Good Manufacturing Practices (GMP) are minimum requirements to ensure that products are created in a manner that ensures they are of consistent quality and safe for their intended use. If a product is found to be produced in a facility that does not meet GMPs, they can be considered adulterated and unsafe. In the U.S., the U.S. Food & Drug Administration (FDA) regulates the manufacture and sale of food and beverages, dietary supplements, pharmaceutical products, and cosmetics by requiring adherence to GMPs. The “c” in cGMP stands for current, meaning that how companies conform to GMPs must continually evolve with the development of new scientific research and industry best practices. Today, the two terms are used interchangeably. While cannabis is not recognized as a legal product at the federal level, federal legalization will inevitably result in the requirement for cannabis producers to conform to cGMPs.
cGMPs can be broken into six major sections (1) Management Commitment, (2) Risk Management, (3) Quality Management Systems, (4) Site & Facility Management, (5) Product Controls, and (6) Staff Training (Figure 1).
Figure 1 Major elements of any system that follows Good Manufacturing Practices
Why are cGMPs important?
cGMPs are important for every industry to ensure manufacturers are producing safe products. A site that isn’t following the minimum requirements for cGMPs in their specific industry is putting the basic well-being of consumers around the world at risk, which the FDA terms adulterated. cGMPs provide assurance that steps within the manufacturing process result in passing final product testing. Final product testing alone is not enough to ensure the safety of consumers. In most cases, final product testing is completed on a small sample batch, so that manufacturers are not wasting the final product on sampling and testing. For example, if the manufacturer is producing 1 million dietary supplements, the manufacturer might only test 100 tablets from that batch. This means that if cGMPs are not being followed and there is no consistency in the safety of producing that product, then some of the products may be safe for consumption, while others may not. This results in product recalls or withdrawals, damage to brand reputation, and lawsuits. A recent study by the Denver Department of Health found that 80% of cannabis products on dispensary shelves failed testing despite passing final batch testing prior to sale.
What do cGMPs include?
Every industry regulated by the FDA has its own guidelines for cGMPs, which are found within Title 21 of the Code of Federal Regulations. Unique differences between cGMP requirements for each industry exist. If your company has multiple product lines that fall into any of these different industries, understanding how these differences will impact you are critical. Figure 2 provides a high-level overview of the major GMP topics that are required by industry.
Figure 2 Summary table of major FDA cGMP regulations by industry sector
Industry Type
Location of primary GMPs within 21 CFR
Food & Edibles
21 CFR 117
Dietary Supplements
21 CFR 111
Pharmaceutical
21 CFR 211
Cosmetics
See Draft Guidance for Cosmetic Good Manufacturing Practices
Figure 3 Table of the major industry types regulated by the FDA and where one can find the major cGMP requirements
Not all GMP topics are referenced in the primary section of the CFRs, which can make it difficult for people who are new to GMPs to ensure they are appropriately prepared. For example, the food and beverage cGMPs (21 CFR 117) does not include packaging and labeling controls, whereas the pharmaceutical cGMPs (21 CFR 211) does include packaging and labeling controls. 21 CFR 101 is home to packaging and labeling statues for the food and beverage industry.
Each sector regulated by the FDA has overlap which contributes to talent acquisition/recruitment from other industries.
THIRD-PARTY cGMP AUDITS
What are Third-Party cGMP Audits?
A third-party cGMP audit is a systematic independent and documented activity in which objective evidence is gathered and assessed to determine if the site’s cGMP system is appropriate and effective. In the 1990’s third-party GMP audits were like an inspection you would receive from the FDA or local health department. This means there was a heavy focus on the building itself and what was happening on the production line during the time of the audit. Nowadays, cGMP audits typically include much more than what is required from the Code of Federal Regulations (CFR). Examples of this include extra requirements for Hazard Analysis Critical Control Points (HACCP) and a much heavier review of documentation to ensure best practices are being followed all the time and not just on the audit day.
Benefits of Using an Experienced and Accredited Certification Body
One thing to keep in mind when considering a third-party cGMP audit is whether or not the audit is accredited. Certification Bodies are accredited (approved) by an Accreditation Body, to ensure their internal procedures and audit processes follow strict guidelines for different audit standards. If approved, the CB gets accredited to that specific audit standard. This along with direct oversight of the audit Scheme Owner and the Accreditation Body ensure that the Certification Body has qualified auditors and that the entire audit process goes through several quality checks before it becomes “final.” In the U.S., the three major accreditation bodies approved to do this are:
WHY SHOULD MY COMPANY RECEIVE A 3rd PARTY cGMP AUDIT?
Unlike the food & beverage, dietary supplement, pharmaceutical, and cosmetics industries, cannabis is federally illegal in the United States. This means there are no federal regulations for cGMPs in the cannabis industry. However, some states, such as Florida, have taken the initiative and implemented requirements to have all cannabis facilities become audited to a cGMP standard before they can receive their license to begin manufacturing.
As the cannabis industry continues to evolve, retailers and others downstream in the supply chain will demand that cannabis manufacturers provide evidence of a certain level of quality and safety in their products. An attestation or certificate from a third-party demonstrating that your facility meets cGMP requirements is an internationally recognized way to provide that evidence and establish trust. Globally, third-party cGMP audits are crucial to maintaining product safety and quality by providing a third set of eyes to verify what is working and what is not. Besides regulatory requirements and customers requiring your facility to get a third-party cGMP audit, there are numerous other benefits to receiving a cGMP audit. Some of these benefits include the following:
Reduction in failed product testing
Improvement of product safety
Improvement of product quality and consistency
Eliminating potential risks and possible recalls
Marketing advantages over competitors who are not audited by a third-party
Improvement to consumer confidence and an increase in brand loyalty
ROADMAP TO cGMP CERTIFICATION
Management Commitment
It is essential to the entire cGMP system to have commitment from top-down. Without this, your site will not receive the resources (e.g. people, equipment, tools, budgets) it needs to implement an effective cGMP system. The culture of an organization requires everyone to practice what is lectured. Simply; Say what you do, do what you say.
Start Preparing Early
Be realistically courteous to the timeline by generating an internal analysis. Using the scheme, the audit will be against, create a list of programs you currently have, and which are missing. Working towards a better score early will provide greater long-term value.
The very first thing you need to do before you start making major changes to your facility or procedures is to identify which GMP standard or standards you intend to meet. With this established, you can select a Certification Body and obtain a copy of the audit form or checklist that they will use to assess you.
Assess Your Current Level of Conformance
Establish an audit team and conduct a thorough assessment of your current organization. If this is new to your organization and staff, it is beneficial to work with a GMP expert that has experience in both cannabis and the cGMP program you are going to be audited against. Review your entire system against the audit checklist and highlight or markup items your site is already doing. This allows you to focus on the things you are missing and close any “gaps”.
