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Berlin’s ICBC: Meeting the European Cannabis Industry

By Marguerite Arnold
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The International Cannabis Business Conference (ICBC) in Berlin is now officially over. The speeches have been made, the parties have been attended. The hard-working crew behind it all has wrapped up, checked out and is off to Vancouver. And most of all, the marathon of meetings and deal discussions that were the mark of this budding and certainly by now established market are done. Even if there are still details to be ironed out in all the new business in the coming months.

As always, the dilemma for conference attendees was how to spend the limited time in this concentrated cannabis gathering. With all of the networking and excitement, people still wanted to hear the experts who spoke on topics ranging from cannabis financing to actually doing business in Germany to new medical advances. Traffic in the expo section was also heavy, as attendees visited the wide range of vendors. Producers and distributors of both plant and derived product were present, along with vape companies brave enough to compete with Storz and Bickel on their own turf, various tech solutions and of course, international consultants.

As the dust clears and the contracts get signed, what are the takeaways from the second edition of the ICBC in Berlin?

Germany Is Going Green

The simplest takeaway? The ICBC Berlin is not a market to be missed in the future for the global cannabis executive. Even if you are an American firm (and for the most part still largely excluded from a rapidly expanding worldwide trade that is establishing itself now with authority), you need to be here. The contacts you make are global, and you do not want to be left out. For foreign investors interested in this market, it is a must. For everyone else, this is a meet and greet, not to mention education, barnone. The German medical and even prosumer CBD market is attracting the world.

Yes, there have been ups and downs even in the last three weeks that include the crashing of the German bid along with news stateside that the Trump Administration is going to hang Jeff Sessions out to dry for Russia with his latest “Make American States Great For Cannabis Again” contortion.

Guenther Weiglein
Guenther Weiglein, activist patient, being interviewed in front of MedPayRx booth

But here on the other side of the Atlantic, it is clear that the federal cannabinoid horse has left the barn. There are now rumorsfloating that the bid is not yet entirely dead (now apparently in a legal purgatory of appeals and even potentially “bid amendments”) that nobody is willing to go on record to discuss. Beyond that, however, as was clear from the frenzied deal-makingon the floor and off it at the ICBC, the market is open, distributors are finding new channels to move product, and patients demanding access are not leaving the streets.

Far from it. In fact, the budding nascent umbrella national non-profit campaign designed to open access for patients and educate doctors, The German Patients Roundtable, had a huge second meeting during the conference, with both German and international attendees from countries including Israel and South Africa.

The CBD and THC genie cannot be stuffed back into the local bottle. And everyone knows it. This is federal medical reform, and even better, covered under German national public health insurance. Despite the hiccups and challenges that still remain, this is open blue water for a medical market that has never existed anywhere to date.

ICBC logoAnyone with a GMP facility, Euro cleared export rights and crop or product ready to ship will be welcome here in a market that at this point, cannot get enough plant or oil. Edibles are still a to-come discussion.

To the extent that this is also negative, it is very clear that the market is still highly inefficient. Producers who do have productare not being found by those on the ground who want to sell it to patients. That will also begin to change. But for now, many on the ground are playing a digitalized Rolodex game of “who do you know” that still consists of personal emails between conference-met colleagues if not LinkedIn contacts and impromptu (and freebie) favors. Those who hope to gain an income merely by connecting the source of product and outlets the old fashioned way are also about to be left in the dust by a market that will not be held back and activist businesses who are eyeing both the United States and Canada right now (if not Israel and Australia), and translating all of that into both euros and German.

It is also very clear that the savvy Germans who were largely left out of the bid proceedings last time do not mean to sit this party out – and are angling to get into the game however they can. This is taking some interesting forms, but processing and testing are going to be huge issues of the market here for a long time to come. And so is home-grown, high-quality CBD. The German government is even offering tax credits for growing certain kinds of hempright now. Sound familiar Kentucky?

Trends and Takeaways

It is not just the Canadians who are going to get market share. The Canadian LPs are still in a good position to dominate the early market but it is clear that there is still room for others to enter. Whether the government allows an appeal of the court’s decision to hold up, there is a quick bid “redo” for the top 10 finalists, or a second bid, the market has now arrived and is in its second year.

margueriteICBC
Marguerite Arnold presents on the impact of blockchain on the cannabis industry

CBD is going to be an important path to other kinds of provision and cultivation. Despite the widespread misconceptions about Germany being a “CBD only” market (it is not), it is clear that a consumer CBD only strategy will be an interesting path into the market here but not one for the faint of heart. The Canadian companies in particular are beginning to move into the realm of big pharma (their market caps certainly are). But it is also clear that more local competition is hip to the same. And as a result, even this part of the market will be a highly competitive one.

German firms are first at this gate, beyond the big Canadian LPs, but they are not the only ones now in the market. See Dutch, Austrian and Swiss firms, many with pharmaceutical company credits and market entry already under their belt.  Not to mention producers from both Greece and the Baltics. Everyone on the import side is eyeing the opening market and stalled bid as a fantastic opportunity. Look for products from these locales as testing and certification protocols become more effective.

Central to all of these developments? The conference is theplacefor the global cannabis industry to meet and get to know one another, put together by Alex Rogers and a seasoned, international team behind the ICBC.

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From The Lab

The Other Side of Cannabis: Terpenes

By Dr. Zacariah Hildenbrand, Allegra Leghissa, Dr. Kevin A. Schug
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Terpene_KAS2

Have you ever wondered why all beers have that strong, characteristic smell? Or why you could tell the smell of cannabis apart from any other plant? The answer is simple – terpenes.

