Tag Archives: strategies

Transportation & Supply Issues in Cannabis Staffing: How to Get Unstuck

By Melita Balestieri
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Anyone in cannabis will tell you that complex transportation and supply issues are stalling industry growth and impacting employers’ ability to hire teams for the critical roles that keep product moving on schedule.

Since the onset of COVID-19 in March 2020, global and domestic supply chains have suffered bottlenecks caused by ever-changing public health policies and ongoing materials and labor shortages. While the status of transportation as an essential business kept other essential sectors, such as cannabis and grocery, chugging along, the current situation is still challenging.

Transportation remains the biggest supply-side problem, with the American Trucking Association reporting a shortage of an estimated 80,000 truckers in October 2021. The Bureau of Labor Statistics also continues to report high numbers of job openings across supply-chain jobs such as warehousing and transportation.

Cannabis businesses, from multistate operators to distributors to delivery service startups, are hardly immune to these issues. In fact, they face the additional hurdle of restrictive federal regulations, including the illegality of transporting cannabis across state borders. For example, this stipulation means that the over-saturation of flower in California cannot be addressed in a naturally symbiotic manner by shipping to states whose markets demand more flower, such as Arizona and New Mexico.

In the aggregate, these challenges impact employers’ operational and logistics goals and diminish candidates’ interest to work in a highly scrutinized industry. Many trucking companies have found it a challenge to attract drivers. Low pay, grueling schedules, and zero-tolerance cannabis testing for drivers despite legalization have led to an exodus of truckers in the U.S. and Canada.

Despite these obstacles, cannabis employers can still embrace smart strategies to attract quality employees and create much-needed stability to thrive in the rapidly changing marketplace.

Cannabis, COVID & the Great Resignation

In recent months, when it seemed America was finally emerging from COVID’s long shadow, the Great Resignation dampened business optimism. Employee turnover hit cannabis hard—especially in California, where other challenges like a thriving illicit market, high taxes and wholesale price compression have impacted companies’ ability to operate smoothly. Transportation and supply issues compound the problems.

For example, even transporting federally legal hemp in California and elsewhere has its headaches. Our company’s trimmer certification course uses hemp for training purposes. We ship the hemp directly to students’ homes so they can participate in virtual training sessions. Although our company has certified that the course packet contains only hemp, the U.S. Postal Service (USPS) will not ship it, regardless of whether the delivery location is in or out of state. We therefore must rely on a private carrier to transport the course packets to class participants, which is more time consuming and costly

Staffing Strategies for Transportation & Supply Jobs

Cannabis employers have several traditional and non-traditional tools at their disposal to address transportation and supply-related staffing.

While standard ecommerce jobs are synonymous with turnover, here lies an opportunity for cannabis operators to differentiate themselves. This is the cannabis industry, after all, and plenty of individuals who might not normally be interested in the transportation or supply aspect of ecommerce, might be far more open to those types of roles if they know the jobs involve cannabis.

What can employers do to attract these more receptive candidates to their organizations? Hone in on workers who have a passion for the plant. In job descriptions, position cannabis messaging front and center and conduct outreach through LinkedIn groups and other social media platforms to groups and individuals that have a cannabis focus.

Salary and Benefits

These days, a competitive salary simply is not enough to entice the right employees. A solid benefits package goes a long way to establishing trust between employers and employees and provides employees with a level of comfort and reassurance that they are supported during these tumultuous times. For example, companies must prioritize healthcare benefits and consider including coverage for part-time workers on the supply side of the cannabis industry.

Bonuses

Bonuses are another great way to catch the eye of potential employees, but bonuses must be developed within a framework designed for retention. Cannabis employers who establish performance bonuses and loyalty bonuses also increase that ever-important aspect of trust within their companies.

Safety

A transparent and robust HR plan that addresses safety concerns—COVID and beyond—can affect employees’ comfort for certain supply or transport positions that may involve increased public exposure or enhanced personal safety risks. Be clear with employees about the system that’s in place to support them in the event of unforeseen emergencies or injuries.

Procedures

Cannabis employers should also be aware of the importance of having compliance-focused internal transportation standard operating procedures and protections for employees. These policies can be a key factor in attracting both drivers and additional transport and supply experts from other regulated transport industries such as food, agriculture and pharmaceuticals. Candidates without a cannabis background will be more drawn to companies that provide a well-developed and safe infrastructure.

Smart Cannabis Staffing Solutions: The Time is Now

Federal cannabis legalization is coming, and with that nationwide sea change other issues in cannabis supply and transport will emerge. How will cannabis transport consolidate? Will the nation’s top carriers simply take over?

Regardless of what those answers might be, the need to embrace smart staffing solutions now is imperative. Providing a solid base wage with health benefits, and making it clear to current employees and job candidates that there’s an internal infrastructure of support—from HR to loyalty bonuses—is the best way to tackle the transportation and supply issues to position your company for future success.