Implementation and Teamwork
The preparation of an audit should never rest on the shoulders of one person. Your site should establish a multidisciplinary/interdepartmental team to implement the various tasks based on the findings from your initial assessment. Collaboration is key to successfully preparing for a cGMP audit, especially when timelines set by upper management are very stringent.
Training
Training is essential in preparing for your cGMP audit and business in general. This helps close the gaps between what your safety and quality department has developed and what your front-line employees are applying. All employees should understand what cGMPs are and how it applies to and benefits their daily activities.
Establish Your Internal Audit Program
Conducting internal audits is an effective way to not only prepare for your cGMP audit but to continually improve your organization. Breaking down your entire audit checklist into department or process-specific sections, you can establish the frequency of auditing these bite-sized sections. Should they be reviewed annually, semiannually, quarterly, monthly, or continuously throughout day-to-day operations? Some things, like reviewing your suppliers, may only need to be done annually, while things such as pre-operational inspections should be performed daily. Always use the actual audit checklist to observe your documents and facility to see if there are any gaps. Whenever possible, the person or team conducting the internal audit should never review their own work. Establishing any issues or non-conformances should be noted, evaluated, corrected, and closed out.
Schedule Your Third-Party Audit
A third-party mock audit is the closest thing you can get to an actual audit. This is where a third-party company would come in and evaluate your site to the specific cGMP standards and give a formal report over any deficiencies found during the assessment. This is a great way to test your preparedness before the actual audit.
Address Non-Conformances and Celebrate!
Your auditor will almost certainly identify areas where you are not fully compliant, known as non-conformances. Depending on your level of preparedness, you will hopefully have only a few Minors, but non-conformances can be classified as Major or Critical. You will work with your auditor to establish actions and a timeline to effectively resolve these non-conformances and provide follow up evidence of their closure. After successfully closing out your non-conformances, you will be rewarded with a certificate or attestation. Sit back, relax, celebrate! With a cGMP system in place, the established intervals to audit your system will ensure you have the tools and knowledge to maintain your cGMP status!
NCIA Committees: Spring 2020 Update On Achievements And Projects
NCIA’s member-driven committees are an opportunity for individuals from NCIA member companies to get directly involved in specific industry issues and sectors. These volunteer-driven efforts engage members’ expertise and passion to drill down in those areas to effect change, provide professional development opportunities, and develop best practices and guidelines that will shape the future of our industry.
We recently checked in with these various committees to learn more about what they’re up to and what projects they’re working on this term. Get updated on their activities below.
Risk Management & Insurance Committee (RMIC)
The RMIC has recently contributed to several NCIA white papers and educational webinars. They are currently working on an insurance manual. The committee has divided into sub-committees responsible for managing white papers, webinars, and the manual.
Scientific Advisory Committee (SAC)
SAC’s vision is to disseminate educational materials to NCIA members on scientific topics in the cannabis industry and to advise on other NCIA initiatives, ensuring that any formal recommendations produced are scientifically sound, sustainable, and legitimate. This term, SAC published a blog discussing why everyone should know about the endocannabinoid system.
SAC is working on other pieces addressing topics such as the recent vape illnesses from a physician’s perspective, indica versus sativa designation, how cannabis can help the opioid crisis, common scientific myths confusing the industry, and budtender and consumer education about the endocannabinoid system.
SAC is also developing a webinar that discusses what should be on a label, how to read a label, and how to associate what’s on a label with either statements on efficacy or marketing/branding.
Cannabis Cultivation Committee (CCC)
The committee has recorded two podcast episodes for NCIA’s Cannabis Industry Voice Podcast. The first was a Cultivation Best Practices Roundtable, hosted by Noni Goldman of the CCC. In that episode, Cody Hitchcock of Smokey’s 420 and James Cunningham of Fog City Farms were interviewed to shed light on their different growing styles and techniques, focusing on the ways that they implement sustainability in their operations.
The second soon-to-be-released interview was with High Times’ new CEO Stormy Simon, and was hosted by CCC Chair Mo Phenix and member Noni Goldman. This interview explored Stormy’s history and how she got to where she is today, as well as what High Times is up to, and where Stormy sees the industry going.
More podcasts to come in the next couple of months from the CCC! Keep an eye out for an episode or two on regenerative agriculture.
Packaging & Labeling Committee (PLC)
The PLC sub-committees have each contributed to a blog or presentation up to this date. The Sustainability sub-committee has worked with Kaitlin Urso and team in regards to their White Paper. A panel discussion proposal has been submitted for future NCIA conferences.
NCIA’s Northeast Cannabis Business Conference in Boston (February 2020) Panel Discussion on the Future of Cannabis Packaging went great!
State Regulations Committee (SRC)
NCIA’s State Regulations Committee has continued to produce content to help educate and inform members on the latest developments in the world of state regulation of cannabis. As the industry’s law and regulations change quickly across the country, the SRC members stay ahead of the curve and share their insight in a variety of forms. These projects include panel presentations at NCIA conventions, published blogs, and interactive webinars. In this quarter, they published three blogs, produced one webinar, presented on two panels, and participated in an NCIA summit.
As the committee strives to keep everyone updated on burgeoning legal topics, the SRC committee presented a webinar on Michigan, a newly regulated market. The webinar provided information on this key Midwestern state, “Michigan’s Adult-Use Market – What Comes Next?”
Conferences:
SRC members also traveled from across the country to share their expertise on panel sessions at NCIA’s Northeast Cannabis Business Summit in February 2020 in Boston.
The Social Equity Sub-Committee leaders, Erin Fay, Chris Jackson, and Margeaux Bruner provided helpful insight during their session, “What You Need To Know For Winning Applications and Successful Operations That Promote Diversity and Inclusion.”
Sean Donahoe and Gabriel Cross of the SRC’s Interstate Commerce Sub-Committee presented on the issues surrounding interstate commerce and strategies for preparing for this anticipated change in the cannabis industry.
Also, SRC members participated in the NCIA’s summit about tackling the illicit market.
The State Regulations Committee is excited about its work and continues to stay knowledgeable about the ever-changing legal and regulatory landscape. Their projected work includes a webinar on the Illinois adult-use market and a wide range of written projects. Stay tuned!
Banking & Financial Services Committee (BFSC)
The committee’s vision is to provide the NCIA member base with current and actionable information related to Banking and Financial Services in the State legal cannabis industry.
They have implemented monthly newsletters for the member base and have been extremely active in response to the proposed federal legislation regarding banking and the cannabis industry.
Human Resources Committee (HRC)
The Committee’s vision is to provide best practices in all disciplines of Human Resources to NCIA members. They have worked on a couple of blogs this year around the recent reduction in force trend and will be releasing a few blogs providing some recommendations for how cannabis employers can navigate CV-19 when it comes to their workforces.
The HR Committee is working on a very exciting case study. They are looking forward to releasing the first few modules of it this summer!
