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WINTER LLP Update: Committee Blog: Protecting Stash-Assets

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Committee Blog: Protecting Stash-Assets

By NCIA’s Infused Products Committee
Contributors include Radojka Barycki, Noval Compliance; Karin Clarke, KC Business Solutions; Lee Hilpert, Organnx; Danielle Maybach, Eva Gardens; Trevor Morones, Control Point; and Todd Winter, Winter LLP

You have spent months fighting sleep deprivation to build a strong pitch deck as the next most desired infused cannabis company. Educating staff, family, and friends, through role-plays and recent published journal entries. Blog after blog, inspirational book after book, and you start to believe that the deck is complete. Dress to impress then review the multi-colored sticky notes that list the risks of your operation. Some are likely, others are less, but what about the ones that are high? Is ALL of your due-diligence completed to pitch to the venture capital groups in the cannabis world?

The Issue

While legalization has quickly brought cannabis and cannabis-related products into international markets, relevant food safety regulations need to be implemented and adopted to protect patients and consumers. The infused product manufacturing sector, in particular, requires more uniform safety requirements to guide operating professionals, many of whom lack knowledge, resources, and incentive to standardize safety.

As target consumers range from large groups of adult consumers to medical users, safety is a paramount concern for all. This is especially true for medical users, as they are predominately high-risk consumers regardless of their specific medical condition.

The cannabis industry, especially the infused edible products sector, has a prime opportunity to incorporate and implement existing food safety regulations into their manufacturing processes. This will demonstrate alliance with the general food manufacturing industry and help to ensure that cannabis-infused product manufacturers are regulated no more stringently than any other food manufacturer.

The Risk

In addition to the already controversial nature of our industry, safety issues will undoubtedly garner public and press attention when as few one people become ill as a result of an unsafe product. Contamination inevitably comes from a variety sources, such as chemical, physical, or biological hazards in the growing and extraction process (and lack of testing), employee contamination (failure to use gloves, wash hands, dirty garments and tools, etc.), failure to adhere to basic food safety processing standards and practices (clean food contact surfaces, improper chemical concentrations, introducing biological contaminants).

Without clear and industry applicable guidelines and processes, product safety issues will emerge and take over headlines. Issues of product safety damage consumer and industry trust, resulting in lost revenue, loss of market share, decreased share value and loss of talent. One most recent example of the exorbitant cost related to product safety was made ominously clear in the multi-state Chipotle case. This incident caused a tragic decline in customer confidence and many days of double-digit stock value plunges.

The Solution

Site-specific training for all team members is the preventative action to reduce risks and generate positive audit results. Rigorous training programs expand food/product safety knowledge, generate a stronger culture, reduce risk, and prevent contamination. By focusing on how each employee can positively impact safety through their daily actions and contribute to the market value and customer satisfaction, employees take on a stronger safety and excellence culture, resulting in higher Net Promoter Scores (NPS).

Measurement is critical to quality control and ongoing excellence. Food Safety Management Systems (FSMS) provide operating structure and validate the process to prove the system is operating as intended. These proven systems operate on a foundation of integrity that mitigates risk throughout the process of a product. No doubt the learnings there transfer to the cannabis products, especially infused products.

What’s Next?

The IPC’s goals are to raise awareness, effectuate positive change, and help establish protocols and standards for food safety, dosing, and testing within the cannabis industry. This will establish baselines from which cannabis business operators can rely upon, prevent inapplicable regulatory requirements that are not relevant to our industry, and most of all provide for the safety of consumers.

Now, when did food safety leave a bitter taste in your mouth? Precisely! Never would we need an Upton Sinclair to transform the industry from a negative outlook on the truths. Collectively we will unite and hold our operations to a standard of excellence that will be called upon during the end of cannabis probation on a national level.

URL: https://thecannabisindustry.org/committee-blog-protecting-stash-assets/

WINTER LLP: COMMITTEE BLOG: NCIA’S INFUSED PRODUCTS COMMITTEE STIRS THE TESTING BATCH (INTERVIEW)

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JULY 23, 2018

COMMITTEE BLOG: NCIA’S INFUSED PRODUCTS COMMITTEE STIRS THE TESTING BATCH (INTERVIEW)

A year ago, NCIA’s Infused Products Committee (IPC) made the decision to tackle the issue of cannabis testing. It is an issue we feel is at the heart of cannabis legalization and is negatively impacting cannabis businesses across the nation. Although it has been a struggle to get comparable lab results across different labs, IPC believes there is a future where cannabis testing will reach consistency.

