly undesirable in a well-managed commercial setting. Compartmentalization allows for essential tasks in a single room that might need an emergency treatment to be completed in a timely manner, and cordoned off after the pesticide application to observe the REI.

A final point concerning this topic is that perpetual harvest facility designs make it difficult to observe certain requirements of the Worker Protection Standard (WPS). WPS is administered by the EPA (but is enforced by the Colorado Department of Agriculture (CDA) in that state) and consists of training intended to reduce the risk of pesticide poisoning and injury among agricultural workers and pesticide handlers. WPS training is required for all agricultural workers and pesticide handlers, including those in the legal cannabis industry. One requirement of WPS is that employers provide decontamination supplies for their employees in case of accidental pesticide exposure or poisoning. Sandra McDonald is a pesticide safety expert and owner of Mountain West PEST, which provides WPS and other training to farmers of all crops in Colorado. She states that decontamination supplies cannot be stored in areas that are to be or have been treated by pesticides (such as perpetual harvest rooms, for the purposes of this discussion), as the applications could possibly contaminate the decontamination supplies with pesticide residues, making them useless or even dangerous.

So, in a perpetual harvest facility, where does one store decontamination materials? Again, while there are solutions to this question, they are not ideal. The materials would of course have to be located outside the perpetual harvest room, the entirety of which is a “treated area” at one time or another. But, in facilities the size of the ones under discussion, it could be difficult for an employee who has been exposed to pesticides to reach an eyewash station if he or she has to navigate the expansive perpetual harvest room, as well as a doorway or two, in order to gain access to safety supplies located somewhere that pesticide contamination is not a risk. McDonald notes that most of the products approved for use on cannabis by the CDA would not require immediate decontamination. However, as not to downplay the very real risks posed by some approved products, she also points out that first aid statements on the labels of such pesticides recommend at least 15-20 minutes of continuous rinsing in the case of a worker getting pesticides in his or her eyes, and treatment that takes place sooner rather than later is obviously preferable. Additionally, there are some approved materials with high pH levels that could be immediately damaging if a worker splashed them in his or her eyes.

The issues raised by perpetual harvest designs in respect to pesticide use and worker safety are amplified greatly if businesses operating perpetual harvest facilities employ or have employed chemical pesticides that are illegal for use on cannabis. Unfortunately, the illegal application of restricted-use pesticides has revealed itself to be widespread, as examples from Colorado and Washington illustrate. One of the most commonly used illegal products, Eagle 20EW, carries with it a 24 hour REI. This means that to properly observe this safety measure, employees would be required to keep clear of the treated area for a full day, which I find unlikely to be enforced considering the daily requirements of a cultivation facility. Drift again poses a problem, but a much more serious one compared to the products on the CDA’s approved list.

Recommendations

It should be obvious by now that, when considering facility or site design, compartmentalization is desirable and necessary. This goes for greenhouse and outdoor production, as well as indoor. In fact, some outdoor farmers in the Emerald Triangle area of northern California work multiple, separate parcels to hedge against the threat of crop loss wiping out their entire year’s efforts. Though the discussion above focused mostly on flowering plants; propagation, vegetative, and mother areas should be separate as well, as they effectively contain all future harvests and are therefore of paramount importance.

The appropriate amount of compartmentalization will vary depending on the operation. In most agricultural businesses, some amount of loss is expected and incorporated into plans and budgets. In terms of areas for flowering plants, they should be compartmentalized to an extent that, should a severe infestation or systems failure occur, the loss of expected revenue from one or more rooms or areas will not cripple the business. Such loss should not happen often in a well-run, well-equipped facility. However, I have seen the drastic damage that russet mites can cause, in addition to experiencing the dread that permeates an entirely darkened warehouse after a transformer explosion, and would advise that cash flow projections take into account the possible loss of a harvest or two from a single room per year, just to be safe.