Marketing & Advertising Committee (MAC)
The MAC coalesces the talents of 20 of the industry’s top-tier marketing and communications professionals around three focus areas: Education, Advertising Access and 2020 political goals. The committee uses their personal, professional and business skills and networks to help build a responsible, legal cannabis industry. The committee is producing best practices, webinars, workshops and social media campaigns to aggregate and generate support from NCIA members, the public, media, government and business leaders.
The MAC Education Subcommittee has focused its energies on developing a Speakers/Expert Directory with a goal to launch by year-end.
The 2020 Subcommittee has created its first infographic covering Oklahoma’s 2020 ballot initiatives; infographics for additional states with legalization initiatives on the ballot this year will follow soon.
The Advertising Access Subcommittee is adding more states (as they come online) to their overarching list of “Do’s and Don’ts” for compliant cannabis advertising. Those are pending editing and legal review and will be published on the NCIA website soon thereafter.
The committee is also working on upcoming webinars including “Advertising Best Practices.”
Cannabis Manufacturing Committee (CMC)
The Cannabis Manufacturing Committee is focusing on reviewing existing business practices and state regulations of concentrates, topicals, vaporizers, and edibles ensuring the manufacturing sector is helping shape its destiny.
They are also working on their second publication, “Facts About Current Good Manufacturing Practices (cGMPs) And Their Role In The Cannabis Industry” which will be a resource for essential businesses.
In addition to the work the CMC is carrying out, they are collaborating with other committees to help create an NCIA resource library.
The CMC Testing sub-committee is working on writing blogs about “Positives of Testing” (from the operator’s view), and “Nomenclature: Cannabis Nomenclature Register” for publication.
Retail Committee (RC)
Members of the Retail Committee attended NCIA’s Northeast Cannabis Business Conference in Boston in February 2020 to participate in an educational panel on Retail 101. The committee has an upcoming webinar in April: “Retail: Tips and Best Practices” which will include 4 panelists that are currently license holders or working in licensed dispensaries in 3 different states (CO, CA, WA), and will also address some tips and best practices for the current CV-19 climate.
Facilities Design Committee (FDC)
Committee member David Vaillancourt of The GMP Collective appeared on NCIA’s weekly podcast, NCIA’s Cannabis Industry Voice, in February 2020 to discuss GMPs (Good Manufacturing Practices) in an episode titled “Revolutionizing How Cannabis Producers Achieve Success.”
Committee Blog: Working With Your Local Government as a Cannabis Processor
If you want to open and operate a regulated cannabis business, there’s no avoiding local government. Every state grants different amounts of power to towns and cities, with some allowing localities to ban cannabis businesses outright, and others simply giving them the same power over time, place, and manner of operations that they have for other businesses. But since cannabis can be a hot-button issue, a proposal to open a cannabis facility often attracts far more attention than opening any other type of business.
To help NCIA members and other cannabis entrepreneurs navigate local government, we at the State Regulations Committee have launched a series of blog posts, with each taking a close look at a different type of cannabis license. Last month, we published our first post, “Working With Your Local Government as a Cannabis Cultivator.”
Today, we’re moving one step down the supply chain and talking about cannabis processors (sometimes also called manufacturers or infusers). Since state programs vary widely, with some licensing cannabis processors independently and others combining processing with cultivation (or even a single vertically integrated license), we will be focusing on the operations rather than the licenses themselves. If you’re seeking a combined license, be sure to read the blog for each activity your business will be allowed to engage in — while there is some overlap, there are also some major distinctions in how different operations can most effectively interact with municipal officials, and you will need to be well-versed in answering questions unique to each phase of your business.
ECONOMIC IMPACT
Like the three rules of real estate being “location, location, location,” the three rules of economic development are “jobs, jobs, jobs.” When proposing a new business in a town or city, local officials are going to want to know how many jobs it will bring, as employment can put money directly into the hands of their constituents and have ripple effects throughout the local economy.
In addition to the raw number of jobs your business will create, it’s also important to highlight the qualifications for those positions. Processing facilities often need to have highly qualified individuals with PhDs or other certifications to manage production processes, and officials will be happy to see the salaries that come along with such positions. Entry-level jobs, such as working production lines, are also worth talking about — even though they have lower salaries than someone with a doctorate, it’s usually much easier to hire local talent for these positions. Any commitment to hiring locally as much as possible is usually a big plus to politicians. Additionally, be sure to mention how much these new employees will add to the local economy, through all the typical living spending they will do.
Setting up and maintaining your facility will also have a major economic impact, especially in smaller communities. If you’re constructing a building to suit, get estimates from your contractors about the jobs your project is supporting, and let officials know how much you’re investing in the build-out. If you’re moving into an existing space, you’ll almost certainly be doing significant renovations to meet the state’s strict safety standards, which is also worth talking about. Towns and cities that are struggling economically will often be very happy to see unused commercial space become occupied, especially if those properties are being improved. If possible, also identify local contractors (like electricians) or suppliers (like lumberyards) you will use for construction.
Finally, there are direct payments to the local government. While officials love to see any sort of economic development, they still have services to provide and a budget to balance, and will want to know what the municipality will be receiving directly. Calculate your building’s expected property taxes, both on an annual basis and 5-10 years out — since cannabis licenses are usually very difficult to re-locate, emphasize that you are in it for the long haul. Be sure to understand your states’ tax structure, and know whether there are any local taxes that the town will receive, or if towns that host cannabis licensees receive any portion of state tax revenue.
PUBLIC SAFETY
The top public safety issue in local officials’ minds when it comes to cannabis processing is almost surely to be butane fires and explosions. This is for good reason — while hydrocarbon extractions can be very safe and effective when done properly, when done improperly they can be incredibly dangerous. City councilors or fire chiefs may have read some of the many headlines about butane-related accidents over the past few years, and it’s up to you to address these concerns directly and honestly. Of course, before diving into these conversations, check to see if the municipality or county has already banned such extraction methods, as some state laws allow local control in this area.
If you’re not planning to perform hydrocarbon extractions at your facility, be sure to tell that to your local officials. They may not realize that there are many other types of cannabis extracts that do not present such safety risks, such as CO2 extracts (carbon dioxide is not flammable, and similar processes are used for decaffeinating coffee) or bubble hash (which uses only cold water). If you have zero interest in ever using hydrocarbons in your facility, putting this agreement into writing may make local officials even more comfortable.
If you do plan to perform hydrocarbon extractions, educating officials on the risks and safety measures is paramount. Most states have extensive regulations on how extraction labs must be set up, which you can email or print out for meetings to demonstrate what you’ll need to comply with. Since the vast majority of butane-related accidents have come from illegal labs with makeshift equipment, show officials the equipment you’ll be using, emphasizing the price and professional quality. The manufacturers may even have fact sheets or other information you can share to demonstrate the safety of their equipment. As you educate officials on your methods and equipment, be sure to keep open lines of communication with the fire chief and building inspector, who will have the most expertise and authority on this aspect of public safety.
