Member Blog: Breaking Ground – Maryland’s Leading Role in Cannabis Testing Standards
With the advantage of watching several other states blaze the regulated and tested trail before it, the state of Maryland’s cannabis testing program is one of the more robust and modern of the current industry. After long delays, the state’s medical program – which included a testing program – finally got off the ground in 2017. Then in November 2022, voters approved recreational, adult-use cannabis. Sales officially began in February 2023. And like all legal states, Maryland requires producers to have their products lab-tested to ensure consumer safety, including a few additions or changes that early-adopter states may not include in their programs.
Under Maryland state law, all “raw plant material” including pre-rolls are required to be tested at a state-licensed laboratory for:
Moisture Content and water activity;
Residual solvents and processing chemicals;
Residual pesticides;
Microbial impurities;
Mycotoxins;
Foreign materials;
The “big four” heavy metals (arsenic, cadmium, lead and mercury) and chromium;
Cannabinoids; and
Terpenes
Aside from cannabinoids and terpenes – which is information consumers often look for and want to know when purchasing – all the rest are safety issues.
“Laboratory testing minimizes the risk of pesticides, microbes, heavy metals, toxins, and residual solvents from being consumed by an immunocompromised population,” reads the most recent revision of the Maryland Cannabis Administration’s Technical Authority For Cannabis, a 33-page document detailing the requirements and procedures labs in the state must perform on cannabis products.
Like many states that have come online in later waves of legalization, Maryland law requires testing of cannabis products in their final form. That, for example, means testing the completed, fully-packed pre-roll, not just the flower that gets packed into it.
While adult-use cannabis sales continue to climb, Maryland still has a fairly robust medical marijuana program that includes nearly 134,000 patients. For those consumers in particular, making sure the cannabis products they use, including pre-rolls, are as safe as possible is vitally important.
Testing for Microbials and Mycotoxins, for example, while important safety considerations for healthy users, is key for those who may be immunocompromised. Mycotoxins are a toxic compound produced by molds, such as Aspergillus, and can suppress the immune system and cause liver damage.
Maryland requires testing for two classes of mycotoxins, Aflatoxins and Ochratoxin A. Both have properties that can alter DNA and potentially cause the formation of cancer cells. Testing for mycotoxins help ensure cannabis products are safe for human consumption.
Regulations require a total mycotoxin concentration of less than 20 parts per billion in order to make it to dispensary shelves.
Maryland law also requires testing for E. coli and Salmonella, among others.
In a similar vein is the requirement to test for water activity, a measure of the available water that can be a breeding ground for microbiological growth. Like most states, Maryland caps water activity at 0.65 Aw in flower and pre-rolls, since water activity above 0.70 Aw creates the conditions for mold to grow, which can be harmful if consumed.
Like many states, Maryland requires testing for the “big four” heavy metals mercury, cadmium, lead, and arsenic, which are toxic to humans, even at small doses. But unlike many legacy markets, Maryland is among a handful of recently-legal states that also require testing for chromium, another dangerous heavy metal. Once chromium reaches the bloodstream, it can damage the kidneys, liver and blood cells with the potential for renal and liver failure if untreated.
RESIDUAL PESTICIDES AND CHEMICALS
Maryland also has strict laws regarding the use of pesticides and other “crop protection agents” (like fungicides) on cannabis. There are 146 crop protection agents approved for use on cannabis by the Maryland Department of Agriculture.
The state also specifically requires testing for 48 pesticides and plant growth regulators, each with their own actionable limits, any of which can require the product to be destroyed.
There are similar requirements for residual solvents used in the process to create cannabis extracts for vape cartridges or infused pre-rolls.
LAB REQUIREMENTS
Along with direction on actionable limits, Maryland requires that all cannabis products be tested at one of the four labs that are certified by the state and accredited to ISO/IEC 17025 by an International Laboratory Accreditation Cooperation (ILAC) recognized third party.
Additionally, the state offers guidance on exactly how samples are to be collected and maintained, including notes on be sure the lab is clean and that employees use personal protective equipment to ensure samples are not contaminated. There is also direction on the standard operating procedures required for some of the tests.
“To reliably provide the laboratory with a representative sample, standard sampling methods with descriptive steps must be applied with quality and consistency,” reads the technical authority document. “All sampling must be consistently performed using accepted methodologies.”
