The quality of your edible cannabis product can only be as reliable as the components that comprise it. The three types of components include active ingredients (such as CBD oil), packaging components (such as the bottles that hold finished product) and inactive ingredients (such as coconut oil). When evaluating a potential supplier for these three areas, a risk-based method follows a vendor selection process that highlights critical ingredients and also adequately assesses excipients. With this approach, the vetting process for a supplier is based on the impact the potential ingredient or component will have on the quality and purity of the finished product.
Choose only those suppliers who can provide certification that the packaging components are food-grade or food-safeThere are three basic categories to guide vendor assessment. Is the supplier providing 1) a packaging component with product contact, 2) an excipient, or inactive ingredient, or 3) the active ingredient? Regardless of the category, due to the factious nature of cannabis, it is important to first verify with a vendor that it will sell its products to a company in the cannabis industry. Once that is determined, the evaluation process may begin.
Packaging components, such as bottles and caps, are considered primary packaging because they have direct contact with the finished product. Suppliers of the primary packaging must be able to provide assurance that their goods do not contain additives that are harmful to consumers. Therefore, choose only those suppliers who can provide certification that the packaging components are food-grade or food-safe. Reputable vendors will also be able to provide a certificate of compliance, also known as a certificate of conformance, which states that the component meets specifications required for that part. Many cannabis regulations require finished products to be sold in child-resistant packaging, so the supplier will need to provide child-resistant certification for the packaging components, if applicable.
Excipients are ingredients that are added to a product for the purposes of streamlining the manufacturing process and enhancing physical characteristics such as taste and color. Some examples could include coconut oil, starch and alcohol. Though they do not have the same critical nature as active ingredients, their potential risk to a finished product is generally greater than that of a packaging component. As such, there are additional factors to consider for an excipient vendor. Verify with the supplier that it can provide the following documentation. While governing regulations may not require some information, the data included in these documents are important to ensure the quality of your finished product.
Certificate of Analysis (or, certificate of conformance), for each lot of material. The information on a certificate, including the tests performed, specifications and test results must be sufficient to determine if the material is acceptable for use in the product.
Allergen Statement. This statement is important to accurately include or disclaim allergens on the finished product label.
Residual Solvent Statement. Solvents are commonly used to bolster the manufacturing process for a material. In order to maintain acceptable levels of residual solvents in a final product, it is necessary to also consider the toxicity and level of each solvent in the raw material.
Heavy Metals Certification. Since metals pose a risk to consumer safety, it is important to know what amounts, if any, are being contributed to your product by raw materials.
Because changes in an excipient can impact your finished product, make every attempt to obtain a commitment from a supplier to notify you if changes are made to the excipient’s specifications.
Cannabis oil is the ingredient that, when the edible cannabis product is consumed, is biologically “active.” Thus, it is considered to be the active ingredient in cannabis products. Since cannabis oil has a direct impact on the quality of a product, it is critical that the oil supplier be appropriately evaluated. One of the main considerations for a cannabis oil supplier is whether the supplier is willing to host initial and periodic audits of its manufacturing facility. Such audits are crucial in assessing the capability of the vendor to comply with regulatory requirements and established procedures – can the supplier consistently provide quality material? The answer to this question is too important to risk for you and your customers.As anyone working in the industry has experienced, anything related to cannabis is placed under an unprecedented critical lens.
Additionally, verify the oil supplier will provide key documentation, such as that listed above for excipients, to support the quality and purity of the oil. And last but not least, ensure the information reported by the supplier is adequate to meet the requirements of your finished product.
Evaluation guidelines and criteria such as these should be added to standard operating procedures to ensure consistency and quality across all products. As anyone working in the industry has experienced, anything related to cannabis is placed under an unprecedented critical lens. The importance of consumer safety and bolstering industry integrity is paramount. Sourcing validation is a critical initial step in the production process that can directly impact a company’s success and longevity in the cannabis industry.
In a few short weeks, the regulations in California’s cannabis market will expand to include more laboratory testing. The previous exemption for selling untested product will be eliminated come July 1st, meaning that every product on dispensary shelves will have to be tested for a number of contaminants.
According to William Waldrop, chief executive officer and co-founder of EVIO Labs, the state is currently finalizing a revision to the existing emergency rules, which is designed to target the potential supply bottleneck situation. “To help alleviate the bottleneck, the state is eliminating the field duplicate test on every batch of cannabis or cannabis products,” says Waldrop. “This will give the labs additional bandwidth to process more batches for testing.” So one test per batch is the rule now and batch sizes will remain the same. This, of course, is contingent on the state finalizing that revision to the emergency regulations.
In addition to that change, the state will expand the types of testing requirements come July 1st. New mandatory pesticide testing, expanded residual solvent testing and foreign materials testing are added in addition to the other tests already required.