Beyond the processing-specific concerns about fires and explosions, all cannabis businesses will have to deal with officials’ concerns about theft. These may be particularly acute for processors since your end products have a much higher value-to-weight ratio than raw cannabis plants. To address these concerns, explain the security requirements in state laws and regulations, and any areas where you are going above and beyond what is mandated. Things like external security cameras and floodlights can both protect your own business and your neighboring community, making a cannabis business a net gain to public safety.
COMMUNITY IMPACT
Once economic development and public safety have been considered, local officials will wonder about the broader community impact of your cannabis business in areas like odor or traffic. This is an easy topic for processors, as they arguably have the smallest impact of any type of cannabis operation.
Processors are generally much smaller than cultivation facilities, and since they’re not full of growing cannabis plants, they also have much less odor to address. Unlike a dispensary or retailer, processors are not open to the public, so town planners won’t need to worry about an influx of traffic. Once you explain how you’ll be operating, local officials should be able to rest easy knowing that to an outside observer, your business will be virtually indistinguishable from a commercial kitchen or light manufacturing facility. If there are still concerns about odor, inform them that modern odor mitigation technology can completely eliminate any odor from leaving your facility.
GOING FURTHER
Once you’ve explained what you’d like to do and how you think your facility would fit into the local community, the conversation isn’t over — it’s just beginning! If the local government needs more time to consider your proposal, then it’s good to keep in close touch and address any additional concerns they have as they arise. If the local officials are already comfortable with your business and are welcoming it into their community (or if your state law doesn’t give local officials the power to stop you from opening up), it’s still great to build that relationship and keep an open dialogue.
Elected officials usually need to know a little bit about everything, but don’t have the bandwidth or in-house expertise to go very deep on most subjects. That’s where you, someone working full-time in the cannabis industry, come in — you almost certainly know more about state laws and regulations than they do, which is a great opportunity for you to serve as a resource. If you hear about changes in the law or proposed bills that could impact their town or city, send over news articles or bill text to help keep them informed.
Once you’re open, it’s always great to offer tours of your facility. This will help officials gain first-hand knowledge of what you actually do, and in municipalities where legal cannabis is new, it can help dispel negative stereotypes and demonstrate how professional you and the rest of the regulated cannabis industry are.
Be sure to stay tuned for future installments in this series, where we will be addressing other cannabis license types. Our next blog will focus on retail.
Committee Blog: California Social Consumption Leads the Way
It was January 28, 2020: It’s a full house at the Berkeley City Council meeting, with comprehensive changes to the city’s marijuana regulations on tonight’s agenda. The biggest issue, with supporters of both sides attending, is the vote to consider legalizing cannabis consumption at specially designated licensed dispensaries.
The proposal to allow smoking, vaporizing, and consumption of edible goods is supported on one side by a phalanx of marijuana advocates and dispensary operators, and on the other side, it’s the city Health Department and Berkeley’s famously NIMBY neighbors. This conflict runs deep; cannabis users want dignified, legal facilities where they can gather and use marijuana, and several dispensary neighbors and the health department want this idea squashed, full stop.
Fact is, people have long gathered together to share cannabis, as shown by an extensive recorded history of use. This spans from ancient Sumerians, who built huts and vaporized cannabis on burning coals inside, to underground marijuana smoke-ins in the 70s and 80s, to now, where cities are licensing legal cannabis consumption facilities for adults.
California is helping lead the United States consumption lounge movement. For example, California’s Bureau of Cannabis Control (BCC) regulations (Section 5025) explicitly contemplate the possibility of consumption lounges, stating that “this section shall not be interpreted to prohibit cannabis consumption on the premises of a licensed retailer or licensed microbusiness authorized to engage in retail sales,” as long as they are locally licensed and approved.
The state law also created Temporary Cannabis Event Licenses, where onsite consumption is allowed at festivals like the High Times Cannabis Cup and the Emerald Cup. Yes, with city or county and state permission, it is possible to throw your cannabis dream event, but there are a limited number of locations in only a handful of places that allow these uses (including my hometown, Oakland). This makes it hard to get these licenses, and the costly and complicated regulations are hard to meet once you have one. Anyone hosting a Temporary Cannabis Event can expect to interact closely with the BCC regulators, who will surely attend to ensure compliance.
Cannabis consumption facilities are nothing new in California. They have long existed, ever since Dennis Peron opened his first dispensary in San Francisco in the early-1990s. His famous location on Market Street was five stories high, literally, as each floor contained tables, couches, and chairs where patrons could hang out and consume cannabis. When the Compassionate Use Act of 1996 passed, collective dispensaries started opening across the state, despite federal illegality and the occasional raid because of it (Dennis was raided by the feds and forced to close in 1998).
I opened my first cannabis consumption lounge at Berkeley Patients Group in 1999, which was long before it was legal to do so. This was under the cover of tolerance provided by Proposition 215; after all, not even dispensaries were actually made legal by this groundbreaking initiative. That didn’t happen until the state legislature passed the aptly named SB 420 in [year], after which most cities grandfathered in their existing cannabis dispensaries. (Not all, though. Some municipalities used this transition as an excuse to ban dispensaries, or to close existing ones, during long periods of regulatory contemplation.) Berkeley allowed onsite consumption until the early 2010s, when the local regulatory processes changed. Hence, the City Council vote tonight to decide the fate of onsite consumption here once again.
Now, I own Magnolia Wellness dispensary in Oakland, where local regulations have allowed cannabis consumption at specifically licensed dispensaries since 2017. Magnolia’s Dab Bar and Vapor Lounge was the first legal consumption lounge in the East Bay. We have café style tables, a gorgeous full, copper top bar, glass dab rigs with e-nails, Vapexhale and Volcano vaporizers, and a variety of tasting events where people can try samples. Unfortunately, Oakland’s dispensary law only allows vaping, edibles, and topicals, limiting smoking to additionally permitted outdoor patios, none of which currently exist. (Full disclosure: I also co-own Hi Fidelity dispensary in Berkeley, too.)
San Francisco, on the other hand, has more than a dozen shops where cannabis smoking, vaping, and edibles consumption are all allowed. SPARC, one of the first lounges in the city, has tasteful tables and chairs right in the main dispensary, where volcano vaporizers can be used onsite. Vapor Room, a few blocks away, is a smaller neighborhood joint, with a handful of seats for people to sit and enjoy smoking or vaping. According to owner Martin Olive, it was a costly HVAC system, at a near six-figure expense, that allowed his facility to host its cannabis smoking patrons. Moe Greens, the latest licensed lounge to open in the city, took four long years to get licensed, but is now a beautiful facility, with cushy booths for smoking and a counter service dab bar with top-of-the-line e-nails and dab rigs for patrons to use.