PRE-ROLL COMPLIANCE AND SAFETY
As noted, Maryland’s cannabis testing is done on products in their final form, meaning that, for example, any pre-rolls must be tested after being packed in their cones. That means that no matter how attentive to the rules you are, your product can still fail if your pre-roll supplier is not as diligent as you are.
On top of that, customers – especially medical patients – should not be worried that the products they are using to help feel better will make them sicker, whether they purchase a pre-roll at a store or pack a cone at home themselves with their favorite flower.
“You’re putting something in your body; make sure it’s high quality,” says Custom Cones USA Compliance Manager André Bayard.
Testing is not required on rolling papers and pre-rolled cones, so many producers do not know what they are getting in their paper, which can contain all of the same dangers as cannabis. For example, a study from California’s SC labs found that 11% of rolling papers they tested would fail that state’s testing regiment, which doesn’t even include Chromium, and that 90% of rolling papers contained heavy metals with more than 8% containing them at a rate above the allowable limits
Bayard recommends making sure your pre-roll supplier has COAs available to prove their products are clean and will pass tests or will send you samples for you to test before committing to a full order.
“Work with a company that focuses on those requirements and are trying to set the industry standard with their products,” Bayard says. “Any one issue can be detrimental to your brand reputation.”
JOIN US AT THE FOREFRONT: REGISTER FOR NCIA’S MARYLAND STAKEHOLDER SUMMIT
Don’t miss out on the opportunity to delve deeper into Maryland’s cannabis landscape at the upcoming NCIA Maryland Stakeholder Summit 2024. This event, hosted by the National Cannabis Industry Association on Tuesday, April 2nd in Baltimore, MD brings together key players, industry experts, and stakeholders to discuss the latest developments, regulations, and opportunities shaping Maryland’s cannabis market.
As a special offer for Industry Insights readers, NCIA is excited to provide a 20% discount code for summit registration. Simply use the code CUSTOMCONESMD25 at checkout to unlock your savings and secure your spot at this must-attend event.
Whether you’re a producer, retailer, advocate, or simply interested in learning more about the industry, this summit offers invaluable insights and networking opportunities. Join us as we explore strategies for navigating regulatory challenges, ensuring product quality, and driving innovation in this dynamic sector.
Register now to secure your spot at the Maryland Stakeholder Summit and be part of the conversation driving Maryland’s cannabis industry forward. Don’t miss your chance to connect with industry leaders, gain valuable knowledge, and contribute to the growth and success of Maryland’s cannabis market.
Register here and be at the forefront of Maryland’s cannabis revolution!
Committee Blog: Navigating Cybersecurity Risks in the Cannabis Industry
Cannabis Industry Cybersecurity threats are on the rise, and organizations that don’t take a proactive approach to information security may see themselves increasingly targeted. In this blog, members of National Cannabis Industry Association’s Risk Management & Insurance (RMIC) details key considerations to help cannabis organizations enhance their network security. Throughout the blog there are hyperlinks for further information on certain topics, and for those organizations just getting started on their cannabis industry cybersecurity journey, two free resources to consider investigating are the Small Business Administration’s (SBA) Cybersecurity Guide and the Cybersecurity & Infrastructure Security Agency’s (CISA)Cyber Essentials Starter Kit.
A Business Case for Cybersecurity Investment.
Like with any business investment, increasing cyber defense resources must provide a sufficient ROI for the business. When considering cybersecurity, it may be best to define that as Regret Of Inaction. Consider that according to IBM’s2023 Cost of a Data Breach Report the average cost of a breach has reached an all-time high of $4.45M. The old adage, “an ounce of prevention is worth a pound of cure” is certainly applicable to security measures.
Cybersecurity risks are not just applicable to large enterprises,Accenture’s Cybercrime study reveals that nearly 43% of cyber-attacks are targeted at small and medium-sized businesses (SMBs), and 60% of small businesses close within6 months of being hacked.
Cannabis Industry Cybersecurity Starts with People
Any cultural shift at an organization needs to start from the top, and that includes security. Security culture needs to be driven from the top. Adopting proper policies and procedures to properly safeguard organization networks and personnel is key. This includes regular employee training. As many as95% of attacks are caused by human error.