These 55,000 different molecules are responsible for a majority of the odors and fragrances around us, from a pine forest, to the air diffuser in your house 1–3. They all share the same precursor, isoprene, and because of that, they are all related and have similar molecular structures. Unfortunately, it is this uncanny similarity that makes their analysis so challenging; we still lack a complete list of which terpenes expected to be found in each given plant species 1,2.

Many different methods have been developed in an effort to provide a time-optimized and straightforward analysis. Gas chromatography (GC) is usually center stage due to the volatility of the terpenes. Therefore, there is significant concern with the type of GC detector used 2.

The flame ionization detector (FID) is a good quantitative detector for GC, but qualitatively it does not provide any information, except for retention time; the differentiation between terpene species is achieved solely by use of retention indices (RI), which are based on elution times from a particular GC stationary phase. The best part of the FID is its low cost, reliability, and relatively easy interface, which make it an effective tool for quality control (QC) but less so with respect to research and discovery 2.

The primary choice for a research setting is the mass spectrometer (MS) detector. It is more expensive and complicated than FID, but importantly, it provides both good quantitative capabilities, and it provides mass spectra for each species that elutes from the chromatograph. However, for terpene analysis, it may still not be the best detector choice. Since terpene class molecules share many structural and functional similarities, even their fragmentation and sub-sequential identification by MS may lead to inconsistent results, which need to be confirmed by use of RI. Still, MS is a better qualitative analysis tool than the FID, especially for distinguishing non-isobaric terpenes 2.

Recently, new technology based on vacuum ultraviolet spectroscopy (VUV) has been developed as a new GC detector. The VUV detector enables analysis of virtually all molecules; virtually all chemical compounds absorb light in the range in the 125-240 nm wavelength range probed by the detector, making it an essentially universal detector 4–11. Previously, spectroscopic absorption detectors for GC have lacked sufficient energy to measure absorption of most GC-amenable species. The VUV detector fills a niche, which is complementary to MS detection in terms of the qualitative information it provides.

Terpene_KAS2
Figure 1: A, Section of the chromatographic separation of a terpenes standard mix; B, highlight of the co-eluting terpenes, camphor and (-)-isopulegol; C, differences in the absorbance spectra of camphor and (-)-isopulegol.

With the VUV detector, each compound exhibits its own unique absorbance spectrum. Even isomers and isobars, which are prevalent in terpene mixtures and can be difficult to distinguish different species by their electron ionization mass spectra, can be well differentiated based on their VUV spectra 6,9,10.  Nevertheless, because analytes exhibit different spectra, it is not required to achieve a perfect chromatographic separation of the mixture components. Co-eluting peaks can be separated post-run through the use of library spectra and software inherent to the instrument 4,10. This ability is called “deconvolution”, and it is based on the fact that two co-eluting terpenes will give a peak with an absorbance spectrum equal to the sum of the two single absorbance spectra 4. Figure 1 shows the deconvolution process for two co-eluting terpenes, camphor and (-)-isopulegol. Due to their different absorbance spectra (Figure 1C), it is possible to fully separate the two peaks in post-run, obtaining sharp peaks for both analytes 6.

The deconvolution process has been shown to yield precise and accurate results. Thus, chromatographic resolution can be sacrificed in favor of spectroscopic resolution; this enables the development of methods with faster run times. With the ability to deconvolve unresolved peaks, a long temperature ramp to chromatographically separate all isomeric terpenes is not required 6. Additionally, the presence of coeluting components, which might normally go undetected with some GC detectors, can be easily judged based on comparison of the measured spectra with pure reference spectra contained in the VUV spectral library.

The other issue in terpenes analysis is the extraction process. Terpenes can be extracted with the use of solvents (e.g., methanol, ethanol, hexane, and cyclohexane, among others), but the process is usually time-consuming, costly and not so environmentally-friendly 2. The plant needs to be manually crushed and then aliquots of solvent are used to extract components from the plant, ideally at least 3 times and combined to achieve acceptable results. The problem is that some terpenes may respond better to a certain solvent, making their extraction easier and more optimized than for others 2. The choice of solvent can cause discrimination against the extraction some terpenes, which limits the comprehensiveness of analysis.

Headspace is another technique that can be used for the sample preparation of terpenes. Headspace sampling is based on heating the solid or liquid sample inside a sealed vial, and then analyzing the air above it after sufficient equilibration. In this way, only volatile analytes are extracted from the solid/liquid sample into the gas phase; this allows relatively interference-free sampling 12–14.

How do we know whether our extraction analysis methods are correct and comprehensive for a certain plant sample? Unfortunately, there is not a complete list of available molecules for each plant species, and even if two specimens may smell really similar to our nose, their terpenes profiles may be notably different. When working with a new plant material, it is difficult to predict the extraction efficiency for the vast array of terpenes that may be present. We can only perform it with different extraction and detection methods, and compare the results.

The route for a comprehensive and fast analysis of terpenes is therefore still long; however, their intoxicating aromas and inherent medicinal value has provided a growing impetus for researchers around the world. Considering the evolving importance of Cannabis and the growing body of evidence on the synergistic effects between terpenes and cannabinoids, it is likely that newly improved extraction and analysis methods will be developed, paving the way for a more complete list of terpene species that can be found in different cultivars. The use of new analytical technologies, such as the VUV detector for GC, should aid considerably in this endeavor.


References:

[1]          Breitmaier E., Terpenes: Flavors, Fragrances, Pharmaca, Pheromones. John Wiley & Sons 2006.