In cannabis farming, as in all agriculture, we must plan for the worst and hope for the best. Compartmentalization is a fundamental and effective safeguard against small pest incursions becoming widespread infestations, while allowing for grow areas to be fully sterilized and decontaminated after a harvest without completely interrupting all operations. It also allows for the observance of REIs, PHIs (even self-imposed ones), and certain WPS guidelines much more easily than perpetual harvest models. Finally, while costing more up front, ongoing operational expenses can be lessened, with a greater return on the energy that is used. While the benefits of wide-open spaces are frequently touted in a variety of contexts, cannabis cultivation is one where being boxed in is preferable to ensure that your employees, plants, and investment are protected.

March 18, 2016

Cannabis Labs Conference Makes History at Pittcon

By Aaron G. Biros

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Last week’s Pittcon, the world’s leading conference and expo for laboratory science, brought together thousands of laboratory equipment companies, scientists and laboratory professionals in Atlanta. This year’s meeting made history, as it featured Pittcon’s first cannabis conference.

Generating quite a bit of buzz at the show in Atlanta, the inaugural Cannabis Labs Conference brought Pittcon attendees, cannabis industry leaders and scientists together to discuss the changing landscape of cannabis testing, the need for standards and cannabis laboratory methods. The improvement of quality standards, outside industry expertise and noting the industry still has a long way to go were some of the themes that came out of the talks.

Nic Easley, chief executive officer of Comprehensive Cannabis Consulting (3C), delivered the keynote, addressing concerns over consumer safety and lab testing standards in such a fast-paced market. “What we need now are outside industry experts to help guide this industry with standards and proper analytics,” he said. “With increased efficiencies and competition in the cannabis marketplace, our ethics need to be called into question as the industry reaps its profits.”

Other highlights included the sharing of new validation methods. Scott Radcliffe, technical support scientist at Romer Labs, Inc., presented his findings on the validation of immunoassays for the detection of pathogens and mycotoxins in cannabis. Amanda Rigdon, applications chemist at Restek, Inc., also led a discussion on the opportunities and challenges for method validation in the evolving cannabis industry.

Rigdon provided a glimpse into the amount of work it takes for method validation. “You can have all of the regulations in the world but that does not guarantee that you will produce good data,” Rigdon said. “We need good science, which is lacking currently in the industry.”

rigdoncannabislabs — Amanda Rigdon, applications chemist at Restek, leading a talk on method validation

“We need to show proficiency with a standardized method and that comes through full validation which, requires a lot of money, time and work,” Rigdon added. These components of validation include accuracy, precision, recovery, selectivity, specificity and proper instrument calibration. “The bottom line is labs need a method that is reproducible and robust,” she said. Rigdon also shared her data from recent methods validation at a cannabis laboratory in Spokane, Washington.

Next year’s Cannabis Labs Conference is scheduled to take place in Chicago during the week of March 5, 2017. To hear more about the Cannabis Labs Conference, sign up for the CannabisIndustryJournal newsletter.

March 9, 2016

Nic Easley Delivers Keynote at Cannabis Labs Conference

By Cannabis Industry Journal Staff

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Nic Easley, chief executive officer at Comprehensive Cannabis Consulting (3C), delivered the keynote address at the first annual Cannabis Labs Conference, co-located with Pittcon. Easley set the tone of the conference early on by identifying safety and quality concerns in the current cannabis marketplace. “We can choose to do business as usual or we can create a new model with outside industry expertise to help guide this industry forward responsibly,” says Easley. Noting the existing comprehensive standards in food and agriculture, Easley emphasized the value of the Cannabis Labs Conference in bringing that expertise to the cannabis space. “We have the guidance and expertise in this room alone to help move the cannabis industry forward out of the closet and into the sunlight,” adds Easley.

March 7, 2016

Soapbox

Compliance: It’s Just Good Business

By Laura Davis

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The numbers are in and Colorado’s retail sales increased 42 percent in 2015. This increase in sales reflects a very vibrant industry in Colorado, the state that is leading the way in legal cannabis through sensible rules and regulations.

While the federal government has yet to consider cannabis’ legal status, savvy cannabis companies are striving to be exceptional business leaders and meet those federal regulations that pertain to product, environmental protection, and employee health and safety. Colorado’s cannabis business owners, including Good Chemistry, strive to lead the industry by developing best business practices, processes and guidelines that provide the foundation for the industry’s continued success and sustainability.

goodchemint — A view of the interior of Good Chemistry’s retail dispensary.

