Committee Blog: Everything You Wanted to Know About Cannabis Facilities But Were Afraid to Ask Field Guide – Part 2 – Extraction Facilities
by members of NCIA’s Facilities Design Committee Jacques Santucci, Brian Anderson, David Vaillencourt, and David Dixon
Continuing our five-part series on the behind-the-scenes workings of the legal cannabis industry. This series focuses on all of the inner dealings and industry advice from established professionals to craft this unlimited How-to-Guide to assist you in setting up your own facility. These articles cover cultivation, extraction, infused products, and retail facilities as well as support activities. In general, remember to be compliant with all local rules and regulations and contact a licensed contractor and industry expert.
Part Two, Extraction: Top Things to Consider When Planning Your Cannabis Extraction Operation
The extraction environment is akin to an industrial process and should be approached away from a safety and chemical handling standpoint. Here are some general considerations as you begin to plan your extraction operation that we often see assumed or overlooked resulting in major unanticipated barriers that significantly impact decision costs and timelines. Always remember to be compliant with all local rules and regulations.
Interior Building Materials
The walls and floors should be designed to be easily cleanable. In areas with solvent use, should have floors and walls made with the material, and ultimately the method for effective and ease of cleaning such FRP (Fiberglas Reinforced Panels).
Facility Specifications
There are many established standards from organizations like the NFPA and ICC-IFC which are commonly cited and required by Fire Marshalls with appropriate fire engineering controls, room interlocks, etc. Knowing which classifications are required based on the room type has a major impact on facility specifications (e.g. C1D1, C1D2, etc.) and the ultimate design. This requires knowing which solvents you will be using (and equally important, solvents you will not be using) as well as identifying all of the activities you will be doing in your extraction/processing facility (winterization, purification, bulk or final product packaging, and more) and whether the rooms will be wet and dry (how will you be cleaning these rooms?). How you answer those questions will help you and your team select the appropriate room materials and overall design.
Electrical Power Ideal Recommendations
Evaluate your utility power infrastructure, including street transformers and available power to your site when designing your facility. The power demand for a cannabis facility is significant and grid limitations can destroy or significantly delay the ability for a business to operate.
Losing power due to weather or events outside of your control are another major risk. When considering alternative power generation, consider a generator with auto-transfer switching and the appropriate fuel type, depending on location and local weather. Contact a local licensed professional. A generator can be an invaluable insurance policy as even a short duration power outage can destroy an entire crop and any products that must be maintained at critical temperatures.
Equipment Rooms and Maintenance Rooms
Appropriate space for equipment and dedicated rooms for maintenance is commonly needed. These all come with different combustion air requirements, venting requirements, air exchange rates, vacuum lines, and more. You may consider a room for spare parts and tools.
Appropriate Storage Area: Biomass, Volatiles, Raw Ingredients, and More
Separation of raw materials with appropriate and dedicated storage areas is needed for the various types of raw ingredients and materials utilized within a cannabis facility. Volatile solvents require extremely specific storage requirements, which will become part of your Chemical Hygiene Plan once you are operational. Refer to your local Fire Marshall for code considerations and from code organizations like the ICC and NFPA.
Cleaning and sanitation agents should be segregated from materials that are utilized in final product formulations (e.i food ingredients, oils, etc.) and raw materials ahead of the design is critical to ensure appropriate storage requirements are met whether indoor or outdoor. Biomass storage can vary based on whether wet or dry and often require controlled temperature and humidity. Finally, do not forget the dedicated space needed for finished good inventory.
Electrostatic Discharge (ESD) Safety
Do you know that shock you get when you are in your car in the winter or flipping on a light switch? Innocent in everyday life, but potentially lethal in an environment such as extraction rooms where highly flammable solvents could be present. Consider rated and non-rated clothing and other personal protection measures.
Food Grade Oil Considerations and Inspections
Extracted oils that will be used downstream in edibles and beverages are akin to ingredients that require Food Safety endorsements such as cGMP.
Equipment Ratings
Before selecting equipment for use, evaluation criteria should be established based on your business needs and compliance. Some authorities having jurisdiction require extraction equipment to come with stamps, certifications, or endorsements from organizations such as ASME, UL, and NFPA as relevant to ensure equipment safety and fit for use.
Room Environmental Controls
Grinding rooms often need separate dedicated ventilation and filtration to be checked against grinding method/equipment and concentration of particulate (typically measured in parts per million (ppm) in the air. Dust collection systems for grinding equipment are effective ways to keep dust levels at manageable levels, reducing the need for time consuming cleaning procedures. Extraction and final product rooms may require additional ventilation considerations and monitoring sensors depending on the extraction method or final product type. Example: Solvents will require sensors and air exchanges located near the ground level since most solvent fumes tend to be heavier than air.
HVACD Management
Designing your facility involves HVACD (Heating, Ventilation, Air Conditioning, and Dehumidification) management that considers airflow controls areas, airflow, and fire protection within control areas. Rooms may require positive and negative pressures with calibrated pressure indicators. You should aim at having a leveled constant environment.
Safety and Injury Handling
Facilities need to have sufficient accessible First Aid and Burn Kits on site. Safety and Emergency Showers are often determined by code and the type of extraction solvent in use at the locations. Eye wash stations may also be required.
Spill and Solvent Safety
In areas where solvents are or may be used, you will need to have barrier/spill kits specific to the solvents and extraction materials on hand. This barrier can be built in or hand delivered per emergency. Solvent storage locations, depending on the type of solvent and hazardous rating.
Having one or two dedicated people to run point on spills can be part of a comprehensive spill procedure that would include evacuation of the area, assessment of the spill and of the clean up technique, disposal method, etc. There are many materials that are not compatible or properties that make them volatile under certain circumstances so having dedicated people to evaluate the situation will save you time, money, and any possible mishaps.
Solvent Storage
Indoor and outdoor solvent storage are dictated by NFPA, ICC-IFC, and local regulations. Storage types and limits are essential to check before buying or building a facility. Fire professionals base these limits on several factors of flammability including class and volatility. You may also need to adhere to SARA Type III reporting depending on the solvent and storage amounts. Do not forget about solvent tank types, whether they need to be mounted or chained to walls, security access controls, and SDS requirements.
Solvent Enclosure
C1D1, C1D2 is needed for solvent use. The actual type of solvents (e.g. CO2, Ethanol, etc.), and volume of solvent will dictate the different requirements for enclosures. This section pertains to areas in which the solvent would be transferred, mixed, extracted, recovered, etc. The type of enclosure is dependent on the type and class of solvent. Most enclosures will have volume limits, containment, vapor detector, electrical and ventilation requirements.
Emergency Ventilation
Ensure wall switch and fast ventilation, automated ventilation when sensors are activated during spill of contaminate.Sensors to be located where appropriate for the substance in use. Coordinated with the fire marshall to meet local requirements through design with architect and mechanical teams.
Employee Access Control
Limiting door access, proper security labeling, and key sets for employees need to be part of your overall security plan. LThe idea is to prevent unauthorized personnel from accessing the extraction space compliant with the local regulatory body.
Equipment Regulatory Listing
There are requirements such as UL certifications/marks which are dependent on the actual device and intended use. Always contact your local code enforcement office and a licensed contractor.
Committee Blog: Everything You Wanted to Know About Cannabis Facilities But Were Afraid to Ask Field Guide – Part 1 – Cultivation
by members of NCIA’s Facilities Design Committee
Jacques Santucci, Brian Anderson, David Vaillencourt, and David Dixon
Introducing our five-part series on the behind-the-scenes workings of the legal cannabis industry. This series focuses on all of the inner dealings and industry advice from established professionals to craft this unlimited How-to-Guide to assist you in setting up your own facility. These articles cover cultivation, extraction, infused products, and retail facilities as well as support activities. In general, remember to be compliant with all local rules and regulations and contact a licensed contractor and industry expert.
Part 1, Cultivation: The Top Things to Consider When Planning Your Cannabis Cultivation Facilities
As you are planning to start your own indoor cultivation facility, there are some often ignored basic parameters that should be taken into account in the design and decision-making process. We have listed the key parameters that will ease the process of going live and may save time and money while you design your facility and the building process. Always remember to be compliant with all local rules and regulations.
Lighting Recommendations
Depending on your goals, building setting, and local requirements, you have many options for lighting, from HPS light to LED lights. Lighting standards are measured in watts per square foot. Recommendations may vary per state or other criteria. For example, Massachusetts recommends an intensity of 36w/sft for energy consumption.
Water Recovery: Minimum Percentage
Cannabis is a water-intensive crop, and consideration of effluent capacity can be inefficient, expensive, and an issue for municipalities. Depending on your cultivation practices, you should consider a water recovery system and what percentage you are able to capture. There are two types of water recovery – leachate, and condensate. An effective system will recover at least 70% of the water for utilization, significantly reducing your water and sewer expenses. Your irrigation and fertigation selection will have an impact on your water consumption.
Generator Capacity: Minimum Recommendations
Your area or your business model may dictate for a generator – which is a critical Business Continuity consideration as a power outage, even if for a brief period of time can destroy a crop. Make sure to calculate the minimum capacity requirements of your facility. Do you plan to have it for emergency or stand-by usage? Typically, 50% of your short lighting load capacity of cultivation, 100% for AHU (air handling), and some back-office and security system, including cameras, access, and server needs.
Carbon Dioxide Enrichment: New Versus Recaptured
You can consider 75% new tanked- or generated- natural gas and 25% recaptured sources, for cultivation rooms, gas-fired chillers, and gas-fired boilers.
