Tag Archives: GMP

Designing Precision Cannabis Facilities: A Case Study

By Phil Gibson
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With data forecasting expert BDSA predicting that the global cannabis market will reach $56B by 2026, there is no time to waste. Whether it’s Oklahoma, New York or even Macedonia, the frenzy is on. Investment decisions are immediate, and you have to be correct out of the box. This is where an expert like Andrew Lange and his company, Ascendant Management, come in. Andrew has designed more than 1.5 million square feet of cannabis facilities and moved them into profitable production in North America and Europe. One of his active customers is Onyx Agronomics in Washington. Bailee Syrek is the director of operations at Onyx and this is the story of the key points in designing a precision cannabis facility with state-of-the-art efficiency.

Background

Andrew Lange, a navy veteran, runs a global cannabis consulting business based in Washington. With a “prove it to me” approach, he regularly tests the best new technologies in the facilities he designs. He integrates his knowledge of what works in practice into his subsequent facilities. One of his previous projects, Onyx Agronomics in Washington, started in 2014 and moved quickly into production in a retrofitted warehouse. Many of his best ideas started with Onyx, including some new innovations in the latest expansion there this month. Onyx is a tier 3 cannabis cultivator.

Bailee Syrek’s operation at Onyx currently produces 9,000 lbs. of dry trim bud per year in 8,000 square feet of canopy. She operates the state-of-the-art, clean room style, indoor grow facility around the clock, delivering 2.7 grams/watt from every square foot of canopy in her building. She runs a highly efficient facility.

Onyx has had an ongoing relationship with Ascendant Management and chose to leverage them again with their current expansion to increase their capacity further. Onyx uses a range of advanced technologies including aeroponic cultivation equipment and control software from AEssenseGrows to hit their metrics.

Precision, Quality & Consistency

“I look for ways that my clients can differentiate themselves,” says Lange. Maybe it’s his military background, but Andrew demands precision, quality and consistency in the operations he designs. “Cannabis is a just a plant really so we look for the highest performance grow methodology. I find that to be AEssenseGrows aeroponics,” says Lange. “The AEtrium Systems provides a good foundation to manipulate for grow recipes and business process. I add teamwork, communications, and operations procedures to that foundation.”

At Onyx, Bailee Syrek works closely with her channels. She invites her customers in regularly to review the Onyx cultivars and to cover their ideal requirements. These can range from bud size for their packaging to THC or terpene profiles (Yes, channels do want both higher and lower THC content for different consumers and price points). Based on that feedback, Bailee and Andrew work together to dial in the ideal grow recipe in the AEssenseGrows Guardian Grow Manager central control software. They push their target strains to optimize the results in the direction requested by their customers. For example, “How do you get the highest possible THC out of 9lb Hammer?” You’ll have to ask Andrew and Ascendant Management.

Driven by customer requests, Onyx is adding new strains to build on their innovative brand. Bailee expects to reach new levels of terpene bundles with Cheeseburger Jones, Koffee Breath, Shangri-La and OK Boomer. Utilizing Andrew’s expert knowledge, they can take typical sub-20% cannabinoid bundles and improve them using aeroponics and better controls, into standout aeroponic 30% packages.

The Onyx Vision

Andrew Lange, Ascendant Management

Bailee Syrek believes this is the most exciting time yet for Onyx. Delivering premium grade cannabis as a white label flower supplier for years, Onyx is a profitable and successful business. But even with doubling capacity every year, they are still having trouble keeping up with customer demand. Bailee wants to get to the point where she can always say yes and accept an order from their white label customers. With this objective, she again engaged Ascendant and Andrew to get beyond 15,000 lbs. of output in 2021 to make her customers happier. Beyond that basic expansion, she is also ambitious and is preparing plans for additional lines of revenue with their own proprietary flower, oil and derivative products.

“This expansion will be a new challenge,” says Syrek. “Flower production is in our wheelhouse. We have tighter operations, with the most consistent bud size, terpenes and test results in our state. These new products will require that same quality but now in new areas.”

Her Path to Leadership

Bailee started with Onyx in a compliance position that grew out of the constant demands for government licensing and reporting. In that compliance role, she had the opportunity to work a bit in every department, giving her a good understanding of all of the facility operations and workflows. All of that experience led her to eventually take over the operations leadership role. She instills care and effort to maintain the cleanest and most efficient operations possible. “With aeroponics, we don’t have to lug soil from room to room or in and out of the facility. This saves us a ton of work that we can redirect to plant health and maintenance,” says Syrek. “Medical precision and GMP quality is a given. Each room on average is 105 lights and one room manager and one cultivation technician take the room from clone/veg transfer to harvest as a two-person team.”

Bailee Syrek, director of operations at Onyx Agronomics

Bailee prides herself with results. “Medical grade precision is normal for us. We use medical grade SOPs for every aspect of our production.” Bailee has designed these guides into their control system that runs on the Guardian Grow Manager software. From sensor tracking, to performance graphs to time cards; everything is integrated in her performance monitoring.

A quality focus is very apparent in every Onyx flower room. Every watt of light energy is transferred to the pristinely manicured canopy. Naked stems feed nutrients up to the fat buds at the trained canopy surface. Fan leaves are removed and all possible energy turns into bud weight and potency. The room technician has a passion for plant health, table care and plant maintenance all the way through to the harvest bonanza.

What is the biggest challenge for Bailee as she drives the operation? Even at 105-110 grams per square foot per harvest, they are sold out. “Every customer wants to buy beyond our capacity. It is a good problem to have,” Bailee says. “Customers want our quality and love the consistency. This is the most exciting thing about our expansion. We will finally be able to make additional channels happy with high quality supply.”

This is where Andrew credits Onyx’s performance. “Most well running operations deliver 1.1-1.8 grams of dry trim bud per watt of electricity used in powering a grow room,” says Andrew. The Onyx grow formula results leave this in the dust. Running Fluence SPYDR 2i grow lights and the AEtrium System aeroponics, Onyx plants are delivering just shy of 4 lbs. per light with every harvest cycle. At 630 watts max output, that delivers ~2.7 grams/Watt, the most efficient operation he has seen. The Onyx process and execution works.

“Bailee is a great example as a professional. She builds a motivated team that executes better than her competition,” says Andrew.

At the same time, Onyx runs a highly space efficient nursery with just enough mother plants feeding energetic cuttings into the 4-layer stacked AEtrium-2.1 SmartFarms in their environmentally controlled clone room. They produce more than enough healthy clones to jump from veg to flower in the span of a week. Grow time, harvest turn time and no veg space, results in very efficient use of power in the complete operation.

Mirroring Onyx for Medical Grade Cannabis in Europe

Andrew Lange’s current passion is a green-field project in Portugal. Self-funded, Andrew says that this facility will be one of the first that is pure enough in operations to supply non-irradiated clean-room-level-quality cannabis beyond the precise standards required by European regulators. Current importers have not been able to clear the European standards for cleanliness without irradiating their buds. Other companies like Aurora have abandoned efforts to access the market due to the precision requirements. Typical methods used for fruit imports use gamma radiation to get bacterial counts down. This was tried with cannabis to sterilize buds, but the problem with cannabis is this degrades the quality of the flower.

Andrew’s Portugal facility will be using a sterile perimeter surrounding his grow space (mothers, clones/veg, flower rooms) and harvest and processing areas (dry, trim, packaging). Andrew creates a safe environment for healthy production. A steady harvest cleaning regimen is built into his operational designs from the beginning. All operators are trained in procedures to exclude pathogens and limit all possible transmission (airborne, physical/mechanical touching, or water carried). Every area is cleaned during and between harvests. Andrew is confident he will reach a consistent level of accuracy and purity beyond European requirements because it is routine in all of his designs.

Certified Efficiency is the Message

Good Manufacturing Practices (GMP) and Good Agricultural and Collection Practices (GACP) are required for certification and access to European markets. Andrew always builds tight operations, but in this case, his Portugal facility is designed with the fit and finish to be GMP and GACP compliant from day one with advanced air filtration and air management throughout.

Automated aeroponics is a foundation technology that Andrew recommends for his facility designs. The automatic data logging, report generation, cloud access and storage make this a foundational technology. Andrew does get some resistance from cultivators that are used to the classic soil media approaches but he explains that software configurable grow recipes, precision controls, zero soil/no pests and hyper-fast growth makes aeroponics the foundation of competitive advantage. Precisely controlled medical quality precision operations are built on top of this foundation.

