Committee Blog: Poor Project Planning – A Costly Mistake for Cannabis Entrepreneurs

by NCIA’s Facilities Design Committee

Facility layout and design are important components of overall operations, both in terms of maximizing the effectiveness and efficiency of the process(s) executed in a facility, and in meeting the needs of personnel. Prior to the purchase of an existing building or investing in new construction, the activities and processes that will be conducted in a facility must be mapped out and evaluated to determine the appropriate infrastructure and flow of processes and materials. In cannabis markets where vertical integration is the required business model, multiple product and process flows must be incorporated into the design and construction. Materials of construction and critical utilities are essential considerations if there is the desire to meet Good Manufacturing Practice (GMP) compliance or to process in an ISO certified cleanroom.

All these activities require a well-thought-out and documented project plan. Unfortunately, many cannabis entrepreneurs that embark on the journey into the industry fail to properly plan, and furthermore fail to understand that proper project planning is the most critical stage of the entire project. Inadequate planning is the primary reason projects spin out of control, take longer to execute, cost more money, and ultimately fail. Proper and effective project planning involves comprehensive mapping and organizing of project objectives and goals, identifying tasks and deliverables, maintaining schedules, proper allocation of resources, and defining roles and responsibilities of team members before the project even gets off the ground. Most problems that lead to project failure can be avoided with proper project planning.

Why is project planning so important? The answer is simple. Proper project planning:

Ensures project performance and success.
- When tasks, deadlines, deliverables, and responsibilities are defined upfront, there is a better chance the project will run smoothly, efficiently, and be successful.
Saves money (and keeps investors happy).
- Failed projects are expensive. Rework and delays may lead to project scope creep which subsequently leads to going over budget and missing deadlines.
Improves team communication.
- When everyone is on the same page and understands the objectives and expectations, projects are effective and timely. Routine team meetings to discuss potential roadblocks to deadlines are key to a project’s success.
Ensures resources are properly allocated.
- Identifying team members with the appropriate skillsets to lead and manage the various aspects of a project is critical to the success of the project. Assigning an overall project manager is highly recommended.
Project status is tracked and documented.
- Documenting target dates, deliverables, and metrics is critical for keeping a project on track. This allows everyone to be aligned and informed on tasks, timelines, expectations, and workflow.

There are several considerations when designing a cannabis operation, whether it is a grow room or a product manufacturing facility. Regardless of what type of facility is needed or desired, applicable local, federal, and international regulations and standards must be reviewed to ensure proper design, construction, and operation, as well as to guarantee the safety of employees.

Materials of Construction

The materials of construction for interior work surfaces, walls, floors, and ceilings should be fabricated of non-porous, smooth, and corrosive resistant surfaces that are easily cleanable to prevent harboring of microorganisms and damage from chemical residues. Flooring should also provide wear resistance, stain, and chemical resistance for high traffic applications. Interior and exterior (including the roof) materials of construction should meet the requirements of the International Building Code (IBC), the National Fire Protection Association (NFPA), Occupational Safety and Health Administration (OSHA), and other applicable building and safety standards, particularly when the use, storage, filling, and handling of hazardous materials occurs in the facility.

Utilities

Critical and non-critical utilities need to be considered in the initial planning phase of a facility build out. Critical utilities are the utilities that when used have the potential to impact product quality. These utilities include water systems, Heating Ventilation and Air Conditioning (HVAC), compressed air, and pure steam. Non-critical utilities may not present a direct risk to product quality, but are necessary to support the successful, compliant, and safe operations of a facility. These utilities include electrical infrastructure, lighting, fire detection and suppression systems, gas detection, and sewage.

Water

Water quality, both chemical and microbial, is a fundamental and often overlooked critical parameter in the design phase of cannabis operations. Water is used to irrigate plants, for personnel handwashing, potentially as a component in compounding/formulation of finished goods, and for cleaning activities. Water quality should be tested and monitored to ensure compliance to microbiological and chemical specifications based on the chosen water type, the intended use of the water, and the environment in which the water is used. Overall water usage must be considered during the facility design phase. In addition to utilizing water for irrigation, cleaning, product processing, and personal hygiene, water is used for heating and cooling of the HVAC system, fogging in pest control procedures, and in wastewater treatment procedures. A facility’s water system must be capable of managing the amount of water required for the entire operation. Water usage and drainage must meet environmental protection standards. State and local municipalities may have water usage limits, capture and reuse requirements, and regulations regarding runoff and erosion control that must also be considered as part of the water system design.