Carbon Dioxide Alarms Levels: Cultivation and Common Areas
Carbon Dioxide monitoring is critical for worker safety. You should be monitoring common areas to ensure that you are below 3,500 ppm. Monitoring should be tied to the fire alarm system for building evacuation, with 2,000 ppm alarm levels for the cultivation area. 5000 ppm limits are required by NFPA/OHSA. Alarms should contain visual strobes, red/green room access indicator lights and/or possibly an exhaust system that is triggered by an alarm
Renewable Energy: Minimum Energy Production Percentage
To demonstrate a commitment to sustainability, a minimum target of 10% of your facility’s energy consumption should be from renewable energy production: i.e. solar power, wind energy, geothermal, biomass, and/or battery energy.
Refuse Disposal: Recycling and Composting
Consider certified disposal of horticulture byproducts with a minimum of 25% recycling or composting by volume; rendered unusable. You will want to establish and verify that your shredder or equivalent system is capable of breaking up debris to a specified size.
Airlock Doors for In-Between Uses
You should install an airlock barrier, or at a minimum an air curtain, between the business and the production side, for outside and inside egresses, to keep a controlled environment. Keep in mind considerations for ventilation systems and cascading airflow.
Wall Material
For best performance to mitigate biological hazards and contamination, depending on your region, recommend installing insulated metal panels, that are non-porous, solid core wall, insulated metal panels (IMP), with surface mounted devices.
Security Entrance: Facility Safety
Consider creating a separate mantrap style entrance to allow for better safety at the entrance point, monitor visitors, keep a controlled environment as well as avoid weather-related issues, i.e. wet areas due to rain or snow, or temperature variance due to extreme heat or cold.
Limiting doors access and key sets for employees needs to be part of your overall security plan, with proper door labeling and authorization levels. The idea is to prevent unauthorized personnel from accessing specific spaces, for proper environment control and to be compliant with the local regulatory body. Remember to be compliant with local rules and regulations.
Security Camera: Minimum Area of Coverage
In most states, you will need security coverage for 100% percent of your faculty where cannabis products will be stored or displayed, with proper recording and monitoring. Keep in mind that your security room will likely need its own dedicated HVAC systems
Security Camera: Minimum Data Storage and Resolution
You will need to store all security camera footage on-site for a minimum of 90-days, or more depending on regulations. You may need to store the data offsite for five years for future legal needs. Footage quality may need to be shot in 1080p minimum. An ASTM International Standard Guide for Video Surveillance System provides additional parameters to utilize.
Security Alarm: Monitoring
Security alarm needs to be monitored by a reputable company. A service level agreement (SLA) or similar to ensure there are redundancies in the event of a failure should be considered, and redundancy or a backup system might be necessary.
Odor Control: Exhaust Air Management
Odor mitigation is a crucial part of all operations. All exhaust airflow must be oxidized or ionized. You also need a fogger system and carbon filtration. Refer to local municipal bylaws and regulations for more information.
For interior odor control and non-cultivation areas, consider cascading air flows from non-cultivation areas to provide a common method of control for pressurization control. Plan to control air flow and exhaust.
Fire Sprinkler: Maximum Bench Sizing
Sprinklers are designed to cover a limited surface area. When installed on cultivation tabletops wider than 48”, additional sprinkler coverage may be required.
Flooring Type: Continuous
Cultivation floors shall have continuous resin or epoxy coating with at least a four-inch lip onto the adjacent wall.
Energy Incentives: Minimum HVAC/D Efficiency Rating
Air Conditioning (AC) units should be no less than 16 SEER, High Point (HP) units no less than 9 HSPF. Incentives for this vary by state. Please check with your local utility company and regulatory commission for all available rebates.
HVAC Validation Requirements:
Bi-Annual Third Party Controlled Environment Validation using required Trend Data Metrics is the validation and calibration of control sensors, including temperature, humidity, CO2, and other devices such as scales, flow meters, integral valves, PPM sensors, EC meters, TDS meters, HVAC dampers and other applicable devices that may drift from factory or initial installation specifications.
Good Agricultural and Collection or Manufacturing Practices (GACP/GMP): Ready Versus Complaint
Your operation should be designed with documentation to prepare for GACP or GMP requirements. Depending on final product types, specific food-based GMPs with appropriate risk assessment programs (such as HACCP, and others referenced within the Food Safety Modernization Act) will prepare you for any federal or international trade opportunities in a federally legalized framework.
Employee Locker Access
Plan for gender-specific, male and female locker rooms, with six square feet per employee per shift expected to arrive at the facility at any given time. Employee supplied flock for locker or lock provided by the employer is a business decision. Keep in mind how you will keep the environment of your production facility under control. You might consider having locker access adjacent to the growing area with a proper gowning area.
Locker Room Type
Make sure your locker room is correctly set up for employees to be able to change in a safe way. Specifications for Locker Room and Gowning/PPE Areas should allow access to faucets for washing hands as well as bathrooms. Note gowning areas should be separate from the bathrooms directly off the locker room area.
Employee Shower Access
Per International Building Code (IBC) and State Plumbing Codes, calculate the number of employees and determine the number of showers based on code requirements as well as business policies. Having gender-specific showers is a recommendation as well as a business decision.
Emergency Eye Wash- Shower
For safety and based on OSHA standards, Integrated Pest Management (IPM), fertigation, and extraction operations must-have emergency eye wash showers. Eyewash stations need to be placed throughout the facility so that they are within 10-15 seconds walking distance from employees. Check local requirements for additional needs.
Note: in a facility where corrosives and skin irritants could pose harm to employees and require immediate remediations, you should consider emergency showers.
First Aid Kit Distribution
First aid kits should be available in all rooms where sharp tools and other hazardous materials are intended to be used. These kits need to be within 10-15 seconds of employee walking distances. Per OSHA requirements, first aid kits should be located in all trim, extraction, flower hallway, and shredding areas. This is overall a must-have in your facility.
Safety and Injury Handling
We recommend that you ensure that you have enough first aid and burn kits available throughout your faculty, based on your activity and the number of employees.
As we approach the end of Q1 2022 and prepare to enter Q2, it’s become clear that this is going to be an important year for the cannabis industry. Cannabis business professionals and investors looking for signs of growth or stagnation in the industry will certainly be interested to see how things unfold. With that in mind,CannaBusiness ERP has put together a list of the top cannabis trends for 2022, and those trends appear to be pointing to more growth. However, it’s clear that difficulties for the cannabis sector are still imminent.
Cannabis Trends for 2022
It almost goes without saying that the cannabis industry is complex and not without its fair share of challenges as the most highly regulated industry on the market. For businesses looking to grow, keeping up with complicated and evolving regulations can be stressful enough on a business in and of itself. Cannabis cultivators, processors, and consultants can look to cannabis industry trends to inform their operational decisions.
Increased legalization in the United States
Support for legalization in the USA continues to rise. In fact, a2021 Gallup poll found that 68% of Americans are in favor of legalizing cannabis. Not only is this a record number of supporters, but this percentage also reflects a growing sentiment among Americans regarding the use of legal cannabis.
The changing tide towards legalization is clear – more states passed legislation to legalize cannabis either medicinally or recreationally in 2021, with several more introducing legalization bills in2022. Because states operate independently of each other, every state will have its own policies as well as regulatory and compliance requirements, which can make things very confusing for cannabis businesses, especially multi-state operators (MSOs).
Leading cannabis business experts are predicting strong sales growth this year due to the growth in legalized markets for cannabis. In fact, legal cannabis sales reached $19.5 billion in 2020, and expertsare projecting sales to reach $30 billion in 2022. Washington State alone, which legalized cannabis ten years ago in 2012, is expected to generate $1.5 billion in sales, up from $1.2 billion sales in 2020. But Washington’s projected sales are small when you compare them to California’s projected sales of $7.6 billion. And as more states legalize cannabis, more sales will surely follow.
Another contributing factor to increased cannabis sales is related to increased demand and a growing number of product types. More consumers are learning why cannabis can be beneficial to them, including more restful sleep, lowering stress, lessening pain symptoms, and recreational use. Additionally, with so many products on the market, cannabis consumers have many options to choose from, ranging from edibles to tinctures to topical ointments and more.
Cannabis experts are predicting a growth in cannabis consumption lounges – the cannabis equivalent of a bar or restaurant that allows consumers to use cannabis on-site. According to theCannabis Industry Journal, the popularity of these lounges is growing because they provide consumers with a legal and safe space to consume cannabis. Just as with alcohol, the lounges are regulated according to laws set by each state.
Increasing sales means cannabis businesses are at a critical junction and need to scale operations to meet the growing demand. One way cannabis growers and processors can capitalize on the demand is by streamlining the business end-to-end withcloud-based cannabis business management software. Otherwise known as Cannabis Cloud ERP, it manages production, cultivation, compliance, inventory, financials and traceability, sales, purchasing, and more, all in one system that lives in the Cloud.
Increased legislative bills and pressure for federalization
Under U.S. Federal Law in the Controlled Substances Act, cannabis is still considered a Schedule I substance. However, as the number of states legalizing cannabis either recreationally, medicinally or both has increased, so too has broader support for federalization in the U.S. government. In fact, there are several bills in the U.S. congressional houses that may positively impact the cannabis industry, especially with banking challenges.