The initial phase of the Portugal facility is 630 lights and this facility is Andrew’s latest personal investment. From secure perimeters to modular grow rooms and highly automated equipment, this location will be state-of-the-art in terms of grams/watt yields and renewable energy with an output of 6 metric tons per year. Solar powered electricity from a 4-megawatt farm will use Tesla megapacks for storage and be grid independent.

Technology & Innovation, Onyx & Ascendant

From his first experience with AEssenseGrows aeroponics, Andrew has been able to design complete grow recipes in the Guardian Grow Manager software with very tight precision on dosage. This makes it possible to create ideal recipes for each strain (nutrition, irrigation cycles, lighting and environmental management). This frees up the operations teams to focus on plant health and execution. The nutrients, pH, CO2, temperature and humidity, follow the Guardian directions that he sets.

Working with Bailee at Onyx, Andrew is now consulting on the post-harvesting side of operations (drying, trimming, extracts and packaging). In parallel with his efforts, Bailee is optimizing THC & terpene production on the cultivation side with UV lighting (considering far-right red frequency light recipe enhancements).

That is the Ascendant Management approach to innovation. Trial, test constantly, perfect ideas in practice. Optimize the results for consistent, high-quality results. Even while driving for the personal craft touch, use automation to increase efficiency of mundane, but important tasks. With these methods, Andrew believes that the Onyx labor cost is one third of typical soil media grow operations. Zero soil aeroponics offers many benefits. Bailee’s team is able to give each plant more attention and delivery better quality. Automation is a win-win for them.

Bailee finds that constant testing is useful for two things: one, great results, and two, surface the best talent with their hand’s-on approach.

Always Finish with People

Bailee says that her staff works incredibly hard. “We are a different grow, with better ergonomics on the job, aeroponics for precision and yields, and advanced technology at the leading edge in every part of our grow. No dirt up and down stairs. People are proud to work here. We are not your dad’s grow operation.”

“We promote from within. Everyone starts as a room tech and has the opportunity to move up. Teams are isolated by rooms so there is no contamination between rooms or humans. Put in the work, and you will get promoted with expansions, and grow with the company as we take a bigger share in the market.” Female employees make up almost half of the current staff, and Bailee encourages employees to refer their friends. “Good people invite good people,” she says.

Her training program introduces the technical aspects of their unique operation, the positive expectations and career path for every new employee. The social environment is friendly with good pay and regular raises. Each new employee fills a range of roles during their 1-month training circuit and are assigned to a cultivation space under a lead as an official cultivation tech at the end of 30 days. “One thing that we do more than at other grows is constant cleaning,” says Bailee. “This is an ever-present mantra for the staff.”

ISO/IEC 17025 Accreditation Falls Short for Cannabis Testing Laboratories

By Kathleen May
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What is the role of the Quality Control (QC) Laboratory?

The Quality Control (QC) laboratory serves as one of the most critical functions in consumer product manufacturing. The QC laboratory has the final say on product release based on adherence to established product specifications. Specifications establish a set of criteria to which a product should conform to be considered acceptable for its intended use. Specifications are proposed, justified and approved as part of an overall strategy to ensure the quality, safety, and consistency of consumer products. Subsequently, the quality of consumer products is determined by design, development, Good Manufacturing Practice (GMP) controls, product and process validations, and the specifications applied throughout product development and manufacturing. These specifications are specifically the validated test methods and procedures and the established acceptance criteria for product release and throughout shelf life/stability studies.

The Code of Federal Regulations, 21 CFR Part 211, Good Manufacturing Practice for Finished Pharmaceuticals, provides the minimum requirements for the manufacture of safe products that are consumed by humans or animals. More specifically, 21 CFR Part 211: Subpart I-Laboratory Controls, outlines the requirements and expectations for the quality control laboratory and drug product testing. Additionally, 21 CFR Part 117, Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventative Controls for Human Food: Subpart B-Processes and Controls states that appropriate QC operations must be implemented to ensure food products are safe for consumption and food packing materials and components are safe and fit for purpose. Both food and drug products must be tested against established specifications to verify quality and safety, and laboratory operations must have the appropriate processes and procedures to support and defend testing results.

ISO/IEC 17025, General Requirements for the Competence of Testing and Calibration Laboratories is used to develop and implement laboratory management systems. Originally known as ISO/IEC Guide 25, first released in 1978, ISO/IEC 17025 was created with the belief that “third party certification systems [for laboratories] should, to the extent possible, be based on internationally agreed standards and procedures”7. National accreditation bodies are responsible for accrediting laboratories to ISO/IEC 17025. Accreditation bodies are responsible for assessing the quality system and technical aspects of a laboratory’s Quality Management System (QMS) to determine compliance to the requirements of ISO/IEC 17025. ISO/IEC 17025 accreditation is pursued by many laboratories as a way to set them apart from competitors. In some cannabis markets accreditation to the standard is mandatory.

The approach to ISO/IEC 17025 accreditation is typically summarizing the standard requirements through the use of a checklist. Documentation is requested and reviewed to determine if what is provided satisfies the item listed on the checklist, which correlate directly to the requirements of the standard. ISO/IEC 17025 covers the requirements for both testing and calibration laboratories. Due to the wide range of testing laboratories, the standard cannot and should not be overly specific on how a laboratory would meet defined requirements. The objective of any laboratory seeking accreditation is to demonstrate they have an established QMS. Equally as critical, for product testing laboratories in particular, is the objective to establish GxP, “good practices”, to ensure test methods and laboratory operations verify product safety and quality. ISO/IEC 17025 provides the baseline, but compliance to Good Laboratory Practice (GLP), Good Manufacturing Practice (GMP) and even Good Safety Practices (GSP) are essential for cannabis testing laboratories to be successful and demonstrate testing data is reliable and accurate.

Where ISO/IEC 17025 accreditation falls short

Adherence to ISO/IEC 17025, and subsequently receiving accreditation, is an excellent way to ensure laboratories have put forth the effort to establish a QMS. However, for product testing laboratories specifically there are a number of “gaps” within the standard and the accreditation process. Below are my “Top Five” that I believe have the greatest impact on a cannabis testing laboratory’s ability to maintain compliance and consistency, verify data integrity and robust testing methods, and ensure the safety of laboratory personnel.

Standard Operating Procedures (SOPs)

The understanding of what qualifies as a Standard Operating Procedure (SOP) is often misunderstood by cannabis operators. An SOP is a stand-alone set of step-by-step instructions which allow workers to consistently carry out routine operations, and documented training on SOPs confirms an employee’s comprehension of their job tasks. Although not required per the current version of the standard, many laboratories develop a Quality Manual (QM). A QM defines an organization’s Quality Policy, Quality Objectives, QMS, and the procedures which support the QMS. It is not an uncommon practice for cannabis laboratories to use the QM as the repository for their “procedures”. The intent of a QM is to be a high-level operations policy document. The QM is NOT a step-by-step procedure, or at least it shouldn’t be.

Test Method Transfer (TMT)

Some cannabis laboratories develop their own test methods, but a common practice in many cannabis laboratories is to purchase equipment from vendors that provide “validated” test methods. Laboratories purchase equipment, install equipment with pre-loaded methods and jump in to testing products. There is no formal verification (what is known as a Test Method Transfer (TMT)) by the laboratory to demonstrate the method validated by the vendor on the vendor’s equipment, with the vendor’s technicians, using the vendor’s standards and reagents, performs the same and generates “valid” results when the method is run on their own equipment, with their own technician(s), and using their own standards and reagents. When discrepancies or variances in results are identified (most likely the result of an inadequate TMT), changes to test methods may be made with no justification or data to support the change, and the subsequent method becomes the “validated” method used for final release testing. The standard requires the laboratory to utilize “validated” methods. Most laboratories can easily provide documentation to meet that requirement. However, there is no verification that the process of either validating in house methods or transferring methods from a vendor were developed using any standard guidance on test method validation to confirm the methods are accurate, precise, robust and repeatable. Subsequently, there is no requirement to define, document, and justify changes to test methods. These requirements are mentioned in ISO/IEC 17025, Step 7.2.2, Validation of Methods, but they are written as “Notes” and not as actual necessities for accreditation acceptance.