The cannabis industry in Colorado and other states is heavily regulated at many levels from cultivation to sale. As the industry grows and matures, companies are looking to federal standards and practices that may not immediately apply to their state’s industry, but that have been in place for years to provide for public safety. As the cannabis industry continues to grow, it is critical that industry leaders demonstrate that, through their practices and adherence to public safety standards, their products are safe for the consumer.

This vision has led cannabis companies to seek out compliance experts and build compliance departments. Hiring compliance experts is a major trend in this fledging industry, and more than that, it is a critical element to maintaining employee morale and providing for public safety. Compliance provides a roadmap for employees, offering guidance and resources to assist them with job performance. It is a basic building block for employee retention.

goodchem.exter — The exterior of a Good Chemistry dispensary

Internally, employees must be aware of what regulations can affect their specific position and job responsibilities. It is crucial that all staff employed by a cannabis business are aware of current and pending regulations. If the employees are well versed on the regulations that impact their duties in the company, there is less of a chance for error.

Externally, cannabis companies should strive for the highest level of compliance, and much can be gleaned from other, more established industries. Standard Operating Procedures (SOPs) should be developed to detail critical work flow areas of the business, including cultivation practices, sales protocols, and more.

Compliance can help to create a more sustainable business. In an industry that has grabbed headlines for energy, water and resource usage, compliance is at the core of a sustainable business model.

Overall, compliance is about working towards creating a sound, respected and sustainable industry. It is essential that the company places a high value on education and regulatory compliance from the chief executive officer to the budtender. Industry leaders must continue to advocate for sensible and practicable regulations for the industry. Cannabis business leaders play a critical role in building an entirely new industry from the ground up, which includes understanding, utilizing and anticipating regulations for the cannabis industry.

February 23, 2016

Ask the Expert: Straight Talk on Safety, Defense and Security, Part II

By Aaron G. Biros, Bruce E. Lesniak, Lezli Engelking

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In this week’s Straight Talk on Safety, Defense and Security, we answer a reader’s question about traceability in quality processes and offer some practical advice for building a safety and security strategy. Travis Lodolinsky from Gleason Technology submitted this week’s question. For a response, we sit down with Lezli Engelking, founder of the Foundation of Cannabis Unified Standards (FOCUS), to help answer your questions. If you have questions about safety, defense and security in cannabis, please ask them in the comments section below and we will address them in the next edition of Straight Talk on Safety, Defense and Security.

T. Lodolinsky: How are safety processes being tracked in the industry to ensure regulations and quality assurance are being uniformly enforced throughout?

Lezli Engelking: In related industries, such as herbal products or pharmaceuticals, the FDA has created guidelines, or current good manufacturing processes (CGMP) that control for the quality, consistency and safety of the products being produced. Businesses must be certified by independent third parties to demonstrate they are following CGMP to protect public health and consumer safety. CGMP is a proactive approach to quality assurance. A basic tenant of CGMP is that quality cannot be tested into a product after it is made; quality must be built into the product during all stages of the manufacturing process. One common misconception is that CGMP only covers the process of manufacturing itself. CGMP actually covers all aspects of the production process including materials, premises, equipment, storage, staff training and hygiene, how complaints are handled and record keeping.

Because cannabis is federally illegal in the US, the FDA has not developed cannabis-specific CGMP guidelines, so lawmakers do not have the benefit of having those guidelines available to base regulations on. So to answer your question, state cannabis regulations do not track processes and procedures used by cannabis businesses to control for safety or quality because they do not have the federal guidelines. Instead, most state cannabis regulations currently take a reactive approach to safety, mandating only for testing of the final product. While testing is an extremely important and valuable part of any quality management program, just analytics is not enough.

This is precisely why FOCUS was created and how they assist business owners and regulators, while fulfilling the mission of protecting public health, consumer safety and safeguarding the environment. The FOCUS standards are a cannabis-specific system of guidelines (cannabis-specific current good manufacturing practices) to ensure products are consistently produced according to quality standards. FOCUS provides detailed guidance and independent, third party auditing services for all key aspects of the cannabis industry including cultivation, extraction, infusion, retail, laboratory, security, packaging, labeling and sustainability.