Lighting

Lighting considerations for a cultivation facility are a balance between energy efficiency and what is optimal for plant growth. The preferred lighting choice has typically been High Intensity Discharge (HID) lighting, which includes metal halide (MH), and high-pressure sodium (HPS) bulbs. However, as of late, light-emitting diodes (LED) systems are gaining popularity due to increased energy saving possibilities and innovative technologies. Adequate lighting is critical for ensuring employees can effectively and safely perform their job functions. Many tasks performed on the production floor or in the laboratory require great attention to detail. Therefore, proper lighting is a significant consideration when designing a facility.

HVAC

Environmental factors, such as temperature, relative humidity (RH), airflow, and air quality, play a significant role in maintaining and controlling cannabis operations. A facility’s HVAC system has a direct impact on cultivation and manufacturing environments, and HVAC performance may make or break the success of an operation. Sensible heat ratios (SHRs) may be impacted by lighting usage and RH levels may be impacted by the water usage/irrigation schedule in a cultivation facility. Dehumidification considerations are critical to support plant growth and vitality, minimize microbial proliferation in the work environment, and to sustain product shelf-life/stability. All of these factors must be evaluated when commissioning an HVAC system. HVAC systems with monitoring sensors (temperature, RH, and pressure) should be considered. Proper placement of sensors allows for real-time monitoring and a proactive approach to addressing excursions that could negatively impact the work environment.

Compressed Air

Compressed air is another, often overlooked, critical component in cannabis operations. Compressed air may be used for a number of applications, including blowing off and drying work surfaces and bottles/containers prior to filling operations, and providing air for pneumatically controlled valves and cylinders. Common contaminants in compressed air are nonviable particles, water, oil, and viable microorganisms. Contaminants should be controlled with the use appropriate in-line filtration. Compressed air application that could impact final product quality and safety requires routine monitoring and testing.

Electrical Infrastructure

Facilities should be designed to meet the electrical demands of equipment operation, lighting, and accurate functionality of HVAC systems. Processes and procedures should be designed according to the requirements outlined in the National Electrical Code (NEC), Institute of Electrical and Electronics Engineers (IEEE), National Electrical Safety Code (NESC), International Building Code (IBC), International Energy Conservation Code (IECC), and any other relevant standards dictated by the Authority Having Jurisdiction (AHJ).

Fire Detection and Suppression

Proper fire detection and suppression systems should be installed and maintained per the guidelines of the National Fire Protection Association (NFPA), International Building Code (IBC), International Fire Code (IFC), and any other relevant standards dictated by the Authority Having Jurisdiction (AHJ). Facilities should provide standard symbols to communicate fire safety, emergency, and associated hazards information as defined in NFPA 170, Standard for Fire Safety and Emergency Symbols.

Gas detection

Processes that utilize flammable gasses and solvents should have a continuous gas detection system as required per the IBC, Chapter 39, Section 3905. The gas detection should not be greater than 25 percent of the lower explosive limit/lower flammability limit (LEL/LFL) of the materials. Gas detection systems should be listed and labeled in accordance with UL 864, Standard for Control Units and Accessories for Fire Alarm Systems and/or UL 2017, Standard for General-Purpose Signaling Devices and Systems and UL 2075, Standard for Gas and Vapor Detectors and Sensors.

Product and Process Flow

Product and process flow considerations include flow of materials as well as personnel. The classic product and process flow of a facility is unidirectional where raw materials enter on one end and finished goods exit at the other. This design minimizes the risk of commingling unapproved and approved raw materials, components, and finished goods. Facility space utilization is optimized by providing a more streamlined, efficient, and effective process from batch production to final product release with minimal risk of errors. Additionally, efficient flow reduces safety risks to employees and an overall financial risk to the organization as a result of costly injuries. A continuous flow of raw materials and components ensures that supplies are available when needed and they are accessible with no obstructions that could present a potential safety hazard to employees. Proper training and education of personnel on general safety principles, defined work practices, equipment, and controls can help reduce workplace accidents involving the moving, handling, and storing of materials.