[2]          Leghissa A., Hildenbrand Z. L., Schug K. A., A Review of Methods for the Chemical Characterization of Cannabis Natural Products. J. Sep. Sci.2018, 41, 398–415 .

[3]          Benvenuto E., Misra B. B., Stehle F., Andre C. M., Hausman J.-F., Guerriero G., Cannabis sativa: The Plant of the Thousand and One Molecules. Front. Plant Sci2016, 719, DOI: 10.3389/fpls.2016.00019.

[4]          Schug K. A., Sawicki I., Carlton D. D., Fan H.,Mcnair H. M.,Nimmo J. P., Kroll P.,Smuts J.,Walsh P., Harrison D., Vacuum Ultraviolet Detector for Gas Chromatography. Anal. Chem.2014, 86, 8329–8335 .

[5]          Fan H.,Smuts J., Walsh P.,Harrison D., Schug K. A., Gas chromatography-vacuum ultraviolet spectroscopy for multiclass pesticide identification. J. Chromatogr. A2015, DOI: 10.1016/j.chroma.2015.02.035.

[6]          Qiu C.,Smuts J., Schug K. A., Analysis of terpenes and turpentines using gas chromatography with vacuum ultraviolet detection. J. Sep. Sci.2017, 40, 869–877 .

[7]          Leghissa A., Smuts J., Qiu C., Hildenbrand Z. L., Schug K. A., Detection of cannabinoids and cannabinoid metabolites using gas chromatography-vacuum ultraviolet spectroscopy. Sep. Sci. Plus2018, 1.

[8]          Bai L.,Smuts J., Walsh P., Fan H., Hildenbrand Z., Wong D., Wetz D., Schug K. A., Permanent gas analysis using gas chromatography with vacuum ultraviolet detection. J. Chromatogr. A2015,1388, 244–250 .

[9]          Skultety L., Frycak P., Qiu C.,Smuts J., Shear-Laude L., Lemr K., Mao J. X., Kroll P., Schug K. A., Szewczak A., Vaught C., Lurie I., Havlicek V., Resolution of isomeric new designer stimulants using gas chromatography – Vacuum ultraviolet spectroscopy and theoretical computations. Anal. Chim. Acta2017, 971, 55–67 .

[10]       Bai L., Smuts J., Walsh P., Qiu C., McNair H. M., Schug K. ., Pseudo-absolute quantitative analysis using gas chromatography–vacuum ultraviolet spectroscopy–a tutorial. Anal. Chim. Acta2017, 953, 10–22 .

[11]       Schenk J., Nagy G., Pohl N. L. B., Leghissa A., Smuts J., Schug K. A., Identification and deconvolution of carbohydrates with gas chromatography-vacuum ultraviolet spectroscopy. J. Chromatogr. A2017, 1513, 210–221 .

[12]       Van Opstaele F., De Causmaecker B., Aerts G., De Cooman L., Characterization of novel varietal floral hop aromas by headspace solid phase microextraction and gas chromatography-mass spectrometry/olfactometry. J. Agric. Food Chem.2012, 60, 12270−12281 .

[13]       Hamm S., Bleton J., Connan J., Tchapla A., A chemical investigation by headspace SPME and GC-MS of volatile and semi-volatile terpenes in various olibanum samples. Phytochemistry2005,66, 1499–1514 .

[14]       Aberl A., Coelhan M., Determination of volatile compounds in different hop Varieties by headspace-trap GC/MS-in comparison with conventional hop essential oil analysis. J. Agric. Food Chem.2012, 60, 2785−2792 .

Massachusetts Prepares for Adult-Use

By Aaron G. Biros
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Last month, the Cannabis Control Commission, the regulatory body overseeing Massachusetts’ newest industry, finalized their regulations for the market. At the beginning of this month, the state began accepting applications for business licenses. Now with the full implementation of adult-use sales on the horizon, businesses, regulators, consumers and local governments are preparing themselves for the legalization of adult-use cannabis. Sales are expected to begin June 1st.

On March 29th, the Cannabis Control Commission announced their finalized rules were filed, published and took effect. Leading up to the filing, the Commission reports they held 10 listening sessions, received roughly 500 public comments and conducted 7 hearings for roughly 150 policy decisions. The license categories that businesses can apply for include cultivator, craft marijuana cooperative, microbusiness, product manufacturer, independent testing laboratory, storefront retailer, third-party transporter, existing licensee transporter, and research facility, according to the press release.

What separates Massachusetts’ rules from other states’ rules are a few of the license categories as well as environmental regulations, as Kris Kane highlights in this Forbes article. Experimental policies, like the microbusiness and craft marijuana co-op licenses, Kane says, are some tactics the Commission hopes may help those affected by the drug war and those who don’t have the capital and funding required for the larger license types.This is a groundbreaking reform previously unseen in states that have legalized cannabis. 

The Commission will also establish a Social Equity Program, as outlined in the final rules (section 17 of 500.105). That program is designed to help those who have been arrested of a cannabis-related crime previously or lived in a neighborhood adversely affected by the drug war. “The committee makes specific recommendations as to the use of community reinvestment funds in the areas of programming, restorative justice, jail diversion, workforce development, industry-specific technical assistance, and mentoring services, in areas of disproportionate impact,” reads one excerpt from the rules (section 500.002) identifying the need for a Citizen Review Committee, which advises on the implementation of that Social Equity Program.

This is a groundbreaking reform previously unseen in states that have legalized cannabis. Massachusetts may very well be the first state to actively help victims of the prohibition of cannabis.Some municipalities are hesitant and skeptical, while others are fully embracing the new industry with open arms.