With July 1st quickly approaching, many in California fear the rules could lead to a major market disruption, such as the previously mentioned bottleneck. Waldrop sees the elimination of duplicate testing as a preventative measure by the state. “It is a good move for the industry because it allows labs to test more batches, hopefully reducing the bottleneck come July,” says Waldrop. Still though, with only 26 licensed laboratories in the state as of March, testing facilities will have to meet higher demand, performing more tests and working with more clients.
EVIO Labs is preparing for this in a number of ways. They already have a lab in Berkeley and are working to expand their capacity for more analyses. In addition to their lab in Berkeley, the company is working to get three more locations operational as quickly as possible. “Right now, EVIO Labs is expanding through the identification of new market locations,” says Waldrop. “We have announced the acquisition of a facility in Humboldt and we are outfitting it for state-mandated testing. We have secured a location in LA, and licensing for LA just began as of June 1stso we are going through the local licensing process at this time. We are still moving through the licensing process for our facility in Costa Mesa as well.”
“In the meantime, we have expanded capacity of personnel in our Berkeley facility to support our client base until these other locations come online,” says Waldrop. “We are refining our business, bringing on additional equipment and more resources.” While the rules haven’t been implemented yet, Waldrop says he’s seen an uptick in business with licensed operators requesting more testing for the new July 1st standards.
While some might feel a bit panicky about how the new standards could disrupt the market, Waldrop says his clients are looking forward to it. “Our clients are very happy with the proposed new rules, because it reduces the cost of testing per batch, which will inherently reduce wholesale costs, making cannabis more affordable for patients and recreational users.”
By Kathy Knutson, Ph.D., Kathy Knutson, Ph.D. No Comments
In Part 3 of this series on HACCP, Critical Control Points (CCPs), validation of CCPs and monitoring of CCPs were defined. When a HACCP plan identifies the correct CCP, validates the CCP as controlling the hazard and monitors the CCP, a potential hazard is controlled in the manufacturing and packaging of cannabis-infused edibles. The food industry is big on documentation. If it’s not documented, it did not happen. The written hazard analysis, validation study and monitoring of CCPs create necessary records. It is these records that will prove to a customer, auditor or inspector that the edible is safe. Here in Part 4, more recordkeeping is added on for deviation from a CCP, verification and a recall plan.
Take Corrective Action When There Is a Deviation from a Critical Control Point
Your food safety team conducts a hazard analysis, identifies CCPs and decides on monitoring devices, frequency and who is responsible for monitoring. You create an electronic or paper record of the monitoring for every batch of edible to document critical limits were met. Despite all your good efforts, something goes wrong. Maybe you lose power. Maybe the equipment jams. Nothing is perfect when dealing with ingredients, equipment and personnel. Poop happens. Because you are prepared before the deviation, your employees know what to do. With proper training, the line worker knows what to do with the equipment, the in-process product and who to inform. In most cases the product is put on hold for evaluation, and the equipment is fixed to keep running. The choices for the product include release, rework or destroy. Every action taken needs to be recorded on a corrective action form and documents attached to demonstrate the fate of the product on hold. All the product from the batch must be accounted for through documentation. If the batch size is 100 lb, then the fate of 100 lb must be documented.
Verify Critical Control Points Are Monitored and Effective
First, verification and validation are frequently confused by the best of food safety managers. Validation was discussed as part of determining CCPs in Part 3. Validation proves that following a CCP is the right method for safety. I call validation, “one and done.” Validation is done once for a CCP; while verification is ongoing at a CCP. For example, the time and temperature for effective milk pasteurization is very well known and dairies refer to the FDA Pasteurized Milk Ordinance. Dairies do not have to prove over and over that a combination of time and temperature is effective (validation), because that has been proven.
I encourage you to do as much as you can to prepare for a recall.A CCP is monitored to prove the safety parameters are met. Pasteurization is an example of the most commonly monitored parameters of time and temperature. At a kill step like pasteurization, the employee at that station is responsible for accurate monitoring of time and temperature. The company managers and owners should feel confident that CCPs have been identified and data are being recorded to prove safety. Verification is not done by the employee at the station but by a supervisor or manager. The employee at the station is probably not a member of the food safety team that wrote the HACCP plan, but the supervisor or manager that performs verification may be. Verification is proving that what was decided by the food safety team is actually implemented and consistently done.
Verification is abundant and can be very simple. First, every record associated with a CCP is reviewed by a supervisor or manager, i.e. someone who did not create the record. This can be a simple initial and date at the bottom of the record. Every corrective action form with its associated evaluation is verified in the same way. When HACCP plans are reviewed, that is verification. Verification activities include 1) testing the concentration of a sanitizer, 2) reviewing Certificates of Analysis from suppliers, 3) a review of the packaging label and 4) all chemical and microbiological testing of ingredients and product. The HACCP plan identifies CCPs. Verification confirms that implementation is running according to the plan.
