In the absence of federal legalization or universal quality and safety standards, cannabis companies are left to navigate a remarkably complex regulatory landscape on their own.
Part of what makes compliance in cannabis highly difficult is the way in which the guidelines can vary so greatly from one jurisdiction to another. According to Joel Chappelle, an attorney and consultant at the Food Industry Council LLC, a major part of his work is helping companies navigate contracts with a supplier or other business partner while having to negotiate with a variety of regulatory authorities.
“Regulatory compliance means different things in literally every different jurisdiction across the country. So when I’m working with a cannabis company on a contract, we want to make sure that we have a clear understanding on both sides of the contract as to what it means to be regulatory compliant,” Chappelle said.
The Food Industry Counsel LLC works with companies to help them meet the licensing and compliance requirements of cannabis and also to make sure that they have insurance coverage to cover potential risks. Chappelle said that when he was in law school he became fascinated by the ways in which cannabis legalization overlaps with constitutional and international law. Six years ago, Chappelle asked if he could start a cannabis practice with the council, and the rest is history.
Working with - not against - regulators
Chappelle described how the Council works to make sure that anything ambiguous in the guidelines is addressed and cleared up before a contract is executed so that “a year down the road the company doesn’t come back and say hey, you’re not meeting such and such requirement when in fact, such requirement may not even be applicable to the producer.”
The issue is further complicated by the fact that not everyone understands the cannabis compliance guidelines - at least not as well as the regulators.
“There is just so much ambiguity that remains in the industry and there are different ways of interpreting things,” Chappelle said, adding that helping companies sort out these issues takes up a lot of his time and effort.
He also stated that this is why it’s so important for cannabis companies to work collaboratively with regulators.
“When you work collaboratively, it almost always leads to a good result and allows everybody to kind of teach each other.”
How are the risks similar in food and cannabis?
Chappelle cited cannabis edibles as an example of how food and cannabis manufacturing are similar.
“When you look at the regulatory bodies that are overseeing cannabis products, oftentimes there’s a great deal of overlap between not only the way that they’re produced but also the regulations dictating how they’re produced and the regulatory bodies that oversee the production.”
Regarding the hazards that cannabis companies have to contend with, Chappelle said that for cannabis flower it's very similar to the forms of contamination that can occur with other agricultural products, such as mold. For cannabis edibles, there are similar risk profiles to manufactured food products.
But the fact that cannabis is also used for medicinal purposes opens up further considerations, according to Chappelle.
“Let’s say somebody is using cannabis because they’re in treatment for cancer. Oftentimes cancer can come with a depleted immune system. In that dose, you’re going to have to be especially careful to make sure that the products you're making are safe and that they’re not going to cause harm to someone.”
The biggest factor - federal prohibition
The warren of regulatory bodies that govern cannabis is a direct result of the fact that cannabis is not legal on the federal level.
Chappelle said the lack of federal cannabis legalization “is by and large the most significant problem and it causes countless issues. Across the board, consumers and the industry end up paying the price for the legal and regulatory inaction at the federal level.”
Know your suppliers, focus on safety
When asked what is the most important advice he could give cannabis companies, Chappelle gave a two-part answer.
“The biggest concern I share with my clients is to make sure to do your due diligence at the front end and make sure you're dealing with a reputable company that’s taking the steps needed to ensure a safe and consistent product.”
But besides performing due diligence on your suppliers and collaborators, Chappelle said companies must understand the cannabis regulations in their jurisdiction and make sure to develop the right education materials and protocols, as well as a safety culture in the workplace.
Hazard Analysis and Critical Control Points (HACCP) is a management system developed to locate and eliminate threats to food safety. Chappelle said that implementing HACCP in the cannabis workplace can “absolutely” make a big difference in reducing risks.
And for any workplace, installing a culture of safety is crucial - and it begins at the top.
“Safety in so many respects starts at the top. Your subordinates are going to look at you and say, ok, but what does the boss think?”
He added, “anybody who’s looking to start a company should make sure that a safety culture is in place because cutting corners on safety is going to come back and bite you at the end of the day.”