Change Control

The standard speaks to identifying “changes” in documents and authorizing changes made to software but the standard, and subsequently the accreditation criteria, is loose on the requirement of a Change Control process and procedure as part of the QMS. The laboratory is not offered any clear instruction of how to manage change control, including specific requirements for making changes to procedures and/or test methods, documented justification of those changes, and the identification of individuals authorized to approve those changes.

Out of Specification (OOS) results

The documentation and management of Out of Specification (OOS) testing results is perhaps one of the most critical liabilities witnessed for cannabis testing laboratories. The standard requires a procedure for “Nonconforming Work”. There is no mention of requiring a root cause investigation, no requirement to document actions, and most importantly there is no requirement to document a retesting plan, including justification for retesting. “Testing into compliance”, as this practice is commonly referred to, was ruled unacceptable by the FDA in the highly publicized 1993 court case United States vs. Barr Laboratories.

Laboratory Safety

FDAlogoSafe laboratory practices are not addressed at all in ISO/IEC 17025. A “Culture of Safety” (as defined by the Occupational Safety and Health Administration (OSHA)) is lacking in most cannabis laboratories. Policies and procedures should be established to define required Personal Protective Equipment (PPE), the safe handling of hazardous materials and spills, and a posted evacuation plan in the event of an emergency. Gas chromatography (GC) is a common test method utilized in an analytical testing laboratory. GC instrumentation requires the use of compressed gas which is commonly supplied in gas cylinders. Proper handling, operation and storage of gas cylinders must be defined. A Preventative Maintenance (PM) schedule should be established for eye wash stations, safety showers and fire extinguishers. Finally, Safety Data Sheets (SDSs) should be printed and maintained as reference for laboratory personnel.

ISO/IEC 17025 accreditation provides an added level of trust, respect and confidence in the eyes of regulators and consumers. However, the current process of accreditation misses the mark on the establishment of GxP, “good practices” into laboratory operations. Based on my experience, there has been some leniency given to cannabis testing laboratories seeking accreditation as they are “new” to standards implementation. In my opinion, this is doing cannabis testing laboratories a disservice and setting them up for failure on future accreditations and potential regulatory inspections. It is essential to provide cannabis testing laboratory owners and operators the proper guidance from the beginning and hold them up to the same rigor and scrutiny as other consumer product testing laboratories. Setting the precedence up front drives uniformity, compliance and standardization into an industry that desperately needs it.

References:

  1. 21 Code of Federal Regulations (CFR) Part 211- Good Manufacturing Practice for Finished Pharmaceuticals.
  2. 21 Code of Federal Regulations (CFR) Part 117;Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventative Controls for Human Food: Subpart B-Processes and Controls.
  3. ICH Q7 Good Manufacturing Practice Guidance for Active Pharmaceutical Ingredients; Laboratory Controls.
  4. World Health Organization (WHO).
  5. International Building Code (IBC).
  6. International Fire Code (IFC).
  7. National Fire Protection Association (NFPA).
  8. Occupational Safety and Health Administration; Laboratories.
  9. ASTM D8244-21; Standard Guide for Analytical Operations Supporting the Cannabis/Hemp Industry.
  10. org; ISO/IEC 17025.
european union states

European Cannabis is Starting to Look Like the US Market 10 Years Ago

By Michael Sassano
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european union states

As the cannabis industry — now estimated to be worth more than USD 200 billion — continues to erupt around the world, Europe is about to take off.

This draws a parallel with the watershed legislative events of November 2012, when Colorado Amendment 64 and Washington Initiative 502 were implemented. These two bills kicked off a wave of medical and adult use acceptance in the United States. Europe’s medical referendums which started in 2017-2018 and the recent December 2020 United Nations acceptance of medical attributes of cannabis will do the same in that continental marketplace. Europe is following science and studying popular opinion about cannabis, just like the United States nearly a decade ago.

In many ways, the American “medical” market has been a political ploy, while the European market is truly medical in every way. Distribution through pharmacies and mainstream channels is the wave of the future. This method of distribution will both increase access and taxable bases quicker than the U.S. “medical” dispensary model. People who truly need cannabis should not be hindered by any rules or regulations to get the medicine, and the U.N. has paved the way for access while the U.S. still awaits rescheduling.

Markets in Europe require EU-GMP manufacturing for a variety of different products

The road to medical cannabis in Europe is more stringent than that of the U.S. and Canada. This is because most European markets have strict medical standards and medicines must be produced in European Union Good Manufacturing Practices (EU GMP) certified pharmaceutical manufacturing facilities. This is the same standard that all medical Active Pharmaceutical Ingredient (API) producers are held to.

Both Canadian companies, who have just launched extraction with Canada’s “Cannabis 2.0”, and American manufacturers alike are unfamiliar with pharmaceutical API production. Some argue that food-grade GMP standards are the most similar to already-existing systems in the U.S. and Canada. However, the meaning of “medical” is clear in Europe — it means medical. Improving access for patients to products will be the central challenge for Europe over the next few years as patient growth increases.

Europe is also embracing its potential adult use markets. First came Denmark, then Luxembourg, and now the Netherlands are all beginning to engage with the question of adult use cannabis legalization. We expect Portugal will soon join this list. After all, in a post-coronavirus world, every country will be looking for a means to grapple with a devastated economy and to boost employment to widen its taxable base.

The United States was supposedly founded by Puritans escaping gregarious Europeans. Now it’s likely America will legalize cannabis within the year and Europeans will be left asking, “Why them and not us?” And it will become harder to explain why such potential for growth in employment and increased tax revenue isn’t being taken advantage of as Europe begins to emerge from lockdown. It would be shrewd to expect a wave of European adult use kick-offs in 2022.

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It’s anyone’s guess what retail will look like for the cannabis market in Europe as it evolves

It is clear that 2021 is setting a blistering economic pace: from mergers and acquisitions to monster capital raises, to increased debt raises to the hot special purpose acquisition companies (SPACs) London Stock Exchange (LSE) up listings and initial public offering (IPO) fever. This year will be a cannabis-fueled explosion that Europe will not be able to ignore. With Canada, the U.S. and Mexico all likely to legalize cannabis in the near future, how long will it be before South and Central America follows suit? And then, how long for this wave to reach Europe?

The real answer is, it’s already here. Early adopters of cannabis overbuilt as the Canadians were given more money than they deserved, while the U.S. market was largely fueled by private equity and proved that it could be the biggest and best-run model. Europe will follow its own path by acknowledging the failures and successes of these markets, blending them to form its own unique European model.

The American dispensary will eventually pop up in Europe in a form similar to the current social clubs of Barcelona and coffee shops of Amsterdam. Possibly specialized pharmacies will carry more cannabis products, but it’s too early to call — countries are only just beginning to figure out how cannabis rules might be shaped to fit their needs and values.

2021 could be a decisive year for the European cannabis market

There are greater issues people are dealing with in the age of COVID-19, but that will change. Economic recovery, the need to provide medicine more quickly and affordably, social reform, green projects and many more pressing issues will become thematic of a post-COVID world; a set of themes for which a cannabis-shaped solution checks many of the necessary boxes.

There is a certain misrepresentation of cannabis as a panacea, able to cure every medical ailment and remedy every social problem if only it were legalized more broadly. While cannabis certainly is not a cure-all, it can fix many issues facing governments today. People were grateful for cannabis during these troubled times with cannabis stockpiling and usage through the roof in the early stages of the pandemic. As a result, 2021 has the potential to shatter old establishment perceptions as more consumers speak out.

Now, it is only a question of how the individual and collective European nations choose to regulate expansion across the continent. And the power to create a truly world-beating cannabis model is in their hands; without the international market differences and troubles that plague the North American sector, there will be virtually no limits to cannabis expansion throughout Europe if those in charge believe it to be so.

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FDA Issues Warning Letters on Marketing and Sale of OTC CBD Products

By Seth Mailhot, Steve Levine, Emily Lyons, Leah Kaiser, Marshall Custer
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The U.S. Food and Drug Administration (FDA) issued warning letters this month to two companies concerning the marketing and sale of over-the-counter (OTC) drug products containing cannabidiol (CBD) as an inactive ingredient. The letters allege violations of the Federal Food, Drug, and Cosmetic (FD&C) Act related to current good manufacturing practice requirements and marketing of new drugs without FDA approval.