Being a Victim Stinks- Elevate Your Basic Cyber Hygiene
The National Cybersecurity Alliance just completedCybersecurity Awareness Month, where they stressed four of the key principles which can help better secure organizations. We’ll touch on each below, and for additional best practices check out the Cannabis Information Sharing & Analysis Organization’s (Cannabis ISAO)blog from 420 where they asked 4 cybersecurity experts to compile 20 tips for the cannabis industry.
Recognize and Report Phishing. A best practice is to set up a channel in your organization’s chat platform where employees can share screenshots of phishing attempts to raise awareness.
Update software. Don’t forget to include all of the connected Internet of Things (IoT) devices throughout the organization
Navigating Cyber Insurance
The world of business insurance, especially in the cannabis sector, can be quite complex. However, with the insights provided here, you can navigate your policy purchasing process with confidence and ensure your business is fortified against potential risks. By understanding policy forms, adhering to safeguards, and adapting to local regulations, you can lay a resilient foundation for your business’s growth and success.
“In Cannabis, we don’t get many options when it comes to cyber insurance providers, so it’s important we put our best foot forward when seeking or renewing cyber insurance policies. Work with your broker early to understand any changes upcoming to policies and the expectations being set by your insurers. When you can, hire a dedicated team that is focused on securing your digital estate, and leverage well known guidance frameworks such as NIST CSF, CIS Top 20, and HIPAA, and work with an independent party to verify your progress, which help keep your premium costs down long-term and reduce the risk of you having an incident that requires you to file a claim in the first place.”- Chris Clai, Director of Information Security, Green Thumb Industries
Stay up to date on Cannabis Industry Cybersecurity threats and trends
Cyber criminals are opportunistic and will look for any advantage to beat cannabis industry cybersecurity systems or trick employees. Holidays can be a prime time for attacks because of employees taking time off and being more distracted than usual. Holidays and major newsworthy events can also lead to a spike in phishing and other scam activities. In the same way FEMA often warns people to look out for scams after natural disasters, consider what industry news may cause a lot of buzz that could also be used in phishing campaigns. Announcements related to a new state legalizing adult use, or legislative updates around SAFER Banking could all be hiding malicious links.
Being involved in communities that actively sharing information about ongoing threats can be very beneficial. A member of the Cannabis ISAO recently shared details of cash management company who had been avictim of a Business Email Compromise (BEC) which led to fraudulent wire transfer requests being sent out. Days later MJBizDaily reported a similar incident which resulted in the loss of funds totalling nearly $650K for MariMed. Keeping up to date on these types of incidents can help inform employees of the current threat landscape, and boost organizational resilience.
Incident Response
Responding to a cybersecurity incident is not the first time you want to be considering what your response processes are. In response to the recent high profile MGM and Caesars ransomware incidents, National Cyber Security Alliance Executive Director Lisa Plaggemierstated “the best way to deal with a ransomware attack is to practice having one, to do tabletop exercises.” Having plans and procedures in place are important, but it’s equally important to test and validate those plans.
In the event of an incident, it may be necessary to utilize a digital forensic vendor. Consider having one on retainer, or at least establishing a relationship ahead of time to enable a speedy response. In some cases your cyber insurance company may have preferred vendors for this type of work.
Conclusion
The RMIC advocates for a proactive approach to risk management that emphasizes the importance of informed decision-making. By evaluating an insurer’s claims experience, comprehending legal nuances, and staying attuned to the evolving threat landscape, you can empower your business with robust protection, ensuring a resilient foundation for growth and success.
NCIA Welcomes New and Returning Members to its Board
The National Cannabis Industry Association (NCIA) is thrilled to unveil the distinguished individuals selected to join its board for the 2024-26 term. Comprising leaders and innovators from various sectors, the newly appointed board members bring a wealth of expertise and commitment to shaping the future of the cannabis industry.
As the CEO of NCIA Evergreen Member FundCanna, Adam Stettner, with extensive experience beyond cannabis, advocates for strong industry representation, emphasizing the need for varied perspectives, political savvy, and insights from a nationwide service provider, eager to advance the collective cause.
Josh Wurzer, Co-Founder and Chief Compliance Officer at SC Labs, is a pioneer in cannabis testing, having commercially tested medical cannabis since 2008. With roles on various industry advisory groups and boards, including the California Cannabis Industry Association and the U.S. Pharmacopeia Cannabis Expert Panel, Josh brings unparalleled expertise in cannabis science to the NCIA board, championing quality control and safety.
