NEWS BITE: Germany is the biggest market for medical cannabis outside of North America. Companies in Canada, and even the U.S., are eyeing opportunities.
Quality management and transportation best practices improve companies’ competitiveness and export opportunities.
In 2018, Canada passed the Cannabis Act, which legalized recreational cannabis. One year later, in October 2019, cannabis edibles and concentrates were legalized.
Legalization ushered in strict rules throughout the cannabis supply chain, including production, packaging, transportation and distribution.
For Nova Scotia-based Iron Apple, a provider of quality management systems (QMS) and training solutions, it was an opportunity to expand its offerings beyond the food industry to include cannabis, too.
“As a Canadian company, it made sense for us to jump in to the cannabis supply chain,” says Lindsay Glass, development and implementation manager. “There are a lot of similarities with the way food and cannabis are manufactured from a regulatory perspective.”
Iron Apple worked closely with a Licensed Producer in Canada to design and build the Cannabis Production & Cultivation QMS.
Iron Apple launched its Cannabis Production QMS a year ago, says Glass.
Because cannabis is legal at the federal level in Canada, there is consistency with safety and standardization throughout the country’s 10 provinces and three territories with some slight variations on the distribution side. Some provinces have private retail stores, while others require government-owned stores.
Nonetheless, “In the terms of safety, labeling and quality standards, the cannabis you buy in Alberta is exactly the same cannabis you’re going to find in Ontario,” explains Glass.
Stringent Rules For Transporters
The stringent regulations associated with the Cannabis Act also impact transportation providers.
Miriam Tepperman, a partner at Devry Smith Frank LLP in Toronto, Canada, says transporters that operate, or are considering operating, in the cannabis industry must exercise due diligence and understand the legal, insurance and regulatory aspects of the Cannabis Act.
For example, transporters need to comply with the Cannabis Tracking System required under the Cannabis Act. The system is designed to track the movement of cannabis from cultivator to processor, on to the province or retailers, and to the final sale, in order to help detect and prevent the diversion of licit cannabis to the black market, and illicit cannabis to the legal market.
“The Cannabis Tracking System requires monthly reporting by LPs (Licensed Producers), inventory reporting, and reporting from the health care practitioners. The obligations of the transporters needs to be determined and needs to comply with this regime,” writes Tepperman and co-author, Janet Son, in an article entitled, “Moving Cannabis: The Canadian Perspective.”
Aside from the significant regulations transporters are required to comply with when transporting cannabis, the product itself demands specialized handling to insure the integrity of the product, as well as the security.
“Cannabis and its products can be very delicate. There can be light issues, heat issues and moisture issues that can damage the product. More importantly, it is a high value-to-weight product that has significant demand on the black market, and therefore is a target for theft,” writes Tepperman and Son.
“Consideration therefore needs to be made to transporting the products with the necessary type of vehicle that can supply the necessary conditions and security needed to keep the product safe and viable. Damage to the product and theft will lead to significant expenses for companies and/or its insurers.”
Transporters need to weigh the pros and cons of “unmarked trucks, versus armored trucks, versus security guard escorts, versus police escorts,” according to Tepperman and Son. “They should also consider the number of drivers per truck, predetermined or blind routes and geo-tracking shipments. While there is little regulation in this regard, the costs associated with theft for companies and the risks prevention measures an insurer may impose will likely create a standard that exceeds any regulations.”
Iron Apple’s Glass concurs. “There’s so much more than temperature-control. For instance, cannabis edibles must be produced in a clean, safe, and sanitary environment that has preventive controls in place, just like a regular food item, such as a chocolate bar.”
Iron Apple’s deep expertise in food safety compliance solutions that are used widely throughout North America for transportation and cold storage facilities was key to developing a robust and comprehensive Cannabis Production QMS. The solution also helps cannabis producers remain “audit ready” while reducing the risk of getting their license suspended or revoked.
While Iron Apple is continually updating its QMS and training modules, Glass says the company is also interested in making the Cannabis Production QMS compliant with the European Union’s Good Manufacturing Practice (GMP) rules, which sets forth standards that a manufacturer of medicines must meet in their production process.
“It’s a really hot topic right now, because in order to sell to the EU, a company has to be GMP compliant, and a lot of companies want to start off being GMP compliant right away and will often simultaneously apply for their cultivation and production licenses while building a facility from the GMP standard,” says Glass.
Germany, in particular, is an important export market for Canadian cannabis producers. The country has legalized cannabis for medical use, but it cannot produce enough domestically to satisfy demand.
Since Canada legalized the export of cannabis for medicinal purposes in 2015, exports of dried cannabis have tripled.
About Lara L. Sowinski