What are the regulatory guidelines for cannabis manufacturers?

In the United States, cannabis is regulated by the states that have legalized its use. The medical cannabis market is poised to take off in the next decade, but with that will come cannabis products are legalized at the Federal level.  Federal regulations are expected to focus on cannabis safety and effectiveness for consumers.

In the meantime, each state regulates cannabis differently.  There are three main types of regulations enacted by the states: licensing, testing, and labeling. While specific requirements vary by state, similarities in requirements do exist.

Licensing: In order to cultivate, manufacture, or sell cannabis products commercially, businesses will need to obtain the proper licenses from state regulators. In order to operate a cannabis business, manufacturers must obtain a license from the state in which they plan to do business. The requirements for obtaining a license vary from state to state, but most require an application fee and proof of compliance with local zoning laws.   These licenses will likely come with strict requirements around things like security, product quality, and employee training, and tax revenue/licensing fees to maintain licensure.

Testing: All cannabis products must be tested for potency and contaminants before they can be sold. This testing process will help ensure that consumers know exactly what they’re getting when they purchase a cannabis product.  The testing requirements vary from one state to the next.  Testing may include chemical content for cannabinoids and terpenes, as well as for impurities, such as heavy metals.  Microbiology testing confirms that the product is free from harmful bacteria and molds.

Labeling: All cannabis products must be clearly labeled with information about their potency, contents, and potential risks. This labeling will help consumers make informed decisions about which products are right for them.  Some labels may include special barcodes to authenticate product and ensure that it is not diverted from its intended supply chain.

 

How do you ensure compliance with these regulations?

There are a few key ways to ensure compliance with these regulations.

First, be sure to familiarize yourself with the specific regulations that apply to your business in your state. Make sure you understand all of the requirements for obtaining a license, as well as the testing and labeling requirements. It is crucial to ensure close compliance with state regulations to maintain licensure.  Additionally, because cannabis is not recognized as legal at the Federal level, cash is king in the cannabis space, and tax deductions for business expenses are prohibited.

Second, work with state-licensed testing facilities to ensure that your products meet all relevant safety standards. These facilities can help you test your products for potency and purity, and they can also provide guidance on how to label your products correctly. It is recommended that laboratories comply with ISO 17025, preferably with appropriate ISO certification.  ISO 17025 provides standards for calibration, maintenance, laboratory management, and test method robustness, so you know that the lab consistently delivers accurate lab results.

Finally, make sure that your labels comply with all labeling requirements. Be sure to include clear and accurate information about your product’s contents and potency, as well as any warnings about potential risks associated with consuming cannabis. By following these steps, you can help ensure compliance with all relevant regulations.  State regulations will have specific requirements for labeling compliance.

 

What are the consequences of noncompliance with regulators’ standards?

If a cannabis manufacturer fails to comply with state regulations, they may face consequences such as fines, suspension of their license, or even shutdown of their business. Noncompliance with labeling requirements can also lead to product recalls and loss of consumer confidence. These are very costly consequences, which can erase any economic windfalls gained by a cannabis business.  Therefore, it is important to make sure you are familiar with the regulatory standards in your state and take steps to ensure compliance.

Further down the road, a track record of noncompliance can lead to legal trouble and potential difficulty once cannabis is regulated at the Federal level.  The Federal government may choose not to allow a company to continue doing business once cannabis can be marketed across the nationally.  The FDA has already issued numerous Warning Letters to cannabis companies who failed to properly label and promote their products.  Many of these companies had no choice but to shutter operations.

Can cannabis manufacturers benefit from working with regulatory agencies to develop best practices and guidance documents specific to their industry sector?

Yes, working with regulatory agencies to develop best practices and guidance documents can help cannabis manufacturers ensure compliance with state regulations. Additionally, it can also help build trust and confidence with consumers. By collaborating with regulators, manufacturers can show that they are committed to producing safe and high-quality products.  Another way to collaborate with regulatory agencies is to participate in a pilot program.  Pilot programs are for companies who work with the regulator to test-drive a new regulatory concept to assess its feasibility for the larger community.  Pilot programs offer an opportunity to collaborate with regulatory experts and to trade ideas with other companies who are facing the same regulatory challenges that you face.

Are there any other considerations that cannabis manufacturers should take into account when it comes to complying with regulatory guidelines?

Cannabis manufacturers should also keep up to date on changing regulations, as they can vary from state to state, and are even changing rapidly at the state level, as states study the outcomes of other jurisdictions and choose to adopt ideas from one another.

Additionally, it is important to have a good understanding of your business’s compliance risks and put in place appropriate risk management strategies. Finally, consider implementing an internal audit program to regularly check that your business is meeting all regulatory requirements.

By taking these steps, you can help ensure compliance with ever-changing regulations and minimize the risk of negative consequences for your business.