At issue: labeling, NDAs and active ingredients

The companies subject to the warning letters market OTC drug products that contain CBD as an inactive ingredient. In the warning letters, the FDA states that it has not approved any OTC drugs containing CBD. According to the FDA, an approved new drug application (NDA) is required to legally market nonprescription or OTC drug products containing CBD, regardless of whether the CBD is an active or inactive ingredient. The FDA notes that CBD has known pharmacological effects and demonstrated risks, and that CBD has not been shown to be safe and suitable for use, even as an inactive ingredient. As a result, the FDA states that CBD cannot be marketed in OTC drug products.

Further, the warning letters noted the marketing of several CBD products that highlighted the benefits of CBD for a range of conditions in such a manner that, according to the FDA, “misleadingly suggests that [their] . . . products are approved or endorsed by FDA in some way when this is not true.” The FDA also took issue with the way products were labeled, which included callouts on the front label regarding the CBD content of the product (a requirement under most state laws that permit CBD as an ingredient). Similarly, the FDA also noted that some of the products advertised CBD as an active ingredient in a topical pain reliever product. According to the FDA, no company may legally market such a product, since there are no OTC monographs or NDAs that allow the use of CBD in an OTC drug.

What this means for you

These warning letters highlight the FDA’s vigilance regarding OTC CBD products. Regardless of whether the CBD is labeled as an active or inactive ingredient, the FDA has taken the position that nonprescription CBD drugs are in violation of the FD&C Act. Companies marketing CBD products should be careful to ensure their marketing practices, as well as their product formulations, do not present a heightened risk of FDA enforcement.

GMPs & Cannabis Manufacturing

By Kathleen May
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Editor’s Note: While CIJ typically omits the word “marijuana” where possible due to antiquated nomenclature and prejudicial connotations, we understand the legal distinction between cannabis containing THC and hemp requires the use of the word when referencing federal government policies and legislative language.

Despite the rapid evolution of the cannabis industry, the assurance of safe manufacturing practices remains unclear.Both the Food and Drug Administration (FDA) and the Drug Enforcement Administration (DEA) have imposed significant hurdles for cannabis operators to remain on the “right side of the law.” Therefore, manufacturers of both hemp and marijuana products have been left to figure things out on their own, or choose to ignore existing guidance because the lack of federal oversight allows them to do so. Inconsistent regulation on manufacturing, packaging, labeling and testing of cannabis products offers the potential for unsubstantiated, non-scientific and often times blatantly false claims on product safety and efficacy.

Science vs. Law

Hemp and marijuana are both species of the Cannabis family, Cannabaceae. Genetically they are identical but are arbitrarily defined by the presence of delta-9 tetrahydrocannabinol (THC). While science does not differentiate between hemp and marijuana, the law does.

The hemp industry declared a small victory with the passing of the Agricultural Act of 2014 (2014 Farm Bill). Under this bill universities and state agriculture departments were allowed to grow hemp under state law. Additionally, “industrial hemp” was officially defined by establishing the legal limit of THC at 0.3% on a dry weight basis. The Agricultural Improvement Act of 2018 (2018 Farm Bill), under the guidance of the United States Department of Agriculture (USDA), took things a few steps further by authorizing the cultivation of hemp and removed hemp and hemp seeds from the CSA. The bill however provides no language that mandates the safe manufacture of hemp-derived consumer goods. The 2018 version also preserved the FDA’s authority to regulate products containing cannabis and cannabis-derived compounds under the Federal Food, Drug, and Cosmetic Act (FD&C Act). To the surprise of most, listing cannabidiol (CBD), even hemp-derived, as an ingredient on consumer product labels remains illegal under the bill. Furthermore, CBD product manufacturers are not protected under the current regulations. Since 2015 the FDA has issued warning letters to firms marketing CBD products as dietary supplements and/or foods, and in December 2018, FDA declared it illegal to introduce food containing CBD (or THC) into interstate commerce, regardless if it is derived from hemp. To date, the only FDA approved CBD product is GW Pharmaceutical’s Epidiolex.

Marijuana remains classified as a Schedule I controlled substance under the CSA. Thirty-six (36) states have approved comprehensive, publicly available medical marijuana programs, and now 14 states have approved adult use programs, with New Jersey passing legislation on February 22, 2021. However, the industry has seen minimal movement toward mandating GMP requirements in the marijuana market. Only a handful of medical programs require manufacturers to follow GMP. Furthermore, the requirements are inconsistent between states and the language in the regulations on how to approach GMP implementation is vague and disjointed. This fragmented guidance supports the complexity and difficulty of enforcing a coherent, standardized and reliable approach to safe manufacturing practices.

What is GMP and Why Should You Care?

Good Manufacturing Practices (GMPs) are a system for ensuring that products are consistently manufactured and controlled according to quality standards and regulatory guidelines. The implementation of a GMP compliant program ensures consumer health and safety, allows manufacturers to understand the intended use of their products, allows manufacturers to defend product specifications as being appropriate, considers the risks to vulnerable populations and minimizes overall business risk. In a nutshell, GMP equals product safety and quality, and defines the responsibilities of the manufacturer to ensure consumers are protected from the distribution of unsafe and ineffective products. Currently, the GMP “landscape” in the cannabis space is complicated. The various “flavors” (food, dietary supplements, cosmetics and drugs/devices) of GMP leave many confused and frustrated when making the decision to implement GMP. Confusion is a result of unclear regulatory requirements as well as operators not fully understanding how to classify or designate the end use of their product(s). Implementing an effective GMP program requires proper planning (both short and long term), financial commitment and qualified resources.

Where Should You Start?

As the regulatory landscape continues to evolve and mature in the cannabis space, your business model must consider GMP implementation if you wish to remain successful and sustainable.

Intended Use

Before you can implement GMP you must first understand what GMP regulations apply to the intended use of your product(s). Are you manufacturing food, beverages or dietary supplements? Get acquainted with the FDA Code of Federal Regulations (CFRs) on GMP. 

Conduct a Gap Assessment

A gap assessment allows you to determine your deficiencies in relation to GMP compliance. The assessment should include, but is not limited to facility design, equipment design, supply chain, risk management and employee training.

Develop an Action Plan

Once the gap assessment is complete a comprehensive action plan will be developed to map out the steps required to achieve GMP compliance. The action plan should follow the SMART Goal principles:

  • Specific (simple, well-defined)
  • Measurable (meaningful)
  • Attainable (achievable, agreed upon)
  • Relevant (resource-based, reasonable and realistic)
  • Timely (time-based, defined due dates)

The plan will include prioritized deliverables, due dates and allocated resources in order to strategically plan and execute and complete the required tasks.

Schedule a Mock GMP Inspection

A mock inspection verifies that the action plan was adequately executed. Hire an experienced resource familiar with related GMPs and QMS to conduct the inspection. A successful mock inspection is a perfect litmus test if the end goal is to achieve GMP certification.

Cannabis manufacturers that ignore the obvious progression toward an FDA-like industry will not survive the long game. Those that embrace the momentum and properly plan to mitigate product and business risk – those who demonstrate integrity and are truly in this space to ensure safe, effective and quality products to consumers will come out on top, gain credibility and secure brand recognition.

References:

  • 21 CFR Part 111, Current Good Manufacturing Practice in Manufacturing, Packaging, Labeling, or Holding Operations for Dietary Supplements.
  • 21 CFR Part 117, Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventive Controls for Human Food and the Food Safety Modernization Act (FSMA).
  • 21 CFR Part 210, Current Good Manufacturing Practice in Manufacturing, Processing, Packing, or Holding of Drugs; General.
  • 21 CFR Part 211, Current Good Manufacturing Practice for Finished Pharmaceuticals.
  • 21 CFR Part 700, Subchapter G-Cosmetics.
  • 21 CFR Part 820, Subchapter H-Medical Devices; Quality System Regulation
  • Congressional Research Service, FDA Regulation of Cannabidiol (CBD) Products, June 12, 2019.
  • United States Food and Drug Administration-Warning Letters, Current Content as of 02/19/2021.