Due to the Schedule I federal classification of cannabis, many banks will not work with cannabis companies, creating tedious banking hurdles that are difficult to solve. TheNational Law Review writes, “Yet, in comparison to other industries, legitimate licensed cannabis-related businesses remain hobbled by the difficulties they face in accessing traditional banking and financial services – largely due to the fact that ‘marijuana’ is still considered illegal on the federal level under the Controlled Substances Act (“CSA”). Currently, financial institutions (including federally insured banks) are hesitant, and oftentimes unwilling, to work with cannabis-related businesses due to fear of reprisal from federal banking regulators.”
Congressional representatives have introduced a decent amount of bills geared towards making much-needed changes to banking processes for cannabis, such as the SAFE Banking Act of 2021, passed by the U.S. House of Representatives in April 2021. It is currently awaiting action in theU.S. Senatewith broad support from both sides of the aisle. If it passes both chambers of Congress, the act will allow cannabis companies to have business-critical access to banking and financial services and would reduce their need to operate as cash-only businesses and remove yearly challenges with tax accounting and reconciliation.
In addition to the SAFE Banking Act, there are other bills like U.S. Senate Majority Leader Chuck Schumer’s Cannabis Administration and Opportunity Act (CAOA), which is a push for federal cannabis legalization as well as an equity play. If passed, it is a measure towards ensuring small businesses and minority-owned businesses have access to financial services.
However, even with the tide of public opinion and legal momentum shifting in the industry’s favor, there remains a challenge with the U.S. tax code. Due to IRS Code Section 280E, if a business is trafficking certain controlled substances, like cannabis, that business is unable to deduct business expenses on their taxes. California has taken steps to address this by signing bills that help cannabis businesses overcome this code, but this is still a prohibitive factor for cannabis companies across the U.S.
Fortunately, cannabis companies that invest in a comprehensive Cannabis Cloud ERP solution with a reputable and experienced industry partner are better able to handle any hurdles that come their way.
Increased Merger and Acquisition (M&A) activity
Merger and Acquisition (M&A) activity has been steady in the industry and 2022 will see even more M&A activity. According toMJBizDaily’s article, “Marijuana M&A sizzled in 2021 and is poised for a hot 2022. Marijuana merger and acquisition activity proceeded at a torrid pace in 2021 – and could accelerate in 2022 – thanks to lower interest costs and pressure on larger companies to expand their footprints and boost revenue.”
Citing prominent cannabis acquisitions in 2021, such as Jazz Pharmaceuticals’ acquisition of GW Pharma (for $7.2 billion) and Trulieve’s acquisition of Harvest Health (for $2.1 billion), it is apparent that M&A is not going to slow down. According toBusiness of Cannabis, several deals are already taking place in 2022. Massachusetts-based Curaleaf acquired Arizona-based Bloom Dispensaries for $211 million, adding a total of 13 Arizona dispensaries and 121 dispensaries nationwide to Curaleaf’s portfolio.
For cannabis companies dealing in M&As and becoming Multi-state Operators (MSOs), it is essential to have a comprehensive, full-suite Cannabis Cloud ERP system that can run all the companies in one system. It is a crucial ingredient to manage their M&A transactions and handle their financial statements, compliance, business transactions, and more.
Most important of all, cannabis companies need to choose the right cannabis ERP.
Jennifer Spanos is the VP of Product and Vertical Strategy at CannaBusiness ERP. She has 14+ years of experience in cannabis and food manufacturing software and operations, working to maximize the efficiency and profitability of customers’ businesses.
CannaBusiness ERP: The Right Cannabis Business Management Software. Cannabis companies can grow their business with an ERP solution designed for the cannabis industry and for MSOs expanding into new markets. Learn how CannaBusiness ERP can set businesses on the right path. Manage financials, operations, quality, compliance, traceability, customers and more.
CannaBusiness ERP iscannabis business management software that is built-inSage X3 and configured byNexTec industry experts to deliver a complete cannabis business solution. Our specialization in developing solutions for the cannabis cultivation and processing industry has resulted in some of the most respected companies around the world managing their day-to-day operation using CannaBusiness ERP.
To learn more about the fast-paced movement in cannabis legalization and how Cannabis Cloud ERP software can help your company keep pace,reach out to us. We’d love to show you what CannaBusiness ERP can do for your business.
Committee Blog: Protecting Innovations in Cannabis Technology
The Role of Patents in the Industry, Now and in the Future
Paul Coble is an intellectual property attorney and Chair of NCIA’s Cannabis Manufacturing Committee; Scott Seeley is an intellectual property attorney with Eastgate IP and is Organizer of the Cannabis Manufacturing Committee
Competition in the cannabis industry has always been fierce. To date, most competition has focused on securing licenses and sales territory. But, as markets saturate and the green pastures are all claimed, the battlefronts must shift. Cannabis companies now look to collect non-geographic assets, such as market share, profitability advantages, and a durable brand presence.
Intellectual property law provides mechanisms to capture and monetize these intangible assets. Assets that give a company a competitive advantage can build value into a business beyond its balance sheet. Well-crafted IP portfolios not only deter freerider copying, but are also valuable assets that can be sold, licensed, or provide incentive for investment or acquisition by larger entities. Businesses with a strong IP strategy are able to maintain their edge over their competitors by protecting their investments in technology and marketing to discourage competitors from utilizing their newfound developments or improperly capitalizing on their brand recognition.
Ignoring cannabis IP not only leaves this value on the table, but exposes the business to unnecessary risk. As in all other industries, cannabis companies must recognize that competitors have IP portfolios that may need to be avoided or licensed. Modern competition requires solidifying your own rights as well as understanding the rights of others.
Intellectual property is often broadly broken out into four major categories. Each category is tailored to protect different forms of intangible assets:
This blog post overviews patents, and how patents can be used by cannabis businesses to protect their technological advancements. This is the first of a 3-part series about cannabis IP. The series will culminate with a Q&A-based webinar on April 19 at 1:00 PM ET. Advance questions can be sent to paul@thalo.io.
What are Patents?
Patents protect technological advancements and can be used to exclude others from making, using, importing, or selling a claimed technological innovation.
Patents are often used by businesses to build walls around technologies they develop to temporarily prevent competitors from using the same advantages. Companies also use patents to build portfolios of technology that can be sold or licensed like any other asset, or used to bolster their valuation for acquisition or investment opportunities.
But patents are not just used to block competition, they can also be a tremendous source of information about technological developments in the field. While patent discovery tools are admittedly lacking at the moment (GooglePatents is a good place to start), the details in a patent can often short-circuit months or years of work. Of course, depending on the patent claims, you may need to license the patent in order to use that information. But that type of information-for-licensing-rights exchange, with the right mentality on both sides, is the foundation of an efficient industry.
Here are just a few examples of the cannabis technology that may be patent eligible:
Cannabis Strains
Formulations for Extracts, Topicals, Tinctures, Vape Liquid, Edibles
Vaporizer Design
Cartridge Design
Extraction Methods
Manufacturing and Processing Methods
There are three types of patents that can be used to protect cannabis technology: Utility, Design, and Plant. These types of protection are not mutually exclusive and sometimes can be combined to form a more comprehensive protection strategy.
Utility Patents
Utility patents are the most popular type of patent, offering the broadest and strongest form of protection. Utility patents last 20 years from the date of filing and are good for protecting nearly any new technological innovation including formulations for extracts, topicals, tinctures, or edibles, new vaporizer designs, new improvements to processing or manufacturing methods, and similar developments. Utility patents can also be used to protect new cannabis genetics, at least theoretically. As discussed below, however, there are several practical barriers to patenting cannabis genetics.
A significant benefit of utility patents is that they can protect the actual function of an innovation, rather than just the outwardly recognizable features or the specific implementation. This aspect of protection sets utility patents apart from other forms of protection like design patents and copyright, which are limited non-functional aspects.
Design Patents
Design patents protect an item’s unique ornamental appearance. Design patent protection is sometimes easier to obtain than utility patents because design patents only protect the look of an item, not how it works. So design patents do not protect against someone selling a functionally identical device with a different outward appearance. This narrower protection also lasts only 15 years instead of 20.
Nevertheless, design patents can be a strong tool to protect products that have a novel and distinct design aesthetic. They can cover the visual appearance of vaporizer batteries or cartridges, retail packaging, even unique dispensary displays. In some cases, design patents can be effectively combined with trademark and trade dress protections to create a highly defensible brand style.
Patenting Cannabis Strains
The most common questions about cannabis patents usually relate to patenting strain genetics. Newly developed strains can be protected by both utility and plant patents, with varying rights and requirements. Cannabis strains may also, theoretically, receive pseudo-patent protection under the Plant Variety Protection Act of 1970 (“PVPA”). As noted below, however, current practical realities make PVPA protection unattainable for most cannabis strains.
Both plant and utility patents can protect cannabis strains, but they do so very differently. Utility patents cover newly invented compositions of matter and, therefore, can be used to prevent copying a novel genetic sequence. These patents literally cover specific sequences of DNA base pairs. A key requirement of utility patents is that the applicant must enable others to make and use the same invention once out of patent. While it may be possible to meet the enablement requirement with a transgenic breeding or CRISPR gene editing, the more common method of enabling plant gene patents is with a biological deposit of seeds or other propagation material with a public organization. So long as cannabis remains federally illegal, it can be difficult or impossible to make the deposit within the U.S. Some applicants have had success making the seed deposit at foreign centers, but the growth of cannabis genetic patents has been slowed by these requirements. When cannabis is eventually descheduled, the practical barriers to genetic patents will fall and that may trigger a rush by more companies to seek patents for their proprietary cannabis strains.
