One lesson from cannabis' recent troubles is that legalization alone won't solve the industry's other major challenge -- the lack of uniform oversight that ensures products are consistently safe. If THC and hemp products were legal tomorrow, we'd still be worried about poisonous vape pens.
But a more definitive regulatory framework is certainly on its way, and along with it, a change in the character of the industry. Cannabis 2.0 will likely see brands embracing product quality and safety as customers, regulators and service providers demand more accountability. Professional operations are in. They build trust. The novelty sell, vague product claims, and empty brand-building are out.
Still, companies are taking their time getting there. For example, relatively few CBD companies -- a handful among thousands -- have attained certifications common in similar industries like food manufacturing.
Colorado's Mile High Labs is one. The self-proclaimed "largest manufacturer of cannabidiol (CBD) isolate in the world" recently opened a new, 400,000-square-foot production facility in Broomfield, Colorado, repurposing the space previously occupied by pharma giant Novartis/Sandoz. The new facility will enable the company to "expand into production of capsules, tablets, topicals, and gummies in addition to CBD isolate and distillate ingredients," among other operational upgrades.
The new facility will also follow the path of MHL's facility in Loveland, Colorado, which is GMP- and ISO-certified. For Rishi Sehgal, managing director of MHL's co-packing division, it's part of a deliberate path the company is taking toward a new cannabis industry -- 2.0.
"Our view is that the long-term play for CBD brands and products will be dependent on quality and scalability," says Seghal. "Right now there are many actors out there who are cutting corners, in it only for the short term. The investment we've made in our facility will allow the brands that manufacture with us to win in the long term."
The million-dollar question is: When will buyers decide that quality and transparency matter? It's a good bet that today, a small percent of CBD buyers know where, or how, products are sourced and manufactured. There's every reason to think that will change. For starters, the FDA and others will insist customers know.
And that's a good thing. CBD manufacturing is unregulated. We're trusting that the companies we patronize are doing the right thing. No doubt most are well-intentioned. But many don't know what they don't know.
"There are a lot of companies who think they're doing well, but really aren't," says Kim Stuck, founder of Allay Consulting and one of the industry's few compliance experts. Stuck was Colorado's first "marijuana specialist" for the Denver Department of Public Health & Environment (DDPHE).
"I hear from companies all the time that they're GMP (Good Manufacturing Practice-certified), or that everyone they buy from is GMP, and that’s highly unlikely," says Stuck, "We so often see very general things that are needed to be FDA-compliant, not even GMP-compliant."
With so many products in the market, and more coming out, Stuck worries a lax compliance landscape makes for problems ahead. "I think that anytime where you're up- taking an untested product from an untested source -- in this case, inhalers, eyedrops, nasal sprays, suppositories -- we're going to run into the most issues, I believe. Plus with the hemp side, they're not regulated at all. They don't have to test for pesticides, for heavy metals, for much of anything. If we don't get regulations quickly, we will have issues there as well."
Even if cannabis companies knew and understood the regulatory framework ahead of them, Stuck also sees a steep learning curve, with companies struggling to adapt to regulations. For Mile High Labs' Sehgal, it will be doubly hard for those brands not already focused on high manufacturing standards, or for brands buying from those who aren't ahead of the GMP curve. "Quality is something you just can't throw money at; it's built into the DNA of a company," he says.
It's part of cannabis' long strange trip that the very regulations that will soon cause heartburn are critical to the industry's success. The sooner cannabis companies take on the collective responsibility to be more transparent and accountable, the sooner those standing in the way of legalization and banking will relent and usher in the real Cannabis 2.0: industry's quantum leap to safer and higher quality products.
Bart Taylor is publisher of CompanyWeek. Reach him at firstname.lastname@example.org.
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