Links:

Integrating a Culture of Quality Into the Cannabis Industry

By David Vaillencourt
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The culture of the cannabis industry is filled with passion that many envy, and for valid reasons. The roots of the cannabis plant go back thousands of years. As of this writing, there are no documented human deaths that were caused by a phytocannabinoid overdose. However, it is not all rainbows and unicorns.

Before breaking ground, fundraising, proper facility design, competitive application and permitting requirements are just the start. Once operating, businesses struggle to stay current with regulations that continue to evolve. Cannabis cultivators struggle to scale while mitigating pest infestations, which is a part of life in the conventional agricultural industry. A lack of consistent products frustrates consumers, while regulators and policy makers continue to struggle on the best way to regulate a commodity that has seemingly endless demand. The reality is dizzying!

However, amidst all of the challenges and opportunities, a continually overlooked tool stands out: a Quality Management System (QMS). Merriam-Webster defines a system as “an organized set of doctrines, ideas, or principles usually intended to explain the arrangement or working of a systematic whole.”

A QMS documents processes, procedures and responsibilities that ultimately direct an organization’s activities to meet customer and regulatory requirements as well as continually improve its effectiveness and efficiency. In other words – it steers innovation through the collection of data while ensuring products are safe for the consumer. For further reading, the American Society for Quality (ASQ), now over 70 years old, is an excellent resource and provider of resources and formal training programs that are recognized and revered around the world.

Step 1: Define your stakeholder requirements

This all starts with knowing your stakeholder (e.g., customer, regulatory body) requirements. For simplicity’s sake, let’s start with your customer; at a fundamental level, they expect safe, consistent and reliable products that impart a certain experience.

How does that translate into specifications? Let’s look at them one at a time.

What does “safe” mean? For an edible, safe means the product is free of physical, chemical and microbial hazards. Knowing what potential impurities could be in your product requires understanding your raw materials (inputs) and the manufacturing process. To take a deeper dive, some of the aspects of safety and quality, product specifications and testing considerations are discussed in this recent Cannabis Industry Journal article by Dr. Roggen and Mr. Skrinskas here.

An example of a compliant label in Oregon

What does “consistent” mean? This builds off and complements the safety profile. It could mean a consistent fill level, an acceptable range of cannabinoid concentration, and so on. For example, in the US Pharmacopeia’s peer-reviewed article about quality attributes of cannabis inflorescence (commonly known as flower or bud), they recommend 20% as the acceptable variance in cannabinoid content. For a product labeled as having 25% THC, the product will actually test to between 20% and 30%. This may be surprising, and discomforting for some, but the reality is that products on the market consistently fail to meet label claims.

What does “reliable” mean? That could mean that you always have inventory of certain products on the shelves at your dispensary. Defining “always” as a SMART goal – perhaps it means that you will have your top 3 products in stock at least 90% of the time. Customers need to feel like they can rely on your business to provide them with the products they want. Take the time to capture the data on what your customers want and work to satisfy their needs and you’ll watch your business really accelerate.

Step 2: Build your processes to meet these expectations

This is where your written standard operating procedures (SOPs), forms and records come into play. Your SOPs serve to memorialize your operations for consistency. Most SOPs in the cannabis industry are not written by the actual operators of a process. Rather, they are written by the legal and compliance team without review by the operators to confirm that what they are stating reflects operational reality. The audience needs to be the operators. Without effective SOPs that are utilized by your employees, your business will struggle to meet the established specifications. Cannabis businesses in Colorado, the oldest regulated adult-use cannabis market in the United States, continue to see 1 in 8 of their products fail final product testing! Cannabis businesses that understand their processes, document them in SOPs and have records to prove they follow their SOPs (see Step 3) are able to reduce errors that ultimately lead to costly rework and product failures.

Consistency in quality standards requires meticulous SOPs

Step 3: Monitor and improve

You have your requirements, you have your process, but how do you know that they are being adhered to? By the time you have results from a third-party lab, it’s too late. Look internally. Records and logs that show preventive maintenance was performed, room and canopy temperature and humidity checks, inventory reports, production records, extraction equipment report and employee training records shouldn’t be filled out only to be filed away. These records are data, which is your most valuable tool. Unfortunately, records are one of the most overlooked assets in today’s cannabis business. A team independent from operations (typically a Quality Unit) should be regularly reviewing these for inconsistencies and trends that can alert you to catastrophic failures before they occur.

Initially, the additional expenditure and learning curve may make this seem like an added burden, but keep in mind that succeeding in today’s cannabis industry requires long-term customer retention. By biting off one piece at a time, you can slowly implement a QMS that will improve your business, increase customer satisfaction, and ensure your brand is a staple for years to come. Remember, quality and compliance is a journey, not a “set it and forget it” situation.

The definition of a Quality Management System includes ‘continuous improvement’. Look forward to a future article which will discuss the importance of tools like a CAPA Program – Corrective Action Preventive Action (which all cannabis license holders in Colorado are required to have in place as of January 1, 2021) and how they complete your QMS, keeping you compliant and mitigating your business risks!

Due Diligence for Suppliers & Cannabis Supply Chain Partners

By Mark Slaugh
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Between the patchwork quilt of rules and regulations that is the modern cannabis industry, products pass through many hands before being sold to a customer. From sourcing, cultivating, manufacturing, distributing and vending, the relationships between a licensee and their vendors/partners up and down the supply chain is complex and touches many stakeholders along the way.

While the focus on quality packaging, dope labeling, delicious ingredients and consistently potent cannabis is a priority for most companies, what often isn’t thought about is the liability in bringing these components together in terms of compliance.

Compliance responsibility falls on licensees as a direct term and condition of licensure within their state. To operate, licensees must maintain and be able to demonstrate compliance with a plethora of rules and regulations. Compliance is the name of the game in cannabis.

While most operators understand this, what most do not think about is how the compliance or noncompliance of their vendors affects their own liability.

Sharing Noncompliance & Liability

Supply chain partners are automatically segregated by whether or not they are plant touching licensees or not.

Licensees are the only entities in the supply chain that can be fined, administratively held, suspended, revoked or even arrested due to noncompliance. This fundamental nature means that supply chain partners are automatically segregated by whether or not they are plant touching licensees or not.

In the case of mutual licensees such as a manufacturer and dispensary, the liability for compliance falls on both entities. A single manufacturer that makes an error on labeling language or a cultivator using the incorrect containers both pass on their liability to any downstream partners.

iComply has seen regulators quarantine hundreds of products among multiple dispensaries who never checked the compliance of the supplying manufacturer. Surprisingly, most dispensaries don’t think of the liability passed to them amid hundreds of SKUs and multiple manufacturers and cultivators. Confounding the issue further is that everyone in the industry can interpret the same rules in completely different ways.

Assuming your supply chain partners are 100% compliant is a dangerous pitfall.

By not checking noncompliance from supply chain partners, operators accumulate evidence dating back years. Like METRC being off, these issues tend to snowball until they seem overwhelmingly difficult to handle. And it doesn’t just stop at labeling issues. Noncompliance can fall on all supply chain partners and be left in the hands of a licensee in a variety of ways.

Business partners like security contractors can often run afoul of regulations and put their licensed partners at risk.

Even worse, are supply chain partners who don’t have a motive to be compliant as they do not own licenses and often have a poor understanding of cannabis compliance. A packaging provider, marketing company, CBD provider, security company, vending machine providers, waste disposal companies and other commonplace suppliers and partners can often run afoul of regulations and put their licensed partners at risk.

Since regulators can only enforce the licensed entity, many states have made it clear that licensees are ultimately and fully responsible for any actions of noncompliance taken by third parties contracted by the company – regardless if they touch cannabis or not.

Areas of Common Noncompliance in Cannabis

Like a game of “Hot Potato” (worth millions of dollars), we’ve seen common noncompliance liability get passed down the supply chain in the following areas of cannabis operations:

  • Product liability
  • Packaging and labeling
  • Test result manipulation
  • Expired licenses
  • Input or ingredient defects
  • Inventory tracking errors
  • Recordkeeping and manifest errors

Some of these areas of noncompliance rely with non-licensed supply chain partners such as packaging, ingredients or third party printed labels. Often, these folks simply don’t know what they don’t know and make mistakes – not knowing the thousands of dollars they could be costing their licensed partner down the line.