Plant Patents
Another form of patents, plant patents, can protect new plant varietals that have been reproduced asexually. Although cannabis plants are relatively easy to reproduce asexually via cloning or cutting, one disadvantage of this form of protection is that plant patents only cover genetically identical copies, reproduced asexually from the claimed plant. That means to infringe a plant patent, one must physically clone the patented plant–a narrow base for an infringement claim.
Plant Variety Protection Act
The last vehicle that can protect a new cannabis strain is the Plant Variety Protection Act that was designed specifically to protect sexually reproducing plants, such as cannabis.
The PVPA, however, comes along with a strict requirement that at least 3,000 seeds of the claimed plant species be deposited with the U.S. Department of Agriculture in Fort Collins, CO. The USDA will not accept any deposits for plants that are classified as controlled substances, including cannabis. Meaning that, for the time being, PVPA protection is unavailable for cannabis plants that do not qualify as hemp (less than 0.3% d9-THC).
The Process – How to Get a Patent
All patents start as applications which must be examined and approved by the U.S. Patent & Trademark Office (“USPTO”) to become granted patents. The application process, from start to finish, can last 1-5 years and cost anywhere between a few thousand to tens of thousands of dollars.
The examination involves a review of the patent application, as well as related literature published before your application was filed (also called “prior art”). An examiner with technical expertise in the application’s field will search for prior art and determine whether the application meets all statutory requirements. Most notable of those requirements are that the invention must cover eligible subject matter and be sufficiently inventive to warrant a patent.
The prosecution process typically involves letters back-and-forth between the inventor and the Patent Office. It is often thought of as a negotiation — nearly all patent applications receive at least one rejection. The applicant is given an opportunity to change what the patent covers or explain why the rejection was wrong. Only if and when the Examiner is satisfied that all statutory requirements are met will the application be allowed to issue as a patent.
How will Patents Shape the Cannabis Industry?
Like it or not, patents are rapidly becoming a major force in the cannabis industry. The cannabis industry is in a unique position to determine the role intellectual property will play, but one thing is certain: cannabis IP cannot be ignored. Some companies, like Canopy Growth, Nextleaf, and various pharmaceutical companies, are aggressively developing patent portfolios and high-stakes patent litigation is already underway. Additionally, holding companies known as “non-practicing entities” have been formed to purchase valuable patents covering key aspects of cannabis cultivation, manufacturing, and consumption.
But these forces do not have to dominate the industry. Patents were originally designed to promote scientific advancement, not inhibit it. When the IP rights of others are respected and technology is licensed widely at reasonable rates, intellectual property can cut years and millions of dollars from research budgets. Some industries have found success with patent cooperatives and similar pooled-patent arrangements. The future may see some combination of patent licensing with blockchain technology, NFTs, or decentralized autonomous organizations (DAOs).
We will continue the discussion as to what an enlightened approach to intellectual property could look like in the cannabis industry in our webinar scheduled for April 19 at 1:00 PM Eastern. Please send any advance questions to paul@thalo.io.
Member Blog: Stickier Products Need Thicker Gloves, Right?
“My gloves keep ripping” is a common frustration we hear from cannabis businesses, especially growers and processors. If your gloves are ripping just buy thicker gloves, right? Maybe. It is a common misperception that thicker gloves are stronger, but this is not always the case. Here are four factors about glove thickness to understand that will help solve this chronic glove problem.
4 Things to consider before buying a thicker glove
Thicker does not mean stronger – A glove’s strength is directly related to the quality of materials used to make it. Period. A glove’s raw material ingredients account for 45% of the production cost. Gloves can have fillers, like carbon black, silica and chalk, added to manufacture them cheaper. Chalk doesn’t stretch. When fillers are added to reduce production costs, the glove’s durability and elasticity will reduce as well.
In one minute, this video shows how to estimate the quality of your nitrile gloves. When buying disposable gloves, always remember, a gloves’ strength is directly proportional to the quality of ingredients used to make it.
Musculoskeletal issues – Low-quality, thicker gloves have less elasticity which in turn makes workers’ hands use stronger muscle force, increasing the chance of injury. For example, a worker’s hand could have unnecessary force put on it with every hand movement they make while bucking or trimming the plant. A disposable glove needs to be of a high enough quality to perform the task and protect the product and the wearer, but excessive thickness can create additional issues. A better-made glove can be thinner while outperforming cheaper, thicker gloves.
Worker efficiency – Despite its thickness, a glove made with lower quality ingredients will rip more frequently. When your staff is constantly having to stop working to change failed gloves, productivity decreases. When workers are busy changing failed gloves they are no longer planting, growing, harvesting, trimming, or curing. Gloves that perform will increase overall productivity and efficiency, not to mention worker satisfaction.
Increased waste – Another possibly less considered consequence of buying thicker gloves is the environmental impact. Glove thickness directly correlates with the amount of waste, disposal costs, and environmental impact generated. A thicker glove equates to more material per glove being disposed of. A glove made of cheap ingredients that fails more frequently will also negatively affect a businesses’ sustainability efforts by increasing the overall quantity of gloves used. Generating more waste will in turn increase disposal costs and the amount of waste that ultimately is put into landfills.
Cannabis plants can be prickly, sticky, and sometimes relatively tough on disposable gloves. A better glove is needed. A better glove, not necessarily a thicker glove. Additionally, different stages in producing cannabis products, from growing to harvesting to processing to tinctures to edibles, can require different gloves. A single glove most likely will not live up to the performance and safety requirements at the various stages. The best way to know you’re buying a quality glove is to purchase from reputable suppliers with specific and ongoing quality control procedures in place. This ensures glove quality, performance and protection, all of which directly mitigate risk to your product and business.
Trustworthy and knowledgeable glove suppliers will be able to help arrange glove trials through which you will be able to determine the best glove to use for every task. Purchasing too heavy of a glove for a task increases costs unnecessarily. Investing the time into ensuring you are sourcing the correct gloves will protect your product, workers and budget.
Disposable gloves are not indestructible. Some tasks, like harvesting and trimming, do require a thicker glove even when they are made of the highest quality. But simply put, a thicker glove spec is not always the answer to a sticky situation.
Eagle Protect, the world’s only glove and PPE supplier to be a Certified B Corporation®. Eagle Protect supplies disposable gloves and protective clothing to the food processing, food service, cannabis, medical and dentistry sectors in both the U.S. and New Zealand.
Eagle is implementing Delta Zero, a proprietary third-party glove analysis program to ensure a range of their gloves are of consistent high-quality, and free from harmful contaminants, toxins and pathogens. The Delta Zero program mitigates the risk of product contamination and recall due to the unknown use of dirty gloves.
After establishing Eagle Protect as an industry leader in New Zealand, where the company supplies approximately 80% of the primary food processing industry, Steve Ardagh relocated with his family to the U.S. in January 2016 and launched Eagle Protect PBC. Steve brought with him Eagle’s values of providing products that are certified food safe, ethically sourced and environmentally better. Steve is driven to keep consumers safe, one high-quality disposable glove at a time, and has been instrumental in developing Eagle’s proprietary third-party Delta Zero program glove testing program.
Member Blog: Evaporation is Costing the Cannabis Industry Millions. Here’s Everything You Need to Know.
As cannabis ages, many of its therapeutic components degrade and transform into less effective compounds. Here’s everything you need to know about cannabis degradation, how the compounds are affected, and a few ways to restore products that have seen better days.
How long do cannabis and hemp buds stay fresh?
Cannabis is made up of various naturally occurring chemical compounds, including cannabinoids, terpenes, flavonoids, lipids, and fibers. Just like all organic materials, these components break down and degrade over time.
Think about your favorite fruits. Fresh oranges for example, will eventually rot as they age and their molecular compounds break down. When exposed to light, their outer layers start to spoil in a process known as photodegradation that causes discoloration and loss of flavor, vitamins, and proteins.
Further enzymatic chemical reactions occur and transform water, vitamins, and other molecules into different formations that can degrade even further with added heat or moisture loss. The oranges will lose their zesty aroma, sweet flavor and will be more susceptible to microbes, which will eventually cause the fruit to spoil. That said, dried fruits can be stored in a pantry for much longer before they’re no longer safe to eat as the “conditioning” or “curing” process can make them shelf-stable for up to a year.
Like dried fruits, cannabis and hemp undergo a curing process that helps to equalize the moisture content among the buds. This process reduces the risk of mold and spoilage while keeping the flower fresh, flavorful, and potent. Following this process correctly can keep cannabis and hemp flower “fresh” for 3-6 months or longer if stored properly. However, even with the most disciplined processes and practitioners, eventually, all organic materials begin to break down from exposure to the elements.
Much like our dried oranges example above, cannabis and hemp stored in suboptimal conditions are more susceptible to “rot” and can lose everything that makes them special. Light and temperature can contribute to the degradation of these natural features, but the biggest factor in terpene degradation is moisture content – or the lack of it. Moisture helps to preserve these compounds for prolonged periods of time.
What happens to the terpene profile and moisture content of cannabis and hemp over time?
On average, 12% of all cannabis and hemp biomass is moisture. As that moisture evaporates, it takes valuable terpenes and other essential oils with it leading to dry and brittle plant matter. Terpenes are naturally occurring chemical compounds found in plants that are responsible for their unique aromas and flavors. They also add and help preserve moisture. Cannabis and hemp contain an unparalleled profile of 100+ different terpene isolates that all evaporate at different rates based on temperature and humidity.