Cannabis M&A in the Post-COVID Era

By Jose Sariego
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After a slow start following a disappointing 2019, M&A in the cannabis space closed 2020 with a bang, with more than $600 million in deals announced immediately following the November elections. Prospects for the New Year are expected to continue the explosive year-end trend with a backlog of nearly $2 billion in deals heading into 2021. The COVID-19 pandemic boosted sales of cannabis products, and election results opening up five new states to legal cannabis use and possible federal regulatory reform are further boosting prospects. Analysts now predict the U.S. cannabis market is poised to double by 2025.

Growth is expected to be led by multi-state operators who have achieved scale, cleaned up their balance sheets and stockpiled dry powder for roll-up acquisitions. Cannabis companies raised nearly $134 million in the two weeks before Election Day, a 185% increase over the same period last year. Most of the money flowed to multistate operators. In addition, the biggest stocks by market capitalization saw a roughly 20% bump ahead of the election and now are trading at record volumes, providing plenty of stock currency for further acquisitions.

Among the headline acquisitions last year:

  • Curaleaf continued its multi-state expansion with two of its largest acquisitions – the all-stock purchases of its affiliated cannabis oil company Select and of Grassroot, another MSO player. Curaleaf is now the largest cannabis company in the world based on annualized revenues, with annualized sales of $1 billion and operations in 23 states and 96 open dispensaries. Curaleaf also raised $215 million privately last year end for further expansion.
  • Close behind, Aphria and Tilray announced in December that they will merge, creating what they say will be the largest cannabis company in the world with an equity value of roughly $3.8 billion. The combined entity will have facilities and offices in the U.S., Canada, Portugal and Germany. The deal is expected to close during the second quarter of this year.
  • Also in December, Illinois-based Verano Holdings LLC unveiled plans to go public at a $2.8 billion valuation through a reverse takeover of a Canadian shell company. That deal followed the announcement that Verano will merge with Florida-based AltMed.
  • In addition, publicly traded New York cannabis firm Columbia Care signed a definitive agreement last month to acquire Green Leaf Medical, a privately held Maryland-based cannabis manufacturer and retailer, for $45 million in cash and $195 million in stock. The acquisition is expected to close this summer. Including Green Leaf’s inventory, the Columbia Care will operate 107 facilities, including 80 dispensaries and 27 cultivation and manufacturing facilities. Columbia Care also took advantage of cannabis fever last year by raising $100 million privately.
  • Also in December, Ayr Strategies announced it would acquire Liberty Health Sciences, one of the largest cannabis companies in Florida, for $290 million in stock, as well Garden State Dispensary, a New Jersey marijuana company for $41 million in cash, $30 million in stock and $30 million in the form of a note. This follows Ayr’s $81 million acquisition of an Arizona medical marijuana operator in November. Voters approved marijuana use in Arizona and New Jersey in November.  Ayr has completed a string of acquisitions in Nevada, Massachusetts, Pennsylvania, Arizona, Ohio and, upon the closing of December’s deals, New Jersey and Florida.

Not all cannabis companies will rely on acquisitions, however. Trulieve, as an example, has focused its efforts on Florida and organic growth. It remains to be seen whether a multi-state approach fueled by acquisitions or a single-state organic growth model will prove the more lasting. Growth and profitability in the short term likely will continue to be hampered by limits on economies of scale due to federal restrictions and differing state laws.

In light of the maturing industry and the 2019 bust, the valuation model for acquisitions in the cannabis space is evolving from one based on sales, typically associated with emerging growth industries, to a more mature industry model based on profits or Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA). Most cannabis MSOs have stabilized and generate positive EBITDA, which justifies the evolution away from a sales-driven model.

From a legal standpoint, the same limitations that have vexed the cannabis industry for years will continue to challenge deal makers until there is greater clarity on the federal front. Institutional investor reluctance, financial industry constraints, haphazard state regulation and the unavailability of federal forums such as national copyright and trademark registration will continue to be issues for acquirers and their lawyers in the space.

Acquisition agreements will continue to have to address the federal Damocles’ sword should expected relaxation of federal enforcement under the Biden administration and further legislative relief does not materialize as expected. Although the U.S. House in December passed the “Marijuana Opportunity Reinvestment and Expungement Act” (MORE) to remove cannabis from the Controlled Substances Act, the Senate did not take up the bill in 2020 and it will have to be re-introduced in 2021. Notably, the MORE Act does not affect existing federal regulation of cannabis, such as the Food, Drug and Cosmetics Act, under which the FDA has limited the use of CBD in certain products despite hemp being removed from the Controlled Substances Act in 2018.