We began our process by asking several questions and with the assistance of the NCIA, we crafted a survey that was sent to experts in the field. During our preliminary research, we discovered that most cannabis testing labs view their protocols and procedures as proprietary information.

To gain better insight about the testing sector, we asked Alena Rodriguez, a member of NCIA’s Scientific Advisory Committee (SAC) to participate in an interview. Alena represents Rm3 Labs, a cannabis testing laboratory in Colorado.

IPC: Are you concerned about the inconsistent and varying test results and the impact it has on consumer safety?

Alena: Yes, I’m concerned. I do not take my job lightly; I know that contaminated cannabis can be harmful and sometimes life threatening. That is why I am involved with state regulators and groups like NCIA’s SAC and Testing Policy Working Group. We aim to educate regulators and stakeholders on the importance of practices such as independent audits, proficiency testing and ISO/IEC 17025 accreditation for cannabis testing labs.

IPC: Do you think we are close to having consistent cannabis test results from different laboratories?

Alena: We are well on our way. In Colorado, licensed labs must undergo Proficiency Testing (PT) twice per year. PT is done through an inter-laboratory comparison where participating labs receive the same sample and analyze it using their methodology. Even though our procedures are not standardized to one method, most of the labs arrive at the same result. Unfortunately, not all states require PT yet, but I feel more and more states will adopt these programs.

Along with PT, consistent testing across labs requires the use of high-quality reference materials that are used to validate analytical methods and calibrate instruments. Cannabis testing labs in the United States have limited access to reference standards. Like cannabis, most industries started with limited resources, but over time the science will progress as federal barriers are lifted to make more research and better standards possible. It took decades to develop standardized, consistent methods in other industries, such as in pharmaceuticals and food testing. I don’t see the cannabis industry being any different.

IPC: Should there by penalties if a testing lab consistently provides drastically different results from prior tests of the same product?

Alena: It depends on the situation. If the lab is knowingly breaking the rules or trying to cheat the system, then absolutely. But, most of the time inconsistent results have causes other than fraud or negligence. This industry produces new products every day and some manufacturers and laboratories don’t “get it right” on the first try. There is a lot of research and development that is involved. Three of the biggest hurdles for consistent testing of cannabis products are 1) the variety of sample types 2) the lack of certified reference materials for uncommon cannabinoids and terpenoids and difficulties in obtaining concentrated standards and 3) inhomogeneity in some infused products or concentrates. Product uniformity is critical and should be confirmed by analytical testing for consumer safety. Variable results across multiple labs may suggest a product lacks uniformity.

IPC: Do you believe testing procedures and protocols are proprietary?

Alena: Yes, third-party cannabis laboratory protocols are just as proprietary as the protocols developed by cultivators, concentrate extractors and infused product makers. Testing labs having proprietary methods is not novel to this industry. If a lab in any other industry (e.g. food, medical, agriculture, environment) develops an alternative method to the standard method, they can use it if they can validate against the reference method.

IPC: Should labs be required to prove their analytical methods are accurate by submitting their practices confidentially to a regulatory body?

Alena: Absolutely! Colorado labs are currently required to send all new Standard Operating Procedures (SOPs) and method validations to the CDPHE prior to implementation. I hope more states adopt this practice, if they aren’t doing so already. As of January 1, 2019, all cannabis testing labs in Colorado will be required to be ISO/IEC 17025 accredited. ISO/IEC 17025 accreditation is the international gold standard for assessing the competence and quality management systems of testing labs across all industries to ensure consistent, accurate test results. More than a dozen cannabis labs have achieved this accreditation across the country.

IPC: Are you aware that the ASTM Committee D37 reportedly drafted testing procedures? If published, will cannabis testing labs follow published procedures that are not their own?

Alena: Yes, I’m excited! This is a great step for our industry. I imagine the committee will develop similar protocols to those being used by third-party labs. But as I mentioned before, labs will have the choice to use the published standard methods or their own alternative method, granted it is validated against the reference method. I expect some labs will attempt to validate their methods against the standard methods and some will adopt ASTM’s methods.

IPC: Are you aware of testing labs that allow for “tipping” on their order forms? Does this concern you, and why?

Alena: It concerns me that there are bad actors in the testing sector of the cannabis industry but I’m afraid there are bad actors in every segment of every industry. At Rm3 Labs, we do not participate in or condone unethical behavior such as paying for the results you want. We would never risk falsifying test results because we are aware immunocompromised individuals and children are possibly taking the products we are testing. I would not risk my entire scientific career to give you 5% higher THC potency results or lie about your contaminant testing results. I advise all cannabis testing labs to always act ethically because you are in the business of public safety and your lab is subject to investigation by regulatory agencies at any time.