While live terpenes smell most potent during the flowering phase, terpene degradation starts immediately after the buds are cut from the stem. This happens because terpene oils, especially the most pleasant ones found in tiny amounts, tend to have low-temperature tolerance thresholds and evaporation levels. Once these terpenes have evaporated they will not be replaced by the living plant after cutting. This is why curing and storage is so important post-harvest. The curing stage allows for the terpene profile to mature but, even during this process terpene potency will continue to weaken.
When flower is stored below 50-55% RH (Relative Humidity) it leads to the fragile cannabinoid and terpene-rich trichomes to become brittle and break off. This lowers potency and causes the terpenes to evaporate with the remaining moisture content. The longer cannabis and hemp are stored in these conditions, the less potent, flavorful, and aromatic they become. On the other hand, going over 65% RH is in the danger zone of where mold can thrive and wreck a harvest with bona fide rot.
Who is affected by terpene and moisture degradation?
In short, terpene degradation affects everyone. Growers see the most significant profit loss as evaporation can take pounds and pounds of cannabis away from their final numbers in as little as 14 days. Dispensaries also see a loss of profit as the flowers dry during transit and while sitting on the shelf, making it so that they paid for more than what they actually ended up selling to their customers.
In the end, consumers are eventually the ones left holding the bag. Not only is the flower at its highest degradation stage by the time it gets into their hands but loss in weight can turn a pre-packaged 3.5g eighth into 3.15 grams or less.
The example in the graphic below outlines how moisture degradation affects both yields and profit.
How can you stop your cannabis from drying out?
Using orange peels and pieces of bread for rehydration used to be the norm in what feels like ages ago. In the more recent past, cultivators, dispensaries, and consumers alike have relied heavily on moisture-control products like Boveda brand or Boost brand humidity packs. These products can help to keep moisture in the 50-65% optimal range. However, they do have their drawbacks.
The humidity packs have a definite shelf life and in extremely dry conditions, they can’t keep up with the rate of evaporation – almost to the point where many claim they don’t actually work. While they can help maintain some moisture content, they can’t rehydrate buds that have gone below the 50% humidity threshold. This makes them closer to a moisture stabilizer of sorts than a moisture booster or replenisher. Beyond using the aforementioned “ancient ways” to rehydrate abused cannabis flower, these packs have been the only option available to the industry.
However, recently a new product on the market called the “Cure-Egg” has been making waves and has been proving invaluable when it comes to product reclamation and preservation. The Cure-Egg’s patented ergonomic design and utility works in a similar way to the hydration packs but boasts the ability to rapidly rehydrate biomass in a few days’ time while staying under the mold growth threshold.
In addition to its ability to quickly rehydrate cannabis and hemp flower it also comes with the added benefit of terpene infusion to counteract terpene loss. Oftentimes beautiful-looking flower is grown but it somehow misses the mark when it comes to the nose. This product could be a game-changer for farms, dispensaries or anyone sitting on older product that has lost its zing from prolonged storage or errors in production.
Users are quickly finding out that they can take less than premium flower destined for the world of “affordable pre-rolls” and easily turn them into a flavor and aroma-packed desirable product that doesn’t have to come at a discounted price. Time will tell if this product will become the next industry staple but one thing is for certain, innovative new products are definitely shaking things up.
Peak Supply Co provides the first true all in one solution providing terpenes, vape cartridges, package design and production, helping clients progress from starting creative to finished product.
Committee Blog: Don’t Wipe Out – Riding the Wave of Cannabis Standardization
Staying ahead of the quick rollout of state, national, and international cannabis regulations is a huge and complex challenge. The patchwork of more than three dozen (and counting) different state regulatory regimes remains disconnected as cannabis remains federally illegal as a Schedule I drug. The framework of regulations and standards that guides allied sectors such as Foods, Dietary Supplements, Pharmaceuticals, or Tobacco is just beginning to take shape. Where do you look for guidance? How do you choose how to invest, how to design your operation, and how to produce?
There are a number of considerations and industry-relevant organizations to become familiar with when looking to conduct business in the cannabis space. In doing so, businesses can operate more successfully and mitigate risk. Risk should not be underestimated – many cultivation and manufacturing facilities will fall seriously short of the expectations of agencies such as the Federal Food and Drug Administration (FDA), Occupational Safety and Health Administration(OSHA), the Environmental Protection Agency (EPA), if risk, both business and consumer health and safety, is not considered upfront. Market pressures will build quickly as brand-savvy companies with significant capital and operational expertise enter the field. One way to avoid wiping out – is looking to national and international standards, guidelines and regulations already in place. For a comprehensive list of relevant standards regulatory bodies, refer to our recent blog post here.
As standards continue to be developed by industry experts for adoption by regulators, businesses can be empowered to run their operations with more predictability and reliability knowing that they demonstrate compliance with approved industry guidelines. Laboratories will have access to valid test methods and reference materials. Equipment specifications will require globally accepted certification marks or labels (such as CE or UL) which ensures safety and longevity of operations.
What is the cost of not adhering to established standards?
A simple batch loss can easily exceed tens of thousands of dollars of lost product, let alone the damage to your brand, labor costs surrounding rework, and relationships with your clients. Crop and batch losses due to subpar equipment sourcing, processes that are not validated, and worse – risk of fines or losing your license are all symptoms of a business lacking standardization.
Credible standards – they are data-driven, go through a rigorous and transparentprocess. In most cases, these standards were developed with input and guidance from federal and international regulatory agencies.
Here is the snapshot today. Read it fast, because it may be out of date next month:
The NCIA has several relevant committees sharing best practices and developing guidance for our industry.
ASTM International, one of the oldest and most recognized Standards Development Organizations (SDO) formed Committee D37 on Cannabis in 2017, and has already approved over 25 standards that provide guidance on key areas such as:
AOAC International, another 100+ year old SDO has a Cannabis Analytical Science Program (CASP) where cannabis standards and methods have also been developed – principally in the area of product standard method performance requirements (SMPRs) and methods of analysis such as:
You don’t have to put your business at risk of wiping out! The resources that NCIA Committees continue to create have your best interest in mind. Stay tuned to ensure you have the latest resources and guidance!
Video: NCIA Today – September 10, 2021
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday on Facebook for NCIA Today Live.
Committee Blog: Managing Your Workforce During Fall Harvest
It’s that time of year again, the busy fall harvest season. While indoor growers can harvest year-round, the fall can create significant workforce challenges, especially for outdoor producers and processors. Here are three tips to make sure you are ready to go for the fall harvest!
Plan ahead! If you have not already thought through your fall harvest plan, you will want to figure this out immediately. Most cannabis companies need additional workers during harvest season, unless their grow schedule is structured where they are harvesting on a regular basis, depending mostly – if not entirely – on their permanent employees for harvesting, de-leafing, trimming, etc. However, given the increased demand for workers by outdoor growers, even in a normal year, the demand for labor often exceeds the supply, placing added pressure on anyone competing for this talent.
Every fall we receive a rash of calls from producers, who failed to plan ahead, requesting workers that same week, if not the same day. Unfortunately, by this time, nearly all the available labor, especially those with experience and skill, have already been scheduled and committed elsewhere. In rare cases, staffing companies might be able to provide workers if they had another client in the area back out, at the last minute due to a heavily damaged crop or not being ready for harvest at the time they originally projected, however, cannabis growers shouldn’t count on this. A good rule of thumb is to provide at least 2-3 weeks’ notice, minimum, to request your harvest crews during the fall, and the further in advance the better. Many cannabis companies that have struggled in the past with worker shortages during the fall have started locking in their fall staffing as early as spring.
COVID-19 has created an even more significant labor shortage. Before 2020, we saw thousands of workers coming into the United States from other countries to take their ‘vacations’ working on unregulated market farms doing harvest work and trimming and getting paid cash. Due to COVID-19 travel restrictions keeping much of this seasonal labor out of the U.S., the regulated and unregulated market were increasingly forced to compete for the same domestic talent with the unregulated market often winning this battle as they were paying tax-free cash at higher wages, given their relatively lower costs compared to the regulated market. Thus, many cannabis companies ran into situations last year where, unless they were able to pay premium rates for harvest workers, their in-house staff were forced to work a ton of overtime to make up for the shortfall. We hope that in 2021 this won’t be the case, however with COVID-19 numbers rising again, this is something that cannabis companies should plan and budget for just in case.
If your cannabis operations are relatively remote or not within an easily commutable distance from a large population center, you may need to go the extra mile to make it easier for workers and staffing companies to assist you. If nothing else it is essential to take an inventory of nearby resources and be prepared to communicate them easily. For example, if you can’t provide lodging to your seasonal workers, you will want to create a list of local hotels/motels, RV Parks, and campgrounds that offer services. Many of these workers are accustomed to traveling from site to site in RV’s, camping, etc. Create a list of grocery stores, gas stations, and other retail establishments the crews may need to access. If there aren’t any lodging options close to your farm, and you have the means, you might want to consider buying some land nearby and building some basic lodging. We have even seen some cannabis companies open a cafe or restaurant close to their farm when there weren’t any good or healthy options in the area so that workers would have a place to go on their lunch breaks or after work. The more of a positive experience you can provide to these workers, even though they are seasonal, the better. Production will typically be quicker, you may gain a customer and even an ambassador for your product, and that worker may be excited to return for years to come, which will keep you from having to deal with some of the labor shortage issues other producers struggle with.