Incumbents Returning for Another Term
The Annual Nominating Committee, consisting of sector committee chairs and select board members, has also appointed six esteemed incumbents for another two-year term:
This selection process, guided by transparency and inclusivity, is a testament to NCIA’s commitment to representing the diverse voices within the cannabis industry.
Leadership for the Cannabis Community
NCIA, proudly recognized as the most inclusive and transparent association in the cannabis industry, emphasizes the significance of leadership chosen by its membership. Board members, selected through a thoughtful and democratic process, serve two-year terms, ensuring a continuous infusion of fresh perspectives.
The eight newly nominated board members will join their counterparts currently serving in the 2023-25 term. This blend of experienced incumbents and dynamic newcomers underscores NCIA’s dedication to fostering an environment that encourages growth and innovation.
A Commitment to Values
As an organization, NCIA is steadfast in upholding the values expected by its members. The board, with its diverse composition, reflects the industry’s dynamism and mirrors the inclusive nature of the association.
For a detailed overview of the board members and their impressive bios, please visit our Board Members Page.
NCIA remains at the forefront of championing the cannabis industry’s growth and prosperity. The 2024-26 board is poised to lead with vision and dedication, ensuring that NCIA continues to be a driving force in shaping the future of cannabis.
Contributing Authors:Stephanie Bozzuto, Cannabis Connect Insurance, Acrisure Partner | Merril Gilbert, Trace Trust | Shay Aaron Gilmore, The Law Office of Shay Aaron Gilmore | Matthew Johnson, AssuredPartners
Navigating the labyrinth of insurance coverage can be daunting for any business owner, especially within the emerging cannabis industry. Questions like “What coverage do I need?” and “How do I ensure my policy covers my exposures?” are common and crucial. The National Cannabis Industry Association’s Risk Management & Insurance Committee is here to guide cannabis business operators in protecting both personal and business assets.
Below are ten key insights and considerations to guide you when purchasing your next insurance policy. Whether you have a policy in place or are exploring multiple policies, it’s crucial to ensure they align with your intended coverage.
Understanding Policy Forms, Endorsements, and Exclusions
Policy forms, endorsements, and exclusions are pivotal during a claim. For instance, some policies sold to cannabis companies in the US have outright ‘cannabis business exclusions’. It’s crucial to read and understand these documents to avoid jeopardizing your business.
Compliance with Protective Safeguards
To ensure theft coverage response in a loss, understand and comply with the protective safeguards on your property insurance policy. For example, non-compliance with a Central Station Alarm Warranty can exclude coverage after a robbery.
Landlord Insurance Requirements
Understand the insurance coverage required by your landlord before signing any contract. If a triple net lease is required, you, as the lessee, will need to insure not only your business but also the building, which can be costly.
Local Insurance Requirements
Each city, state, and county permitting cannabis will have its own insurance requirements, often including general liability, product liability, commercial auto insurance, and workers’ compensation.
Some states have created specific requirements not present in other states (looking at you, Michigan!). Consult with an attorney to fully understand and meet these requirements.
Facility Maintenance
Maintain and update your facilities, especially if they are older than 20 years, to avoid limited property coverage and being forced to buy an “actual cash value” policy versus “replacement cost.” Updates to your HVAC, plumbing, roofing, and electrical systems are well worth the investment.
High-Risk Area Considerations
If your facility is in a high brush area, be prepared for limited property insurance options and a list of exclusions due to tighter wildfire insurance availability. Your insurer may offer expanded coverage if you’re willing to invest in wildfire defense systems.
Evaluating Insurance Companies
Know the financial strength of your insurance company before purchasing. Consider whether the company is admitted or non-admitted and research their reputation and claims experience.
Claims Experience
Inquire about the carrier’s claims handling experience, conditions of coverage, and the duration it takes to receive a payout from a covered loss. If your broker doesn’t have claims experience with a given carrier, feel free to ask someone on the NCIA’s Risk Management & Insurance Committee.
Legal Concepts and Types of Insurance
Understand the legal concepts involved in property and liability insurance and familiarize yourself with the different types of property insurance policies available on the market. For instance – are you purchasing an admitted or a non-admitted insurance policy? Are you on an ‘all risk’ or a ‘named perils’ coverage form?
