Hello everyone! Nick with Precision here, it's my pleasure to bring you another video today and
today we're going to talk about one of the biggest obstacles in the cannabis and hemp industry
and that's compliance - and there's many aspects, many facets of compliance. Compliance is a,
I would say, ever changing sort of target that you need to hit in the cannabis and hemp industry.
And a lot of this stuff now that we're getting more to a mature industry a lot of it is really
becoming concrete. We really have a good construct around it, and you have firms like ourselves you
know that have a decade of experience in cannabis compliance. A lot of this is also bleeding over
and applying to the hemp market. So we're going to talk about what are all these things we need
to comply with, what do they do, what to look for when you're starting a cannabis industry business,
and it really will give you a leg up against relatively your competition.
So really it's important to understand how it all started. So when extraction all started it was
a bunch of people blowing butane through tubes or doing it in their garages, and really in late
2013/2014 that's when we started to see the first regulations come online through Colorado through
Washington state and some things in California. And this was mainly surrounding the fire codes,
surrounding the building codes, and things like that. So from there it's completely morphed into
a full construct through all these different codes and all these different standards that
we're going to go through today. And I'm going to take something that's extremely complex in terms
of all these different standards and just break it down for you guys so you understand at least on
a cursory level what you're going to have to do, what these codes mean. There's a lot of acronyms,
a lot of letters, it can be very confusing for a new entrant but our goal is to make you understand
this in a very simplistic fashion. So where we are today is we've got about 10 to 12 standards
that are universally followed throughout all these jurisdictions, and what that means is you're going
to get caught up in these types of inspections, these types of submittals, these liceansings, all
these sort of things are going to need to happen. You're going to need to understand how all these
different jurisdictions apply these codes to your cannabis business, so really when we when we talk
about what these codes are we could categorize them as "codes" and "standards." And the first and
most prevalent one that we'll talk about is ASME. So ASME is the American Society of Mechanical
Engineers, and basically what this applies to is it applies to any pressure vessel. So anything
that's under pressure, it's ASME coded. And what that really means is you need to buy equipment
that's ASME stamped and a lot of times equipment manufacturers, like ourselves, will guide you
through that - but in many cases fire marshals and local building officials are requiring you
to submit your ASME paperwork with your serial number of your equipment in order to understand
that this is ASME compliant equipment. It's going into this jurisdiction and that's a lot of times
what the fire marshals and building officials are looking for. So ASME is also something that
you would potentially find like if you have a boiler heater in your house. You look at the
actual boiler vessel that would be an ASME vessel, so you can think of anything that holds pressure
as needing an ASME stamp in the cannabis industry. The next thing that I would cover is the NEC and
IBC. So that would be the National Electric Code and the International Building Code, so just like
any other building that you're building you're going to have to follow these codes.
These codes are going to be pretty standard, pretty uniform across all jurisdictions, although
individual fire marshals, or individual electrical inspectors, individual building inspectors,
may have individual sort of opinions or variants on this. There could be local ordinance that
changes these codes, but overall if you hire a qualified contractor and a qualified electrician
most of them should understand these codes and how they apply to your actual facility.
The next one that we would talk about which is really a big one is the NFPA. So NFPA is
the fire code and really we're focused on NFPA 58 there's also other sections like 39, 38, and
1. And there's also the International Fire Code. Fire code when it comes to extraction is a very,
very large gambit of different things that need to be interpreted, coordinated, and what we do here
at Precision is we actually have a full-time fire safety engineer, Professional Fire Safety Engineer
we call them - FPE, and really what that does is it allows us to analyze projects. It allows us to
come up with an interpretation of the code, and we'll talk about some of the other things that
tie into fire code, but obviously building code and electric code those all tie into fire code. So
really what the fire marshal wants to see is how much solvent you have, how you're
using this solvent, how you're transporting the solvent, how you're storing the solvent. This all
goes back into the NFPA or the International Fire Code, National Fire Protection Association Code,
that's NFPA, so these are things that you want to read up on, you want to become more educated on,
but those three codes are obviously specifically pertaining to your facility. Some other things
that we've seen and that we coordinate with our clients with third-party architects, with our
internal architects and design firm, is really seismic codes. So if you're in a seismic region
it's absolutely something that you're going to have to consider. I know that seems kind of common
sense for a lot of people that do construction in seismic regions, but the codes differ a little bit
right - because the facility that you have is now full of flammable solvent potentially. It's full
of things that are volatile, pressure containing vessels. Whether it's CO2, hydrocarbon, ethanol,
