I recently attended the annual Marijuana Business Daily Conference and Expo along with over 30,000 other cannabis professionals from as far away as Vanuatu. There were talks on marketing tips and tricks, the latest status of international markets, and speculation on US legalization pathways. Between the endless booths vying for executives blank checks and the myriad of talks, many US based companies still struggle to see the freight train that is barreling down the tracks. As nearly everyone is well aware, Cannabis remains federally illegal, and although the Agricultural Improvement Act of 2018 (also known as the Farm Bill) removed cannabis plants containing less than 0.3% THC from the Controlled Substances Act (CSA), there is still no federally legal pathway for production of consumer products containing cannabis with the exception of drugs approved for clinical use such as Epidiolex®.
What is this freight train barreling down the tracks you may ask? While there is no lack of speculation regarding where 2020 will take the industry, a close look at the actions from within the FDA and Congress makes a compelling, if not painfully clear case of what direction the industry is heading.
Compliance and the Feds
Compliance is much more than seed-to-sale traceability or adhering to ever changing regulations set out by state and local authorities. Manufacturers should be laser focused on complying with Good Manufacturing Practices, which are the minimum requirements established by the Food and Drug Administration (FDA). Here is why:
First – The FDA regulates a wide range of products from pharmaceuticals and food to tobacco and even pet turtles. Thus, they have been regulating identical product lines for decades if not over a century. In the case of cannabis based products, the only difference is the cannabis plant derived ingredient(s). Takeaway: The FDA is technically prepared to step in and oversee production facilities just like any other consumer product.
Second – Since 2015, the FDA has been issuing Warning letters to CBD companies for violating the Food, Drug, and Cosmetics Act (FD&C Act). Most recently, 15 companies were warned for illegally selling products containing CBD in November. A month prior, the FDA and FTC jointly warned a CBD company for egregiously misleading marketing claims. These companies are forever plagued with the scarlet letter, and in the near-term, suffer from expenses caused to rectify an easily avoidable situation. This includes developing and seeking approval by the FDA of a robust action plan to address all of their violations within 15 days. The actual remediation can take 6 or more months as companies hunt down all of their poorly controlled material and make the required changes. This is a significant expense to the business and hurts consumer confidence in their brand.
Third – The FDA has made it clear in numerous public statements that they are aware of the cannabis industry and the significant consumer interest in it. One particular statement that has been overlooked by much of the cannabis industry was a November 7th speech by one of the Principal Associate Commissioners at the FDA Office of Policy given at the Council for Responsible Nutrition Conference. Much of the talk was on dietary supplement regulatory changes which have many parallels to the current CBD market. This parallel was made clear by Mr. Schiller himself as he remarked, “at FDA, we don’t have one set of rules for cannabis-derived substances, and another set of rules for other substances. We don’t approach CBD or other cannabis-derived substances with any sort of animus or impose unique burdens. At the same time, we don’t absolve them of having to meet the relevant safety standards and other requirements for whatever type of FDA-regulated product they’re found in. Consumers have a right to expect as much”. He made particular mention of the manufacturers entering the cannabis space lacking experience with the FDA including “complying with basic requirements like good manufacturing practices or truthful labeling” (emphasis mine).
Industry On Notice
The FDA is not coming to town. They are here, and here to stay. If you intend to have a viable business beyond the next 12 to 18 months, which is the average time it takes for a manufacturer to build a quality system from the ground up that complies with the FDA’s Good Manufacturing Practices, manufacturers would be wise to do what increasing numbers of businesses are doing and making moves to meet these needs. If done properly, a compliant quality system will not only keep you out of trouble with the regulators, but can provide unrivaled visibility into your operational efficiency, increase your bottom line, identify waste streams, and increase your attractiveness to investors.
With our Quality Managed Services as well as end-to-end technical consulting, the team at The GMP Collective can help you navigate these challenges and rise above with a profitable and reputable brand. Contact Us today to learn more.