The cannabis M&A market is moving into a more mature phase, as MSOs will be choosier in their approach rather than continuing the land-grab mentality of years past. Due to improved financial strength, 2021 should see these MSOs continuing to expand their footprints either within existing states or new ones. Although uncertainties abound, further consolidation and expansion through add-on acquisitions is likely to continue apace in 2021, providing plenty of opportunities for deal makers and their lawyers.

Aphria & Tilray Merger Creates World’s Largest Cannabis Company

By Cannabis Industry Journal Staff
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On December 16, 2020, Aphria Inc. (TSX: APHA and Nasdaq: APHA) announced a merger with Tilray, Inc. (Nasdaq: TLRY), creating the world’s largest cannabis company. The two Canadian companies combined have an equity value of $3.9 billion.

Following the news of the merger, Tilray’s stock rose more than 21% the same day. Once the reverse-merger is finalized, Aphria shareholders will own 62% of the outstanding Tilray shares. That is a premium of 23% based on share price at market close on the 15th. Based on the past twelve months of reports, the two companies’ revenue totals more than $685 million.

Both of the companies have had international expansion strategies in place well beyond the Canadian market, with an eye focused on the European and United States markets. In Germany, Aphria already has a well-established footprint for distribution and Tilray owns a production facility in Portugal.

tilray-logoAbout two weeks ago, Aphria closed on their $300 million acquisition of Sweetwater Brewing Company, one of the largest independent craft brewers in the United States. Sweetwater is well known for their 420 Extra Pale Ale, their cannabis-curious lifestyle brands and their music festivals.

Once the Aphria/Tilray merger is finalized, the company will have offices in New York, Seattle, Toronto, Leamington, Vancouver Island, Portugal and in Germany. The new combined company will do business under the Tilray name with shares trading on NASDAQ under ticker symbol “TLRY”.

Aphria’s current chairman and CEO, Irwin Simon, will be the chairman and CEO of the combined company, Tilray. “We are bringing together two world-class companies that share a culture of innovation, brand development and cultivation to enhance our Canadian, U.S., and international scale as we pursue opportunities for accelerated growth with the strength and flexibility of our balance sheet and access to capital,” says Simon. “Our highly complementary businesses create a combined company with a leading branded product portfolio, including the most comprehensive Cannabis 2.0 product offerings for patients and consumers, along with significant synergies across our operations in Canada, Europe and the United States. Our business combination with Tilray aligns with our strategic focus and emphasis on our highest return priorities as we strive to generate value for all stakeholders.”

Gen Z Marketing Dos and Don’ts in the Cannabis Industry

By Alexis Krisay
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Gen Z is currently at about 40% of consumers, and this segment will be rapidly growing in the coming years. Most researchers and media define this generation as those who were born between the mid to late 1990s and early 2010s. In the United States alone, Gen Z consumers have an estimated $143 billion in buying power. Businesses that aren’t putting enough marketing strategies toward Gen Z need to reevaluate and switch gears, stat! Start laying the groundwork for your company’s success in the coming years. Kickstart your targeted Gen Z marketing strategies now. Every industry is different, but there are a few key do’s and don’ts to follow when communicating with Gen Z buyers. In the cannabis field, it is especially important to only market to those who can legally indulge.

Do Make Genuine Connections Online

Gen Z is our first truly digital generation. They’ve grown up using social media and the internet. As digital natives, they’re quick to recognize inauthentic communication methods. Whether it’s unnatural comments or trying to cover up negative testimonials, the younger crowd can always spot brands trying to be something they are not. Instead, practice total transparency with followers and friends to ensure that there is never a lack of brand accountability and authenticity. Within the cannabis industry, businesses can use their social media platforms to educate, build relationships and easily refute longstanding cannabis stereotypes that are so common in older generations.

Don’t Try Too Hard to Be Relatable

One way to make genuine connections is to engage with, create and share memes and other trends on social media. Although this is an excellent method for increased interactions, there is also plenty of room for error, so caution is the guiding principle. If not executed correctly, a post about a meme could easily make brands look unprofessional, or behind the times as they’ve missed the actual joke. These techniques can make business accounts seem like they are trying too hard to fit in, and will ultimately cause Gen Z to hit the “unfollow” button. Instead, focus on topics that closely align with the brand’s image and find creative ways to make content relate to exciting and funny trending ideas about cannabis.

Do Care About Social Issues and Responsibility

Focus on creating high quality, exciting videos and vibrant pictures that highlight cannabisResearch has shown that Gen Z sincerely cares about social issues and responsibilities. These beliefs don’t only apply just to their personal lives, but also to their buying habits and which businesses they want to support. These beliefs provide an excellent opportunity for brands to stake out common ground with Gen Z and support a variety of causes at the same time. Many of these consumers seem to care about topics like the environment, equality, hunger and homelessness. Do note that it’s essential to review and analyze these issues before making statements or posting about them on social media. For the cannabis industry, many businesses tend to raise awareness about medical matters, social equity and community-oriented programs.