For environmental rules, Kane notes the Commission is taking unprecedented steps to address energy usage in the cultivation process, pushing the industry to think about environmental sustainability in their bottom line and as part of their routine regulatory compliance. He says the Commission mandates a 36 watts-per-square-foot maximum for indoor cannabis cultivators.

On Monday, April 2nd the state began accepting applications for businesses seeking licensure. Within a few days, nearly 200 businesses have applied. That number is expected to grow significantly over the next few weeks.

While businesses continue applying for licenses, local governments are preparing in their own way. Some municipalities are hesitant and skeptical, while others are fully embracing the new industry with open arms.

A couple weeks ago, the City Council of Springfield, Massachusetts passed a six-month moratorium on cannabis sales, citing the need for more time to draft local regulations for businesses first. “I believe the moratorium is in place to make sure that we get it right the first time,” Councilor Adam Gomez, chairman of the council’s Economic Development Committee told MassLive. “We don’t have a chance to get it right the second time. The residents of Springfield supported this.” There are also talks of a potential temporary ban in Truro, MA.

Meanwhile in the city of Attleboro, ABC6 News reports Mayor Paul Heroux is “working to make his city marijuana friendly as city councilors work to draft regulation ordinances.” In Peabody, two businesses just received approval to begin operating as medical dispensaries.

PA flag

Pennsylvania Adjusts Medical Cannabis Program

By Aaron G. Biros
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PA flag

On Monday, Pennsylvania Health Secretary Dr. Rachel Levine announced plans to allow patients access to whole plant, dried flower, as well as more qualifying conditions. The move reverses the previous rule permitting dispensaries to sell only processed forms of cannabis, which some say limited access and kept costs high for patients.

According to the Marijuana Policy Project (MPP), the Department of Health approved changes to the program at a hearing on Monday, which were recommended by the Advisory Board last week. While smoking remains theoretically prohibited, patients can now access the flower for vaporization.

The medical cannabis program in Pennsylvania has only been functional for a few months now; patients began getting access to the drug back in February of 2018. In a press release, MPP says only a small number of cultivators and dispensaries are currently operating. This fact, coupled with the need to purchase processed forms of cannabis, has created product shortages and costly medicine for patients.

It is expected that this move could help alleviate some of those problems in the state’s new program. “Allowing cannabis in its natural, flower form and expanding the list of qualifying conditions will have a huge positive impact on seriously ill Pennsylvanians,” says Becky Dansky, legislative counsel for the Marijuana Policy Project, who helped lead the legalization effort in Pennsylvania’s legislature. “By being able to provide medical marijuana in plant form, producers will be able to get medicine into the hands of patients much more quickly and for much lower cost to patients,” says Dansky. “This is vitally important for patient access right now while the program is still getting off the ground and production is not yet at full capacity. We hope these rules are promulgated as quickly as possible so even more patients will be able to find relief.”

The qualifying conditions added to the list for patients seeking medical cannabis is set to include cancer remission therapy as well as opioid-addiction therapy, which are two very notable additions. With more qualifying conditions and a potentially cheaper form of medicine, these changes could improve the program’s efficacy in treating patients.

HACCP

Hazard Analysis and Critical Control Points (HACCP) for the Cannabis Industry: Part 2

By Kathy Knutson, Ph.D.
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HACCP

HACCP is a food safety program developed in the 1960s for the food manufacturing industry, mandated for meat, seafood and juice and adopted by foodservice for the safe serving of meals at restaurants. With state requirements for the safe production of cannabis-infused products, namely edibles, facilities may be inspected against HACCP principles. The cannabis industry and state inspectors recognize the need for safe edible manufacture. Lessons can be learned from the food industry, which has advanced beyond HACCP plans to food safety plans, starting with procurement and including the shipment of finished product to customers.

In my work with the food industry, I write HACCP and food safety plans and deliver training on food safety. In Part 1 of this series, I wrote about the identification of hazards, which is the first step in HACCP plan development. Before we continue with the next HACCP step, I will discuss Good Manufacturing Practices (GMPs). GMPs are the foundation on which HACCP is built. In other words, without GMPs in place, the facility will not have a successful HACCP program. GMPs are required in the food, dietary supplement and pharmaceutical industries, all under the enforcement of the federal Food and Drug Administration (FDA). Without federal regulation for cannabis edible manufacture, there may not be state-mandated requirements for GMPs. Let me warn you that any food safety program will not succeed without proper control of GMPs.HACCP

GMPs cover all of your programs and procedures to support food safety without having a direct, instant control. For example, when brownies are baked as edibles, food safety is controlled by the time and temperature of baking. A written recipe and baking procedure are followed for the edible. The time and temperature can be recorded to provide documentation of proper baking. In the food industry, this is called a process preventative control, which is critical to food safety and is part of a HACCP plan. Failure of proper time and temperature of baking not only leads to an unacceptable product in terms of quality, but results in an unsafe product that should not be sold.

Back to GMPs. Now think of everything that was done up to the steps of mixing and baking. Let’s start with personnel. Facilities for edibles have hiring practices. Once an employee is hired, the employee is trained, and training will include food safety procedures. When working at the job after training, the employee measuring ingredients will demonstrate proper grooming and hand washing. Clean aprons, hairnets, beard nets and gloves will be provided by the facility and worn by the employee. The same goes for the employee that bakes and the employee that packages the edible. One category of GMPs is Personnel.