CannabisIndustryJournal: What advice can you offer to cannabis businesses for product safety, defense and security prior to standardization?

Bruce E. Lesniak: Businesses that make products infused with cannabis (I call these businesses “plus one” companies because they produce products that include one more ingredient than traditional food products), require a carefully written master plan that specifically addresses the unique qualities, sensitivities and critical areas of the business. When building a comprehensive plan I address three questions:

Why (identify the why, this is your preventative, overarching strategy)?
How (addresses the “why question” with products, services and training)?
What (what is your reactive strategy that addresses actions and activities to be performed in the event of a breech)?

First and foremost, consumer-facing businesses must safeguard their products to the public. One product recall or illness related incident could spell disaster. Build your plan correctly the first time. Contact an industry expert to review your facility and help build and implement your plan. This will save you money by quickly exposing vulnerabilities and providing corrective measures specific to your business needs and requirements. Even though product safety and defense are closely related to security and should share a complementary strategy, product safety and defense are unique (due to standards and regulations), and should be treated as such.

Banks not accepting industry money complicates normal business operations and security planning, causing retail operations to handle and store large sums of cash. I asked industry expert and security professional, Tony Gallo of Sapphire Protection LLC, what is the single most important piece of security equipment you are currently providing for the retail and dispensary owner? “Design an air tight policy of handling money,” says Gallo. “Remove money often from cash registers and place it into the best safe for your application!”

Spend time familiarizing yourself with all things product safety and defense (there are volumes written on food safety and food defense, thus the “plus one” reference). This a great starting point and protecting the consumer protects your business. When it comes to designing your security application, consult an expert! Take into account that the cannabis industry is unique due to its “plus one” ingredient. Therefore you need to build your security systems, applications and policies to systematically protect your employees, facility, suppliers, transportation, manufacturing, distribution, warehousing, supply chain and brand.

February 9, 2016

Quality From Canada

The Great Green North: Canada vs. US in Cannabis Regulations

By Tegan Adams

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A lot has been changing quickly in the world of cannabis across North America. While international drug treaties sit back and watch in horror, cannabis and cannabis-infused products have been popping up in households across Canada, on retail shelves and in private delivery services across the US. How each jurisdiction in North America accepts and regulates (or draws a blind eye) to the sale of cannabis is different depending on where you are located. Here are a few key distinctions between the current Canadian and US regulatory approaches to marijuana.

In Canada, cannabis is regulated at the federal level by Health Canada through the Marihuana for Medical Purposes Regulations, (MMPR). The MMPR allows persons to obtain dried cannabis for their own personal medical purposes or for another person for whom they are responsible. To obtain dried cannabis, a person must obtain a medical document from a physician, or nurse practitioner to register as a client with a licensed producer of their choosing. After registering as a client, they are able to order dried cannabis and possess up to a maximum of 150 grams at any one time, depending on the recommendation of their physician. More recently, in 2015, regulations allow the distribution of not only the dried form of cannabis but also their extracted forms.

In the US, at the federal level, cannabis is still 100% illegal. Public statements from the federal administration dictate that they steadfastly oppose legalization of cannabis and other drugs. They are concerned that legalization would increase the availability and use of illicit drugs, and pose significant health and safety risks to all Americans, particularly young people. At the state level, legalization laws are rapidly changing. The office of National Drug Control Policy lists 23 states (a rising number) and Washington DC that have passed laws allowing cannabis to be smoked for a variety of medical conditions. The state laws do not change federal regulation. Many local governments are creating zoning and other restrictions that prohibit dispensaries from operating in their communities. That being said, voters in Alaska, Colorado, Oregon and Washington state support legalizing the sale and distribution of cannabis to adults over 21. There are many differences in the regulation of marijuana within each state, municipality and within the country itself.