West Hollywood is the biggest news on the California consumption lounge scene, as the city recently licensed 16 facilities for on-site consumption. Half of these facilities will allow retail sales and consumption, while the others are allowed to sell only single-use items, designed to be consumed café style, while patrons are on-site. This plan has been controversial, though, because in issuing these licenses, the city took permits away from several of the long-existing dispensaries, re-issuing them to new operators. The ensuing lawsuits and legal battles will surely play out through 2020.
There is another big problem in West Hollywood: the state law does not match up with their rather forward-looking ideas for cannabis cafes. For example, cannabis cannot be blended into café food and served on the spot, as the city imagined when creating this law; Cannabis can only be sold pre-packaged and tested, per BCC regulations. Furthermore, state-licensed cannabis businesses are not allowed to sell anything but cannabis products (and a shortlist of branded items like mugs, lighters, and pipes). In other words, they can’t sell non-infused foods or beverages like coffee, soda, or tea (or, since we are talking West Hollywood, kombucha and smoothies).
Until state law changes, the plan is stuck in limbo, with facilities looking for creative workarounds to allow food and beverage service.
So, despite the West Hollywood ordinance passing in late 2018, only one facility has opened there, and even this has hit roadblocks. In fact, they recently re-branded after only a short time in business, from Lowell’s Café to the Cannabis Café, after a regulatory crackdown hit the Lowell’s brand hard. It remains to be seen when the other 15 cannabis lounges will open there.
Back in Berkeley, staff from the Health, Planning, Police and Economic development offices joined forces with the Berkeley Cannabis Commission to present the City Council with a comprehensive plan to update the city’s cannabis ordinance. Diverging opinions meant that the agenda contained competing proposals on several of the ten proposed ordinance changes, with the Cannabis Commission leading efforts to create progressive changes, and the Health Commission stuck on the old trope, “we need more research.”
Elizabeth Greene, City of Berkeley Senior Planner, explained to Council that these proposals have been in development since 2017, with the goal of expanding the rules to protect the entire cannabis supply chain, from seed to sale. This includes development of two new license types, cannabis consumption lounges and non-retail dispensary licenses.
“State law allows for consumption lounges as part of a retail license, as these are the only facilities open to the public,” Greene says. “Currently, consumption lounges are not permitted in the City of Berkeley.” Her presentation made it clear that city staff recommended cannabis lounges be permitted, despite the worries of the Health Commission, whose representative commented that “legalization is new,” despite that cannabis sales have been regulated by the city for around 20 years.
Long time senior advocate, and ICANN dispensary owner, Sue Taylor spoke eloquently in support of the proposal to allow lounges. “Seniors need a place to learn about cannabis, how to use it and dosing, and you could do that in a vape lounge. I can’t go into their homes, but I can provide this education at a lounge,” says Taylor. “It’s not like a bar; at a bar, you just get sicker. A vape lounge helps people.”
Ultimately, the City Council agreed. By 11:30 PM, Mayor Jesse Arreguín called the vote, with the Council unanimously approving the entire proposal. Supporters filled the room with cheers, and long-time advocates like myself reflected on the fact that, yes, hard work and determination do pay off. Together, we may just end prohibition, once and for all — and have some fun, too.
Video: Episode #2 of NCIA Today – #NECannaBizCon recap, Safe Vaping, Illicit Market Summit, and more!
Tune in to episode #2 of our new monthly video series: NCIA Today!
Off the top, Bethany looks back at #NECannaBizCon in Boston, MA this past month, our first trade show of 2020.
In our policy update, Bethany discusses “The Key to Consumer Safety: Displacing the Illicit Cannabis Market – Recommendations for Safe Vaping,” a recent report produced by our Policy Council and informed by a variety of subject experts, with NCIA Director of Public Policy Andrew Kline.
Oour annual in-person member policy and government relations update event series, the Cannabis Caucuses, are only days away in March. See where your caucus is happening!
2019 was an incredible year of growth for the cannabis industry; mergers and acquisitions, multi-state expansion, new state licensing, and an explosion of new jobs created. Operationally, more businesses began adopting best practices from the retail and hospitality industries and implemented technology systems to connect all facets of business for stronger insights. There have been focused efforts on hiring, engagement, and training to improve employee retention. Plus, the momentum for widespread acceptance of cannabis legalization is truly unstoppable.
These favorable advancements haven’t come without a variety of challenges, including continued banking access stalls, compliance hurdles, and environmental tragedies. While most legal markets in the nation are struggling to keep up with the demand for qualified talent, select California enterprises laid off an average of 30% of their workforce due to numerous obstacles. Most notably, the vaping crisis shed light on the need forconsistent regulation and testing. Additionally, lack of access to capital has significantly slowed down business growth nationwide.
According to a survey Wurk sent to leading enterprise U.S. cannabis businesses, the largest human resource challenge in 2019 was managing rapid growth and scaling the workforce to meet demand. Managers felt pressure to ensure hiring plans were strategic, yet could meet the constant change of the industry, and many learned that employee turnover was directly related to a lack of training and effective performance management practices.
2019 tested the resiliency, patience, and commitment of many in the industry. As 2020 begins, consider this: this is a passionate community that has the experience, determination and gumption to persevere no matter the roadblocks. As pioneers in cannabis HR, leaders are responsible for providing the right support and resources to the people of the industry, so momentum continues.
In 2020, recognize these 9 trends in cannabis Human Capital Management:
Employee Training & Performance Management
While more than half of the US has some form of cannabis legislation in place, the industry still lacks a standardized education and training program for employees in each vertical. Compliance and risk management programs have been developed by vendors like Cannabis Trainers, and states such as Massachusetts are mandating that operators take part in these sessions. A portion of marijuana businesses have created internal training programs and will invite producers in-house to offer product education to budtenders.
Although there’s been progress in this category, the industry is still a long way away from providing consistent, reliable education to employees. In the coming year, HR leaders will have self-developed or outsourced courses on compliance, at a minimum. More and more operations will expand their employee development to include product and plant specifics, responsible selling best practices, and even positive psychology coaching.
Reducing employee turnover will remain a focus for cannabis HR leaders in 2020. Operators will take a fresh look at how performance management is handled and whether it aligns with company culture. One approach to replace the annual review will be “continuous performance management,” where frequent one-on-ones are scheduled to improve communication, address issues fast, and ensure employees are engaged in the organization. HRIS platforms can support these conversations with people data so managers can combine the human interaction with trending evidence in order to spot at-risk employees before they jump ship.
Employee Experience
People are a business’s largest asset, which means not only can they be the most substantial expense, they are also the biggest revenue generator. The Employee Experience (what people encounter, observe or feel over the course of their employee journey) will begin to be a part of cannabis HR strategy into the new year. By gathering insights about this unique workforce through surveys, interviews, and conversational documentation, cannabis businesses will start to define an Employee Experience that parallels the company’s mission, vision, and values.