Verification is like a parent who tells their child to clean their room. The child walks to their room and later emerges to state that the room is clean. The parent can believe the word of the child, if the child has been properly trained and has a history of successfully cleaning their room. At some frequency determined by the parent, the room will get a parental visual check. This is verification. In the food industry, CCP monitoring records and corrective action must be reviewed within seven days after the record is created and preferably before the food leaves the facility. Other verification activities are done in a timely manner as determined by the company.
Write a Recall Plan
In the food industry, auditors and FDA inspectors require a written recall plan. Mock recalls are recommended and always provide learning and improvement to systems. Imagine your edible product contains sugar, and your sugar supplier notifies you that the sugar is recalled due to glass pieces. Since you are starting with the supplier, that is one step back. Your documentation of ingredients includes lot numbers, dates and quantity of sugar.You keep good records and they show you exactly how much of the recalled lot was received. Next you gather your batch records. Batches with the recalled sugar are identified, and the total amount of recalled sugar is reconciled. You label every batch of your edible with a lot code, and you identify the amount of each affected lot and the customer. You have a press release template in which you add the specific information about the recall and affected lots. You notify every customer where the affected edible was shipped with a plan to return or destroy the edible. When you notify your customers, you go one step forward.
How would your company do in this situation? I have witnessed the difficulties a company faces in a recall when I was brought in to investigate the source of a pathogen. Food safety people in my workshops who have worked through a recall tell me that it was the worst time of their life. I encourage you to do as much as you can to prepare for a recall. Here are two good resources:
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.
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.
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. 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.”
Editor’s Note: This is an article submission from the EAS Consulting Group, LLC team.
To Audit, or not to audit? Not even a question! Audits play a crucial role in verifying and validating business practices, ensuring suppliers are meeting their requirements for Good Manufacturing Practices (GMPs), and most importantly, protecting your interests by ensuring that you consistently receive a compliant and quality product. Audits can help ensure sound business procedures and quality systems, including well-established SOPs, verification and documentation of batch records, appropriate sanitation practices and safe storage and use of ingredients. Audits can also identify deficiencies, putting into motion a corrective action plan to mitigate any further challenges. While a detailed audit scheme is commonplace for established industries such as food, pharmaceuticals and dietary supplements, it is equally important for the cannabis industry to ensure the same quality and safety measures are applied to this budding industry.
If the question then is not whether to audit, perhaps the question is howand when to audit, particularly in the case of a company’s suppliers.This is an opportunity to strengthen the working relationship with each side demonstrating a commitment to the end product.
Supplier audits ensure first and foremost that the company with which you have chosen to work is operating in a manner that meets or exceeds your quality expectations – and you should have expectations because ultimately your product is your responsibility. Any issues that arise, even if they are technically the fault of a supplier, become your issue, meaning any enforcement action taken by your state regulators will directly impact your business. Yes, your supplier may provide you with a batch Certificate of Analysis but you should certify their results as well.
Audits are a snapshot of a moment in time and therefore should be conducted on a regular basis, perhaps biennially or even annually, if they are a critical supplier. In some cases, companies choose to bring in third-party auditors to provide an objective assessment of suppliers. This is especially helpful when the manufacturer or customer does not have the manufacturing, compliance and analytical background to accurately interpret data gathered as part of the audit. With the responsibility for ensuring ingredient identity and product integrity falling on the manufacturer, gaining an unbiased and accurate assessment is imperative to reducing the risk to your business.
Conducting a supplier audit should be well planned in advance to ensure both sides are ready. The audit team must be prepared and able to perform their duties via a combination of education, training and experience. A lead auditor will oversee the team and ultimately will also oversee the results, verifying all nonconformities have been properly identified. They will also work with the supplier to conduct a root cause analysis for those nonconformities and develop a corrective action plan to eliminate them from occurring in the future. The audit lead will also verify follow-up results.
Auditors should discuss with the supplier in advance what areas will be observed, what documentation will need to be ready for review and they should conduct their assessments with professionalism. After all, this is an opportunity to strengthen the working relationship with each side demonstrating a commitment to the end product.This is your chance to ensure your suppliers are performing and will meet your business, quality and product expectations.
Auditors must document that ingredient identity and finished product specifications are verified by test methods appropriate for the intended purpose (such as a whole compound versus a powder). State regulations vary so be certain to understand the number and types of required tests. Once the audit is complete and results are analyzed, you, the manufacturer, have an opportunity to determine if the results are acceptable. Remember, it is your product, so ultimately it is your responsibility to review the available data and release the product to market, you cannot put that responsibility on your supplier.