Internationally, Canada has a platinum reputation for delivering and regulating quality consumer products. Within the Canadian cannabis industry, many feel Health Canada’s regulatory regime is inaccessible, restricts production to large corporations and limits distribution channels. The average start up cost of even a small licensed facility is around $4-5M CAD. On top of the financial costs, production companies have to compete with the other 2000 or so applicants who have been waiting, in some cases up to two years, to hear back from Health Canada if they will succeed in the licencing application process. In response, Canada has seen many tolerances made to allow dispensaries to distribute marijuana at the municipal level, even though not allowed as per regulation.

Many Canadian dispensaries operate with professional policies and procedures including providing customers with access ID cards and offering physician consults. Vancouver became the first city in Canada to license and regulate marijuana dispensaries. The number of licenses within the city exceeds both Tim Hortons and Starbucks Franchises combined. Many dispensaries provide bar and café settings for people to enjoy a “bong shot” or café au lait infused with cannabis. Licensing dispensaries has become a great financial resource for the city, charging $30,000 CAD per licence. Vancouver’s dispensaries have been a topic of debate across all levels of government. The Health Minister asked Vancouver to shut the dispensaries down, while other municipalities have started to expand the same concept. The Royal Canadian Mounted Police (RCMP), Canada’s federal police force, has started raiding various dispensary locations. Part of the new Prime Minister, Justin Trudeau’s, political platform and claim to fame is to legalize cannabis recreationally across Canada. How the framework will unfold is still in the works and subject not only to local jurisdictional reform but also to international negotiations.

Editor’s Note: Eurofins-Experchem has helped submit over 150 MMPR applications to Health Canada and continues to work with 10 of the 27 licensed MMPR producers in Canada. Their regulatory affairs division has started working with companies applying to produce and distribute cannabis in those states, which are new to its sale and distribution. They offer services include writing SOPs, training staff and performing mock inspection audits.

January 20, 2016

Ask the Expert Series: Straight Talk on Safety, Defense and Security with Bruce Lesniak

By Aaron G. Biros, Bruce E. Lesniak

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This is the first part of a series dedicated to understanding more about defense, security and safety as they relate to the cannabis industry, the importance of having standards and some tips for cannabis business plans. Over the next few weeks, we will hear from multiple industry pioneers discussing those topics and offering practical solutions for problems that many cannabis businesses face daily.

Inconsistent laws across multiple states created a fragmented network of regulations for cannabis. Some third parties are filling the gaps between the industry standards and state regulations. The Colorado Marijuana Enforcement Division (MED) and the Washington Liquor and Cannabis Board’s i-502 rule provide guidance on regulations surrounding packaging and labeling, advertising, pesticide use, retail and other areas.

Still there are many opportunities to fill the gaps. The Foundation of Cannabis Unified Standards (FOCUS), is an independent non-profit founded to develop some consistency in standards governing public health, consumer safety and the environment. In cultivation, the third party certification, Clean Green Certified, works to provide some guidance for growing cannabis organically based on USDA organic standards. For laboratories, Washington’s regulations provide some guidance, but organizations like FOCUS, the American Association for Laboratory Accreditation (A2LA) and the Cannabis Safety Institute seek to fill the gaps in laboratory standards along with the ISO 17025 requirements.

Security and defense is one particular area of the cannabis industry that still needs a benchmark for businesses to follow. In this series, we sit down to discuss security, defense and safety with Bruce Lesniak, president of the Food Safety and Defense Institute and member of the oversight committee for the establishment of standards in the cannabis industry in conjunction with FOCUS.

Cannabis Industry Journal: What changes do you see coming to the cannabis industry related to product safety, defense and security?

Bruce Lesniak: As in every industry that provides a public consumable product, the primary objective is to protect the consumer by providing products that are consistently safe. The largest change coming to the cannabis industry will be the implementation of enforceable, nationally uniform standards across all states and all product lines. I believe that the standards and regulations developed for the cannabis industry will mirror those of the food industry. Companies are already busy working to develop this uniform standard, one such group is FOCUS. Founded by Lezli Engelking, FOCUS works with diverse professionals from regulatory, quality assurance, medical, law enforcement, business, research, and the government officials, medical and research professionals along with subject matter experts from numerous business disciplines across the industry to develop impartial, comprehensive, cannabis specific standards that will be presented for adoption by state and federal governing bodies. Lezli summarizes the FOCUS Mission as “ To protect public health, consumer safety, and safeguard the environment by promoting integrity within the cannabis industry.” Look for more on this in our next Ask the Expert update, on CannabisIndustryJournal.com or you can contact Lezli Engelking at FOCUS here: 866-359-3557 x101.

