Committee Blog: Future-Proofing Cannabis Manufacturing Processes – Part 2

by NCIA’s Cannabis Manufacturing Committee

Despite prohibition, the cannabis industry is not behind the curve of sustainability progress. While other industries were inventing modern Cloud-based quality control/distribution systems and making stuff out of plastic, cannabis producers were maximizing yields per watt and creating stronger concentrates in attempts to get the most out of their value streams while staying under the radar. Now all industries are racing towards a more sustainable future and the cannabis industry has the opportunity to show that it can be a good example, even a leader in sustainability. Regardless if it is in preparation for competition or regulation, now is the time to start building more sustainable, energy-efficient, and overall lower footprint businesses.

As the manufacturing branch of the cannabis industry paves its way into the future, the processes involved need to be made environmentally sustainable and best practices need to be shared and standardized to ensure product safety and industry longevity. Collecting and sharing data from manufacturing facilities is the ideal way to achieve these sector goals.

Environmental sustainability is a multi-discipline effort. Experts in engineering, emissions, air quality, worker health and legal matters should be relied on for educating and guiding businesses into a more sustainable future.

The Data Vacuum Is Holding Back Environmental Sustainability Advancements

While cultivation is one of the main focuses of the cannabis sustainability effort, manufacturing procedures are also prime targets for sustainable advancements. Due to the nature of the organic chemical processes used to produce consumables, some of the materials and practices could have a negative impact on both worker and environmental health if not addressed and handled properly. As a best management practice, regulated cannabis manufacturers typically operate closed-loop systems, which greatly reduce certain dangers, but this can require other more energy-intensive systems. As these relatively new processing techniques are being pioneered, we need more data to understand how they can be made more efficient and sustainable. For various reasons — such as intellectual property concerns — advancements in sustainable practices are often not shared and therefore not visible to potentially become a standard process that ensures product and consumer safety.

Cannabis Science Outpacing Regulations

The scientific improvements for manufacturing cannabis into consumer products in high demand have outpaced regulations. From process design and equipment to processing material sourcing, the manufacturing branch of the cannabis industry has much to offer the future of sustainable cannabis products. In many jurisdictions today, regulators have hastily opted for vertical, prescriptive regulations which have left many manufacturing operations without the leeway required to innovate more sustainable process strategies. Even more businesses with the legal leeway simply do not want to push the envelope in today’s regulatory climate. More forward-thinking, regulation-savvy equipment manufacturers have begun focusing on lower energy-use in their newer products as a selling point. The industry as a whole could be making progress much faster if regulators focused on performance standards for manufacturing facilities.

Strategies inspired by building and process heat recovery offer dozens of basic possibilities when it comes to implementation in a cannabis manufacturing facility. Using the energy released during solvent condensation for solvent evaporation is a prime example. Connecting liquid-cooled equipment with the building’s central plant system is another. These are big ideas that could be implemented in different ways with different efficiencies. Intelligent use of insulation, exhaust recirculation, odor mitigation, ventilation minimization, demand-control ventilation for providing makeup air, etc. could also make significant differences. Data collected from actual operating facilities experimenting with different strategies will be the best guide going forward in determining what the best energy saving strategies are.

Cannabis Extraction Processes and Air Quality

In an effort to prevent unnecessary Volatile Organic Compounds (VOC) emissions it is important to maintain proper solvent transfer and storage, perform extraction equipment inspections, and ensure a maintained inventory and handling of solvents on site are a part of a facility’s standard operating procedures. Best practice for extraction and post-processing dictates the use of butane, propane, CO2, ethanol, isopropanol, acetone, heptane, and pentane as solvents to encourage safe consumer products.

Carbon filtration is also the best management practice for controlling cannabis terpenes (VOCs) and odor emissions. It is important to install properly engineered molecular filtration systems (aka carbon scrubbers) that are sized appropriately for a facility’s ‘emission load’ and don’t exceed the maximum cfm rating for air circulation through the filter. To prevent VOC and odor breakthrough, it is imperative to inspect and conduct regular maintenance of HVAC systems and carbon filters. A standardized method for measuring the lifespan of carbon is by using a Butane Life Test, which equips manufacturers with the data to know how to manage their carbon replacement schedule effectively, minimizing unnecessary carbon waste. Additionally, processors can conduct air sampling to detect and measure VOC and odor levels in their facilities and the data can be used to validate the impact of control technologies further protecting worker and environmental health.

Proper VOC and cannabis odor control from manufacturing processes helps reduce community odor complaints and improve neighborhood relations. It also improves public and environmental health by reducing local ozone concentrations. Proper emissions control when running cannabis manufacturing processes and handling chemicals helps to shift the industry at large toward sustainable and environmentally conscious business practices.

Preparing Your Business for the Next Stage

Cannabis manufacturers are seeing big changes on the horizon. Increased legalization brings increased competition and inevitable M&A activity. Whether a business aspires to compete on the world stage or to be acquired in one of the coming green waves, there are actions that can be taken today to help cannabis manufacturers maximize their value to both customers and potential acquirers.

One of the most important assets a company can have — both to compete effectively and to attract purchasers — is intellectual property. Intellectual property, or IP for short, is the term for an intangible asset that has been afforded certain legal protections to solidify the asset into a commodity that can be bought, sold, and licensed. IP can have a negative connotation in some circles, mostly resulting from misconceptions in the law but also rooted in IP abuses by unscrupulous “trolls.” In reality, IP is an important tool to help companies protect their hard work and, when properly deployed, intellectual property can increase transparency into cannabis manufacturing processes and open new avenues of scientific advancement.

Intellectual property broadly covers a number of different types of rights. Patents protect new inventions like processes, machines, compositions of matter, ornamental designs, and plant genetics. Patents can grant relatively broad rights to these ideas, but with substantial additional costs and scrutiny.

Similarly, copyright can protect creative works, like writings, drawings, and sculptures. But many do not recognize that copyright can also protect compilations of data that have been creatively selected or arranged. Data and algorithm copyrights are relatively nascent, but they promise to play a large role in the intellectual property landscape of the future cannabis industry.

Another sect of intellectual property, trademarks, is all about protecting a brand: the names, logos, slogans, and overall look that tells customers that a good or service is from a particular company. Federal trademark registration is unavailable for federally illegal goods and services, but that does not mean that federal trademark protection is unavailable to cannabis brands. Many companies are using the zone-of-expansion doctrine baked into federal trademark law to set up registrations on related legal products (smoking/vaping devices, clothing, and even CBD edibles) that can be expanded to cover THC products when federally legal.

The nuances and requirements of these property rights — along with other IP rights like trade secrets and trade dress — are highly fact-specific, so involve a good IP attorney to guide your strategy from the start.

Towards A More Sustainable Future

Now is the time to start building more sustainable, energy-efficient, and overall lower carbon footprint businesses and the emerging legal cannabis industry is well-positioned to be the leader. If manufacturers are incentivized to safely share processing data directly or through emerging data collection and tracking platforms, the industry will make major advancements towards more environmentally sustainable practices. Environmental impact areas, such as air quality, energy, water, soil waste, and community all need to be considered by the manufacturing arm of the cannabis industry. Regulators can help push the industry forward by reducing negative impacts in these areas though focusing on performance standards for manufacturing facilities and their processes. Lastly, understanding that IP, including trademarks, can in fact increase transparency into cannabis manufacturing processes and open new avenues of scientific advancement will help position operators for M&A activity coupled with proper legal representation. These factors work together to protect the environment and communities, as well as future-proof manufacturing operations setting up the rest of the cannabis industry for longevity and federal legalization.