Edibles facilities are not foodservice; they are manufacturing. A second GMP category is cleaning and sanitizing. Food safety is controlled through proper cleaning and sanitizing of food contact surfaces (FCS). The edible facility will have in place the frequency and methods for cleaning all parts of the facility- outside, offices, restrooms, break room and others. GMPs cover the general cleaning procedures and procedures for cleaning receiving, storage; what we would consider processing to include weighing, process steps and packaging; finished product storage and shipping. Management of the facility decides the methods and frequency of cleaning and sanitizing with greater care given to processing. Without proper cleaning and sanitizing, a facility cannot achieve food safety.

I could go on and on about GMPs. Other GMPs include water safety, integrity of the buildings, pest control program, procurement, sewage disposal and waste disposal. Let’s transition back to HACCP. In Part 1 of this series, I explained identification of hazards. Hazards are one of three types: biological, chemical and physical.

At this point, I am not surprised if you are overwhelmed. After reading Part 1 of this series, did you form a food safety team? At each edibles facility, there should be at least one employee who is trained externally in food safety to the standard that foodservice meets. Classes are offered locally and frequently. When the facility is ready, the next step of training is a HACCP workshop for the food industry, not foodservice. Edibles facilities are not foodservice; they are manufacturing. Many colleges and associations provide HACCP training. Finally, at the least, one employee should attend a workshop for Preventive Controls Qualified Individual.

To institute proper GMPs, go to ConnectFood.com for a GMP checklist. Did you draw up a flow diagram after reading Part 1? With a flow diagram that starts at Receiving and ends at Shipping, the software at ConnectFood.com takes you through the writing steps of a HACCP or food safety plan. There are many resources out there for GMPs, so it can get overwhelming. ConnectFood.com is my favorite resource.

The next step in HACCP development after identification of hazards is to identify the exact step where the hazard will be controlled. Strictly speaking, HACCP only covers process preventive controls, which typically start with a weigh step and end with a packaging step. A facility may also have a step where temperature must be controlled for food safety, e.g. cooling. In HACCP, there are commonly two process preventive controls:

  • Biological hazard of Salmonella and Escherichia coli: the heat step
  • Physical hazard of metal: metal detector

Strictly speaking, HACCP does not include cleaning, sanitizing and supplier approval for procurement of ingredients and packaging. I hope you see that HACCP is not enough. There have been hundreds of recalls and outbreaks due to problems in non-processing steps. The FDA requires food manufactures to go beyond HACCP and follow a written food safety plan, which includes hazards controlled at these steps:

  • Biological hazard of Listeria monocytogenes: cleaning and sanitizing of the processing environment and equipment
  • Physical hazards coming in with ingredients: supplier approval
  • Physical hazard of glass and hard plastic: Here I am thinking of glass breaking or plastic pieces flying off buckets. This is an internal hazard and is controlled by following written procedures. The written document is a Standard Operating Procedure (SOP).
  • Chemical hazard of pesticides: supplier approval
  • Chemical hazard of mycotoxins: supplier approval
  • Chemical hazard of allergens: supplier approval, label check at Receiving and product labeling step

Does a cannabis edible facility honestly not care or not control for pesticides in ingredients because this is not part of HACCP? No. There are two ways for procurement of ingredients in which pesticides are controlled. Either the cannabis cultivation is controlled as part of the samebusiness or the facility works with a supplier to confirm the ingredient meets pesticide tolerances. Strictly speaking, this control is not part of HACCP. For this and many other reasons, HACCP is a good place to start the control of food safety when built on a solid foundation of GMPs. In the same way the food industry is required to go beyond HACCP with a food safety plan, the cannabis industry must go beyond HACCP.

My thoughts will be shared in a webinar on May 2nd hosted by CIJ and NEHA. I encourage you to listen in to continue this discussion.Please comment on this blog post below. I love feedback!

Is There a Looming Supply Bottleneck in California?

By Aaron G. Biros
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California’s regulated adult use cannabis market has been up and running for around four months now and rumors of a potential supply bottleneck on the horizon are beginning to circulate. There are a number of factors that could have an impact on the cannabis supply in the market, most of which stem from changes in the distribution channels now that the state is implementing new regulations.

Those include a slow rollout in licensing cannabis businesses, new testing requirements, the supply carryover period prior to January 1stas well as new labeling and packaging regulations. In this piece, we are going to examine some of those rumors, see if there might be some truth to them and provide some guidance for what businesses can do to prepare for this.

A Slow Start to Licensing

This one is perhaps the most obvious factor to impact the supply chain in California. Much of the delays in licensing cannabis businesses came from the issue of local control, where businesses needed to get approval from their municipality before getting a state license. In the first month of the new market, it took Los Angeles weeks longer than other counties to begin licensing dispensaries. Whereas San Diego retailers saw a massive influx of customers right away, forcing them to buy up product to meet the high demand. Smaller producers also had trouble getting licenses as quickly as some of the larger ones.

Basically it all boils down to a slow start for the new market, according to Diane Czarkowski, co-founder of Canna Advisors. “The state is requiring businesses to get their local licenses before they can get their state license and that will create a delay in operators being able to bring products to market,” says Czarkowski. She says this is pretty typical of new markets, or when a market experiences dramatic changes quickly. “It could be a brand-new market, like in Hawaii, where the operators were ready with product, but there were no labs to test the products, which caused delays.” In addition to the licensing roll out being slow to start, the temporary licenses initially awarded to businesses are set to expire soon, by the end of April.

Stricter Rules to Come

The same logic goes for the testing regulations. New testing and labeling requirements, according to the Bureau of Cannabis Control regulating the market, will be phased in throughout 2018.

