Knowledge is Power
Knowledge is critical in effectively navigating this complex regulatory environment. See below for some of the most common questions our SME’s encounter in the early stages of an engagement.
What are the steps in bringing a legal cannabis product to market?
While cannabis is illegal at the federal level, many states have legalized it for either medical and/or recreational use. Each state has its own set of guidelines which may include:
- Licensing and Registration:
- Register your business with the secretary of state.
- Obtain any license, permit or other authorization required by your county, city or state.
- Perform annual analytical testing to confirm purity and potency.
- Our team also recommends toxicological assessments to ensure your product is appropriate for its intended use.
- Cultivation or Sourcing:
- Secure a cultivation facility and obtain the necessary permits.
- Comply with cultivation regulations, including quality control and testing requirements.
- Alternatively, if you’re not cultivating in-house, establish relationships with licensed cannabis growers or suppliers to source the cannabis material for your products.
- Manufacturing and Processing:
- Develop standardized operating procedures (SOPs) for manufacturing and processing, ensuring compliance with regulations and quality control measures.
- Process the cannabis material into the desired product form (e.g., extraction, infusion, formulation).
- Follow Good Manufacturing Practices (GMP) to ensure product consistency.
- Product Testing:
- Conduct comprehensive testing of your cannabis products in compliance with regulatory requirements.
- Test for potency, contaminants, pesticides, residual solvents, heavy metals, and microbial content.
- Use licensed and accredited third-party laboratories for unbiased and accurate results.
- Packaging and Labeling:
- Design compliant and informative packaging that adheres to local regulations, including child-resistant packaging requirements.
- Clearly label your product with the necessary information, such as potency, strain, ingredients, dosage instructions, and any required warning labels.
- Distribution and Supply Chain:
- Establish a secure and compliant distribution network to transport your products from the manufacturing facility to retail locations or customers.
- Ensure proper storage and transportation conditions to maintain product quality and compliance.
- Maintain detailed records and implement track-and-trace systems to track the movement of products in the supply chain.
- Marketing and Branding:
- Develop a marketing strategy to promote your cannabis products while adhering to advertising restrictions and regulations.
- Comply with regulations regarding age-restricted marketing and avoid making unverified health claims.
- Sales and Distribution Channels:
- Establish partnerships with licensed retailers or dispensaries to distribute your products.
- Comply with regulations regarding sales limits, point-of-sale systems, and inventory tracking.
- Consider online sales, where permitted, and explore direct-to-consumer models.
- Ongoing Compliance and Adaptation:
- This industry is evolving at a break-neck speed, so it’s important to stay up to date on the evolving regulations and adapt your processes to ensure ongoing compliance.
- Maintain proper record-keeping systems and be prepared for audits or inspections.
- Monitor customer feedback, market trends, and regulatory changes to refine your products and stay competitive.
It’s crucial to note that specific steps and requirements can vary depending on the jurisdiction, so you’ll want to consult with legal and regulatory experts familiar with the laws and regulations in your target market.
What regulatory bodies govern cannabis marketing and distribution?
Each state has its own governing body. California has the Bureau of Cannabis Control while the office of Cannabis Management governs New York. Oregon places this responsibility under the Oregon Health Authority. As part of your due diligence process, research the regulation in your state to determine the governing bodies regulating your organization and product(s).
How do I avoid being perceived by governing bodies as marketing to minors?
McKinney RSA’s team has developed a set of criteria to evaluate youth attractiveness of your product. Product naming and packaging play a significant role in determining whether a product is being marketed to minors. We advise our clients against including cereal names or making associations to candy, cartoon characters, etc. You’ll also want to consider usage of color – i.e., bright colors and/or shapes that could attract minors.
How can cannabis manufacturers help shape future legislation?