but these are all things that if an earthquake comes around or you get some seismic activity
obviously it needs to be planned for at the very least. Some of the other things that we really see
is a really strict sort of mandate towards OSHA. Now OSHA when we first started in extraction
really wasn't a large part of compliance, but it's becoming more and more prevalent. We're
seeing more and more OSHA inspections coming into these facilities and OSHA really that's basically
occupational safety. So it's Occupational Safety and Health Administration that's what "OSHA"
stands for. But it's surrounding the safety of the employees working in the facility so
are they breathing in clean air, is there slip and fall potential, is there potential for things to
be spilled, is there issues that could basically put your employees in danger. And obviously when
you have a facility that again it has solvents, it has pressure vessels, it has glass, it has
laboratory working environments, you have things coming into the air, you have Class 1 Division
1 rooms, all these types of things need to be accounted for. So it's important to work with
a firm that really understands how to design your facility for OSHA and how OSHA compliance
is coming into the cannabis industry now. When we talk about facility design and we talk about
the specific aspects of facility design, what we really look at also is the minimum allowable
quantities of the solvent. So every jurisdiction based upon the the National Fire Code is going to
have a different allowable quantity of solvent. That solvent is going to differ based upon what
kind of solvent it is, the flammability rating, the storage, the vapor pressure,
these are all things that need to be coordinated. These are reports that need to be created by
a fire protection engineer, and this is something that your local municipality is absolutely going
to want to see submitted to them. On the other side of that, they like to see things like waste
disposal. So if you can imagine we have our biomass, we're extracting, we may have some
residual ethanol in there, some residual butane or propane, in there - that biomass needs to be
evacuated and there needs to be a disposal plan for that, right? We don't want to send that out
with any organic compounds in it, or volatile organic compounds, into a standard waste disposal.
It has to be either remediated or there needs to be a plan for that. We also, if we're doing
cannabis, we don't want somebody to be able to come in, kids or whomever, to really get into that
waste disposal and reconstitute it or all sorts of things that they can do negatively to themselves.
So you can see that we're painting a picture here of a lot of information, a lot of construct of
these codes, and I think that the principle is that you work with a partner, like Precision,
or somebody that has a very, very robust amount of experience surrounding these codes. And we're
not done yet, because there's a lot more that we still need to talk about. So when we talk
about electric, and we talked about the National Electric Code, but based upon your region we may
have UL, CSA and CE. So CE obviously would cover European union and a lot of the rest of the world,
CSA would cover Canada, and UL is the standard for America. So all these different standards
mean that if you're buying something for your laboratory, and you're in say Canada or you're
in the United States, it needs to have one of these applicable (They call them "Nationally
Recognized") Testing Laboratory Stamps" or stickers, or certifications - whatever you want to
classify it. As well what that means is, a lot of these products, a lot of these pieces of equipment
that are coming into the extraction space, because it has been such a gold rush, these companies will
come and they won't hold a UL Listing, they won't hold a CE Listing. If you're going into the EU,
they won't hold the CSA listing. What that means is you could buy something that's not UL Listed,
you could put it in your lab, and the electrical inspector comes and he says "Hey, this is not
to NEC code. This is not happening, you're not passing. Pull this a piece of equipment out." And
then you just wasted all that money on equipment, so important to understand the electric codes.
Some of the other things that we see is the ASHRAE standards, the Universal Mechanical Code,
and the PBA code surrounding HVAC and mechanical. So these are things like air flow rates in your
Class 1 Division 1 room, these are things like air exchanges, how are your emergency
ventilation systems working, how are you pulling out solvents, how are you ventilating solvents,
how do those solvents go into the atmosphere. And then if they are going into the atmosphere,
another thing that you have to look at is the volatile organic compound
discharge from your facility. So if you're in a clean air zone, we've seen this in California,
from environmental regulation and so forth - but there's only so many volatile organic compounds,
there's so many solvents you can put into the air on a given day or any given period of time.
And really if you go outside those bounds of pollution, then what's going to happen is you're
going to have to register for a clean air permit - and that's a whole other bag of worms. But the
important thing is really hiring an environmental engineer, this is something that we can also help
you with and give you a positive referral to great environmental engineering groups that we've worked
with, to understand and give your municipality that assurance that your facility is operating
cleanly and within the construct of how the clean air acts are sort of intended to make businesses
operate so that we obviously don't pollute the environment. We're going to cover the last two
here and these last two are really big ones, and they have to do with production standards. So say
we've got everything done, I mean I know that was a lot - it's a very dense subject matter - but say
we've got our facility running, all the codes are met, the employees are happy and so forth.