Facilities Management

Facilities management includes the processes and procedures required for the overall maintenance and security of a cannabis operation. Facilities management considerations during the design phase include pest control, preventative maintenance of critical utilities, and security.

A Pest Control Program (PCP) ensures that pest and vermin control is carried out to eliminate health risks from pests and vermin, and to maintain the standards of hygiene necessary for the operation. Shipping and receiving areas are common entryways for pests. The type of dock and dock lever used could be a welcome mat or a blockade for rodents, birds, insects, and other vermin. Standard Operating Procedures (SOPs) should define the procedure and responsibility for PCP planning, implementation, and monitoring.

Routine preventative maintenance (PM) on critical utilities should be conducted to maintain optimal performance and prevent microbial and/or particulate ingress into the work environment. Scheduled PMs may include filter replacement, leak and velocity testing, cleaning and sanitization, adjustment of airflow, the inspection of the air intake, fans, bearings, and belts, and the calibration of monitoring sensors.

In most medical cannabis markets an established security program is a requirement as part of the licensing process. Facilities should be equipped with security cameras. The number and location of the security cameras should be based on the size, design, and layout of the facility. Additional cameras may be required for larger facilities to ensure all “blind spots” are addressed. The facility security system should be monitored by an alarm system with 24/7 tracking. Retention of surveillance data should be defined in a Standard Operating Procedure (SOP) per the AHJ. Motion detectors, if utilized, should be linked to the alarm system, automatic lighting, and automatic notification reporting. The roof area should be monitored by motion sensors to prevent cut-and-drop intrusion. Daily and annual checks should be conducted on the alarm system to ensure proper operation. Physical barriers such as fencing, locked gates, secure doors, window protection, and automatic access systems should be used to prevent unauthorized access to the facility. Security barriers must comply with local security, fire safety, and zoning regulations. High security locks should be installed on all doors and gates. Facility access should be controlled via Radio Frequency Identification (RFID) access cards, biometric entry systems, keys, locks, or codes. All areas where cannabis raw material or cannabis-derived products are processed or stored should be controlled, locked and access restricted to authorized personnel. These areas should be properly designated “Restricted Area – Authorized Personnel Only.”

Future Expansion

The thought of expansion in the beginning stages of facility design is probably the last thing on the mind of the business owner(s) as they are trying to get the operation up and running, but it is likely the first thing on the mind of investors if they happen to be involved in the business venture. Facilities should be designed so that they can be easily expanded or adjusted to meet changing production and market needs. Thought must be given to how critical systems and product and process flows may be impacted if future expansion is anticipated. The goal should be to minimize downtime while maximizing space and production output. Therefore, proper up-front planning regarding future growth is imperative for the operation to be successful and maintain productivity while navigating through those changes.

Member Blog: GMPs – A Way Ahead for Hemp and CBD Firms

by Charlotte Peyton, Independent Consultant, EAS Consulting Group

The hemp industry is the marijuana industry’s half-sister. Both are variations of the plant cannabis sativa and both were made illegal in 1937 with the passing of The Marijuana Tax Act. Flash forward to the Agriculture Improvement Act of 2018 (known as the 2018 Farm Bill) that was signed into law by Congress on December 20, 2018. One year later, The USDA issued interim regulations that entitled Establishment of a Domestic Hemp Production Program for the cultivation of hemp on October 31, 2019. Both were huge steps forward for public access to hemp and hemp products. FDA legalized the growing of hemp in states with a state-mandated hemp program and removed hemp and its derivatives from Drug Enforcement Administration (DEA) Schedule I status and the U.S. Domestic Hemp Program aims to approve cultivation plans issued by states and Indian Tribes.

Even so, then FDA Commissioner Scott Gottlieb issued a statement hours after the signing of the Farm Bill reiterating that “Congress explicitly preserved the agency’s current authority to regulate products containing cannabis or cannabis-derived compounds under the Federal Food, Drug, and Cosmetic Act (FD&C Act) and section 351 of the Public Health Service Act.”