Forbes recently included “tending” people as an HR trend to be aware of in 2020. The idea is to cultivate employees and support their growth, rather than manage them. This intentional relationship-building practice evokes a sense of community and wellbeing. Harvard Business Review notes that tending goes a long way in mitigating the “workers as machines” phenomenon. If crucial talent feels they are just a cog in the Multi-State Operator machine or an unseen hourly inventory manager, the likelihood of them voluntarily departing the business will rise.
Standardization vs Customization
Recognition must be given to leadership in 2019 for leaning on other industries for processes to effectively manage a mostly hourly workforce. While cannabis businesses are still in start-up mode, there are labor tasks and procedures that mirror those in the fast food, hospitality, and agricultural segments that can help shape standards. There’s no need to reinvent the wheel, but it’s obvious that the intricacies involved with the seed-to-sale process require customization.
In 2020, HR will balance enforcing best practices and the need for agile, tailored decision-making. When it comes to talent acquisition, for example, a hiring manager may draft a job description that includes vital soft skills, like reliability, communication skills, organization, adaptability, and leadership. In new cannabis markets, following a cookie-cutter model won’t generate the talent pool needed to build a business.
Being innovative with tried and true methods will allow leadership to solve bottlenecks today, not in the future.
Data-Driven Decision Making
According to Deloitte’s 2018 Human Capital Trends report, 85% of companies see people analytics as a high priority, but only 42% believe they are either ‘very ready’ or ‘ready’ to meet expectations. Over the years, cannabis executives have taken action to implement a technology foundation that supports compliance, streamlines processes, and reduces cost. Yet, there is still a lot of runway left to cover.
The focus will shift from technology as a ‘nice to have’ to technology as a major transformational driver in the years to come. Organizations will recognize the benefit of all-in-one solutions that enable better business decisions based on data. Human Resources will remain on budget by comparing actual spend per department, location, and cost center to predicted payroll spend. Managers will rely on people analytics to identify what elements impact turnover and employee engagement. Even in the most fast-paced, ever-changing industry, HR professionals will have the ability to predict future trends for talent, finance, and workforce planning.
Managing Rapid Growth
Massive expansion has created immense pressure for all positions in the cannabis vertical, notably for HR professionals. With most companies growing through M&A activity, not organically, the structure of business is evolving faster than most can realistically manage. This surge will only continue in 2020, demanding the expertise of the HR department to effectively discern new opportunities and build the workforce of the future.
According to the PwC CEO survey, 77% of CEOs believe the biggest threat to their business is the lack of availability of key skills. With CEOs so concerned about talent, cannabis HR managers will shift focus to increasing productivity of their existing workforce as opposed to hiring additional staff. Data will help inform HR professionals on who the top performers are and what conditions are supporting their success.
Outsourced HR Solutions
Employee relationship management should be made a priority for every business, but in-house cannabis human resources may not be an option for all. Small businesses may wait until they reach 40 or even 75 employees before bringing on a full-time HR manager. Constantly evolving labor laws and the risks involved with cannabis payroll will drive some business owners to outsource HR services to cannabis-specific partners.
From employment taxes to employee benefits to the Fair Labor Standards Act (FLSA), there are many aspects of workforce management that owners may not have the resources or experience to maintain. In an industry already strapped for financial support, one mistake in adhering to the work and pay rules for a specific municipality can amount to a hefty fine. The risk involved with managing cannabis people is high and this liability will drive licensees to depend on cannabis-friendly HR and Payroll partners.
Diversity and Inclusion
Key states had strict requirements surrounding diversity initiatives in the cannabis application process in 2019 and this focus will only grow in the decade to come. HR departments will develop stronger D&I plans with innovative ways to recruit, to communicate the importance of unique perspectives and to support peers across the organization.
Sadly, the industry saw a decline in the number of women execs at the end of the decade. Vangst found that of the 38.5% of employees that self-identified as females in the industry, only 17.6% of these women held a “Director” or “Executive” role. This compares to 82.4% for self-identified males.
As momentum gains, the industry will continue to attract like-minded, experienced professionals from mainstream, big box corporations. This past year, KushCo Holdings appointed former Nestle and Cetera Financial Group HR Executive, Rhiana Barr, as their Chief People Officer and Harborside brought on a female HR leader from big pharma. This trend will progress as the industry continues to prove legitimacy through international acceptance and financial opportunity.
Corporate Social Responsibility
Giving back to the community has been a challenging push for cannabis businesses as many non-profit organizations and volunteer programs are still hesitant to partner with plant-touching operations. Thankfully, this trend is taking a turn in a positive direction. Take for example, Cresco Labs, who launched the SEED initiative in 2019 to “ensure that all members of our society have the skills, knowledge and opportunity to work in and own businesses in this industry.” Companies all over the nation are contributing to those most affected by the War on Drugs by donating to non-profits like Last Prisoner Project or collaborating on expungement events.
Human Resources will attract a wider talent pool and increase employee satisfaction in 2020 by providing thoughtful opportunities for employees to be involved in CSR efforts.
Wellness and Benefits Offerings
For years, marijuana businesses have had to worry about basic employee resources, like ensuring they have access to banking and can receive a direct deposit. Although this will remain a hurdle for many, more doors have begun to open for managers to offer benefits, and even 401(k). Insurance and 401(k) brokers that are transparently serving the industry are becoming more and more prevalent into the new year. While Section 280E hinders employers from offering a 401(k) match, some production-focused entities may be able to deduct contributions to their employee benefits plans, where dispensary entities may not be able to—even when they’re owned by the same parent company.
Partnering with cannabis-friendly brokers and financial advisors will only benefit HR professionals as these offerings are still difficult to obtain and execute.
They say a year in cannabis is like 7 dog years… The industry has made it this far, not without flaw and frustration, but certainly with grit and determination. Organizations have the strength to power through 2020 with a solid foundation, the right toolset, and the best people around.
Heather is an experienced marketing professional with a demonstrated history of work in cannabis technology and digital strategy. Skilled in customer relationship management, online marketing, immersive experience design and communications, Heather brings a unique combination of creative ideation and project management. As Director of Marketing for Wurk, the first workforce management company designed specifically for the cannabis industry, Heather develops key messaging to inform the market about effective human resource management and to support the advancement of the industry. With previous experience at MJ Freeway, the leading provider of seed-to-sale software solutions for marijuana businesses, Heather brings a unique understanding of cannabis chain of custody and the various challenges operators face in this highly regulated space. Heather earned a bachelor’s degree in communication design and marketing from Metropolitan State University.
Designed specifically for the cannabis industry, Wurk allows employers to protect and streamline their operations, while providing an environment where people are a priority every step of the way. The intuitive, all-in-one solution automates the most complicated and risk-prone processes associated with hiring, scheduling, and paying employees. Learn more at enjoywurk.com.
NCIA Committees: Quarterly Update And A Look Ahead
NCIA committees are an opportunity for members to get directly involved in specific industry issues and sectors. These volunteer-driven efforts engage members’ expertise and passion to drill down in areas of expertise and passion to effect change, provide professional development opportunities, and develop best practices and guidelines that will shape the future of our industry.
