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Developing a Quality Assurance Program for Businesses in the Cannabis Industry

By Cory Waggoner

The cannabis industry is still in its infancy stages, resulting in constant changes in regulation, industry standards, and quality assurance (QA) and controls. Additionally, there are no federal quality assurance regulations, so companies must become (and stay) up-to-speed with their state’s regulatory requirements. In an industry involving ingestible products, it is paramount that companies put QA at the forefront of their operations. Failing to do so could lead to product recalls, lawsuits, loss of license, and brand tarnishment.

Quality assurance, quality controls, and the cannabis industry

Quality assurance relates to the quality of the product that lands on the shelf for purchase. In contrast, quality control (QC) refers to standard operating procedures, maintenance programs, and other functions implemented at the facility. QA is essential in the cannabis industry because the market offers ingestible products. Testing must be in place to ensure consumer safety, including measuring microbials, pesticides, and more. Every cannabis facility must pass QA in most states to continue sending products to market. QC, on the other hand, helps ensure that a product passes QA by utilizing proper labeling (such as a label including a red square with a THC symbol indicating the product contains THC), implementing software documentation that tracks every product, and enabling the ability to recall products back at any point in the process.

A facility’s main risk in not implementing a QA program is a loss of license, which could come with economic trouble due to product recalls, lawsuits, and brand tarnishment. A subpar QA program can also have consequences. While some facilities are well-documented and compliant, others view their QA program as a label showing a process is in place. Facilities that take QA lightly lack controls around the products they develop, resulting in inconsistent production and the potential for brand tarnishment.

How QA programs help brands differentiate themselves from competitors

In addition to meeting safety standards, QA programs also help companies that place an emphasis on branding tie their QA to their mission and vision, helping gain the trust of their customers. For small businesses, it may be challenging to justify the hefty expenditures of a comprehensive QA program, so focusing on state requirements for packaging and compliance may be the most cost-effective plan. However, a QA program can go above and beyond compliance for companies ready to invest and address intricacies like bud structure, potency, and strain names. The industry is split approximately 80:20 when it comes to QA. About 80% of companies are dedicated to implementing the cheapest methods, while 20% understand the value of branding. For the companies focused on branding, the benefits include creating intellectual property that can be licensed, the ability to work with partners and train others on your methods, and brand awareness that surpasses state lines.

The importance of keeping QA top of mind

QA needs to be top of mind as it relates to many aspects of each cannabis business; however, implementation is heavier on the front side than in the maintenance phase. For cultivation, the QA program must consistently be in a state of improvement. In the cultivation stage, getting a strain out the door often takes a long time. For example, it could take five months from seed to shelf. By the time the strain hits the shelf, the market will look different than it did five months ago, so companies need to expeditiously implement new QA and QC measures for the next strain. Dedicated research and cultivation development will help ensure product quality remains high and continues to improve. A successful research and development program will collect essential data through all stages of the cultivation process to help inform future decisions. In short, QA and QC are all about the details and should be spot-checked daily, weekly, and monthly to support quality products.

How to set up a QA program

With no federal guidelines, businesses may be curious about how to set up a QA program. Although there is no federal direction for cannabis, understanding federal guidelines related to goods manufacturing processes is a strong starting point.

1.) Research state requirements

Gather information online. Document items that relate to QA so you know that the facility meets what the state requires. At a minimum, a company must meet state requirements.

2.) Work with a consultant who is familiar with state requirements

Working with a consultant who implements QA programs in your state can help to build context around what your QA program needs to look like (on paper). For example, facilities need a highly technical document addressing state requirements to pass QA. A consultant can explain how to prepare the document and what it needs to look like when completed.

3.) Align QA needs with company goals to determine the extent of the QA program

No matter what, your QA program needs to meet the state’s minimum requirements. Beyond that, it is up to the facility what additional measurements they want to take to bring their brand to the next level. For example, consider if the QA program is designed just for state compliance (80% of the time) or if it’s to uplevel the quality of the products and the brand (20%). It may be helpful to reach out to a consultant here to bring everything together, such as having the visual aspects and marketing language meet the backend production of the strains. This way, the feel and look of the branding match the product.

How much should a business invest in a QA program?

How much a business invests in its QA program depends on the size of the company and the scope of operations. Another factor to consider is how much overlap there is between marketing, branding, software, and data. With a highly integrated model, the investment into QA positively impacts the other facets of the business. Therefore, if a company invests significant resources into its QA program and utilizes an integrated model, it will see a more substantial ROI than a business investing to meet the bare minimum without addressing product quality and brand awareness.

For example, the most notable pre-roll company in the nation reached this status by placing QA at the core of its operations. The company wasn’t initially producing good products regularly due to inconsistency within cultivation, extraction, etc. Then, by revolving the business around QA and hiring a full-time employee to oversee the process, the product quality improved significantly, leading the company to become the most renowned preroll company in the nation. They now sell the most expensive prerolls available, and they can do that because of their brand awareness and quality.

What happens if a business doesn’t pass QA?

If a business doesn’t pass QA, it risks losing its license, opens the door to potential lawsuits, and will likely lose vendors. Within the industry, relationships are essential, so doing anything that risks losing connections (for example, not packing per compliance and then selling to vendors) can make it hard to regain a positive reputation in the industry.

Not passing QA can tarnish the company’s brand, impacting relationships with vendors and customers. For example, if a company puts a subpar product in beautiful packaging, the company loses the customer’s trust when they open the product at home.

Remember, it only takes one bad batch to tarnish a product or a brand, so QA needs to determine everything a company does.

 

 

Cory Waggoner

Cory Waggoner

Cory Waggoner, CEO & Founder Higher Yields Consulting, leads the team of expert consultants at Higher Yields Consulting while also serving clients directly in his unique areas of expertise, including international regulations, domestic legislation development, and strategy and innovation for operators in states with varying application processes, regulations, and markets.

Waggoner entered the cannabis industry as an operator in 2008 helping develop commercial cultivation sites in Northern California. He moved to Colorado to partner with several retail facilities, cultivators, and manufacturing labs in 2010.

Recognizing the need for experience-based regulations and professional services to support cannabis operations, Waggoner worked with distressed retail stores and cultivation sites from 2013 to 2015 to implement sustainable processes and quality-predictable procedures. Throughout his time rescuing cannabis businesses under strain, Waggoner developed dynamic SOPs and strategies that dramatically increased profit margins in an ever-changing industry.

His experience fixing and – when owners desired to – flipping cannabis businesses inspired Waggoner to make his services available to cannabis businesses around the country by founding Higher Yields Cannabis Consulting.

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