Tag Archives: violation

A Second Chance: CannTrust To Destroy Inventory & Plants

By Marguerite Arnold
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The beleaguered CannTrust has been given a way out of the perilous mess that executive management created for the company – but such a salvation comes at a high cost. That said, the company was already in deep water with regulators and clients. Health Canada, in fact, cancelled the company’s license to produce and sell cannabis in September – essentially mandating mass returns two months after a whistleblower instigated what is probably the legal industry’s most egregious scandal to date.

Efforts to regain regulatory approval also include plans by the company to recover cannabis that was not authorized by its license, and improve inventory tracking – the full details of which will be delivered to Health Canada by October 21.

While the beleaguered pot company’s stock predictably surged again on the public markets, the question lingers: can CannTrust ever be trusted again? These were egregious violations.

A Changing Industry

As with most things in business, the issues plaguing CannTrust were not isolated to one company. This has ranged in the past from pesticide use to creative accounting. Not to mention all sorts of creative endeavors on the financial side that are, depending on which stock market you look at this from, less than legit or just this side of shady.

It was easy to throw the book at a company like this – not only for these specific violations, but also as a warning to others tempted to engage in similar tactics (or fail to clean those up that still exist).

CannTrust in other words, was a clarion bell about the change in the weather, driven not only by international treaties but the legitimization of the drug, on the ground. Globally. When large health insurers get involved (see Europe), the conversation begins to change. And it is, fairly drastically.

On the ground in Germany, there are two more cultivation sites underway with one now certified and functional. BfArM (the German equivalent of the FDA) is now on the front lines of a battle that so far, at least in Canada, has not been addressed at a level Europe requires. That said, this reality too is changing. One of the largest distributors in Germany, CC Pharma, now owned by Aphria, has started a supply chain compliance check that is overdue. And further, while focussed on the cannabis industry, in truth, is a problem that plagues pharma far from cannabinoids.

However, as this is the cannabis industry, the scandals that rip through headlines are that much more visceral.

Seed to sale traceability, and further in a model unseen in the industry so far, will also become a watchword that is still rippling through an international industry chafing at any sort of standards, let alone standardization required for pharmaceutical acceptance. The bar, in other words, has just been set much higher. And there are many who will not make the grade.

CannTrust, certainly, was a victim not only of internal mismanagement, but a shifting environment that is rapidly upgrading on a level not seen so far in the entire North American industry – with a few notable exceptions. 

Pharmaceutical Grade Is The Standard To Beat

Here is the reality now facing an industry coming into its own and on an international basis. The standards are tightening. The rules are not only being written but being enforced. And while there are sure to be a few more scandals along the way, the kinds of basic problems found at CannTrust are probably, finally, going extinct in the part of the industry that now knows it is being held accountable to far higher standards.

The reason? Medical grade and national food standards are in the room for every exporter now eyeing Europe. And that alone is resetting the debate everywhere. No matter how treacherous the path may be.

So no matter how harsh the penalties are now facing one company, even the regulators know that this is shifting territory. CannTrust, after all, is being given a second chance.

5 Compliance Reporting and Notification Requirements That You May Not Know About

By Anne Conn
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New cannabis businesses must demonstrate proof of compliance to myriad laws and regulations as part of the initial license application process. And once a license is issued, it is easy to prioritize day-to-day business operations over ongoing compliance reporting requirements especially when sales are booming and compliance requirements are multi-layered, vague or obscured in non-cannabis specific programs and regulations.

But seemingly benign neglect of some minor reporting requirements can have major consequences to new and established businesses alike.

This article explores five compliance reporting requirements that cannabis businesses may not know about, and suggests ways to maintain a strong compliance posture across all regulatory agencies.

Pesticide Reporting

All licensed growers are required to prove compliance to state pesticide usage regulations. However, expectations on how and when to provide that proof of compliance vary greatly from state to state.  Furthermore, the responsibility of education and enforcement for pesticide usage in the cannabis industry often falls to non-cannabis specific agencies such as state departments of agriculture or environmental compliance.

For example in California, cultivators must report detailed monthly pesticide use reports via the State’s Agriculture Weights/Measures Division reporting portal, while Washington State regulators simply expect cultivators to keep records locally on site and provide them when requested.