IPC conducted the above enlightened interview with SAC. While we were inspired by some of the answers, much like our survey attempt this past year, many of our questions remain unanswered. For example, we don’t agree that cannabis cultivators or manufacturers are to blame for receiving inaccurate “clean/approved” test results from labs due to products being inhomogeneous.

That said, it is clear by a couple of the responses that some states, like Colorado, are making substantial progress in oversite and legal requirements for testing laboratories, while other states, like California, are still leaving significant and dangerous gaps.

In our opinion, the industry’s need for consistent and accurate testing results remains at the forefront of the issues facing commercial cannabis today. The ability to send the same sample, from the same batch, under the same conditions, and have it tested by multiple labs, achieving the same results, is paramount to our industry’s future and success. State laws should require it. The industry should demand it. And the consumers most certainly deserve it.

As such, the IPC will continue its mission to drive this conversation forward with both testing labs and operators alike. Only together, can we really solve this crucial issue facing our amazing industry.

WINTER LLP UPDATE: National Cannabis Industry Association Calls On Congress To Regulate Cannabis In Response To Reports Of Vaping-Related Illnesses

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Advocates cite prohibition as main driver of illicit market products linked to most cases, urge federal action, caution from producers of state-legal cannabis vape products
** Statement below from National Cannabis Industry Association Executive Director Aaron Smith **
WASHINGTON, D.C. – In recent weeks, a growing number of respiratory illness cases associated with nicotine or cannabis vaporizer (vape) cartridges have been reported, leading to increasing concern among cannabis vape cartridge consumers, regulators, and medical experts. As of early this week, more than 450 cases have been reported nationwide, including six fatal cases.
The vast majority of these reports have been linked to vape cartridges that were produced and obtained in the illicit and unregulated market, or that were adulterated by consumers. The minute number of cases that have so far been associated with legal cannabis products have not shown definitive links to those specific products. Cases have been reported in states with and without regulated cannabis markets.
Preliminary research has suggested some additive thickening agents, particularly Vitamin E acetate, as a likely cause for many of these cases. This is so far inconclusive, however, and other possible causes including pre-existing medical conditions, faulty delivery devices, or problematic consumption behavior are being explored.
In light of the indeterminate cause(s) of these illnesses and variance in state regulations regarding vape cartridges, the National Cannabis Industry Association (NCIA) makes the following recommendations:
Congress is urged to immediately remove cannabis from the Controlled Substances Act and begin to sensibly regulate this substance in a manner similar to alcohol and other consumables, and to make funds immediately available to state medical authorities to investigate these cases.
Licensed vape cartridge producers are encouraged to halt the use, if any, of additive thickening agents until more data is available.
Given the preliminary reported association of some illness cases with Vitamin E acetate, any licensed producer that has included this additive in recent vape product batches is strongly encouraged to issue a voluntary recall of those products.
Licensed cannabis retailers are encouraged to take steps to ensure none of their available vape cartridge inventories have been sourced from a producer that uses Vitamin E acetate.
Cannabis vape cartridge consumers are urged to immediately cease the use of any product obtained from the illicit market and to limit any future purchases of vape cartridges and other cannabis products to state-licensed, regulated businesses.
Statement from Aaron Smith, executive director of the National Cannabis Industry Association:
“These unfortunate illnesses and deaths are yet another terrible, and largely avoidable, consequence of failed prohibition policies. Current federal laws interfere with research, prevent federal regulatory agencies from establishing safety guidelines, discourage states from regulating cannabis, and make it more difficult for state-legal cannabis businesses to displace the illicit market. These policies are directly bolstering the markets for untested and potentially dangerous illicit products.
The fact that so few of these cases have so far reported any link whatsoever to the legal cannabis market is a testament to the effectiveness of state regulators and licensed businesses at ensuring product reliability. As an industry, however, we view it as our duty to make sure whatever is causing these illnesses is not replicated in legal products and to work toward enacting regulations that can prevent similar public health issues from occurring in the future. The legal cannabis industry is paying very close attention to any new information provided by medical authorities regarding these cases.
It is now the responsibility of Congress to end prohibition and regulate cannabis without delay. By removing cannabis from the schedule of controlled substances and instituting a clear regulatory framework through existing agencies, the federal government can provide helpful guidance to states that have or wish to establish regulated cannabis control systems while helping put irresponsible illicit market producers out of business for good.
We are deeply saddened by this situation and sincerely hope the specific causes are determined as soon as possible to help avoid further suffering. We stand ready to work with Congress and federal regulators on the long-term solution to this problem, which is replacing prohibition with sound regulations.”
Cannabis is legal for adults in 11 states, Guam, and the District of Columbia, and 33 states as well as several territories have comprehensive medical cannabis laws. The substance is legal in some form in 47 states.