Other areas in which compliance should be expected from licensed partners lies in product liability, test result issues, inventory tracking, manifests and recordkeeping. No one usually wants to be out of compliance and usually these issues arise from licensed partners who are simply confused, mistaken or ignorant to the requirements of ongoing and changing rules.

It’s hard to keep all of one’s suppliers and supply chain partners on the same page over the long run and amid a multitude of changing rules. But what you resist, persists…

Managing Compliance in the Cannabis Supply Chain

Nothing worth it is ever easy; but it is possible to identify common areas of noncompliance in one’s cannabis operation and supply chain partners and to do something about.

To identify problem areas, iComply recommends conducting regular auditing at a macro level; but to also dive deeper into micro level audits of all of one’s books and records (covering vendor files) and packaging and labeling for at least 12 months.

You don’t know what you don’t know, so one must begin by investigating and understanding where liabilities are occurring between themselves and their supply chain partners. Once valid feedback and noncompliance is discovered, it can be remediated.

Like triage, you have to stop the bleeding before you can prevent further injury.

Consistency in quality standards requires meticulous SOPs

It is always more expensive and time consuming to continue reacting to noncompliance and trying to fix issues after the fact. This is how snowball effects happen until the problems seem so overwhelming, operators tend to simply ignore the liability. While it is human nature, it is also extremely dangerous and detrimental when multimillion dollar licenses are on the line.

An ounce of prevention is worth a pound of cure –Benjamin Franklin

By implementing proactive compliance measures, cannabis businesses can avoid costly noncompliance consequences and position themselves as proactive checkpoints of supply chain compliance. We recommend integrating the following procedures, documents, training and tools into one’s operational compliance infrastructure:

  • New vendor checklist
  • Packaging and labeling checklists by product type
  • Virtual review of labels/non-cannabis packaging
  • Calendar expiration dates for licenses and products
  • Compliance auditing of key vendors and strong contracts regarding liability
  • Input product checklists and tracking as per GMP compliance

This snapshot is just the tip of the iceberg when it comes to the depths of liability a cannabis business is exposed to by its supply chain partners. To truly manage compliance, one must be aware of shared risk and implement proactive measures to prevent suppliers and supply chain partners from inadvertently affecting the operational compliance of your cannabis business.

Selecting Supply Chain Partners

There are plenty of fish in the sea and plenty of suppliers vying to do business with you. iComply has seen the good, the bad and the ugly. We’ve been on the front lines of developing markets like California where we warned our clients to steer clear of companies like Kushy Punch long before they finally lost their license for noncompliance.

control the room environment
Preventing contamination can save a business from extremely costly recalls.

We advise our clients on the importance of being selective and conducting due diligence in vetting supply chain partners and vendors. Most fundamentally, how aligned are the values of potential partners? Are they in the business for the same reasons you are? What brought them to the cannabis space? How do they value relationships and what do they know about compliance?

Too often when focused on price or speed, people miss the more important fundamentals of relationships. We serve as vetters for our clients whether they are shopping for a POS provider, a bank or a waste disposal company. Beyond the cultural alignment, the more objective questions begin to take shape in vetting a potential partner. This can differentiate between license holding and non-holding supply chain partners.

For plant-touching licensed partners, we recommend answering the following before entering into business partnerships that affect your supply chain:

  • Copies of licenses, contracts, and a catalogue of products
  • For products being selected, prior to ordering a sample, obtain a copy of the label by email first. Or an EMPTY sample of product packaging and labeling to vet against a packaging and labeling checklist.
  • Search news articles on the company and ask if they have had compliance issues before. Obtain documentation if there have been compliance issues previously.
  • Ask how they manage their compliance and prevent noncompliance down their supply chain. Do they train their staff? Do they conduct regular audits internally? How often do they update SOPs and reconcile inventory?

For non-plant touching partners, we recommend answering the following:

  • Obtain any certifications for quality assurance or in credentials for services.
  • Ask for references from other customers who have cannabis licenses.
  • Discover how familiar they are with the cannabis industry AND the rules and regulations in your market.
  • Ensure they have an understanding of how they impact your compliance. Discover how they plan on preventing areas of concern together.
  • Make sure they know you are ultimately responsible for noncompliance and understand what they are willing to do to protect you.

Ensuring accountability across the supply chain means selectively choosing partners who share the same values of integrity and professionalism. On more complicated deals, such as licensing IP or your brand to operators in new states or markets, we recommend that you mandate a compliance program that offers third-party validation to ensure the internal integrity of your partners. Too often, brand risk isn’t considered in the fast-paced expansion of the industry and operators must not only be vetted, but held accountable, when representing one’s brand and products.

For all intents and purposes, the wild web of the supply chain in cannabis is the industry. We are a collective of collaborators who all serve the goal of delivering high quality and safe products to cannabis consumers globally. For those committed to minimizing their risk to protect their profits, cannabis compliance is the key to success.

Ensuring accountability across the supply chain means selectively choosing partners who share the same values of integrity and professionalism. In doing so, the industry elevates its legitimacy and more effectively expands in a sustainable manner that protects all stakeholders involved.

Noncompliance affects licensees the most and they must be the most vigilant, but it takes a village to raise an industry. Compliance affects most everyone in the supply chain and the loss of any operator hurts the entire industry.

Advancements in Extraction & the Growth of the Concentrate Category

By Dr. Dominick Monaco
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Due to quick progressions in legalization, today’s cannabis industry bears little resemblance to the industry of five years ago. As the cannabis space gains mainstream acceptance, it resembles more “traditional” industries closely. In turn, how we consume cannabis has changed dramatically within this novel legal framework.

A brief visit to a cannabis dispensary quickly illuminates just how much the industry has changed in the past few years.

Within the dynamic of modern cannabis, perhaps no vertical has seen the same advancements as cannabis extracts. It’s precisely the growth of the concentrate category that has given rise to the many branded products that define the legal market.

To give a clear picture of how advancements in extraction have stimulated the concentrate category’s growth, we put together this brief exploration.

Standards & Technology

extraction equipmentBefore legalization, the production of cannabis extracts was a shady affair done in clandestine and often dangerous ways. Especially concerning BHO (Butane Hash Oil), home-based laboratories have long since been notorious fire hazards. Even more, with a total lack of regulation, black-market extracts are infamous for containing harmful impurities.

In the few short years that cannabis has been legal in Nevada, Washington and other states, extract producers have adopted standards and technology from more professional arenas. By borrowing from the food and pharmaceutical industries, concentrate companies have achieved excellence undreamed of a decade ago.

Good Manufacturing Practices

One of the essential elements in the extracts vertical advancements is the adoption of good manufacturing practices. According to the World Health Organization website, “Good Manufacturing Practice (GMP) is that part of quality assurance which ensures that products are consistently produced and controlled to the quality standards appropriate to their intended use.”

When adult-use cannabis was legalized in markets such as Colorado, cannabis companies were able to come out of the shadows and discuss GMPs with legit businesses. In doing so, they implemented professional controls on extract manufacturing in accordance with “quality standards” of state regulatory agencies.

Supercritical CO2 Extraction

As cannabis businesses adopted GMP from other industries, extract producers also embraced more sophisticated technology. Of these, supercritical CO2 has pushed the cannabis concentrates vertical into the future.

IVXX processingAccording to the equipment manufacturer Apeks Supercritical, “CO2 is considered to be a safer method of extraction because the solvent is non-volatile. The extract is purer because no trace of the solvent is left behind. It is also versatile and helps protect sensitive terpenes, by allowing cold separation.” By deriving methods from food production, supercritical equipment manufacturers have given cannabis companies a viable option for the commercial production of extracts.

Supercritical technology has helped push the concentrates vertical forward by providing a clean and efficient way to produce cannabis extracts. Nonetheless, supercritical CO2 equipment is highly sophisticated and carries a hefty price tag. Producers can expect to pay well over $100,000 for commercial supercritical CO2 extraction setup.

Products

Just as standards and technology have evolved in the cannabis extracts vertical, we have also seen products rapidly mature. Notably, the legal environment has allowed manufacturers to exchange ideas and methods for the first time. In turn, this dialogue has led to the development of new products, like isolates and live resin.