Don’t Post the Same Content Repeatedly

After getting into the social media game, it can be tough to figure out how often to post. As much as those aspects do play an essential role in overall engagements, it’s also crucial to pay attention to the type of content that makes it into followers’ feeds. All photos and videos should be related, yet unique. Posting the same marketing content over and over is going to bore Gen Z, and make business accounts look less aesthetically pleasing. Instead, focus on creating high quality, exciting videos and vibrant pictures that highlight cannabis, and then vary your post types.

Navigating Gen Z communication and marketing tactics are going to be pivotal in just a few years, making it critical for businesses to rework their marketing strategies as soon as possible. If cannabis brands can capture the essence of authenticity and social responsibility in their communication methods, while avoiding posting repetitive content, they should be able to reach legal Gen Z-ers seamlessly.

The Brand Marketing Byte

Introducing The Brand Marketing Byte

By Cannabis Industry Journal Staff
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Cannabis Industry Journal is pleased to announce our partnership with Pioneer Intelligence on this new series of articles. This is the first installment of The Brand Marketing Byte.

Pioneer Intelligence uses data to benchmark marketing performance of consumer-facing cannabis brands across three areas: social media, earned media and web-related activities. At present, Pioneer takes in over 60,000 data points each week. The company’s team of marketers and data scientists share findings through weekly generated Performance Scorecard reports as well as Brand Marketing Snapshots. Pioneer Intelligence offers reports on more than 500 U.S. cannabis brands. Ben Walters, founder of Pioneer Intelligence, says their mission is “to help cannabis industry stakeholders better understand how marketing strategies & tactics resonate with audiences.”

The Brand Marketing Byte will showcase highlights from Pioneer Intelligence’s Cannabis Brand Marketing Snapshots, featuring data-led case studies covering marketing and business development activities of U.S. licensed cannabis companies. We hope this column can serve as a resource for readers interested in branding and marketing.

In terms of scoring methodology, Pioneer Intelligence’s reporting favors “heat” over “strength” as the company prioritizes “relative change” above “absolute position.” This means that, for example when talking about social media audience size, they don’t just score brands based on the number of followers, but they also score audience growth. In fact, Pioneer’s algorithms put more value in growth figures than actual number of followers. For more insight on their methodology, along with a weekly updated index of the hottest brands, visit their website here.

Without further ado, here is a data-led, shallow dive on the California brand, Legion of Bloom:

Legion of Bloom – Content Strategy

Legion of Bloom (LOB) was founded in Northern California in 2015 when five independent growers joined forces. As one of the more widely recognizable brands in the region, they produce craft, high-quality cannabis products and are well known for their vape cartridges. The company has superior genetics and sustainable practices, which they capitalize on in their marketing efforts.

LOB has invested heavily in generating content, which appears to be fruitful. Their website has an in-depth introduction to terpenes for consumers and they utilize their blog section well with a high volume of quality content throughout the second half of 2019. It’s worth mentioning their website features full laboratory test results for all of their products, highlighting their commitment to transparency, consumer trust and brand recognition. Through looking at a few key metrics like indexed keywords, site strength and visit duration, it is apparent that LOB has increased their audience engagement significantly.

All of those factors combined, LOB has used a variety of content tools to grow their website consistently and sustainably, earning them #38 spot on last week’s Pioneer Index, a ranking of the hottest U.S. cannabis brands.

2nd Annual Cannabis Labs Virtual Conference Announced

By Cannabis Industry Journal Staff
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The 2ndAnnual Cannabis Labs Virtual Conference is set to take place on Tuesday, April 2, 2019, starting at 12:00 Noon and concluding at 4:00 PM EDT. This complimentary series of webinars will take a deep dive into a variety of subjects related to cannabis testing and the laboratory industry.

The virtual event will help attendees better understand some of the more technical aspects of starting and operating a laboratory. Topics discussed will include pesticide testing, cannabinoid and terpene testing, the new ISO 17025:2017 accreditation and a lesson in starting a laboratory in a new market.

Attendees registering for this complimentary series of webinars will get access to four veterans of the cannabis lab testing industry, who are available for Q&A after each presentation. In addition to getting the opportunity to chat with these subject matter experts on April 2, a recording of the presentations will be made available to all who register.

Charles Deibel, President & CEO – Deibel Labs, Inc.

Here is a snapshot of the agenda:

Pesticide Testing: Methods, Strategies & Sampling
Charles Deibel, President & CEO – Deibel Labs, Inc.

