Compliance is Key

[dropcap class=”kp-dropcap”]C[/dropcap]alifornia is on the verge of a new frontier of a highly regulated cannabis industry. With the likely passage of state regulation for medical cannabis and ballot initiative for adult use in 2016, cannabis business owners will soon be operating under completely new regulatory frameworks. Compliance to these new rules will be make-or-break for many businesses. New and existing businesses should begin to prepare for these changes as soon as possible.

It makes sense to look at how other states are implementing regulation and what types of costs are being incurred in order to become compliant. One of the most highly regulated areas is that of food regulation. Up until recently, the rule has been “Caveat Emptor,” which is Latin for “Let the Buyer Beware.” States like Colorado, Nevada and Washington have worked to create very strict regulations for edible manufacturers for the testing, packaging, labeling and food handling.

Colorado faced its first major regulatory shift in 2015 when infused edibles had to follow new packaging, labeling and potency restrictions. This shift came after the tragic death of a college student who jumped from a Denver hotel balcony after consuming an infused cookie and a surge in the number of children brought to the ER for accidental ingestion of cannabis edibles. The Colorado Department of Public Health and Environments wanted to ban almost all edibles but instead, Colorado addressed the public concerns with strict regulations.

The changes came from a work group that included representatives from the state’s Marijuana Enforcement Division, the industry, parent groups, hospitals and law enforcement. Though not everyone is happy, overall, the industry is supportive because business owners agree that it’s critical to keep the consumers safe. California edible manufacturers should keep an eye towards Colorado in order to anticipate the kinds of regulations they might face.

Colorado’s regulations include THC limits of 100mg per container or package. They also require manufacturers to ensure edibles can be broken up into 10mg sections, each stamped with the THC content or provide individually wrapped doses. In addition, there are new packaging, labeling and testing requirements. Some of these new requirements are that all cannabis-infused foods including cookies, drinks and candy “must have a distinct look” by 2016. For example, a gummy candy that looks like a gummy bear would not be allowed, but a gummy candy shaped like a cannabis leaf would comply. All edibles sold in Colorado must be “shaped, stamped, colored or otherwise marked, when practicable, with a standard symbol indicating that it contains marijuana and is not for consumption by children.”

Before sale to a consumer, a retail cannabis store must place edibles in a container that is child-resistant, or place the container in an “exit package” that is child resistant. “Child resistant” packaging must conform to federal consumer product safety regulations, be opaque so the product cannot be seen and be closable if not intended for single use. Proper labeling includes specific warning statements and containers for edible cannabis products must be labeled with all ingredients, if refrigeration is required, standard serving limit and expiration date.

Many Colorado edible companies had to spend significant capital to make sure their companies were compliant. Marijuana Business Daily interviewed some top CEO’s of infused products companies to find out about the expenses incurred for compliance. Jamie Lewis, the CEO Mountain Medicine, said that he spent $20,000 for new kitchen machinery and around $25,000 for new packaging. Julie Dooley, president of Julie’s Natural Edibles, noted another major cost from new labeling requirements that include nutritional information. Cost for a label jumped from 7 cents to 42 cents. California edible manufacturers should consider building in the increased costs for labeling and testing now, to be prepared for the future.

Colorado is considered the shining example of how a state can regulate the industry and ensure the safety of its consumers. California is on track to follow suit, with legislation such as AB-266, which will require testing, specific labeling and packaging. It’s important to be prepared by staying up to date and educated and most importantly beginning to integrate specific labeling, testing and child resistant packaging into your business practices today.