So now we've got to go to GMP, and we've got to go to ISO. So ICO is an International Standard for
Organization, GMP is Good Manufacturing Practices. So the way that I sum up GMP is we need to trace
everything from the time that that plant is a seed all the way to the time it goes into the
end user's bloodstream. And so you can imagine you have your seed over here, you have the end user
using the product over here, there's a million different paths of potential contamination that
could come in with that entire production line. So what we really talk about is GMP or cGMP practices
and what that is really - it can be summed up as a risk assessment. A risk assessment - tracking
and controls. And the risk assessment is - okay, if I'm growing a seed, if I'm harvesting, if I'm
extracting, etc - what are all the things, what are all the people, what are all the materials,
that are touching this product that could potentially contaminate it? Where are the
points that we're testing it, how are we labeling our batches, how are we coordinating our batches,
and how are we outputting our batches? So that if there is a future state problem,
we can trace that back to a batch number. And if you look at supplements very commonly,
I won't buy a supplement that's not cGMP registered from a manufacturer,
so you can look at places like Jarrow or NOW or these large supplement manufacturers,
they're all cGMP registered facility. But what that means is there's very, very tight controls
around production traceability. Not only is there controls around production and traceability,
it stems back to actually being audited, right? So GMP is an FDA guideline to some degree
and the FDA auditors will actually come in and audit these supplement facilities. They'll audit
the pharmaceutical facilities all pharmaceutical facilities are cGMP, it's a higher standard of
cGMP, but they're all cGMP. So it's traceability, it's production quality, it's risk assessment.
And what a lot of people don't realize is it's kind of a free-for-all now.
You walk into a cannabis laboratory, you walk into a hemp laboratory, and
there's really no standards, right? In terms of production standards. There are standards for
building codes and keeping people safe, but the contamination and and batch traceability this is
all coming. And the FDA has already issued some guidance surrounding this for the hemp market.
We anticipate that this guidance around GMP and cGMP will come in rather quickly.
This is a whole other topic and if you guys would like me to do a video on this I absolutely can,
but you can bet that this is coming also to the cannabis industry, right? It's almost like the
litmus test is the hemp market, and it's going to be pushed to cannabis. Now the question is when?
When's it going to be pushed to cannabis? Will states start doing cGMP on their own? Or will
this be something that really is coordinated with the federal government? But as you know
we have looming federal legalization, maybe "looming" is not the right word but it's still
kind of just floating out there like it's going to happen at some point. And when that happens,
you're going to see this cGMP regulation, you're going to see centralized facilities. So if you're
in the cannabis industry, if you're thinking about coming into the cannabis industry, this is
something you should strongly consider in your initial planning. And when we talk about cGMP,
a subset of cGMP is ISO - and this is the last thing that we'll cover. The International
Standards of Organization. So for manufacturing this can be things like ISO 9001, or different
designations of the ISO standards. And really what that is it's a quality assurance, quality
management system. So if you have GMP as the audited version, again of the traceability of the
batch production of the actual risk assessment, your quality management system is the actual
management system that's put in place that's registered with ISO in order to coordinate that.
And often, in almost all times, a GMP auditor will require an ISO certification in order for
you to meet GMP standards - so it's another level of management traceability and accountability.
So you can see where we've been was very, very simple. Where we started was very,
very simple. I should say we started really blowing butane through a tube in a garage,
then we got a little bit more regulation, a little bit more, a little bit more, a little bit more.
Ultimately it's a very clear path, we see it at Precision as a very clear path, and that's because
these standards exist and have existed for decades. They've existed in supplement
manufacturing, they've existed in pharmaceutical manufacturing, and it's only a matter of time
before they're fully and universally implemented into the cannabis industry.
So these are things that we need to look at, with things that we need to research,
and things that you as a cannabis business startup or cannabis business owner should
absolutely widen your understanding surrounding these topics. And if, again if there's any one
of these individual ones that you want me to talk about and go an in-depth video just
leave a comment below I'm happy to put a in-depth video surrounding any of these codes, any of these
sort of standards that are coming out. We can talk more about the future state of where we think
things are going. But I thank you so much. I know it was a very dense video. I know it was a lot
of information to take in, but thank you for your watching, and your viewership, and your attention.
If you need anything at all, Precision's here to help - so precisionextraction.com or you
can give us a call and we look forward to talking with you. Thanks so much!