Still today, two years later and counting, FDA only permits CBD products submitted as an Investigational New Drug (IND) Application as a pharmaceutical and there remains only one such accepted CBD product, Epidiolex, manufactured by G.W. Pharma. All other CBD products are illegal for interstate shipment.

In-state production and sales may be a different story, provided that state has a mandated hemp program. In those cases, provided state law is followed, production and sales are legal and protected, but the minute products cross state lines, they become the jurisdiction of the federal government and, more specifically, the FDA. At least 47 states have enacted legislation to establish hemp production programs or allow for hemp cultivation research.

Section 10113 of The 2018 Farm Bill states that (c) Nothing in this subtitle shall affect or modify:

(1) the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.);

(2) section 351 of the Public Health Service Act (42 U.S.C. 262); or

(3) the authority of the Commissioner of Food and Drugs and the Secretary of Health and Human Services- ‘‘(A) under- ‘‘(i) the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.); or ‘‘(ii) section 351 of the Public Health Service Act (42 U.S.C. 262); or ‘‘(B) to promulgate Federal regulations and guidelines that relate to the production of hemp under the Act described in subparagraph (A)(i) or the section described in subparagraph (A)(ii).”

The mission of the FDA is “to ensure the safety, effectiveness, and security of human and veterinary drugs, vaccines and other biological products for human use, and medical devices.” As such, FDA categorizes every product for sale in the U.S. which is either ingested or applied to a human or animals into categories. That means hemp-derived CBD products will have to lawfully fit into one of those categories, however, while there has been positive movement towards the legal sale of hemp products on the USDA cultivation side, the FDA has authority over foods and dietary supplements, and the FDA’s position is that the addition of hemp/CBD to a food or dietary supplement is “violative.” In a Consumer Update statement revised on November 25, 2019, the FDA clearly stated that “it cannot conclude that CBD is generally recognized as safe (GRAS) among qualified experts for its use in human or animal food.”

That being said, FDA has indicated it would be open to review of safety data for submission of a cannabinoid as Generally Recognized as Safe (GRAS) for Food or as a New Dietary Ingredient (NDI) in a supplement as the lack of any federal regulation runs the potential of putting people at risk. That has sent the industry scurrying to design and initiate studies in the hopes of demonstrating levels of safety that meet FDA’s satisfaction.

In the meantime, those currently operating in states where hemp manufacturing is legal, must ensure Good Manufacturing Practices (GMPs) are adhered to closely. Should the FDA ever allow hemp products with CBD to be sold in the future, a manufacturer’s ability to demonstrate understanding and compliance with GMPs will be critical. Each FDA regulated industry has its own set of GMPs for the development and implementation of quality systems.

21 CFR 117, Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventative Controls for Human Food
21 CFR 507, Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventative Controls for Food for Animals
21 CFR 111, Current Good Manufacturing Practice in Manufacturing, Packaging, Labeling, or Holding Operations for Dietary Supplements
21 CFR 210, Current Good Manufacturing Practice in Manufacturing, Processing, Packing, or Holding of Drugs; General
21 CFR 211, Current Good Manufacturing Practice for Finished Pharmaceuticals
FDA Draft Guidance for Industry, Cosmetic Good Manufacturing Practice, June 2013

As the industry waits in the hopes that FDA will come on board with those states that have already legalized CBD’s use in products, it important to take the necessary steps to develop GMP protocols and quality systems as part of documented Standard Operating Procedures and record-keeping that those procedures are being followed, products are being tested and those tests are being validated.

Ensure as you begin to develop or strengthen your GMP programs that you do so with a full understanding of the requirements set forth in 21 CFR 111. Whether these programs are designed in-house or with the assistance of an outside consulting firm, ensure your GMPs are specific to your manufacturing procedures as opposed to a stock one-size-fits-all program. A reputable consulting firm with demonstrable expertise in FDA regulations and in helping to develop these GMPs is a good place to start, one that listens to your questions and concerns before providing you their stock answer. A good consulting firm can walk you through your unique processes.

Ensure your quality systems are robust and documented, including your demonstrations that your cGMPs are being followed.

Charlotte Peyton supports EAS Consulting Group CBD and hemp clients as well as that of dietary supplements and pharmaceuticals. As an independent consultant, she assists with projects ranging from startup through manufacturing and support. Her expertise includes quality, regulatory and management, method development, and method validation for FDA regulated drug, dietary supplement, and bioanalytical samples. She has extensive experience in writing validation protocols, reports, and SOPs and assists with implementation of stability programs and report writing for finished products.

