Concrete details about when federal legalization may occur or how it may unfold remain almost nonexistent. Nevertheless, the industry has begun preparing for the increased scrutiny most see as inevitable. Other highly regulated industries may provide clues about cannabis’s path forward.
Good Manufacturing Practices (GMPs) are employed almost universally in established industries to protect consumers and provide assurances about commercial suppliers. By committing to these standards and enforcing them with audits conducted by appointed regulatory bodies, businesses large and small safeguard themselves against risks and costly recalls. Cannabis Safety and Quality (CSQ) was created in anticipation of the same paradigms in the cannabis industry and to help forward-thinking operators lay a foundation of consistent product safety standards and best practices.
Starting something new
Prior to launching CSQ, founder and Chief Technical Officer Tyler Williams served as vice president of operations for ASI Food Safety, one of the leading third-party food safety auditing, training, and consulting companies in the United States. At ASI, Williams was responsible for certifying more than 3,000 audits per year as well as managing contracted auditors around the world. During his tenure, the company began fielding requests from cannabis companies interested in deploying GMP audits.
“At the time, [ASI] only had a food processing, food packaging, or dietary supplement audit,” he said. “These audits didn’t fit what cannabis companies needed. I started looking around and realized that nobody was offering certification programs to the cannabis space specifically for safety and quality. That’s when the light bulb in my head went off. These companies are really trying to do the right thing, but the regulations aren’t anywhere close to where they need to be.”
So, Williams began developing a set of standards—agreed-upon safety practices and standard operating procedures—that would meet the unique needs of the cannabis industry today and tomorrow. “The regulations and requirements, especially around GMPs, are generally in line with that of the food, pharmaceutical, and dietary supplement industries,” he said. CSQ and stakeholders “used those industries to build the standards, although obviously there are things in there that are specific to cannabis.”
CSQ and MSOs
Given the preemptive preparation and manufacturing hubs multistate operators [MSOs] maintain in different states, CSQ’s first clients were MSOs, which played a pivotal role in the establishment of cannabis-specific standards. “They were the ones that helped us understand the cannabis industry,” Williams said. “The multistate operators are trying to get ahead of federal legalization. They know the regulations are coming, and CSQ is helping them create standardization across all their states, which is huge for them.”
Williams pointed out many MSOs grew by acquiring smaller companies or merging with other businesses in states where regulations varied, giving them a patchwork of standards inconsistent with their national aspirations. “You have all these companies in different states with different processes and different standard operating procedures,” he said. “CSQ not only ensures consumers are getting safe, quality products, but we also help build consistency throughout the entire operation across multiple states. This is one way to verify you’re producing safe products, which everybody, hopefully, wants to do.”
While major operators are spearheading the push to standardize manufacturing best practices, small and medium-sized businesses likely will follow because standards typically trickle down from the top. In the early 2000s, major retailers like Walmart, Amazon, and Target sought to reduce the number of audits in the food industry. At the time, every supplier or purchaser of a specific product was doing their own audit because they didn’t trust third-party auditors. The major retailers built the Global Food Safety Initiative (GFSI) benchmarking program to standardize the process across the industry.
“These big retailers were asking, ‘How can we make our product safer? How can we make sure our suppliers are supplying us with safer products?’ The answer to that is third-party certification,” Williams said. “After the GFSI was established, big retailers put it on their manufacturers to get certified, and those manufacturers put it on their smaller suppliers to get certified. So you had a trickle-down effect that started with the bigger companies requiring smaller companies to get certified.”
Williams envisions a similar thing playing out in the cannabis industry, with the pressure on smaller operators to comply coming from farther up the supply chain. While a skeptic might see this as another example of MSOs leveraging their abundant capital and upstream positioning to maintain an advantage over smaller firms, Williams believes such evolution will be inevitable with federal legalization.
CSQ strives to keep the process accessible for small startups: Registration fees for facilities are capped at $250, though that doesn’t include fees due to the certification body for the audit, which vary depending on facility size and scope of operations.
As it stands, the organization has created standards across four categories, but expansion is on the schedule. “The first part is basically general requirements relating to things like complaint management, document control, et cetera,” he said. “No matter what your process is, you have to follow these. We also have a part for growers, which includes growing, cultivation, and packaging of raw flower; another for extraction; one for edibles, which covers food and beverage products; and one for dietary supplements.”
Williams frets the cannabis industry remains a long way from ideal when it comes to product quality and safety. In preparation to launch its standards earlier this year, CSQ performed a series of pilot audits to gauge where the industry is and identify the necessary steps toward the organization’s vision of standardization.
“We went to some MSO-owned facilities as well as some small and medium-sized facilities and conducted a surprise audit to see how they would do in that situation without any preparation,” Williams said. “As you might expect, most of the facilities failed. We only had two facilities that ended up being certified. With that, we realized the cannabis industry isn’t ready for this strict of an audit, especially the small to medium-sized players.”
In response, the organization developed a tiered approach, helping smaller operators level up gradually toward full CSQ certification. This allows facilities to start with cGMP (current Good Manufacturing Practices), which is a lower-level standard, then add Hazard Analysis Critical Control Points with the cGMP+ audit, and finally receive full CSQ certification.
“We don’t expect every facility to be CSQ-certified this year or even next year,” Williams said. “We understand that going from nothing to CSQ’s level of standards is a big jump. That’s why we created this tiered approach and are solving the problem of getting smaller to medium-sized companies on board in an easier way than taking the leap from zero to a hundred.”
Standards imperative for growth
Nevertheless, product and manufacturing safety standards are imperative as industries mature, and cannabis manufacturers with an eye on national expansion ignore these developments at their peril. The fallout from a product recall can destroy businesses and hurt industries. Williams pointed to the annual devastation E. coli recalls have created for the romaine lettuce industry and the 2009 demise of the Peanut Corporation of America, which filed for bankruptcy after a deadly salmonella outbreak killed nine people and sickened 700 more.
“That recall didn’t just affect them; it hurt all of these small peanut farmers who weren’t even involved in the issue, because a lot of people stopped buying peanut butter,” he explained, recalling the 2019 vape crisis that stemmed from bunk cannabis vaporizers bought on the illicit market. “Even if it’s just for a month or two, that is a long period of time to not have your product moving, especially if you’re a small to medium-sized company.”
While cannabis largely has been spared a major recall that could undermine public trust and sink businesses, Williams and his company caution against the kind of hubris that has caught many industries off guard. Instead, he implores cannabis operators to start taking safety standards seriously sooner rather than later.
“One of the common things I hear, especially when working with people coming from the illicit market to the legal market, is, ‘We’ve always done it this way. We never had any issues.’” he revealed. “I always tell them this is exactly what every single person has ever said the day before they got a recall.”