CA cannabis testing chart
California’s plan for phasing in testing requirements.

The state has already phased in cannabinoids, moisture content, residual solvent, pesticide, microbial impurities and homogeneity testing to some extent. On July 1st, the state will add additional residual solvent and pesticide testing as well as foreign material testing. At the end of 2018, they plan on requiring terpenoids, mycotoxins, heavy metals and water activity testing. All of those tests cost money and all of those tests could impact suppliers’ ability to bring product to market. “Oftentimes regulations require different types of testing to be done to products without recognizing that adequately completing those tests requires different methods, equipment, and standards,” says Czarkowski. “Most labs do not have all of the necessary components, and they are very costly. Producers could wait weeks to get test results back before they know if they can sell their products.”

Back when we spoke with Josh Drayton, deputy director of the California Cannabis Industry Association, about the upcoming changes to the California market, he voiced his concerns with the coming testing rules. “A lot of testing labs are concerned they are unable to test at the state’s threshold for some of these contaminants and pesticides; the detection limits seem very low,” says Drayton. “The testing portion will take years to work out, I am sure we will remove and add different pesticides and contaminants to the list.” California’s testing industry is, however, capable of adapting to changing rules, as they’ve done in the past on more than one occasion. It should be noted that many labs in the state are on the cutting edge of testing cannabis, working with The Bureau to implement the new rules.

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Roy Bingham, CEO of BDS Analytics

Cannabis products made prior to December 31st, 2017, did not need to comply with the stricter testing rules that are coming in the next few months. This carryover period allowed dispensaries to have products on the shelves when the new market launched in the beginning of 2018. Retailers knew this rule meant they needed to stockpile product in the event of a supply bottleneck, and it appears much of that product is now sold and running out, according to Roy Bingham, founder and chief executive officer of BDS Analytics. “The true impact of licenses is starting to be felt since the carryover from December buying prior to the licensed market has been sold,” says Bingham. “Some of the major brands have consciously not applied for licenses. Some of that has to do with the flexibility the government has given them to wait.”

A fourth reason for a potential bottleneck could also come from packaging and labeling rules. “There will have to be many modifications to products to ensure they follow the new potency regulations, and many formulations will have to be modified in order to meet new regulations,” says Czarkowski. Distributor licenses, according to The Bureau, have a number of compliance documentation requirements, such as arranging for all product testing, quality assurance and packaging and label accuracy. Everything has to be packaged before it gets to a dispensary, which is a new rule California businesses need to comply with.

Pricing is the Indicator

There are a handful of reasons why prices could increase; some of them are more defined than others, the biggest factor being the tax burden passed on to consumers, where reports showed up to a 40% increase from last year. A price increase in the future could also come from The Bureau implementing testing regulations throughout 2018, as mentioned previously.

If prices were to surge enormously and very quickly, that might be an indicator that a shortage is fast approaching. A dramatic increase in price over this year could squeeze margins for smaller producers, forcing retailers to pass that burden on to consumers as well.“So yes, the rumors are true.”

According to Roy Bingham, there has been a significant increase in pricing in all categories at the retail level. “In January and February, we are seeing about 10% increases per month in average retail prices,” says Bingham. “If we look at concentrates in California during 2017, they averaged about $34 by the end of the year, whereas it was about $31 at the start of 2017. So in January, prices have increased up to $38, which is a bit above trend, but in fact we were seeing a trend upwards before January 1st as well.” Comparing that with edibles pricing, Bingham says we see a clear jump at the start of 2018. “It was basically flat in 2017, averaging $14 roughly almost straight-line across, dipped in December, then in January it jumped to $17 and then to $18 in February, a big increase and significantly more than concentrates,” says Bingham. He also says flower was hovering around $9 per gram in December 2017, but surged above $10 in February 2018.

According to Cannabis Benchmarks, the California wholesale averages surged in the summer of 2017 up to $1,631 by September, then reached their lowest point in December, with their spot index at $1,368. The Cannabis Benchmarks report underlines some important reasons for the changes in pricing, but they also attribute it to the new licensing system.

“Increasing operating expenses for businesses preparing to enter California’s licensed system in 2018 were key to propping up supply side rates in the first six months of 2017. New compliance requirements were being instituted to varying degrees by local governments, while market participants warily eyed draft regulations from state officials for guidance as to how to prepare their sites and facilities to meet under-construction regulatory mandates.”

Their report highlights some very important aspects of the supply chain. “Again, it is likely that the increased costs faced by operators up and down the supply chain exert some upward pressure on wholesale rates, preventing them from steep year-over-year declines that were observed in some of the other major Western markets,” reads the Cannabis Benchmarks report.

So How Can Businesses Prepare?

Well to start, producers should make sure their operations and product are clean and safe. Making sure your product will pass a pesticide test should be top of mind. Dispensaries should also be wise in selecting their suppliers, performing supplier quality audits or some form of verification that they meet your standards is key in a consistent supply chain.

Dr. Jon Vaught, chief executive officer of Front Range Biosciences, believes tissue culture could be a viable solution for some California producers. Using tissue culture, as a form of propagation instead of mothers and clones can be cleaner, cheaper and more efficient, thus allowing growers to keep up with demand and prevent a shortage.