Isolates

Just as the name implies, isolates are concentrates made from a singular, pure cannabinoid. In today’s market, CBD isolates have grown increasingly popular because people can consume pure CBD without ingesting other cannabinoids or plant materials, including the legal 0.3% THC found in hemp.

Isolates are made by further purifying cannabis extracts in the process of purification, filtration and crystallization. As seen with other concentrates, isolates are used as the base for many cannabis products, such as gummies.

There is also growing interest in CBG isolate, which is another non-psychoactive cannabinoid when consumed orally.

Live Resin

The cannabis concentrate live resin has taken the industry by storm over the past few years. Live resin is a form of extract that is originally sourced from freshly harvested and frozen cannabis plants. The primary selling point behind this extract is the fact that fresh flowers produce much more vibrant aromas and flavors than dried cannabis. Interestingly, this pungency is tied to the preservation of terpenes in live resin.

Just a few of the dozens of various products types on the market today.

To make live resin, producers “flash freeze” fresh cannabis plants immediately after harvest. Valuable cannabinoids and terpenes are then extracted from the fresh, frozen plant material using hydrocarbon solvents. This whole process is done at extremely cold temperatures, ensuring no thermal degradation to the precious and volatile terpenes.

In lieu of these intricate steps to preserve the flower and extracts, live resin has continuously gained popularity. Namely because vaping with live resin is the best way to sample fresh cannabis terpene profiles in its most authentic fashion

It is amazing to see how much cannabis extracts have grown and progressed with legalization. Due to such amazing advancements in standards, technology, and products, the concentrates category has exploded on the dispensary scene. In today’s market, flowers have been largely sidelined in favor of concentrate-based products like gummies. These products now adorn dispensary shelves in beautiful packaging replete with purity and testing specifications.

It’s an often-overlooked fact that the purity standards of the legal extracts have made reliable cannabis brands possible in the first place. You cannot develop a cannabis brand without consistent products that customers can rely on; all things considered, it can be said that advancements in extraction have not only stimulated the concentrate category but the entire industry as we know it today.

extraction equipment

The Hidden Costs of Non-Compliance for Consumers

By Mark Slaugh
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extraction equipment

Anyone owning and operating a cannabis business should know the value of proactive compliance management to operate successfully. For consumers, the view into the world “behind the budtending counter” is limited to the cool looking packaging, test results and the overall “vibe” of products they may want to try.

In our experience, as the oldest cannabis compliance firm, we’ve audited and visited hundreds of facilities and have seen the proverbial “Wizard behind the curtain”. We know “how the sausage is made.” And, as one can expect, it’s not always as glamorous in the back of the house as it appears on the shelf.

As markets expand and people buy into existing or new cannabis businesses, amid a world of thousands of competing companies and products, consumers need to ask themselves: “What do I know about the companies and products I consume?”

More and more, the question of consistent quality keeps coming up in the cannabis industry. Recalls are still ongoing in the news as products continually fail testing for potency and contamination.

Colorado, for example, is considered the shining jewel of the US industry in terms of experience, quality and integrity. However, consumers may be shocked to learn that a majority of dispensaries in the state do not operate by stringent SOPs, nor do they verify packaging and labeling for compliance, or review test results of products coming in and going out of their shops.

Starting January 1, 2021, these retailers finally have to develop and implement recall procedures in the event of contaminated products or cannabis that is causing adverse side effects. Later this year, vape pens will finally have their vapor tested instead of just the concentrate therein.

These liabilities or lack of compliance infrastructure may very well be a ticking time bomb no consumer in their right mind would want to deal with.

Bad Product/Brand Experience

Non-compliance and inconsistency on the part of operators translates directly into negative experiences for consumers. Whether its consuming a product that tastes like chlorophyll or enjoying a product the first time only to find a completely different experience the next time around, consumers experience the cost of non-compliance the most.

Beyond products, most consumers recognize their brand experience when shopping for products. Since the invention of Weedmaps, customers have always expressed their like or dislike for particular dispensaries and delivery services. Operators know these reviews from a customer’s experience can make or break their business and brand.

We always tell cannabis operators that a brand is a double-edged sword. As easily as it can strike through competitors, it can just as easily damage one’s own business.

Examples include SweetLeaf and Kushy Punch whose brands, once well-known and popular, are now synonymous with the worst of the worst given their histories of non-compliance and shut downs.

For consumers, finding consistent, quality products at a fair price is often the most important consideration to avoid the cost of a bad experience with cannabis. For visitors or first-time consumers, this could mean the difference between trying cannabis again or deciding it’s simply not for them.

Contamination & Illness

control the room environment
Preventing contamination can save a business from extremely costly recalls.

The worst-case scenario for consumers, especially patients, is the cost of consuming contaminated products or otherwise having adverse effects from the use of cannabis. While cannabis itself is one of the least harmful substances known to man, contaminated cannabis can be dangerous or deadly.

In the early days of the industry and in many emerging markets with poor to no oversight, these lessons are learned most severely. From the use of non-commercial washing machines being used for water-based extracts that tested positive for E. coli to recalled products ladened with Eagle 20 (which contains the harmful pesticide known as Myclobutanil), the industry has been reactive to safety measures and complying with best practices.

Still, some states persist with limited to no testing and simply label products with a warning to consumers that they are using cannabis at their own risk without testing for safety or efficacy.

Most consumers may be shocked to know that most cannabis companies do not adhere to good agricultural practices or good manufacturing practices (GAP/GMP) to ensure consistent quality and safety standards in similar industries such as nutraceuticals and food manufacturing.

Patients already weakened by disease states – including auto-immune disorders – are most at risk and understand all too well the costs of hospitalization, medical bills and loss of quality of life. For the average adult user, these risks are the same and there is often little to no recourse with the dispensary or product manufacturers if the product slips through contamination testing because of the non-compliance of product validation on flower or infused products.

For companies, outdated and inaccurate SOPs as well as production batches are the only line of defense to protect the company from product liability lawsuits filed by consumers in the event of contamination and illness. Most cannabis companies do not manage this aspect of their business effectively and simply assume they are sufficiently compliant without proactively measuring such compliance and adjusting operations as necessary.

Long-Term Consequences

Consumers would do well to remember that the modern industry is infantile in its development compared to other heavily regulated industries. Cannabis companies are babies learning to crawl while major food and beverage, pharmaceutical and nutraceutical, and alcohol and tobacco industries are far ahead of the game. The US industry, is arguably, already behind the compliance curve comparative to other nations already placing stricter regulations and standards on licensees.

For customers, this can be a confusing experience given that no two batches of flowers will taste the same let alone give a consumer exactly the same effect.

Already, customers are learning Sativa and Indica are imaginary cultural terms to describe generalized characteristics of major and minor cannabinoids and terpenes in each strain which produces a variety of effects – despite state limitations on labeling these active ingredients.

Vape pens are under increasing scrutiny as regulators discover long-term effects of vape use from the tobacco industry causing EVALI in consumers and being deemed as dangerous. As with anything new, the data and science simply aren’t there to truly tell customers what the effects may be over the long run. It has taken decades for tobacco, as an example, to go from doctor-recommended to carcinogenic.

Consistency in quality standards requires meticulous SOPs

Similarly, Big Cannabis of the future may be facing similar concerns that aren’t being warned about currently on their products and consumers could face unknown long-term consequences. In no way is this a condemnation of cannabis and early research shows cannabis is much safer than either alcohol or tobacco.

The point is to emphasize that over the long run, compliance is key to tracking the consistency and safety of products to avoid long-term liability and costs on consumers. Consumers would be wise to gravitate towards compliant brands and companies that focus on consistent quality and safety to minimize potential long-term negative impacts and costs.

Accountability & Transparency

Customers must first understand where the buck stops and who is responsible for what as it applies to cannabis and the cannabis products they consume. This can vary between states from vertically integrated models to horizontal models which allow for independent businesses to buy and sell cannabis between each other.

In the case of cannabis, the restrictions on METRC and other state “seed to sale” tracking systems make it nearly impossible for customers to return products and unclear on how to file complaints.

METRC and other seed to sale systems dictate that dispensaries must be able to track originating sources of cannabis back to another licensed facility. As such, once the consumer buys a faulty vape pen, for example, it’s gone from the dispensary inventory. Bringing it back in physically creates non-compliance issues for the dispensary as they cannot virtually account for the physical addition back into inventory.