Cannabis manufacturers can play an active role in shaping future legislation by engaging in advocacy and taking part in the political process. Here are a few strategies to consider employing:
- Join Industry Associations: Get involved with a reputable cannabis industry association that advocates for sensible regulation and policies. These organizations often have lobbying efforts and work directly with lawmakers to shape legislation. Manufacturers can amplify their voices and contribute to the collective effort by joining and supporting these associations.
- Collaborate with Stakeholders: Building balanced regulation is a collective effort that requires collaboration across stakeholders. We encourage our clients to build cross-industry relationships with growers, retailers, consumers, and patient advocacy groups. By working together, manufacturers can form a united front, share knowledge and resources, and present a more cohesive and compelling argument for favorable legislation.
- Participate in the Legislative Process: As states and the federal government consider policy changes, it’s important to monitor regulatory dialog at each level. For starters, sign yourself up for legislative newsletters that come to your email and help guide your listening efforts or consider attending a public hearing and participating in the commenting period. If you want to dig in further, consider joining a relevant committee/task force or perhaps partner with an association or fellow industry stakeholders to submit a legislative proposal. You can provide input through public testimony or by submitting written comments expressing your perspectives, concerns, and suggestions. The point is to get involved, so find a way that feels comfortable for you and stick with it!
- Foster Relationships and Educate Policymakers: Proactively engage policymakers, lawmakers and legislative staffers by offering educational resources, hosting informational sessions, or providing tours of your facilities. Conversely, make an effort to attend political events, fundraisers, and community gatherings where you can build personal connections with key stakeholders. These interactions help further their understanding of the cannabis industry, its economic impact, and the benefits of responsible regulation.
- Support Institutional Research and Data Collection: Collaborate with academics, researchers, and organizations focused on cannabis research. By supporting and participating in studies on topics such as health effects, economic impact, and public safety, manufacturers can help generate credible data that informs evidence-based legislation. Sharing these research findings with policymakers can strengthen arguments for sensible regulations.
- Grassroots Advocacy: Mobilize your various constituencies – employees, customers, and local community supporters – to advocate for cannabis reform. Encourage them to contact their elected representatives, attend town hall meetings, and voice their support for responsible cannabis regulations. Grassroots efforts can have a significant impact on policymakers and helps demonstrate broader support of your message.
- Donate to Pro-Cannabis Initiatives: Identify and contribute to campaigns or initiatives that promote sensible regulation. Financial support can help fund public awareness campaigns, lobbying efforts, and legal challenges, all of which influence the legislative landscape.
Remember, shaping future legislation requires persistence, collaboration, and a commitment to responsible practices. By actively engaging in the political process, cannabis manufacturers can influence laws and regulations that promote a thriving and responsible cannabis industry. Ultimately, a solid regulatory strategy starts with manufacturers self-regulating. In absence of clear regulation, manufacturers can self-regulate by studying their product, understanding how the compounds interact and ensuring the product aligns to its intended use. By having clear benchmarks and quality control measures, you set the table for responsible future regulation.
What tips do you have for how cannabis manufacturers can self-regulate amid murky Federal regulations?
- Stay updated on local and state regulations. Although federal regulations may be unclear or inconsistent, it is crucial to stay informed about the specific regulations and requirements set by your state and local authorities. Regularly monitor any changes or updates and adjust your practices accordingly.
- Meet, or exceed, industry best practices. Adopt best practices recommended by reputable organizations or industry associations. These guidelines often cover cultivation techniques, manufacturing processes, quality control, and packaging standards. Implementing these practices can create a baseline and build credibility.
- Establish rigorous internal standards. Create comprehensive internal protocols and quality control measures to ensure product safety, consistency, and compliance with applicable state regulations. This includes guidelines for cultivation, processing, testing, packaging, and labeling.
- Implement robust testing procedures. Prioritize product testing to guarantee quality, safety, and accurate labeling. Test for potency, contaminants, pesticides, heavy metals, and any other relevant factors to maintain high standards and protect consumer health.
- Maintain transparent labeling and packaging. Clearly and accurately label your products with relevant information, including potency, strain, ingredients, and recommended usage. Use child-resistant packaging as required by local regulations to ensure safety.