EAS Consulting Group, a member of the Certified family of companies, is a global leader in regulatory solutions for industries regulated by FDA, USDA, and other federal and state agencies. Our network of over 150 independent advisors and consultants enables EAS to provide comprehensive consulting, training, and auditing services, ensuring proactive regulatory compliance for food, dietary supplements, pharmaceuticals, medical devices, cosmetics, tobacco, hemp, and CBD.

Member Blog: 5 Things You Can Do While Waiting for License Approval

By Steve Flaks, VP of Sales, BioTrackTHC

Your state passed a cannabis legalization bill and licensing applications are underway! Hooray! Now, you’re gearing up to start your canna-business. With your business plans in-hand and your application sent in, the fee paid, there is nothing to do now but wait… or you can prepare. These 5 steps can help ensure your business is ready for a successful, stress-free opening day, and beyond.

Find Solid Employees

It’s important to look for candidates, if not expressly experienced in the cannabis industry already, to at least have transferable skills; anything from customer service to professional horticulture. It’s also helpful to look into the less-obvious employee options, as in, not just growers and budtenders.

Considering the amount of technology licensed cannabis operations requires, whether it’s maintaining your dispensary point of sale hardware, or ensuring your lights are properly wired to your timing system, IT and technology professionals are vital to any well-run business.

Hiring a cannabis compliance officer can be another vital employee to consider while defining the ideal operational structure. Finding a solid compliance officer isn’t an easy task – it takes an individual who has in-depth knowledge of cannabis compliance and regulations. Not only that, but finding someone who is a problem-solver and understands how to navigate even the murkiest of regulatory waters will be essential in growing across U.S. and international borders.

Develop Your SOPs

Standard Operating Procedures (SOPs) serve as the backbone of your day-to-day operations and define how employees can stay compliant while performing tasks, outline safety and regulatory requirements, and construct standardized steps to comply with cannabis business regulations. Implementing those steps and enforcing them creates consistency from employee to employee, even in the event of turnover and new hires.

Find a Software System that works FOR You

Whether you’re a grower, manufacturer or dispensary, you’re going to have to rely on a track and trace software to keep you compliant and keep your operation running smoothly. It’s important to find a software system that works FOR you, not the other way around. Many cannabis software solutions have rigid workflows and limited functionality, which leaves you with no other choice than to operate in a way that syncs up with the software. Others offer flexibility and can be customized to match your process.

Establish Your Brand

From logos and overall design to messaging and developing a social media presence… as Jeff Bezos says, “Branding is what people say about you when you’re not in the room.” With hundreds of other canna-business out there trying to make a name for themselves, developing a strong brand has become vital in the cannabis industry. Outstanding products have come and gone, so differentiating your business in the market can be the difference maker. As the embodiment of essentially everything your business does and represents, developing a solid and unique brand identity will take plenty of thought, and plenty of time.

Keep Track of Compliance in Your State

Do you know the ins and outs of cannabis compliance in your state? If you’ve already sent in your license application, odds are you’ve mostly wrapped your head around it. But understanding it and maintaining it in your day-to-day operations are two different things.

Each state has unique cannabis laws, which as we’ve seen many times are subject to amendments. It’s up to businesses to stay up-to-date on your state’s regulations and any potential changes to them, as well as keeping your operational workflows up to speed. Keeping smart on the proposed, and sometimes implemented regulations, will enable you to stay ahead of compliance changes and implement swift changes to address them.

It can be frustrating the pace at which the cannabis industry progresses, but as one of the fastest growing and emerging industries in the world, the one thing you can’t afford to do is tread water. There’s always something you can do to prepare so when you do open your doors, you’re already 10 steps ahead of your competition.

Leading the sales team at BioTrackTHC, Steve Flaks has helped to establish the company as a leading cannabis software provider operating in over 2,000 business locations. Mr. Flaks has been featured in a variety of industry panels and publications as a subject matter expert surrounding licensed cannabis operations discussing topics including SOP’s, operational workflows, cannabis software, and seed-to-sale compliance.