With so many places to look, the best place to start your pesticide reporting requirement search is with your local agriculture department. They should be able to answer your questions and provide you with a list of resources to help you better understand how to comply with state pesticide usage and reporting regulations.

Hazardous Materials Reporting

Like pesticide use and reporting, hazardous waste handling and reporting requirements are complex and vary state to state. In fact, there may even be nuanced variations in handling requirements at the county level. The best approach to ensure compliance with a complicated set of regulations is to start by consulting your local county fire department. They will have the most specific set of rules for hazardous materials handling and reporting and can help you develop a site-specific compliance plan.

Two OSHA reporting requirements

Depending on how your cannabis business is classified, you may be required to keep injury and illness incident records and provide reports to the Occupational Health and Safety Organization (OSHA) for specific time periods.

Contact your business insurance provider’s loss prevention representative for more information about how your business is classified, which specific OSHA reporting requirements apply to you, and how to stay in compliance with applicable OSHA requirements.

Click here to learn more about how OSHA organizes reporting requirements by business type.

A note of caution here: OSHA non-compliance penalties can be steep and “I didn’t know I was supposed to do that” is not an acceptable defense when it comes to explaining any OSHA violations.

Labor Law Notification Requirements

Federal labor law requires that you notify employees of their rights. At a minimum, you post information regarding wages and hours, child labor, unemployment benefits, safety and health/workers’ compensation and discrimination in a conspicuous place where they are easily visible to all employees. Some states requires additional information be posted in a similar manner, so it’s important to be sure that those notices are posted along with the federal requirements.

This is a simple, yet easily overlooked, requirement for all businesses, regardless of industry. Ask your insurance provider for a copy of the notice to print and post right away (if you have not already) for a quick compliance win!

These five reporting and notification requirements may seem tedious, overly complicated and burdensome in the face of day-to-day business operations, but compliance to these requirements not only protects your business and employees, it also enhances the overall reputation of the industry. The good news is that regulatory agencies welcome a proactive approach and are happy to work with cannabis businesses to provide guidance and information for developing compliance plans.

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FDA Issues Warning To CBD Companies

By Aaron G. Biros
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On November 1st, the U.S. Food and Drug Administration (FDA) published a press release addressing warning letters issued to four companies. The warning letters, sent to companies marketing cannabidiol (CBD) products with therapeutic claims, cites unsubstantiated claims about their products’ ability to treat or cure cancer and other diseases.

A snippet of the warning letter issued to Greenroads

According to the press release, the four companies that received warning letters are Greenroads Health, Natural Alchemist, That’s Natural! Marketing and Consulting, and Stanley Brothers Social Enterprises LLC. The press release called their marketing campaigns “deceptive” for “unproven treatments.” Here is the letter they sent to Greenroads Health.

“As part of the U.S. Food and Drug Administration’s ongoing efforts to protect consumers from health fraud, the agency today issued warning letters to four companies illegally selling products online that claim to prevent, diagnose, treat, or cure cancer without evidence to support these outcomes,” reads the FDA statement. “Selling these unapproved products with unsubstantiated therapeutic claims is not only a violation of the Federal Food, Drug and Cosmetic Act, but also can put patients at risk as these products have not been proven to be safe or effective.”

According to the press release, the FDA has issued ninety warning letters in the past ten years, with around twelve this year, to companies making fraudulent claims about cancer therapies. Here are some examples of claims made by companies that the FDA took issue with:

  • “Combats tumor and cancer cells;”
  • “CBD makes cancer cells commit ‘suicide’ without killing other cells;”
  • “CBD … [has] anti-proliferative properties that inhibit cell division and growth in certain types of cancer, not allowing the tumor to grow;” and
  • “Non-psychoactive cannabinoids like CBD (cannabidiol) may be effective in treating tumors from cancer – including breast cancer.”

“Substances that contain components of marijuana will be treated like any other products that make unproven claims to shrink cancer tumors,” says FDA Commissioner Scott Gottlieb, M.D. “We don’t let companies market products that deliberately prey on sick people with baseless claims that their substance can shrink or cure cancer and we’re not going to look the other way on enforcing these principles when it comes to marijuana-containing products. There are a growing number of effective therapies for many cancers. When people are allowed to illegally market agents that deliver no established benefit they may steer patients away from products that have proven, anti-tumor effects that could extend lives.”