- Provide compliance training and education. Regular employee training on compliance, safety and quality control helps your entire team engage in the process and promotes adherence to best practices and relevant regulation.
- Create a Track and Trace system. Manufacturers should have a robust tracking system to monitor the movement of cannabis products from cultivation to the point of sale. This helps ensure accountability, prevent diversion, and maintain regulatory compliance.
- Build your industry network. Join and, at the very least, support industry associations who are already working to establish and promote the maintenance of high standards across the cannabis industry. Collaborating with other manufacturers and industry stakeholders can help shape responsible practices and demonstrate a commitment to self-regulation.
- Be a responsible marketer. Adhere to advertising regulations specific to the cannabis industry, avoiding claims that are misleading, unsubstantiated, or appeal to minors. Be transparent about the potential risks and effects associated with cannabis consumption.
- Maintain detailed records. Keep comprehensive records of all operations, including cultivation, manufacturing, testing, packaging, and distribution. This documentation will help demonstrate compliance, respond to inquiries or audits, and track any necessary recalls or product improvements.
What are the most common regulatory issues that cannabis manufacturers encounter?
- Licensing and Permitting: Obtaining the necessary licenses and permits to operate legally can be a significant hurdle. The application process, requirements, and fees vary widely across jurisdictions, and the limited number of licenses available in some areas can lead to intense competition. Consult a regulatory expert and/or legal counsel before jumping.
- Regulatory Compliance: Cannabis manufacturers must navigate a web of regulations that cover cultivation, processing, manufacturing, labeling, packaging, testing, transportation, and distribution. These regulations typically involve strict guidelines on product safety, quality control, testing protocols, advertising restrictions, record-keeping, and security requirements.
- Different Standards for Different States: Cannabis regulation differs significantly from state to state, making it challenging for manufacturers operating in multiple jurisdictions. Each state has its own licensing, testing, labeling, packaging, and product formulation requirements. Manufacturers must ensure they are compliant with the specific regulations of every state in which they operate.
- Evolving Regulatory Frameworks: The regulatory landscape for cannabis is continually evolving as laws are updated or a new regulation is introduced. Keeping up with these changes, and adapting associated business practices can be a significant challenge. For starters, visit NORML and MJ Biz to get a lay of the land.
- Banking and Financial Services: Cannabis is federally illegal in many counties, which can pose financial challenges for cannabis organizations when managing cash flow, accessing loans, and other day-to-day banking functions. This is because many financial institutions are fearful of violating federal laws, legal risk and/or compliance issues. In the US, the SAFE Banking Act could create a legal pathway to finance in states where cannabis is legal, but that legislation is still in its early days.
- Marketing and Advertising Restrictions: Cannabis manufacturers are subject to strict marketing and advertising rules, in order to prevent misleading or unsubstantiated claims and promotion to minors. Here’s a resource that can help you get a better sense for the regulation in your region.
- Interstate Commerce Restrictions: In countries or regions where cannabis is legal at the state or provincial level, but remains federally illegal, cannabis manufacturers face obstacles in conducting interstate commerce. This can restrict market access to within your state, limit distribution options, and create logistical challenges.
- Packaging and Labeling Requirements: Cannabis products often have specific packaging and labeling requirements to ensure safety, proper dosing, and regulatory compliance. Manufacturers also must navigate guidelines related to child-resistant packaging, product warnings, ingredient lists, dosage information, and more. Packaging requirements are currently established on the state level, so make sure to understand the requirements in your state.
- Environmental Regulations: Cultivation and manufacturing processes can have environmental impacts, such as energy consumption, water usage, waste management, and pesticide use. Complying with state environmental regulations and implementing sustainable practices can be both a legal requirement and a social responsibility for cannabis manufacturers.
Didn’t find what you need? Check out the FDA’s glossary on cannabis and cannabis-derived products.