The Cannabis Market Is Opening Up: Are Producers Aware of the Potential Regulatory Challenges Ahead?
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The 2018 decision to legalize hemp at the federal level in the United States drastically changed the industry landscape and created a new revenue stream for farmers. As hemp is the species of cannabis that CBD is extracted from, its legalization allows farmers to capitalize on the growing CBD consumer trend.
CBD products, from cosmetics and wellness to food and drink, are rapidly growing in popularity. Experts predict the combined value of the CBD market will reach $20 billion by 2024. Since the Farm Bill was signed into law, farmers have been working to acquire the necessary equipment – including extractors, filtration equipment, and distillation machines – to produce CBD at scale and benefit commercially from this rising demand.
But with this new opportunity comes challenges. Producers need to maintain strict quality control standards and meet newly formed market regulations. To understand the importance, we can imagine the scenario of a food product gaining popularity – a rapid spike in demand is quickly met with increased supply and new brands entering the market eager to capitalize on the trend. But this creates a regulatory nightmare in the unfortunate event that the health of consumers is affected, and it is found that ingredients in the product that were not regulated by the government were the cause.
Cannabis producers want to avoid this with cannabis oil. Understanding the regulations that CBD oil needs to adhere to is the first step, but in the rush to begin production and meet demand, many farm owners and processors are purchasing and using equipment that is not up to par, including secondhand filter housings and filters that are not compliant with the latest guidance.
In particular, production facilities at CBD oil processing sites need to be compliant with food contact regulations and meet good manufacturing practices (GMP) in order to deliver the high-quality products that both the end consumer, and the government, expects.
Why is food contact compliance (FCC) so important?
Manufacturers have a responsibility to ensure that their equipment and practices meet the high standards required to create a final product fit for the consumer. Equipment needs to be confirmed as suitable for the intended application, meet food contact compliance, and adhere to GMP.
Failure to meet to these requirements could cost production facilities time, money, and even their license to operate. For both new and old players in the market, it is mission-critical to identify and work with vendors who understand and adhere to the highest standards of GMP and can advise on the most suitable equipment solutions.
The next challenge comes in understanding what it takes to be GMP compliant. The US cannabis market is very complex one when it comes to compliance, with regulation varying from state to state; the rules in Virginia are not the same as those in New York.
Because regulations are inconsistent, cannabis farmers find themselves in a difficult situation when trying to determine the level of compliance they need to meet. This makes finding a vendor that understands the nuances of compliance across different states all the more important.
As the US market adapts to the legalization of hemp and the challenges and opportunities that come with it, it pays to look at other countries as a framework. Canada is an important benchmark for the US, where cannabis companies are currently required to meet European Union levels of compliance. The various provinces do have different regulations for Canadian Registration Number (CRN) housings, but all cannabis oil producers are expected to meet a minimum level of compliance with respect to GMP and FCC, which creates a standard for all cannabis companies in Canada to follow.
Considerations for farmers when entering the CBD market
Rising consumer demand for CBD products offers many commercial opportunities and the market is ripe for growth, but it is extremely important the same mistakes that other nascent industries have made are not repeated.
Adhering to FCC/GMP regulations is paramount and ensuring that equipment does so from the outset can help avoid running into issues further down the line.
Farm owners need first to consider what the current or potential GMP requirements are that their end product must meet, and of course whether there are any state or regional differences to consider in this.
It is also important to look at how customers will use the cannabis oil that is being produced and whether there are any specific regulations surrounding the product. Most importantly, cannabis oil processors need to consider whether the equipment meets the latest FCC regulations and if not, how it can do so. Ultimately, these companies need to keep the end consumer in mind, as a product recall could cost them their brand.
When purchasing equipment, cannabis companies should work closely with potential vendors to make the best decision – the best vendor should be more than a vendor, it should be a partner which understands the complexities of FCC and GMP and can help select the right equipment to ensure a product’s compliance and ultimately its success. At Pall we work with producers to enable them to supply consistent, quality-assured product, and succeed in whatever market or region they are operating in.
Connor Hutcherson is a field application scientist at Pall Corporation focused on driving innovation manufacturing solutions within food and beverage manufacturing. Connor’s responsibilities include monitoring cannabis industry trends in the United States and Canada.