Pesticides represent the number one area for batch failures in the US cannabis market. These are concerns not only for consumers, but are a very big concern for cultivators and manufacturers of cannabis products. remediation of the pesticides, once they are in the product are not always feasible From the lab level, they are also the hardest test to run in the laboratory, even one equipped with state-of-the-art equipment. The best instruments on the market are very expensive and there are no standardized methods, meaning lab to lab variability has happened.

  • What are the pesticides in cannabis and are there any that are the “main concerns” or ones that stand out as particularly damaging?
  • What is a basic breakdown of the testing and methods used for pesticide testing?
  • What are the best strategies for the sampling of cannabis products?

    Chris Martinez
    Chris Martinez, Co-Founder & President, EVIO Labs FL

Building a Lab in an Emerging Market
Chris Martinez, Co-Founder & President, EVIO Labs FL

  • Will present a discussion of the genesis of EVIO Labs Florida, how to start a lab in a new market
  • Challenges in how we navigated changing regulations in a state with newly legalized cannabis
  • Expanding a lab to a second location – logistics, hiring, training, consistency.

Cannabinoid & Terpene Testing: Methods, Strategies & Standardization

Dr. Cindy Orser, Chief Science Officer, Digipath Labs

  • Appreciation of “measurement uncertainty” in cannabis testing

    Dr. Cindy Orser, Chief Science Officer, Digipath Labs
  • Standardization of testing methods is a high priority
  • Terpenes are the distinguishing chemicals in cannabis sensory perception and chemotaxonomy

Benefits of Accreditation to the ISO 17025:2017 Standard
Jane Weitzel, Independent Consultant

  • The ISO/IEC 17025:2017 standard is now being used to accredit cannabis testing laboratories. From this presentation you will learn the key new aspects of the standard. This includes risk-based thinking. Many aspects of this risk approach require the use of measurement uncertainty. This means the measurement uncertainty must be adequately evaluated. You will be introduced to evaluating and using measurement uncertainty.
  • The 2017 standard emphasizes conflict of interest and impartiality. Procedures and practices to achieve impartiality will be shown. This reduces the risk of potentially damaging leaks of information or the risk of people not working to the best interests of the laboratory and its clients.

    Jane Weitzel, Independent Consultant
  • The 2017 standard is a valuable and useful business tool that can save the laboratory resources, effort and money. Are you doing too much testing? Are you doing too little testing? When you evaluate the measurement uncertainty you can use it to learn the steps in your test method that need enhancement to reduce the risk of making mistakes. You can also use the measurement uncertainty to focus on the significant steps and stop wasting time on steps and activities that are insignificant.
  • These benefits of laboratory accreditation will be demonstrated with examples from the cannabis industry.

To learn more about this complimentary series of webinars, click here to look at the agenda and register.

Pesticide Testing: Methods, Strategies & Sampling

By Charles Deibel
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Editor’s Note: The following is based on research and studies performed in their Santa Cruz Lab, with contributions from Mikhail Gadomski, Lab Manager, Ryan Maus, Technical Services Analyst, Dr. Laurie Post, Director of Food Safety & Compliance, Andy Sechler, Lab Director, Toby Astill, Senior Business Development Leader at Perkin Elmer and Charles Deibel, President of Deibel Cannabis Labs.

Pesticides represent the leading cause of batch failures in the cannabis industry. They are also the hardest tests to run in the laboratory, even one equipped with state-of-the-art equipment. The best instruments on the market are HPLC and GC dual mass spectrometer detectors, called “HPLC-qqq”, “GC-qqq,” or just triple quads.

As non-lab people, we envision a laboratory that can take a cannabis sample, inject it into a triple quad and have the machine quickly and effortlessly print out a report of pesticide values. Unfortunately, this is far from reality. The process is much more hands on and complex.In the current chemistry lab, trained analysts have to first program the triple quads to look for the pesticides of concern; in cannabis pesticide testing, this is done by programming the first of two mass spectrometers to identify a single (precursor) mass that is characteristic of the pesticide in question. For BCC requirements in California, this has to be done for all 66 pesticides, one at a time.

Next, these precursor ions are degraded into secondary chemicals called the “product” ions, also called transition ions. The second of the two mass spectrometers is used to analyze these transition ions. This process is graphed and the resulting spectrum is analyzed by trained chemists in the lab, pesticide by pesticide, for all the samples processed that day. If the lab analyzes 10 samples, that translates to 660 spectra to analyze (66 pesticides x 10 samples). When looking at the spectra for each pesticide, the analysts must compare the ratios of the precursor ions to the product ions.

Confirmation Testing

If these spectra indicate a given pesticide may be present, the chemists must then compare the ratios between the precursor and the products. If these ratios are not what is expected, then the analyst must perform confirmation testing to prove the precursor mass either is or is not the pesticide of concern. If the ratios are not what is expected, it means the molecule is similar to the pesticide in question, but may not be that pesticide. This confirmatory testing is key to producing accurate results and not failing batches when dealing with closely related chemicals. This process of analyzing spectra is done in all labs that are performing pesticide testing. In this fledgling industry, there are few published cannabis pesticide methods. 