This series will highlight important issues involving security, defense and safety in the cannabis industry. Next week, Bruce, along with cannabis security professional, Tony Gallo of Sapphire Protection, will provide some advice on what companies can do to improve their master business plan. Stay tuned for next week’s Part II of Ask the Expert: Straight Talk on Safety, Defense and Security with Bruce Lesniak.

January 15, 2016

Analyzing National Trends for Marijuana Policy: Q&A with Matt Karnes

By Aaron G. Biros, Matthew A. Karnes, CPA

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According to Matthew Karnes, founder and managing partner of GreenWave Advisors, LLC, looking toward the growth of the cannabis industry requires analysis of the changes in state and federal laws. “Eventual rescheduling or de-listing of marijuana as a federally prohibited drug, will hopefully lead to consistent and uniform national regulation and taxing authorizations that will ultimately change the structural and economic landscape of the industry,” says Karnes in an article here.

Looking at the sales trends in current legal states is a viable option to make financial projections, but much of that relies on the changing legal and political landscape of our country. According to Karnes, because it is impossible to accurately predict federal rescheduling or full legalization, investors must look at short, medium and long term trends to guide their decision making process. Cannabis Industry Journal sat down with Matthew Karnes to discuss some of the foreseeable trends.

Cannabis Industry Journal: What are some of the trends happening presently, that you can expect to continue?

Matthew Karnes: Just as states continue to pass legislation in some form of legalization measure, there is talk at the federal level of minimizing interference with state policies and removing prohibition statutes. We can see this national progression continuing until rescheduling cannabis eliminates the current obstructions that have limited industry growth.

Where states continue to roll out legislation to legalize cannabis, the rate of retail and cultivation license granting will have a large effect on the growth rates for each given state. Free market approaches as seen in Colorado and California will allow for faster growth rates than more restrictive states.

Recreational and adult use measures being introduced are notable disruptions in the medical sector that once fueled legalization. Medical research and development of strains for specific ailments is still in its early stages due to the impact of federal policy on research.

With an eye forward to eventual federal rescheduling or possible de-listing it is reasonable to assume that uniform national testing and operational standardization protocols will eventually be implemented at least as a baseline binding thread that will steadfastly assure consumers of an expectant consistency of product.

CIJ: Where do you see medium term trends taking the industry?

Matt: With more and more states legalizing cannabis in some form, we can expect the federal government to make a policy change. This will be accomplished via a DEA policy change or through congressional avenues in conjunction with federal agencies like the FDA, USDA and Department of Agriculture administering regulations.

With FDA or Department of Agriculture implementing cannabis policies, we can expect increased interest from outside the industry in research and development of cannabis-based drugs. This will lead to a medical market with more targeted medicine with precise dosing. We can expect more physicians to gain comfort in treating ailments with cannabis as well.

The recreational market will expand greatly with normalized commerce, enabling larger cultivation operations and infused products brands could grow to the national scale with interstate commerce.

CIJ: Where do you see the industry going long term?

Matt: When the cannabis industry matures down the road, we can expect multiple offshoots occurring. The recreational industry will involve local, regional and national policy much like the alcohol industry, and will likely resemble a liquor store model with individual “mom and pop” type businesses.

We anticipate that the medical market will recalibrate as more targeted products with precise dosing and efficacy are developed. At that point it will experience increased competition and consolidation. Without medical research and clinical trials, we cannot accurately project the growth of the medical sector.

Regulations involving tax revenue will most likely use a similar mechanism that states use for alcohol and tobacco taxation. Entities like state liquor control boards will oversee cannabis regulations. When that time comes, the cannabis industry will no longer be a novel idea and will become another conventional ‘consumer staple.’