Quality Agreements as Part of a Business Agreement
There are opportunities to strengthen a partnership at every turn, and one way to set a relationship on the right path is to include a quality agreement as part of a business agreement. A quality agreement lays out your expectations for your suppliers, what you are responsible for and is a living document that, once signed, demonstrates their commitment to upholding the standards you expect. Just as with a business agreement, have any quality agreements reviewed by an outside expert to ensure the wording is sound and that your interests are protected. This is just another step in the development of a well-executed business plan and one that solidifies expectations and provides consequences when those expectations are not met.
Supplier audits must be taken seriously as they are opportunities to protect your brand, your business and your consumers. Enter into an audit as you would with any business endeavor – prepared. This is your chance to ensure your suppliers are performing and will meet your business, quality and product expectations.
Just as the dust had settled on the news that Canadian LP Aurora had signed agreements to finance a major growing facility in Denmark, the company also added another European feather to its cannabis cap.
On January 18, the company announced that it is the sole and exclusive winner of an EU-wide tender bid to begin to supply medical cannabis to the Italian government through the Ministry of Defense. Why is this federal agency in charge instead of the federal ministry of health? So far, the Italian cannabis program has been overseen exclusively by the Italian military.
But the military just isn’t cut out to cultivate cannabis for the entire medical needs of a country, which should seem obvious. And that is where the Canadian LPs apparently are coming into play.
There were two stages to the bid, with Pedanios, Aurora’s German-based arm prequalifying in the first. In the final round, Pedianos won exclusive rights to begin supplying the government with medical cannabis.
What is interesting, however, is what this says not only about the potential growth of the cannabis market in Italy, but beyond that, Germany.
A German-Canadian Sourced Italian Product?
Pedanios, who won the bid, is the German-based arm of Aurora, one of Canada’s largest LPs. And Italian medical cannabis is now about to be routed by them from Canada, via Berlin, to market locally via pharmacies. It is certainly one of the stranger paths to market globally.
This announcement is even more interesting given that Aurora is widely suspected to be one of the top contenders in the still-pending German bid.
Could this herald a German-sourced cannabis crop for an Italian neighbour?
And what does this say about the sheer amount of volume potentially needed for cultivation next door (or even in Italy) as Germany begins its own cultivation program, presumably this year, to source an already undersupplied domestic market where growing numbers of patients are getting their medical cannabis covered under public health insurance?
Will Germany further antagonize its neighbours over a cannabis trade imbalance? Or does this mean that a spurt of domestic Italian cannabis production is also about to start?
There are 80 million Germans and about 60 million Italians. Who will be the cannabis company to supply them?
Nuuvera Also Makes Italian Moves
Less widely reported, however, was the news that Aurora/Pedanios would not be the only private supplier to the Italian market. Nuuvera, which just announced that they had become finalists in the competitive Germany cultivation bid, also just acquired an import license to Italy for medical cannabis by buying Genoa based FL Group.
One thing is clear. The pattern of establishing presence here by the foreign (mostly Canadian) firms has been one of acquisition and financing partnerships for the past 2 years.
Import until you cultivate is also clearly the guiding policy of legalizing EU countries on the canna front.
The question really is at this point, how long can the import over cultivation preference continue? Especially given the expense of imported cannabis. Not to mention the cannabis farms now popping up all over the EU at a time when the Canadian market will have enough volume from recreational sales to keep all the large (and small) LPs at production capacity for years to come.
In the next year, in fact, look for this reality to start changing. No matter who has import licenses now with flower and oil crossing oceans at this point, within the next 18-24 months, look for this pattern to switch.
The distributors will be the same of course. But the brand (and source) of their product will be from European soil.
Foreign Invasions, Domestic Cultivation Rights & More
One of the more interesting professional conferences this year globally will clearly be the ICBC in Berlin, where all of these swirling competitions and companies come together for what is shaping up to be the most influential cannabis business conference in Europe outside of Spannabis (and with a slightly different approach). Nowhere else in the world now are international companies (from bases in Canada, Australia and Israel primarily) competing in such close proximity for so many foreign cannabis markets and cultivation rights to go with them.
With the average cultivation facility in Europe going for about USD $30-40 million a pop in terms of sheer capital requirements plus the additional capital to finance the inevitable delays, such market presence does not come cheap.
It is increasingly clear that the only business here will also be of the highly regulated, controlled medical variety for some time to come.
That said, when the move towards recreational does come, and within the next four years or so, the global players who have opened these markets on the medical side, will be well positioned to provide product for a consumer base that is already being primed at the pump. Even if for now, the only access is via a doctor’s prescription.
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