No one ever said making sausage was a pretty or easy process. That’s why most consumers don’t want to think about how it’s done.

This example is a simple one to showcase the importance of compliance in the cannabis business and the complexities businesses must go through to operate. What is more applicable and important for consumers to understand is how non-compliance and inconsistency can affect them negatively – beyond messy fingers from leaky vape carts.

extraction equipment
Consumers should ask cannabis companies about their product quality standards

These types of unexpected issues represent significant costs for cannabis operators in recalls, fines, lawsuits and fees which is what most people think the “costs of non-compliance” mean.

However, and in addition to the literal cost mandated by regulation, there are the costs owners don’t think about: in the time and fees charged by the professionals to solve these issues, the time and stress spent on production, the increase or decrease in supply, mitigating product liability, and brand recognition and damage due to poor quality or recalls.

All of these factors simply drive up the costs of products for consumers and decrease the reliability of finding consistent, quality products and brands that customers can count on.

As we always say at iComply:

“It is always more cost-effective to be proactive, rather than reactive, when it comes to operational cannabis compliance management.”

Consumers would be wise to recognize which companies are proactive in managing their compliance. And companies would be wise to get ahead of these customer costs by being the proactively compliant companies that consumers want and need.

Facility Considerations for Cultivation & Manufacturing: A Case Study

By David Vaillencourt
1 Comment

The cannabis industry is growing and evolving at an unprecedented pace and regulators, consumers and businesses continually struggle to keep up.

Cannabis businesses: How do you maintain an edge on the market, avoid costly mistakes?

Case Study: Costly Facility Build Out Oversights

David Vaillencourt will be joining a panel discussion, Integrated Lifecycle of Designing a Cultivation Operation, on December 22 during the Cannabis Quality Virtual Conference. Click here to register. A vertically integrated multi-state operator wants to produce edibles. The state requires adherence to food safety practices (side note – even if the state did not, adherence to food safety practices should be considered as a major facility and operational requirement). They are already successfully producing flower, tinctures and other oil derivatives. Their architect and MEP firm works with them to design a commercial kitchen for the production of safe edibles. The layout is confirmed, the equipment is specified – everything from storage racks, an oven and exhaust hoods, to food-grade tables. The concrete is poured and walls are constructed. The local health authority comes in to inspect the construction progress, who happens to have a background in industrial food-grade facilities (think General Mills). They remind the company that they must have three-compartment sinks with hot running water for effective cleaning and sanitation, known as clean-out-of-place (COP). The result? Partial demolition of the floor to run pipeline, and a retrofit to make room for the larger sinks, including redoing electrical work and a contentious team debate about the size of the existing equipment that was designed to fit ‘just right.’

Unfortunately, this is just one more common story our team recently witnessed. In this article, I outline a few recommendations and a process (Quality by Design) that could have reduced this and many other issues. For some, following the process may just be the difference between being profitable or going out of business in 2021.

The benefits of Quality by Design are tangible and measurable:

  1. Reduce mistakes that lead to costly re-work
  2. Mitigate inefficient operational flow
  3. Reduce the risk of cross-contamination and product mix-ups. It happens all the time without carefully laid out processes.
  4. Eliminate bottlenecks in your production process
  5. Mitigate the risk of a major recall.

The solution is in the process

Regardless of whether you fall in the category of a food producer, manufacturer of infused products (MIP), food producers, re-packager or even a cultivator, consider the following and ask these questions as a team.

People

Food processing and sanitation
By standardizing and documenting safety procedures, manufacturers mitigate the risk of cannabis-specific concerns

For every process, who is performing it? This may be a single individual or the role of specific people as defined in a job description.

Does the individual(s) performing the process have sufficient education and training? Do you have a diverse team that can provide different perspectives? World class operations are not developed in a vacuum, but rather with a team. Encourage healthy discourse and dialogue.

Process

Is the process defined? Perhaps in a standard operating procedure (SOP) or work instruction (WI). This is not the general guidance an equipment vendor provided you with, this is your process.

How well do you know your process? Does your SOP or WI specify (with numbers) how long to run the piece of equipment, the specification of the raw materials used (or not used) during the process, and what defines a successful output?

Do you have a system in place for when things deviate from the process? Processes are not foolproof. Do not get hung up on deviations from the process, but don’t turn a blind eye to them. Record and monitor them. In time, they will show you clear opportunities for improvement, preventing major catastrophes.

Materials

What are the raw materials being used? Where are they coming from (who is your supplier and how did you qualify them)?

Start with the raw materials that create your product or touch your product at all stages of the process. We have seen many cases where cannabis oils fail for heavy metals, specifically lead. Extractors are quick to blame the cultivator and their nutrients, as cannabis is a very effective phytoremediator (it uptakes heavy metals and toxins from soil substrate). The more likely culprit – your glassware! Storing cannabis oil, both work in process or final product in glass jars, while preferred over plastic, requires due diligence on the provider of your glassware. If they change the factory in which it is produced, will you be notified? Stipulate this in your contract. Don’t find yourself in the next cannabis lead recall that gets the attention of the FDA.

Savings is gained through simple control of your raw materials. Variability in your raw material going into the extractor is inevitable, but the more you can do to standardize the quality of your inputs, the less work re-formulating needs to be done downstream. Eliminate the constant need to troubleshoot why yields are lower than expected, or worst case, having to rerun or throw an entire batch out because it was “hot” (either too much THC in the hemp/CBD space or pesticides/heavy metals). These all add up to significant downstream bottlenecks – underutilized equipment, inefficient staff (increase in labor cost) all because of a lack of upstream controls. Use your current process as a starting point, but implement a quality system to drive improvement in operational efficiency and watch your top line grow while your bottom-line decreases.

Consistency in quality standards requires meticulous SOPs

Have you tested and confirmed the quality of your raw material? This isn’t just does it have THC and is it cannabis, but is it a certain particle size, moisture level, etc.? Again, define the quality of your raw materials (specifications) and test for it.

Remember – ranges are your friend. It is much better to say 9-13% moisture than “about 10%”. For your most diligent extractor, 11% will be unacceptable, but for a guy that just wants to get the job done, 13% just may do!

Test your final product AFTER the process. Again, how does it stack up against your specifications? You may need to have multiple specifications based on different types of raw material. Perhaps one strain with a certain range of cannabinoids and terpenes can be expected for production.

Review the data and trend it. Are you getting lower yields than normal? This may be due to an issue with the equipment, maybe a blockage has formed somewhere, a valve is loose, and simple preventive maintenance will get you back up and running. Or, it could be that the raw biomass quality has changed. Either way, having that data available for review and analysis will allow you to identify the root cause and prevent a surprise failure of your equipment. Murphy’s law applies to the cannabis industry too.

  1. You are able to predict and prevent most failures before they occur
  2. You increase the longevity of your equipment
  3. You are able to predict with a level of confidence – imagine estimating how much product you will product next month and hitting that target – every time!
  4. Business risks are significantly mitigated – a process that spews out metal, concentrates heavy metals or does not kill microbes that were in the raw material is an expensive mistake.
  5. Your employees don’t feel like they are running around with their hair on fire all the time. It’s expensive to train new employees. Reduce your turnover with a less stressed-out team.

Takeaways

Maintaining a competitive edge in the cannabis industry is not easy, but it can be made easier with the right team, tools and data. Our recommendations boil down to a few simple steps:

  1. Make sure you have a chemical or mechanical engineer to understand, optimize and standardize your process (you should have one of these on staff permanently!)
  2. Implement a testing program for all raw materials
    1. Test your raw materials – cannabis flower, solvents, additives, etc. before using. Work with your team to understand what you should and should not test for, and the frequency for doing so. Some materials/vendors are likely more consistent or reliable than others. Test the less reliable ones more frequently (or even every time!)
  3. Test your final product after you extract it – Just because your local regulatory body does not require a certain test, it does not mean you should not look for it. Anything that you specified wanting the product to achieve needs to be tested at an established frequency (and this does not necessarily need to be every batch).
  4. Repeat, and record all of your extraction parameters.
  5. Review, approve and set a system in place for monitoring any changes.

Congratulations, you have just gone through the process of validating your operation. You may now begin to realize the benefits of validating your operation, from your personnel to your equipment and processes.