We recently checked in with these various committees to learn more about what they’re up to and what projects they’re working on this term. Get updated on their activities below.
Scientific Advisory Committee (SAC)
SAC is comprised of practicing scientists, physicians, and other scientific field professionals. SAC’s vision is to disseminate educational materials to NCIA members on scientific topics in the cannabis industry and to advise other NCIA committees as they work to develop standards and guidelines, ensuring that any formal recommendations produced are scientifically sound, sustainable, and legitimate.
SAC is currently working on five projects, all of which are in the outline or first draft phase:
1) Blog on the science behind why ‘sativa’ and ‘indica’ are no longer the best way to classify cultivars.
2) White paper on how cannabis may help the opioid crisis with a review of scientific studies that show how cannabis can be an alternative for pain management.
3) Blog calling doctors to action in the cannabis industry and why it is important for doctors to get involved.
4) Blog on the vaping crisis from a physician’s point of view. 5) General audience and technical white papers on the Endocannabinoid System.
Marketing & Advertising Committee (MAC)
The MAC coalesces the talents of 20 of the industry’s top-tier marketing and communications professionals around three focus areas: Education, Advertising Access and 2020 political goals. We use our personal, professional and business skills and networks to help build a responsible, legal cannabis industry. The committee is producing best practices, webinars, workshops and social media campaigns to aggregate and generate support from NCIA members, the public, media, government and business leaders.
In our first quarter, our Education Sub-Committee began creating a Speakers Bureau to provide qualified experts for conference organizers and media who will address topics of interest and concern in the industry.
Our Advertising Access Sub-Committee is completing best practices for advertising, making presentations to media groups and expanding Advertising/Labeling Do’s and Don’ts from five states to all legalized states.
Our 2020 Sub-Committee is driving awareness around policy change through panel presentations, preparing a campaign supporting pro-cannabis candidates and is encouraging professionals from the cannabis industry to run for office.
Cannabis Cultivation Committee (CCC)
We are working on producing our first podcast episode, which will feature top-notch farmers who are doing great work employing sustainable practices in indoor facilities.
There will be more podcast episodes to come on other hot cultivation topics.
State Regulations Committee (SRC)
The State Regulations Committee has been hard at work on a number of exciting pieces of work-product that should be available soon. For example, we hosted a webinar on December 3, 2019, in which the expert members of the Committee break down what operators need to know about Michigan’s adult-use market’s rules before it launches in 2020.
The State Regulations Committee has work-product in the pipeline on a number of topics of great importance to members. That includes a recurring guidance series on social consumption in markets across the nation, posts analyzing challenges in local/municipal regulation, a focus on the crucial questions of promoting social equity, and much more.
Cannabis Manufacturing Committee (CMC)
The Cannabis Manufacturing Committee is focusing on reviewing existing business practices and state regulations of concentrates, topicals, vaporizers and, edibles ensuring the manufacturing sector is helping shape its destiny. In this approach, we have published our first blog using lessons learned from the e-cig sector. We are also engaging with NCIA’s Safe Vaping Task Force.
CMC has created three sub-committees; GMP (Good Manufacturing Practices), Testing (from the operator’s view), and Nomenclature (providing clarity to industry language). GMP has its first draft complete and will be ready for publication in November. Nomenclature has a concrete draft to review for publishing its first part of a multi-piece series.
Packaging & Labeling Committee (PLC)
The PLC has 4 subcommittees: Honesty & Labeling, Sustainability, Security, Next Generation Packaging. Each subcommittee has set a goal of producing 3 or more blogs and 1 webinar. We have a very motivated and strong group this year. Our biggest vision for the year is to use our data, blogs, white papers, webinars, and PLC members’ knowledge to create a document reflecting the industry views on what federal policy should be around packaging and labeling.
The Retail Committee is working on a compilation of SOPs for retail compliance to turn into a white paper and webinar series, combining efforts from various retailers in several states/markets in order to be most useful to the national audience.
Facilities Design Committee (FDC)
As a new committee, we have established a mission statement: To provide access to resources for the NCIA community and regulators that will inform the design and use of GMP-driven, sustainable and operationally efficient facilities to position our industry to compete in the global marketplace.
We have established two sub-committees: Standards and Sustainability. The Standards Sub-Committee is linked through membership to ASTM’s D37 committee on cannabis.
Banking & Financial Services Committee (BFSC)
Our vision is to provide reliable, actionable and current information to NCIA’s members via committee member videos and a monthly newsletter. The committee will also be coordinating “NCIA Panels” at Bank and Credit Union conferences throughout the country to spread awareness to the issue and bring these institutions closer to the industry.
Lastly, the committee will be contributing language to the Policy Council for revision of the current version of the SAFE Act.
We will keep the NCIA updated as the Bank and Credit Union panels are confirmed. The committee will continue to pair any operator with the best banking option based on a myriad of factors, free of charge.
NCIA’s Safe Vaping Task Force Submits Testimony
Last week, the Center for Disease Control (CDC) identified a probable proximate cause of recent vaping injuries and deaths. Simultaneously, the United States Senate (HELP Committee) noticed a hearing for tomorrow (Wednesday) on the vaping crisis, where CDC officials will testify.
NCIA Policy Council’s Safe Vaping Task Force has submitted testimony for the record, which can be found here.
For weeks, NCIA’s Policy Council has been calling for de-scheduling and regulation at the federal level to displace the illegal, untested, unregulated illicit market. It’s time for Congress to act. We can no longer sit by and watch as people are sickened by unregulated, untested, and dangerous products from the illicit market.
While April 20th, or “420” is the “high” holiday of cannabis, did you know there are a variety of lesser-known CBD-related holidays throughout the year that can be great grist for the promotional mill? To achieve notoriety and engagement, CBD purveyors may want to include lesser-known celebrations into their annual marketing calendar.
For example, there’s National CBD Month in January, National Hemp Day February 4, National Hemp Month in July, Oils and Concentrates Day July 10 (sometimes referred to as 710 because OIL upside down resembles the number), National CBD Day August 8 and National Pet CBD Month in October.
And let’s not forget Jack Herer’s (The Hemperor’s) birthday celebrated June 18. According to Wikipedia, the devoted cannabis rights activist and author promoted cannabis and hemp for decades. His book, “The Emperor Wears No Clothes” has been in print for three-plus decades. Herer was “frequently cited in efforts to decriminalize and legalize cannabis… Herer also founded and served as the director of the organization Help End Marijuana Prohibition (HEMP).”
CBD purveyors wanting to get even more innovative can use their branding — including labels — to tie to lesser-known holiday promotions. Here are some ways to use labels as powerful promotional tools in conjunction with “holiday” celebrations:
Extend their reach for a whole year via extended content labels (ECLs). For CBD purveyors committing to promotions tied to a calendar of holidays, ECLs can be a fun and impactful way to present information, offers and calls to action.