The need for this type of confirmation testing doesn’t happen all of the time, but when it does, it will take longer than our targeted three-day turn-around time. In the picture above, one precursor mass is ionized into several product masses; but only two are large enough to be used for comparison. In this hypothetical situation, two product masses are produced for every one precursor, the expected ion abundance ratio should be less than 30%. When performing any confirmatory testing, if the ion abundance ratio is >30%, it means the original precursor molecule was not the pesticide of concern. For example, if the ion abundance ratio was 50%, then the original molecule broke down into too many parts; it was not the pesticide we were looking for. This ion abundance ratio threshold was established by FANCO, the international organization that sets guidelines for all pesticide testing.

Testing Strategies

Methodology: In this fledgling industry, there are few published cannabis pesticide methods. The identification of the precursor mass and product ions are not always published, leaving labs to research which ions should be used. This adds to the potential for differences between lab results. Once selected, labs should validate their research, through a series of experiments to ensure the correct precursor and transition (product) ions are being used in the method.

Sample Preparation: Beyond the time-consuming work that is required to develop sound pesticide methods, the extraction step is absolutely critical for credible results. If the pesticides aren’t fully extracted from the cannabis product, then the results will be lower than expected. Sample preparations are often not standardized between labs, so unless a given extraction technique is validated for accuracy, there is the possibility for differences between labs.

Getting a Representative Sample

The current California recommended amount of sample is one gram of product per batch. Batch sizes can vary greatly and it is entirely likely that two different one gram samples can have two different results for pesticides. Has the entire plant been evenly coated with exactly the same amount of pesticide onto every square inch of its leaves? No, probably not. That is why it is imperative to take a “random” sample, by taking several smaller samples from different areas of the entire batch.

Sampling Plans: We can learn a lot from the manufacturing and sampling best practices developed by the food industry through the years. If a food manufacturer is concerned with the possibility of having a bacteria pathogen, like Salmonella, in their finished product, they test the samples coming off their production lines at a statistically relevant level. This practice (theory) is called the sampling plan and it can easily be adapted to the cannabis industry. The basic premise is that the more you test, the higher your likelihood of catching a contaminate. Envision a rectangular swimming pool, but instead of water, it’s filled with jello. In this gelatinous small pool, 100 pennies are suspended at varying levels. The pennies represent the contaminates.

Is the pool homogenized? Is jello evenly represented in the entire pool? Yes. 

Is your concentrate evenly distributed in the extraction vessel? Yes. The question is, where are the pennies in that extraction vessel? The heavy metals, the microbial impurities and the pesticides should be evenly distributed in the extraction vessel but they may not be evenly represented in each sample that is collected. Unfortunately, this is the bane of the manufacturing industry and it’s the unfortunate reality in the food industry. If you take one random cup of jello, will you find the penny? Probably not. But it you take numerous 1 cup samples from random areas within the batch, you increase your chances of finding the contaminate. This is the best approach for sampling any cannabis product.

The best way to approve a batch of cannabis product is to take several random samples and composite them. But you may need to run several samples from this composite to truly understand what is in the batch. In the swimming pool example, if you take one teaspoon scoop, will you find one of the pennies? The best way to find one of the pennies is to take numerous random samples, composite them and increase the number of tests you perform at the lab. This should be done on any new vendor/cultivator you work with, in order to help establish the safety of the product.

Heavy Metals Testing: Methods, Strategies & Sampling

By Charles Deibel
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Editor’s Note: The following is based on research and studies performed in their Santa Cruz Lab, with contributions from Mikhail Gadomski, Lab Manager, Ryan Maus Technical Services Analyst, Laurie Post, Director of Food Safety & Compliance, and Charles Deibel, President Deibel Cannabis Labs.

Heavy metals are common environmental contaminants resulting from human industrial activities such as mining operations, industrial waste, automotive emissions, coal fired power plants and farm/house hold water run-off. They affect the water and soil, and become concentrated in plants, animals, pesticides and the sediments used to make fertilizers. They can also be present in low quality glass or plastic packaging materials that can leach into the final cannabis product upon contact. The inputs used by cultivators that can be contaminated with heavy metals include fertilizers, growing media, air, water and even the clone/plant itself.

The four heavy metals tested in the cannabis industry are lead, arsenic, mercury and cadmium. The California Bureau of Cannabis Control (BCC) mandates heavy metals testing for all three categories of cannabis products (inhalable cannabis, inhalable cannabis products and other cannabis and cannabis products) starting December 31, 2018. On an ongoing basis, we recommend cultivators test for the regulated heavy metals in R&D samples any time there are changes in a growing process including changes to growing media, cannabis strains, a water system or source, packaging materials and fertilizers or pesticides. Cultivators should test the soil, nutrient medium, water and any new clones or plants for heavy metals. Pre-qualifying a new packaging material supplier or a water source prior to use is a proactive approach that could bypass issues with finished product.