Link: https://thecannabisindustry.org/press-releases/national-cannabis-industry-association-calls-on-congress-to-regulate-cannabis-in-response-to-reports-of-vaping-related-illnesses/?utm_campaign=NCIA%20Content&utm_medium=email&_hsenc=p2ANqtz-_QSGQOOUPW2CVU63lHKv4RXl7YRUvTsGpKRHsO9swsh_5rrOkTfeHKGehMwDrtuuNl83i7iXHoyIsEIsoORc2qErwSiiiBfwYPnz1hykydjFQ13F8&_hsmi=76719797&utm_content=76719797&utm_source=hs_email&hsCtaTracking=f4f9fce2-1e48-448c-aa85-3ab7c5e30145%7C1f416949-6f18-4b31-8b46-2e20b9209df7

WINTER LLP UPDATE: CCIA SUBMITS TESTIMONY AT HISTORIC HOUSE HEARING ON CANNABIS BANKING

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CCIA PREPARES TESTIMONY FOR HISTORIC HOUSE HEARING ON CANNABIS BANKING

Sacramento,CA – The California Cannabis Industry Association (“CCIA”), which is the leading cannabis trade association in the state of California, has strengthened its advocacy in Washington by submitting testimony to the House Financial Services Committee hearing “Challenges and Solutions: Access to Banking Services for Cannabis-Related Businesses,” scheduled for February 13. As home to the country’s oldest medical cannabis market, established in 1996 by the Compassionate Care Act, and home to the country’s largest legal adult use market, the expert testimony of CCIA Executive Director, Lindsay Robinson, addresses the safety, social, and economic risks and realities experienced with an all cash industry. CCIA’s federal advocacy is in support of the Secure and Fair Enforcement (SAFE) Banking Act, providing the cannabis industry access to banking and to capital markets that they desperately need.
The country’s legal cannabis market has grown to 33 states plus the District of Columbia with legalized medical cannabis and over ten states with legalized adult use cannabis, reaching over $10.4 billion in sales in 2018. Most of this revenue being cash as cannabis businesses do not have access to banks due to Federal illegality.
CCIA Executive Director, Lindsay Robinson, says that “legalization of cannabis is not a partisan issue. We have seen the legalization of cannabis across the political spectrum, and public support is at an all-time high.”
But what does that mean? Robinson says that “Due to the federal government’s continued classification of cannabis as a Schedule I drug under the Controlled Substances Act, the multi-billion dollar U.S. cannabis industry is denied access to banking and capital markets, which are basic necessities for any legitimate industry.”
Robinson’s testimony goes on to explain that “The ability to use U.S. financial institutions for banking is essential to ensure the safety of the cannabis industry and cannabis consumers. Without access to banking, companies are forced to maintain large amounts of cash on hand, pay employees and vendors in cash, and use cash to pay taxes. All of this creates an untenable situation where the safety of consumers, employees, and companies is at risk.”
The lack of access to capital markets by the cannabis industry adds a barrier to social equity applicants attempting to access funding to enter the legal market. Robinson explains that “The lack of access to capital markets, however, means that federal cannabis prohibition continues to place women and minorities at a disadvantage. Although some states have sought to address the issue of diversity in the cannabis space, the costs associated with starting a cannabis company are prohibitively high for those without easy access to capital. Banks’ inability to lend to cannabis entrepreneurs perpetuates the exclusion of women and minorities from the cannabis industry and concentrates opportunities in the hands of a predominantly white, male segment of society who traditionally has more access to capital.”
The many challenges and unintended consequences that are experienced by the legal cannabis industry’s lack of access to banking and capital have been challenging in California, which is why CCIA’s Executive Director is taking her advocacy to the Federal government to find solutions. “For these reasons, CCIA supports the Secure and Fair Enforcement (SAFE) Banking Act. This bill will provide our membership with the access to banking and capital markets that they desperately need. It will increase the safety of the industry by eliminating the need to operate on a cash basis and will help to ensure that women and minorities have access to the capital needed to enter the cannabis industry.