Create a major promotion around one celebration (e.g., January’s National CBD Month), and use ECLs to explain/inform. This could be a contest with details, one or more discount offers, or even a history of the CBD “movement.”
Print specific labels for each holiday. For example, create fun and informative labels around “The Hemperor’s” birthday month in June. A series of labels could detail various hemp-related accomplishments by Herer, even possibly going so far as to be small pieces of art depicting him and his life’s work.
Use them to link to digital media. There’s always a case to be made for labels containing QR codes, URLs and other links to more information. This can be especially appropriate for surveys, reviews and other interactive platforms where consumer feedback is desired. Any of these efforts can be themed around holiday celebrations (e.g., an upcoming anniversary of hemp or CBD adoption/legalization). In the CBD world particularly, companies need to understand how their consumers view them, assess the quality of products and express any concerns that may emerge.
Present labels as a quality control and consumer safety tool. At a time when buyers worry about the safety and authenticity of the products they consume, labels can help come to the rescue. And what better holiday than one which celebrates both the healthy effects of products and a concerted effort to protect those consuming them?
For example, new label technologies enable consumers to verify the authenticity of their products through a smartphone app that scans a small digital ID on the label. These track-and-trace digital IDs offer a powerful deterrent to counterfeiting, protecting consumers from harmful or ineffective fake products. In turn, CBD product manufacturers can demonstrate to customers that they are working actively to ensure their safety. That creates favorable word-of-mouth, goodwill and loyalty among buyers who will criticize or even pursue regulatory and legal remedies if they feel there’s a problem.
Gary Paulin is Director of Sales and Client Services for Lightning Labels, a Denver-based label printer that has been offering state-of-the-art affordable, full-color custom labels and custom stickers of all shapes and sizes to cannabis purveyors for more than a decade. They offer many options for materials and laminates and special effects to achieve digital short-run requirements (50 minimum) on up to 15 million labels, plus Lightning fast delivery. For more information and to place orders online, visit LightningLabels.com. For the latest in packaging news and labeling promotional offers, find Lightning Labels on, Facebook, Instagram, Twitter (@LightningLabels), Pinterest, and LinkedIn.
Webinar Recording: The Veterinary Cannabis Industry – What to Know And What’s For Show
In case you missed the live webinar this week, watch this recording to learn more about the medical applications in veterinary medicine. NCIA has proudly partnered with one of the leading figures in the veterinary cannabis space, Dr. Zac Pilossoph, a nationally recognized veterinarian to shed light on the veterinary cannabis industry. He provides a general overview of where the veterinary cannabis industry currently stands, briefly touching on endocannabinoid system comparative anatomy, proposed clinical applications, and current rules and regulations.
Consumers and manufacturers of products that have been infused with THC or CBD are probably very familiar with two key issues that plague the product class: slow onset time and uneven dosing of the active ingredient. In a bid to provide a solution, many groups are marketing “water-soluble technology,” or “nanotechnology.” The vast majority of the groups claiming water-soluble (more properly referred to as “water-compatible”) technology are offering up a nanoemulsion.
Nanoemulsion technology is a very promising and accessible solution. It has the ability to allow for both (1) rapid onset and (2) uniform distribution of the active ingredient in infused products such as beverages, gummies, and water-based topicals. Unfortunately for most businesses and consumers, there are many factors that can destabilize a nanoemulsion and eliminate the benefits of the technology. Making things even more difficult is the fact that consumers and businesses are usually not equipped to properly evaluate their options, due to the technology being so new in its commercial use.
In order to evaluate your options, whether you’re a consumer or a business looking to enhance your products, you need to have a high-level understanding of nanoemulsions and how they are made. Put very simply, you create a nanoemulsion when oil is combined with functional ingredients and then blasted with energy or combined with a catalyst which, in both cases, causes the oil particles to split into smaller pieces. When made small enough, the particles disperse uniformly in water and won’t separate out into larger globs of oil. Other added benefits of the small size are a dramatic drop in the onset time for THC – from around 45 minutes to under 10 minutes – and increased absorption of the active ingredient.
Knowing this, there are a number of questions that you should always ask of your technology provider. Each of these questions helps you dig into how well-designed a formulation is and ultimately whether the technology you use will truly enhance your products. Every provider of nanoemulsion technology should be able to speak to:
Particle Size of the Nanoemulsion – You should be looking for an average size under 100 nanometers, preferably under 50 nanometers (as measured by the “dynamic light scattering test”).
Particle Size Test Method – The “by volume” test is far more optimistic, and less useful, than the “dynamic light scattering test.” Look for a solution that is less than 50 nanometers, measured using the dynamic light scattering test.
Temperature Stability – Nanoemulsions tend to destabilize (lose their nanoemulsion properties) over time when exposed to heat. This can be a major issue if the product is shipped or stored in warm/hot environments or if consumers use the product on a hot day.
pH Stability – Low pH environments, such as citric beverages, can cause instability and can also contribute to rapid degradation of the active ingredient (e.g. THC or CBD). Poor formulations can cause as much as 50% of the active ingredient to degrade over a period of one month – not ideal if the product is stored or sits on the store shelf for a while prior to being consumed.
Stability with Artificial Sweeteners – Many end products that are being infused use artificial sweeteners, which can cause the nanoemulsion to become cloudy and lose its rapid onset and enhanced absorption properties.
Active Ingredient Degradation – pH is just one of a number of factors that can contribute to rapid degradation of the active ingredient.
Creating a nanoemulsion that addresses these challenges is not an easy task, but each one of the parameters is important if it’s going to provide the performance benefits claimed by the technology provider. Regardless of whether you choose to engage in your own R&D or use a third-party solution, these questions will help you understand how well a particular water-soluble technology will work for you. Consumers will gravitate toward products that maintain the benefits of this water-soluble technology, and manufacturers will consequently need to do the same.
Andrew Wong – President of Axiomm Technologies
Having spent nearly five years at the nationally-recognized corporate law firm of Stikeman Elliott LLP, Andrew is experienced in securities, M&A and private equity matters. He has acted for both public and private companies, as well as private equity and investment funds with assets under management of $500 million to $1 billion. Andrew moved from Stikeman Elliott to Shea Nerland LLP in 2016, where he founded the cannabis practice group and provided clients with regulatory, structuring, finance and corporate governance counsel.
Andrew co-founded Axiomm Technologies in late 2017. Axiomm is a technology company whose team of technical experts combines academic and industrial expertise in the development and commercialization of novel manufacturing and consumption methods. All technologies and products are designed with the health and wellness consumer in mind, and each increases the efficiency and speed with which the body absorbs vitamins, nutraceuticals and cannabinoids.
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Gary Paulin is Director of Sales and Client Services for Lightning Labels, a Denver-based label printer that has been offering state-of-the-art affordable, full-color 