Testing Strategies

The best approach to heavy metal detection is the use of an instrument called an Inductively Coupled Plasma Mass Spectrometry (ICP-MS). There are many other instruments that can test for heavy metals, but in order to achieve the very low detection limits imposed by most states including California, the detector must be the ICP-MS. Prior to detection using ICP-MS, cannabis and cannabis related products go through a sample preparation stage consisting of some form of digestion to completely break down the complex matrix and extract the heavy metals for analysis. This two-step process is relatively fast and can be done in a single day, however, the instruments used to perform the digestion are usually the limiting step as the digesters run in a batch of 8-16 samples over a 2-hour period.

Only trace amounts of heavy metals are allowed by California’s BCC in cannabis and cannabis products. A highly sensitive detection system finds these trace amounts and also allows troubleshooting when a product is found to be out of specification.

For example, during the course of testing, we have seen lead levels exceed the BCC’s allowable limit of 0.5 ppm in resin from plastic vape cartridges. An investigation determined that the plastic used to make the vape cartridge was the source of the excessive lead levels. Even if a concentrate passes the limits at the time of sampling, the concern is that over time, the lead leached from the plastic into the resin, increasing the concentration of heavy metals to unsafe levels.

Getting a Representative Sample

The ability to detect trace levels of heavy metals is based on the sample size and how well the sample represents the entire batch. The current California recommended amount of sample is 1 gram of product per batch.  Batch sizes can vary but cannot be larger than 50 pounds of flower. There is no upper limit to the batch sizes for other inhalable cannabis products (Category II).

It is entirely likely that two different 1 gram samples of flower can have two different results for heavy metals because of how small a sample is collected compared to an entire batch. In addition, has the entire plant evenly collected and concentrated the heavy metals into every square inch of it’s leaves? No, probably not. In fact, preliminary research in leafy greens shows that heavy metals are not evenly distributed in a plant. Results from soil testing can also be inconsistent due to clumping or granularity. Heavy metals are not equally distributed within a lot of soil and the one small sample that is taken may not represent the entire batch. That is why it is imperative to take a “random” sample by collecting several smaller samples from different areas of the entire batch, combining them, and taking a 1 g sample from this composite for analysis.

References

California Cannabis CPA. 12/18/2018.  “What to Know About California’s Cannabis Testing Requirements”. https://www.californiacannabiscpa.com/blog/what-to-know-about-californias-cannabis-testing-requirements. Accessed January 10, 2019.

Citterio, S., A. Santagostino, P. Fumagalli, N. Prato, P. Ranalli and S. Sgorbati. 2003.  Heavy metal tolerance and accumulation of Cd, Cr and Ni by Cannabis sativa L.. Plant and Soil 256: 243–252.

Handwerk, B. 2015.  “Modern Marijuana Is Often Laced With Heavy Metals and Fungus.” Smithsonian.com. https://www.smithsonianmag.com/science-nature/modern-marijuana-more-potent-often-laced-heavy-metals-and-fungus-180954696/

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Year in Review, What’s In Store for 2016: A Q&A with Nic Easley

By Aaron G. Biros
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With 2015 coming to a close, to understand and start strategizing for the next year, we must look back on the year and gauge the industry’s progress. A lot has happened this year and there is a lot to look forward to in 2016.

Nic Easley presenting at the 2015 High Times Business Summit in Washington, D.C.
Nic Easley presenting at the 2015 High Times Business Summit in Washington, D.C.

Nic Easley, founder and CEO of Comprehensive Cannabis Consulting (3C), gave a presentation at the High Times Business Summit last week, reviewing the cannabis industry’s progress in 2015, and providing some insights on what to look for in 2016. 3C is a national cannabis and hemp consulting firm dedicated to ensuring the highest standards in large-scale, sustainable organic production and product manufacturing. Over the past eight years in Colorado and nationwide, Easley has helped more than 60 clients design, build, start up, and optimize their operations. Easley is an active participant on multiple committees in various industries, non-profit groups, and rule making organizations that are setting the standards and regulations guiding this industry. Through his involvement he is able to promote sustainable, sensible practices and policies that drive cannabis cultivation and industry best practices into new realms of productivity, profitability, and professionalism.

We were able to sit down with Nic Easley after the conference to get some better insights for how the industry performed in 2015 and what is in store for 2016.

 

CannabisIndustryJournal: How do you think Colorado’s year of pesticide recalls will help shape the industry’s future?