Grasping Liability Insurance Distinctions
Liability insurance is crucial, acting as “third-party” coverage, contrasting with “first-party” coverage like property insurance, which protects against damage to one’s own assets.
Duty to Defend vs. Duty to Indemnify
Understanding the difference between the duty to defend and the duty to indemnify is vital. The former is broader, obligating the insurer to defend the insured in lawsuits, even if allegations are baseless. The latter only kicks in if the insured is found legally liable for damages.
Defense Inside/Outside the Limits
One should also inquire about defense inside versus defense outside the limits of a liability policy. A policy with ‘defense outside’ considers all legal costs separate from the total liability coverage, while legal fees will erode the total liability limit for a ‘defense inside’ policy.
Insurable Interest
An insured must have a direct financial interest in the preservation of the property and be exposed to monetary loss as an immediate and proximate result of its destruction. The interest must not be contingent or expectant. Interest in anything not founded on an actual right to the property is uninsurable.
Scope and Importance in Cannabis Industry
The scope of liability insurance, covering legal costs and payouts, is essential, especially in the cannabis industry, where legal landscapes and associated risks are continuously evolving. Adequate coverage is paramount to mitigate potential financial losses due to unique legal challenges and risks, such as product liability claims.
Conclusion
The world of business insurance, especially in the cannabis sector, can be quite complex. However, with the insights provided here, you can navigate your policy purchasing process with confidence and ensure your business is fortified against potential risks. By understanding policy forms, adhering to safeguards, and adapting to local regulations, you can lay a resilient foundation for your business’s growth and success.
The proactive approach advocated by the National Cannabis Industry Association’s Risk Management committee emphasizes the importance of informed decision-making. By evaluating an insurer’s claims experience, comprehending legal nuances, and staying attuned to industry developments, you can empower your business with robust protection, ensuring a resilient foundation for growth and success.
by Aaron Smith, NCIA Co-founder and Executive Director
When a handful of top cannabis business leaders came together to form a national industry association in 2010, the world was a different place. Medical cannabis providers were routinely raided by federal law enforcement, the media often characterized cannabis businesses as illegitimate, and there was little political will in Congress to take on the marijuana issue whatsoever. Some of my colleagues in the reform movement even expressed skepticism over whether it was entirely a good idea to bring the industry together as a vocal stakeholder in the fight to change outdated marijuana laws.
Aaron Smith at NCIA’s 1st Annual Cannabis Business Summit, June 2014
As we come close to concluding our 5th year of operation, I’m incredibly proud of what our members have made possible. Cannabis businesses are now largely taken seriously by the mainstream media, a majority of voters, and we are experiencing greater momentum in Congress than ever before.
Too much has happened over the last half-decade to list it all but here are just a few key developments:
Four states and the District of Columbia have legalized adult cannabis use and robust industries have already taken root in Colorado and Washington,
Protections for medical marijuana businesses have been included in the federal government’s annual budget,
Presidential candidates are taking our industry seriously and at least one held a fundraiser with the industry during NCIA’s national Cannabis Business Summit, and
This progress didn’t happen by coincidence. The cannabis industry is finally being taken seriously because our members have come together to assert their collective economic and political strength just as every other business sector does.
The coordinated political and communications strategy executed by NCIA has changed the narrative around marijuana. The debate is now more about how legal cannabis sales will be regulated than about whether people should be put in jail for its use. We have also reframed the conversation so that responsible cannabis businesses and the economic and social benefits they offer communities are at the forefront.
2016 is going to be an even bigger year for the industry and as we look back at our accomplishments, we also must acknowledge there is so much more work that needs to be done before our industry is treated fairly under federal law.
In celebration of NCIA’s 5th Anniversary, we are challenging each of our nearly 1,000 members to contribute at least $500 in our annual fund drive so that we can start next year off as strong as possible.
As a token of my gratitude, all members who contribute to this cause will be acknowledged at our 5th Anniversary Banquet in Las Vegas on November 11. All contributors will also be entered into a drawing to win an iPad Air 2, which will be selected at the Anniversary Banquet.
Please consider investing in the future of the industry by giving a $500 gift to NCIA* today. All proceeds will support our direct advocacy and lobbying efforts on behalf of the cannabis industry.
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