Have a contingency plan. Many of you already know this, but you should always have a plan B and plan C, maybe even a plan D. 2020 and 21 have definitely been years of fires, hot temperatures, and floods. If air quality is deemed especially poor in your area, due to smoke, many harvest workers won’t be able to work outdoors as worker’s compensation policies won’t cover workers laboring in such conditions and few people will want to. We’ve also noticed an uptick in state governments coming out with restrictions and safety guidelines during times of poor air quality or extreme heat. If you’re in an area that has a fire season, you’ll want to have a plan for workers during this time. Perhaps you will need to have them work indoors when the air quality is poor, focusing on things like bucking, trimming, and packaging; then back outside to continue the harvest when conditions allow.
Given the increase in COVID-19 cases, you’ll definitely want to have SOPs and contingency plans in place in the event your crew is exposed to COVID-19. To be proactive, you should also take precautions to protect workers from exposure before it occurs including having masks and hand sanitizer supplies on hand in abundance. Contingency plans could include having a partnership with a staffing firm to provide workers for your fall harvest or offering overtime and bonus incentives for your regular workers to pick up the slack, if necessary. If you’re working with a staffing company, most crews of harvest workers will have a team lead who is there to assist with any HR-related issues that might come up (i.e., sick workers, injury, etc.). However, if for some reason there is not a team lead assigned for your crew, you’ll want to make sure that the workers have a point of contact at your company for any HR-related issues that come up.
Last but not least, if you’re looking for great, experienced harvest talent, especially when it comes to trimming, you will need to budget for the kind of talent you want. With the most talented crews, you’ll likely need to pay some form of a retainer upfront as many of them have trimmed more seasons than adult-use has been around and have not always been paid for their work. Last year, we typically saw trimmers making $15-$25/hour. This was before bonuses. Companies who want to incentivize things like speed and quality increasingly offer bonuses for the quantity and quality of output. This has resulted in the best workers making nearly $50/hour!
The Godmother of Cannabis Industry Recruiting, Kara Bradford, MBA, MM, is Co-Founder & CEO of Viridian Staffing. Founded in 2013 as the first professional, full-service staffing, recruiting & HR consulting firm in the Cannabis industry, Viridian Staffing has led the way in providing temporary, temp to hire, direct placement & HR outsourcing services. Kara has been an HR professional, specializing in Talent Acquisition, Talent Management, Workforce Planning, Employer Branding, Compliance, Federal/State Employment Laws, and Organizational Design for over 15 years. Her career has spanned multiple Fortune 100 companies & start-ups in a wide variety of industries. More importantly, she has more experience recruiting in the cannabis industry than any other Recruiter globally. Kara has an MBA in Human Resources & Organizational Behavior and is LinkedIn Recruiter Certified. Kara is active in many organizations, including NCIA, The Cannabis Alliance, Women of Weed, etc., and was the Founding Chair of the NCIA’s Human Resources Committee.
Committee Blog: Safety – Terpene Limits in Cannabis Manufacturing
by NCIA’s Cannabis Manufacturing Committee
From the taste of your fruits and vegetables to the aroma that travels from trees and flowers in bloom, terpenes are the organic compounds that play a vital role in the flavors and smells we experience daily. Terpenes are common ingredients that are used in many industries such as food, cosmetics, tobacco, and pharmaceuticals. Therefore, the information on the safety of terpenes in these industries can be used for determining the safe use of terpenes in a wide range of product applications.
Terpenes are currently being introduced into a variety of adult-use and medical cannabis preparations across the U.S. and hemp-CBD markets around the world for both flavor and functional purposes. Much research has been and still is being conducted on the therapeutic effects of terpenes and their synergistic effects when used in conjunction with cannabinoids. The strong research background supports the benefits of infusing terpenes into cannabis extracts, both in reference to endogenous terpenes found naturally in the plant and those terpenes that have been added back into preparations from other botanical sources. Therefore, almost every manufactured cannabis product contains a percentage of terpenes. However, the clear lack of understanding of the full potential of the terpene profiles, and misuse of these volatile, fragile compounds bring up various misconceptions regarding terpene safety versus their efficacy in creating an elevated user experience.
As terpenes make a significant contribution to the quality of cannabis products, which varies from one consumption method to the other, it is highly important to utilize the most advanced knowledge regarding terpenes in order to maximize their potential while maintaining product safety.
Inhalation
Bioavailability
Terpenes are a naturally occurring constituent in resin cannabis extracts. Terpenes have been incorporated into vaporizable formulations in the form of pre-filled cartridges. These terpene formulations are designed to produce specific effects based on the creator’s intentions, or the terpenes are simply reintroduced to mimic the source material since the extracts are often refined to the point that they have little or no taste (i.e., lost their original essence).
Inhalation of these volatile molecules leads to quick absorption of the compounds via the lungs and directly into the bloodstream. The high solubility of monoterpenes in the blood and hydrophobic medium suggests a high respiratory uptake and accumulation in fat tissues (Falk 1990a). This was confirmed by recent studies of uptake and elimination of a-pinene and 3-carene in humans (Falk 1990b, Falk 1991b). The bioavailability range via inhalation of alpha pinene, camphor and menthol has been studied and reported to be 54-76% (Kohlert 2000) which is relatively high compared to oral bioavailability. Therefore, terpenes via inhalation are an efficient route of administration which allows low dosage of terpenes.
General Guidelines
When examining terpene infusion, the points below should be taken into consideration:
From accumulated knowledge within the cannabis industry and considering terpenes’ natural ratios in cannabis (1 – 5%) and data on safety, it is suggested not to exceed a concentration of 10% in the final product.
As terpenes are volatile molecules, the final terpene-infused product is recommended to be used only with adjustable temperature vaporizers such that the oil will not be heated to high temperatures to prevent unnecessary heat-derived toxin production.
Aerosol testing for the final product is recommended to test for heavy metals leaching into the vaporizable product.
Terpenes are recommended to be used within their defined expiration date labeled on the suppliers’ bottle. The final vaporizable product must be tested in a certified lab under the requirements of the authority having jurisdiction to make sure it meets all quality and regulatory requirements.
Terpene Limits
By using position papers such as the ANEC Position Paper on E-cigarettes and e-liquids, suggestions regarding terpene limits can be made for cannabis inhalable products. It is important to mention that the final decision on added terpene amounts and determination of product safety is the sole responsibility of the manufacturer based on their assessments, internal procedures, and local regulations.
The following numbers are the suggested infusion percentage of specific terpenes in E-liquid. This suggestion was calculated by using DNEL (Derived No Effect Level) levels in inhalation as well as frequency of puffs a day.
On average, E-liquid users take 500 puffs a day (ANEC position paper), whereas cannabis users take around 9 puffs a day. Therefore, the suggested terpene limit percentage in cannabis inhalables may be higher than E-liquid due to the lower daily usage.
Substance
Suggested Terpene Limit in E-liquid According to ANEC
Linalool
0.34%
Menthol
7.8%
Beta Pinene
0.7%
Alpha-Terpineol
1.1%
Geranyl Acetate
7.4%
Carvone
0.14%
Ingestion
Bioavailability
Terpene presence in foods of plant origin and in herbs with functional properties has led to further exploration of their bioavailability following oral consumption. The research on terpenes’ bioavailability is commonly done through medicinal plants since they are subjected to digestion within the mouth and stomach before accessing the small intestine. Bioavailability through oral ingestion is affected by mechanical actions, enzymatic actions, and different pH conditions, Transformations into usually more water-soluble and more readily excreted in the urine compounds affect this process as well. These transformations appear mainly in the liver, but also in the gastrointestinal tissue, lungs, kidneys, brain, and blood (Furtado 2017) Several studies have shown that terpenes consumed orally are absorbed through the gastrointestinal tract and are bioavailable as soon as 0.5 h after intake, reaching their peaks between 2 and 4 h (Furtado 2017, Papada 2018).
General guidelines
Terpenes are commonly used as flavor ingredients and their usage guidelines are clear when used in foods, such as the FEMA values table below. However, when terpenes are used for therapeutic purposes, the suggested dose in food is not fully researched, and the balance between flavor and functionality is still yet to be determined. Basing the dosing according to flavor guidelines is a good place to start. Upper limits should be defined by safety limits such as the DNEL values table found below. It is important to use natural, Food Grade terpenes that are backed up with certificates of analysis and are safe to ingest.
Terpene Limits
The Flavor and Extract Manufacturers Association of the United States (FEMA) has developed an innovative program utilizing the GRAS concept to evaluate the safety of flavoring substances. The FEMA GRAS program began in 1959 with a survey of the flavor industry to identify flavor ingredients then in use and to provide estimates of the amounts of these substances used to manufacture flavors. This database provides information on all ingredients that have been determined to be “generally recognized as safe” under conditions of intended use as flavor ingredients. According to The FEMA GRAS assessment – aromatic terpenes used as flavor ingredients are ubiquitous throughout the food chain; and therefore, not surprising that they serve as effective flavoring ingredients.
The below table presents the average maximum usage levels of terpenes used as flavors in several product types as provided by FEMA.