Nic Easley: As a member of the Pesticide Advisory Committee with the Colorado Department of Agriculture, I think there is a tangible need for better, more comprehensive regulatory guidance. If we come out with strict pesticide regulations, it will be better for everyone in the industry and consumers, but more importantly it will benefit patients gaining access to safe, laboratory-tested medicine. The regulators will need our help to write the rules. Harder laws are good for us though, because the ethical businesses will always take the route of integrity, as opposed to the businesses that cut corners. Those companies not playing above board will be weeded out and reprimanded in due time. A lot of it comes with the responsibility as a grower and producer to facilitate medical needs, that is a responsibility that requires great integrity. As for the testing regulations, there are too many conflicts of interest and we need to look toward third party testing and accreditation to prevent laboratory shopping, skewed results and other inconsistencies. We need to not allow producers to provide their own samples, sampling and sample preparation needs to be controlled through third party laboratories working above board, as opposed to labs wanting to keep clients instead of providing accurate and consistent test results. Looking forward to 2016, we will continue to see the pesticide issue shape the industry, for better or worse, this is a problem we need to find the right solutions for and that comes through working with regulators, like the Colorado Marijuana Enforcement Division, to write the required regulatory framework.

CIJ: Looking nationally, what major trends were highlighted in 2015 and what would you like to see change for 2016?

Nic: With Oregon going online October 1st, and Maryland’s license application process opening up, we are recognizing some diminishing barriers to entry in markets previously difficult to tap due to things like residency requirements and where the capital came from. Maryland’s infused product and processing licenses are much more readily available as opposed to the cultivation licenses due to stipulations. States like Oregon and Alaska that dragged their feet a little with regard to their regulatory model, are just releasing a lot of barriers to entry for licensing applications. Oregon may have missed some tax revenue in the initial launch of the program, but they are doing it right through diligent research instead of using their citizens as guinea pigs. For businesses looking to get started, you can avoid poor decision making by knowing the rules. New and established businesses alike need to take the responsibility to write the rules to be socially, environmentally and economically responsible. If we want to make money in this industry to help the government’s role in keeping us safe, then doing business in the most socially responsible way possible will lead to profitability. What I would like to see change for 2016 is the expanding list of qualifying conditions. As a military veteran, I would like to see Colorado stop looking at the tax revenue of adult use cannabis, and make PTSD a qualifying condition for medical marijuana. The Bob Hoban lawsuit suggests that Colorado is marginalizing medicine because they will make more tax revenue by blurring the lines of adult use and medicine. All of the studies out there, including Dr. Sue Sisley’s work, suggests PTSD can be treated with medical marijuana. That highlights another trend I would like to see change in 2016: We need clinical research on these conditions, because observational research just is not credible enough. We [businesses in the industry] need to actively promote the need for clinical research to help propel social change and get the information and knowledge out there. With the right information, this industry can make informed decisions that will help all stakeholders.

CIJ: What advice can you offer to cannabis businesses for 2016?

Nic: I tell my clients that, because cannabis is still federally illegal, you must understand the present risk associated with the work you are doing. We need to ask questions like how can we do this responsibly and set a good example so when the time comes, the federal government will look to us as a legitimate industry, working with regulators to write the rules for safety. For new businesses, produce the safest, highest quality, and affordable medicine and work with other businesses and regulators to keep innovating in the area of safety. Focus on the structure of your business: build your foundations and using expert advice, you can avoid major pitfalls and become the leaders in this brand new industry. Look for environmentally sustainable solutions, climate change issues need to be addressed in this industry. Use appropriate technology instead of burning coal to grow marijuana, which increases our carbon footprint. This includes both environmentally sound standard operating procedures and the right technologies, but also social justice. We are presented with a terrific economic opportunity to work on climate change issues, so work to address inefficient practices and innovate to be as sustainable as possible.

CIJ: For the entire cannabis industry in 2016 , what kind of growth do you expect?

Nic: We have reached a point where I foresee a holding pattern beginning to take shape. In 2016, the industry will continue to grow and demand will not be satiated by supply. August of 2015 was the first month when Colorado saw over $100 million in sales. We will increasingly see more price fluctuations as bigger projects come online. Many states in 2016 will focus on problems with their regulatory models and devising solutions for them. Businesses will continue their strategic growth planning, with key states potentially coming online for adult use such as Nevada and California. Nevada is one of the most up and coming markets in America with a 68% approval rating, and they have the ability to grandfather in businesses and previous rules associated with their medical marijuana program. Knowing licensing applications can take eight to eighteen months before you can become operational, we have to place our bets wisely. There is a lot happening in all these states and from the big November votes on, chaos will ensue as regulators tackle big problems with the overhaul. In 2016, the cannabis industry will make a big impact on the United States, and the exciting part is that progress is made through business as usual for us.