Dr. Jon Vaught headshot
Dr. Jon Vaught, CEO of Front Range Biosciences

Dr. Vaught says growers could look to tissue culture as a means to “mitigate risk to their supply chain and mitigate the risk of potential loss and improve their ability to efficiently grow their plant.” Maintaining a disease-free, sterile environment is a huge advantage in the cannabis market. “The real use of tissue culture is to provide disease free, clean, certified material, that has gone through a QA program,” says Dr. Vaught. “In greenhouses, the ability to control your environment is also critical because your margin of error is high. Variations in sunlight, weather, humidity all of these things have an impact in your plants. Technology can help monitor this.”

We’ve covered the basics of tissue culture previously on CIJ, with Dr. Hope Jones chief science officer of C4 Laboratories. She echoes many of Dr. Vaught’s points, firmly believing that, having existed for decades, tissue culture is an effective propagation tool for advanced breeders or growers looking to scale up.It is a complex supply chain that requires systems thinking.

It is important to note they don’t think growers should try this at home. Work with professionals, get the necessary funding, the training and facilities required if this is a project that interest you. “There’s a pretty big barrier to entry there,” Dr. Vaught urges. “The ability to manage thousands or millions of plants in a greenhouse increases risk, whereas in the lab, you’ve got a safe, secure, sterile environment, reducing risk of disease, making things easier to manage. The producers most successful at large scale are controlling those variables to the T.”

Ultimately, one segment of the market can’t prevent a bottleneck. It is a complex supply chain that requires systems thinking. Regulators need to work with producers, manufacturers, retailers, distributors, patients, consumers and laboratories to keep an eye on the overall supply chain flow.

Diane Czarkowski says the California market should prepare for this now if they haven’t already. “We have seen supply issues in every market going through a change. Other potential bottlenecks will occur because former distribution channels will be required to change,” says Czarkowski. “So yes, the rumors are true.”

Lessons from Food Safety: Applications to the Cannabis Industry

This free, 1-hour webinar co-hosted by NEHA and CIJ, will be held May 2nd at 1pm EST: A hazard analysis and critical control points (HACCP) plan has historically been applied by the food manufacturing industry and later foodservice to control food safety. Both a food facility and a restaurant strive to sell food that is safe for consumption, that will not cause injury or illness. As the cannabis industry grows in the manufacture of cannabis-infused products, namely edibles, lessons can be learned from the progress and success of programs like Good Manufacturing Practices, HACCP, Juice HACCP and the Food Safety Modernization Act. One side of the coin is compliance with regulations; the other side of the coin is taking all necessary steps to ensure a safe product for the consumer. We will also discuss the disparities in state-to-state cannabis safety and quality regulations, and implications for infused-product manufacturers.

Washington Lab Conducts Transparency Study

By Aaron G. Biros
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Earlier this week Capitol Analysis Group, a cannabis-testing laboratory based in Lacey, Washington, announced they are conducting a “data-driven Lab Transparency Project, an effort to improve accuracy of cannabis testing results in the state through transparency and a new third-party auditing process,” according to a press release. They plan to look through the state’s traceability data to find patterns of deviations and possible foul play.

The project launch comes after Straightline Analytics, a Washington cannabis industry data company, released a report indicating they found rampant laboratory shopping to be present in the state. Lab shopping is a less-than-ethical business practice where cannabis producers look for the lab that will give them the most favorable results, particularly with respect to higher potency figures and lower contamination fail rates.“Lab shopping shouldn’t exist, because it is a symptom of lab variability,”

According to the press release, their report “shows that businesses that pay for the highest number of lab tests achieve, on average, reported potency levels 2.71% higher than do those that pay for the lowest number of lab tests.” They also found labs that provide higher potency figures tend to have the largest market share.

The Lab Transparency Project logo
The Lab Transparency Project logo

The goal of The Lab Transparency Project is to provide summaries of lab data across the state, shining a light in particular on which labs provide the highest potency results. “Lab shopping shouldn’t exist, because it is a symptom of lab variability,” says Jeff Doughty, president of Capitol Analysis. “We already have standards that should prevent variations in lab results and proficiency testing that shows that the labs are capable of doing the testing.” The other piece to this project is independent third party auditing, where they hope other labs will collaborate in the name of transparency and honesty. “Problems arise when the auditors aren’t looking,” says Doughty. “Therefore, we’re creating the Lab Transparency Project to contribute to honesty and transparency in the testing industry.”

Dr. Jim McRae, founder of Straightline Analytics, and the author of that inflammatory report, has been a vocal critic of the Washington cannabis testing industry for years now. “I applaud Capitol Analysis for committing to this effort,” says McRae. “With the state’s new traceability system up and running following a 4-month breakdown, the time for openness and transparency is now.” Dr. McRae will be contributing to the summaries of lab data as part of the project.

According to Doughty, the project is designed to be a largely collaborative effort with other labs, dedicated to improving lab standards and transparency in the industry.

Steven Burton

3 Ways The Cannabis Industry Can Benefit By Adopting IoT Tech

By Steven Burton
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Steven Burton

The cannabis industry of the United States is unlike other horticulture markets in the country. It’s younger, less traditional and with roots in a black market, it’s no surprise that its forerunners aren’t afraid to experiment with new approaches and technology.

The rapid adoption of IoT (Internet of Things) technology is one way in particular that this new generation of producers is stepping up, and they’re beginning to reap the rewards. But to better demonstrate how significant the implementation of IoT tech can be, we’ll peek over the fence at other craft-oriented food industries—namely wine and chocolate—to discover how effective they can be long-term for serious players in the cannabis industry.

The results, as you can probably guess, are astounding.