Product
Lime Terpenes
Average Max (ppm)
Orange Terpenes
Average Max (ppm)
Grapefruit Terpenes
Average Max (ppm)
Limonene Average Max (ppm)
Myrcene Average Max (ppm)
Linalool Average Max (ppm)
Beverages, Nonalcoholic
750
1,550
500
31
4.4
7
Beverages, Alcoholic
1,000
1,000
1,000
NA
NA
50
Chewing Gum
20,000
20,000
20,000
2300
NA
200
Hard Candy
5,000
5,000
5,000
49
13
400
Soft Candy
5,000
5,000
5,000
NA
NA
10
ppm is an abbreviation for “parts per million” and it also can be expressed as milligrams per liter (mg/L) or in a percentage where 10,000 ppm is 1%. For example, the maximum suggested infusion for orange terpenes in chewing gum is 2%, where the suggested infusion in hard candy is 0.5%.
*Point of thought*: Since terpenes in the cannabis industry are mostly infused in cannabis-based products, the frequency of usage of such products is lower than regular food products.
Additional safety data can be gathered from reviewing reports from governmental agencies such as European Chemicals Agency (ECHA). The following data about the DNEL (Derived No Effect Level) in the category of General Population was collected from ECHA website. These numbers may be used as a guideline for maximum daily intake via oral administration:
Substance
DNEL (Derived No Effect Level)
Calculated Daily DNEL for 70kg subject (mg/day)
Linalool
0.2 mg/kg bw/day
14
Menthol
4.7 mg/kg bw/day
329
Beta Pinene
0.3 mg/kg bw/day
21
Alpha-Terpineol
no hazard identified
no hazard identified
Geranyl Acetate
8.9 mg/kg bw/day
623
Carvone
69.4 µg/kg bw/day
4,858
For example, a 70 kg person consumes a 1g cookie that is infused with 1% Pineapple Express terpene formulation and Linalool constitutes 10% of the formulation, then there will be overall 10mg of terpene formulation in the cookie, out of the 10mg there is 0.1mg of Linalool which doesn’t exceed the DNEL level.
Topical
Bioavailability
Terpenes are lipophilic, small, and nonpolar molecules that are considered to be the largest group of natural fragrances. Terpenes can easily penetrate the skin and enhance transdermal delivery (Aqil 2007) and can potentially aid cannabinoid transdermal delivery. Terpenes are also known to have several dermal benefits including anti-inflammatory (Maurya 2014), wound healing (d’Alessio 2014) and anti-acne (Yuangang 2010). Terpene bioavailability via transdermal delivery ranges between 3-12% depending on the type of terpene, medium and application (Brain 2007, Gilpin 2010). Following topical application, maximum plasma levels of terpenes are reached within 10 minutes (Kohlert 2000).
General guidelines
While some terpenes are known as dermal irritants, the severity of the irritation may depend on their concentration. These should not be used on any inflammatory or allergic skin condition and should always be appropriately diluted. The oxidation of terpenes can increase risk of causing skin reactions because the oxides and peroxides formed are more reactive. This can be seen with (+)-limonene, δ-3-carene and α-pinene and arise due to the formation of oxidation products, some of which are more sensitizing than the parent compound. For this reason, proper storage of terpenes is required to preserve their effectiveness and decrease the risk of adverse reactions.
The table below lists commonly known allergenic terpenes, and for this reason, should be declared on the packaging or in the information leaflet if the concentration of these allergenic fragrances is higher than the permissible concentration of 0.01% in shower gels and baths (rinse-off products) and higher than 0.001% in body oils, massage oils and creams (leave-on products)
Allergenic Terpenes
Citral
Citronellol
Eugenol
Farnesol
Geraniol
Isoeugenol
D-Limonene
Linalool
Terpene Limits
The International Fragrance Association (IFRA) defines which compounds represent a potential allergy risk and determines their maximum concentration to produce safe cosmetic products. IFRA also issues recommendations for the safe use of fragrance ingredients, which are published in the IFRA Code of Practice and its guidelines. In the below table, there can be found specific infusion recommendations for specific terpenes.
Substance Name
Restriction Limits in the Finished Product (%) according to IFRA:
Lip Products
Body Lotion, Cream & Oils
Hand Sanitizer & Hand Cream
Body Wash
Citronellol
2.20%
12.00%
3.20%
24.00%
Citral
0.11%
0.60%
0.15%
1.20%
Farnesol
0.21%
1.20%
0.29%
2.30%
Eugenol
0.45%
2.50%
0.64%
4.90%
Geraniol
0.85%
4.70%
1.20%
9.20%
Alpha Bisabolol
0.42%
2.40%
0.60%
4.60%
Testing of terpenes in dermal products can be achieved safely by making a sample product with terpene formulation infused at 0.5% to 5% concentrations in petrolatum. Patch testing can be a useful technique to detect and avoid skin reactions.
As the cannabis industry scales and more states legalize for adult-use, the demand for consumable cannabis products increases. To keep up with the demand, manufacturing facilities have to not only scale, but stay ahead of the curve as far as conserving resources, constantly innovating facility design to meet regulations and third-party compliance, e.g., ASTM Cannabis Certification Program and Good Manufacturing Practices (GMP).
Here are a few areas of environmental, product quality, and worker impacts to consider when planning for the future of your manufacturing facility.
Energy
As with any manufacturing facility, cannabis manufacturers pull power from shared electrical grids, meaning there is increasing pressure to reduce energy usage as they scale their operations. There are many design strategies for facilities to consider, whether they retrofit or build new, to reduce environmental impacts and position their operation for a sustainable future. One example for the cannabis industry is to recapture and repurpose heat generated from the processing equipment used for manufacturing products. Another example is incorporating climate control technologies to reduce the amount of energy required in extreme environments. More and more energy companies are starting to incentivize cannabis operations to reduce their energy usage and offer guidance on how to do so. Furthermore, regulators are beginning to enforce energy usage requirements for manufacturing facilities.
There are many ways to reduce your facility’s energy usage from efficient lighting to control system maintenance and making sure your odor and emissions control systems are designed to your facility’s specific emission load and mechanical design. Whenever possible, installing cloud-based smart systems with the ability to capture energy usage and system maintenance data will help to improve your facility’s energy efficiency. More areas of impact and best management practice guidance can be found in the NCIA’s Environmental Sustainability Report, released in October 2020.
Air Quality
Manufacturers of Infused Products, or MIPs, are Colorado’s manufacturing facilities, which is one example of a market segment facing regulatory enforcements for air quality control. The large-volume use of solvents for extraction leads regulators to monitor the volatile organic compounds (VOCs) emitted from the use of these solvents, as VOCs are contributors to low-level ozone formation, poor air quality, and public health issues. These solvents are also potential contributors to water contamination if wastewater is not discharged properly from the facility and are consequently on the radar for regulators to tightly monitor. The EPA states “the main concern indoors is the potential for VOCs to adversely impact the health of people that are exposed. While VOCs can also be a health concern outdoors, EPA regulates VOCs outdoors mainly because of their ability to create photochemical smog (or low-level ozone) under certain conditions.”
Luckily, smart technology such as cloud-based platforms using the Industrial Internet of Things (IIoT) for control equipment is increasingly being installed in manufacturing facilities, allowing for the collection and monitoring of facility data, such as emissions. Furthermore, the same technologies that are used for odor mitigation, such as molecular filtration systems (aka carbon scrubbers) also remove VOCs in the facilities’ air space from both the products and the solvents in the facility. The ability to prove this removal to regulators with real-time data will help reduce facilities’ contributions to VOC emissions when regulators require reporting.
Worker Health & Safety
In addition to environmental impacts from VOCs, along with other emissions inside of a cannabis manufacturing facility, there is also the issue of indoor air quality and worker health. There is not a lot known about the potential impacts of the processing of cannabis on indoor air quality. What is known is that terpenoids that are emitted in the cultivation and processing of cannabis can contribute, through a series of atmospheric reactions, to the production of known air pollutants. Terpenoids, such as monoterpenes (C10H16) and sesquiterpenes (C15 H24), are highly reactive compounds with atmospheric lifetimes ranging from seconds to hours. These compounds on their own are non-toxic. However, the atmospheric reactions they participate in can result in a range of low volatility products that create aerosols or ozone. These two compounds have clear implications for indoor air quality and thus occupational health.
Uncertainty remains as to the extent of the formation of these pollutants since previous studies have been hampered by a lack of reliable data and are predicated on conditions and practices prevalent in illicit operations. Given that the methods employed in these illegal operations are driven by different needs, the methods currently used in legalized facilities may produce vastly different conditions. This speaks to the urgent need for rigorous new scientific research and evaluation to aid this new industry and relevant regulatory bodies in assessing the current occupational environmental threats of marijuana processing and provide solutions to mitigate those impacts.
Quality by Design
The competitive licensing process, regulatory requirements, and lack of knowledge on scaled cannabis production has contributed to facilities that were not designed to properly ensure control of environments, the process flow that minimizes risks of cross-contamination and the adequate storage for the many types of raw materials, work in process, and final products. The result is an inefficient operation that may have been spared significant Capital Expenses (CapEx), but requires significant Operational Expenses (OpEx) to maintain.
The concept of Quality by Design (QbD) was first developed by the quality pioneer Dr. Joseph Juran.It posits that quality should be designed into a product and recognizes that most quality issues are a result of poor initial design. It is supported by long-standing evidence that increased testing does not necessarily improve product quality.
Currently, there is an overarching emphasis on final product testing as the determinant of whether cannabis products are safe for release into the marketplace. This has pitted labs, regulators, and producers against each other, leading to accounts of lab shopping, exclusive contracts, and other nefarious activities. This approach does not serve anyone, and is in stark contrast with the concept of Quality by Design.
Transitioning from a Quality Control Approach to Quality by Design
Transitioning from our current processes into a proactive Quality by Design approach requires an understanding of Good Manufacturing Practices or GMPs.The first set of GMPs for finished pharmaceuticals were established for enforcement by the United States FDA in the Federal Register in 1963. Since then, GMPs have been created for and adopted globally for nearly all products that can be consumed or applied for human and veterinary use –- categorized under dietary supplements, food, cosmetics, and of course, pharmaceuticals. GMPs represent the minimum sanitary and processing requirements to ensure safe and consistent products. Consider the road map and cross-over between major FDA cGMP (current Good Manufacturing Practices) by industry sector.
GMP regulations are written by the FDA and adopted in the code of federal regulations under the authority given to the FDA by various laws. Almost all of these regulations are performance standards. There are dozens to potentially thousands of substantially different products regulated under each category of GMP standards. It is up to each manufacturer to ensure their unique processes meet the GMP standards. In this way the regulations are flexible yet force all manufacturers to operate with a minimum level of rigor that includes programs that proactively mitigate risks that can lead to product failures and cannot be controlled simply through final product testing. They take a holistic approach to facility operations, starting with the facility culture, design, layout, placement, and selection of equipment, along with ongoing training, supplier qualification, environmental monitoring, and executive commitment.
The current status quo of manufacturing facility design has been built on a quality control approach. Most facility owners believe cannabis will be assigned a cGMP category based on the final product type and have been trying to build compliant facilities under this assumption. Some States have incorporated by reference the federal GMP regulations. However the competitive application process and focus on final product safety via testing has created an environment in which facility owners feel compelled to do as much if not more than the other facilities in order to meet regulator expectations and all focus is on the final product, not the process. In order to win the application, businesses want to look ‘better’ than the other applicants so they tack on as many hazard controls as they can think of. This has given regulators unrealistic expectations as to the best practices required to operate responsibly. Instead of quantifying hazards by collecting data and making informed decisions as to how to best eliminate risks, facilities are simply copying hazard controls they have seen used in other industries with hopes they meet the regulators’ expectations of what a GMP facility looks like. This culture of adding as many hazard controls as possible is a quality control approach focused on the final product, not a Quality by Design approach focused on the process. As a result, envelope in an envelope style facilities in which the manufacturing process is entombed in layers of energy and resource consuming hazard controls are commonplace.
There are other ways of designing compliant facilities; ways that could be more efficient and use less energy and resources. With a Quality by Design approach, these options become explorable. With quantified hazards the process can be approached holistically and significant design questions asked, e.g.. how much energy goes into the outer envelope and how much product quality/safety is gained from that?
In the Southwest deserts, there is consideration given to opening canopy/atrium style extraction spaces that would use less energy while providing the safety of unconstrained open atmosphere ventilation. The important question to ask when considering alternative facility designs is – How much energy/resources goes into containing human contamination versus the likelihood and the actual consequences? Perhaps manufacturing facility workers can wear long sleeves, pants, and hair restraints and that will be sufficient versus wearing a full body gown?
Quantification of Risks
Quantifying the processes and proven hazards of the cannabis manufacturing industry will allow for more informed design and operational choices versus prescriptive solutions that may potentially over-mitigate the risks and possibly introduce additional risks. Moreover, this data would provide validation that the design and operational choices made are in fact the best practices. Instead of scrambling to follow each standard in a quality control approach, Quality by Design considers the whole process, how the 10 principles of GMP standards apply and focuses on finding the most efficient strategies to eliminate risks.
A Way Forward
Training is vital for the manufacturers to know the next steps and why they are critical for the future of cannabis extraction and post-processing. Knowledge is required to put valuable technology, tools, and equipment in place with the least operational downtime. Further, it is necessary to accept guidance from verified knowledgeable support, such as from a vetted supplier. Lastly, risk mitigation education is necessary to highlight the reality of long-term savings and sustainability versus the common short-sighted tendency for immediate cost savings, which can result in significant consequences for a business such as TerrAscend Canada’s 2021 recall of infused gummies due to mold contamination.
Committee Blog: Cannabis Auto Insurance – Best Practices, Claims Processes, and More!
by Jesse Parenti, Programs Director of Nine Points Strategies, Stephanie Bozzuto of Cannabis Connect Insurance Services, Matthew Johnson, Vice President of QuadScore Risk Services, and Helkin Berg, CEO of Strimo Members of NCIA’s Risk Management and Insurance Committee
If your company has an “auto exposure” such as delivery, distribution, or employees simply running company errands, your company needs a robust risk management program.
Managing a fleet is essential to ensure drivers are given the necessary tools to be safe and responsible while on the open road. Implementing a vehicle maintenance program is also a necessary component of fleet management.
Proper automotive risk management starts with driver guidelines on how you hire your drivers and what is required to qualify to be employed by your organization. Best practices on age, driving experience, motor vehicle reports, and training make for a great start. Even though your employees may think they are only delivering or transporting cannabis, they are commercial drivers, and they need to take that duty very seriously. Morbid as it may sound, death is not the worst thing that can happen…
Here are some best practices:
Drivers should ideally be at least 25 years old with five years of driving experience. For the best insurance pricing and experience, you should hire drivers that are between 35-55 years old. Note that commercial drivers over a certain age will face increased pricing from insurance companies much like their youthful counterparts. Keep that 22-year-old with four speeding tickets off your policy, even if they are the business owner’s relative!
Only hire drivers with squeaky clean driving records. Experienced drivers with a clean record are more likely to continue to drive this way when working for your organization. If you hire drivers with violations or points on their records, expect this level of driving to continue when working for you. Drivers don’t often change driving habits just because of their employment status. Note that age and driving records directly affect commercial auto rates.
Set up an Employee Pull Notice Program or Motor Vehicle Reportpull program through the DMV. A “pull program” ensures that you are aware of your drivers’ violations in real-time, whether the violations happen during or outside of work. Suppose a driver is out of compliance based on your insurance carrier guidelines. In that case, your insurer can deny a claim based on your driver’s record or violations that happened while employed by your organization, even if the violation occurred outside of work. If you are not monitoring your drivers, you would never be aware of these concerns or problems. Secured motor vehicle records (MVR) storage is also crucial to protect your employee’s personal information. Make sure you backup all your records in the cloud or a protected server network. Identity theft can happen quickly, and unprotected data will create cyber liability exposures if not protected correctly.
Take cell phone, texting, or distracted driving violations very seriously. Distracted driving is the #1 cause of death and accidents since 2012 and is increasing yearly as time goes on. The NHTSA reports that an estimated 1.6 million accidents in 2020 were caused by distracted drivers too busy eating, texting, smoking, etc., to keep their eyes on the road. Suppose one of your drivers has a distracted driving violation. In that case, you can rectify it by having them take a distracted driver class to understand the gravity of such infractions. Then put that driver on probation with consistent monitoring of their MVR for 18-24 months to ensure they don’t continue to have these violations.
Onboarding driver training must include how to drive defensively, what to do if you are held up for a robbery, and what to do if you are pulled over by the police. This training makes a world of difference when or if any of these take place. In addition to robust onboarding training, training needs to continue over time as safety never stops, and good practices always need to be reinforced.
Here are some examples of claims to give you an idea of what could happen to you:
A large distribution company hires a driver and has them complete some training in a large, empty box truck. This training helps the driver understand how to drive and brake with a(n empty) truck. The next day the driver goes out with a full load of cannabis flower and concentrates in their truck. The driver notices that the truck is handling differently than when it was empty. A wind picks up just as the truck is taking a turn. The truck rolls onto its side and totals the box on the truck, damaging the product inside. The company could have avoided this accident had they trained their driver in real-life experiences, with actual loads.
A driver is delivering cannabis to a customer’s home. While en route, the driver accidentally hits a pedestrian crossing a sidewalk on a poorly lit street. The driver did nothing wrong, but the accident still caused permanent disability to the man who was the head of the household, and the insurance company paid out over $7M. If the insured didn’t have the $10M in auto liability, they would have had to close their doors.
You and your employees can do everything right, but accidents can and will still happen. That is why culture, safety, and accountability are essential when working in the transportation and delivery space. If you don’t take this seriously, your company will pay the price. To avoid these costly mistakes, work with your legal team, insurance providers, and software vendors to ensure ideal policies, training requirements, and data storage.
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Nine Point Strategies is a national risk management firm specializing in all forms of commercial auto for the cannabis industry. We can help you with anything you need concerning hiring, training and maintaining all your required driver compliance you need to be a safe and profitable organization. Contact us to discuss how we can better protect your cannabis auto exposures.
QuadScore Insurance Services is the nation’s leading insurance provider for marijuana businesses. QuadScore offers comprehensive property & casualty solutions as well as a full suite of risk management services for large cannabis companies around the United States.
The Strimo™ team is comprised of industry veterans. We are both practitioners in cannabis and long-time experts in software. We have supported companies in rapid growth and deeply understand that your software needs to grow with you. Strimo is the leading enterprise cannabis SaaS platform.
Cannabis Connect Insurance is a specialty division of Bozzuto Insurance, an insurance firm serving businesses since 1978 and part of Acrisure, LLC the 4th largest insurance brokerage in the United States. We specialize in connecting cannabis business owners with custom built insurance programs.Cannabis Connect was founded on basic principles of honesty, integrity, and trust. We are actively involved in the cannabis industry on both a local and state level. We are involved in multiple cannabis associations and continue to remain informed on policy forms and legislative changes to ensure our clients best interests come first.
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