Farm Productivity and Precision is on the Rise

IoT tech isn’t just a cool new thing for experimental growers – it’s as necessary as air in the 21st century. New and veteran farms alike are discovering ways to streamline production and enhance the quality of their crops. One of the most common implementations of IoT tech in agriculture is the installation of smart measurement tools. Remote sensors can monitor soil acidity, humidity, salt concentrations, temperature and a variety of other metrics, automating the collection of data and providing a clear picture of plant health. For many farms, like E. & J. Gallo Winery, this is a game-changer.By installing hundreds of sensors per block and upgrading to a more precise irrigation system, Gallo was able to connect moisture measurements to a central system

Before placing sensors in over 250 acres of their vineyard, Gallo could only make irrigation adjustments at the large block level. Even with careful monitoring of moisture levels, the grape yield was inconsistent in size and flavor. By installing hundreds of sensors per block and upgrading to a more precise irrigation system, Gallo was able to connect moisture measurements to a central system. The system collects the data, considers the weather forecast, and automatically irrigates small areas of the vineyard as needed to ensure all plants are optimally watered. This resulted in a more uniform crop, less water waste and more desirable grapes.

Cannabis farms are starting to pick up on this simple approach as well. Organigram, one of Canada’s leading Cannabis producers, is well aware of the benefits of this kind of automation and data collection. “All our grow rooms are helping us learn all the time,” says Matt Rogers, head of production at Organigram. “With 20 grow rooms going, we can gather as much information about these plants as you would get in a century of summers.”

Automation and precision have enabled by Gallo and Organigram to improve yield and increase precision, which has helped them achieve their well-respected status in the wine and cannabis industries.

The Supply Chain is Becoming More Transparent

As much as we would like the industry to be free of scams and crooks, there’s more than a few producers stretching the truth when it comes to labeling product. MyDx, a cannabis chemical analyzer, recently revealed that the label on the package often does not totally coincide with the product within.Protecting your brand’s reputation is a necessity and IoT tech is helping some pioneering industries do that.

For example, the most frequently tested cannabis strain, “Blue Dream”, averages a 64% difference in chemical makeup from sample to sample. Similarly, “Gorilla Glue” and “Green Crack” show as much as 83% variation from sample to sample—largely because there’s no regulation of these names.

While variation is inevitable from grower to grower, plant to plant, and even between different parts of the same plant, misleading labels and the addition of ‘fillers’ is a growing issue for edible cannabis producers, and the threat it poses to your brand isn’t minor. Protecting your brand’s reputation is a necessity and IoT tech is helping some pioneering industries do that.

Wine in China is a powerful example of how improved traceability can reduce large-scale mislabeling. Brand-name winemakers in the country face a massive problem: 70% of imported wines are counterfeits. To combat this, winemakers are attaching near-field communication (NFC) labels to imported and domestic bottles. It’s a dramatic solution, but one that’s protecting the brand of winemakers dedicated to quality and transparency.

As the legalization of cannabis spreads and coveted strains emerge, so will the availability of counterfeits—or, at the very least, less-than-truthful labeling. This has proven to be true in almost every specialty market, and adopting improved traceability tech will defend your brand and reputation from the consequences of selling a product that’s discovered to be more ‘filler’ than cannabis.

Compliance is Easily Achieved

The conversation of cannabis regulation generally revolves around age restrictions and driving while impaired, but government compliance is far more complicated – especially for facilities that create cannabis-infused food products. And here’s the frustrating part for those who must (and should) maintain a food safety plan: every time a regulation is adjusted (or every time a new variation is added in another state), facilities must be able to document changes in procedures, recipes and hazard controls. It gets complicated quickly, especially if all the documentation is kept manually.

There’s a lot to be gained by connecting your systems and products to the Internet of ThingsA central, connected system is the best way for food manufacturers to streamline and automate a variety of documentation and food safety tasks, which can mean thousands of dollars saved over months or years. Using software like Icicle, facilities can create a comprehensive data environment that’s dynamic and accessible from anywhere. Incoming measurements from connected equipment and employee records are collected and an admin dashboard allows you to see what food safety systems are thriving and which need revisiting. The records – transformed into a compliant food safety plan – can then be pulled up during audits and inspections on the spot, saving the months that companies usually spend preparing documentation.

According to Mitchell Pugh of Chewter’s Chocolates, their system “gives me a great peace of mind in the sense to know we have all our information prepared and anything that an inspector is going to ask for – whether they’re looking for one product, a general system, a certain hazard, or a bill of ingredients or materials or an allergen – is easy for us to search for it, pull it up, and find exactly what they’re looking for.”

Considering that most food manufacturers still record measurements and create food safety plans manually, this is an area where progressive companies can quickly outpace their non-automated rivals.

Whether you’re a grower, dispensary, food producer, or some other kind of cannabis professional, there’s a lot to be gained by connecting your systems and products to the Internet of Things. Which direction will you take?

Cannabis Regulation Update, Terpene & Residual Solvent Analysis and Heavy Metals Analysis

This free webinar, hosted by Perkin Elmer and CIJ, will dive into the regulatory environments surrounding cannabis testing, as well as terpene, residual solvent and heavy metals testing. Are you finding it difficult to keep up with changing regulations for the cannbis industry? Are you looking to reduce hands-on analysis time? Speed up sample processing? Have less waste? Possibly reduce the number of individual tests running in your laboratory?
Learning Objectives:
• Understand and prepare for new state regulations in the US and pending federal regulations for Canada
• Learn how to run two regulated tests (terpenes and residual solvents) in one analysis, on one instrument, and with one SOP
• Overcome challenging cannabis matrices for heavy metal analysis with microwave digestion

Sign up for free today!