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Is Your Cannabis Business Ready for Inspection?

February 19, 2018 | Melissa Schiller

Cannabis businesses are subject to many different inspectors and auditors, including the Occupational Safety and Health Administration (OSHA), Environmental Protection Agency (EPA), its state’s cannabis licensing body, insurance companies, banks, building inspectors, fire marshals, water authority, labor department—and the list goes on.

Interacting with these agencies is “very common, and very routine and, of course, normal business,” says Rino Ferrarese, chief operating officer (COO) of Connecticut Pharmaceutical Solutions, a medical marijuana producer and research firm.

But constantly keeping your business compliant with these regulatory bodies and ready for inspection can be overwhelming. Ferrarese recommends following a Quality Systems Approach, such as the one outlined by the Food and Drug Administration (FDA) for the pharmaceutical industry, to help you dominate compliance and inspections.

“In layman’s terms, a Quality Systems Approach … would be a documented system to interpret regulations, all regulations, relevant to the business,” Ferrarese says.

Having an employee dedicated to quality assurance and compliance is crucial, he says, adding: “The FDA mandates that a production company have at least a senior person in a quality assurance function, independent of the production function, and that QA function commands authority equal to the production function.”

Here, Ferrarese offers do’s and don’ts for remaining compliant and preparing for an inspection.

1. Adopt an established compliance system.

Out-of-the-box compliance systems are available, and many include a variety of topics to adopt when building a quality management system for a business, Ferrarese says. The ISO 9001 system is one example.

“That would be a good start,” he says. “There are lots of other standards out there, too.”

2. Document it, or it didn’t happen.

The most common compliance pitfall businesses face is poor record keeping, Ferrarese says—If you don’t document it, it didn’t happen.

“A good rule of thumb would be [to think about] what … you hope you had done in advance to prepare you from sitting across from that inspector or that regulator,” he says.

Ferrarese encourages business operators to consider areas they will be held accountable for during an inspection and ensure compliance in all those areas prior to meeting with an inspector, documenting everything along the way.

“I think recordkeeping is critical,” Ferrarese says. “If I had to identify the most important thing, it would be to document important matters—write everything down.”

3. Self-audit your facility.

“You should self-check by conducting and documenting routine internal audits of your facility a couple times a year,” Ferrarese advises.

Using your own internal audit as a roadmap for the inspection can impress the auditor, he adds, and it will position you to guide him or her through the facility and demonstrate your compliance.

“When an inspector arrives, we immediately assume they know where all the critical issues can be found and that they have a sixth sense, when really, they’re probably just trying to get a grasp of you and your operation,” Ferrarese says. “This is an appropriate time to demonstrate examples of compliance and your company’s commitment to good manufacturing practices through self-audits.”

Product audits are an easy way to conduct self-inspections. Choose a finished good and audit all the documentation from the first stages of its production through its final production.

“For example, if you’re auditing a dried flower product, then you might audit all steps back to the first clone cutting of the donor plant that was used as a source for that flower,” Ferrarese says. “You would audit the raw materials used for packaging and labeling, the nutrients and amendments used in the cultivation. You would review the training records of the growers who cultivated that plant, you would audit the production batch records, the harvest and cure records and so on, and that could be an effective way to do a health check of your documentation and quality systems. There are other types of audits that we’ll talk about, too, like process audits and facility audits.”

Self-audits can be as exhaustive as you like, Ferrarese adds. For example, the audit could verify that all scales used to weigh product are calibrated annually by a certified metrologist using NIST traceable weights. The audit could also validate the daily performance verifications of those scales, proper cleaning and maintenance protocols, and good documentation practices. An audit report that includes this kind of information will demonstrate to an inspector that the business is operating in a state of control.

4. Don’t blindside your banker.

Ferrarese says his bank comes to his facility a couple times per year, and operators should always keep their bankers in the loop to ensure they will continue the working relationship.

“You don’t want your banker to be blindsided,” Ferrarese says. “You want to keep your banking rep as up-to-date on everything as possible. You want them to know everything that’s going on within your organization.”

This includes employee relations, changes in federal regulation and legislation, and more. “You want to keep them informed so they can go back and maintain a sound relationship with their superiors, who will allow you to continue doing business with that bank,” he says.

5. Have the documentation to support your label claims.

Cannabis producers need to have documentation to support their label claims, which also includes sound stability and studies that support expiration dating, Ferrarese says. It’s also important to keep product retained samples on site. This way, should an issue arise, it can be addressed immediately through scientific methods and product testing using those in-house samples.

Many state-regulated cannabis programs mandate that every batch of cannabis for sale to consumer must be tested by a third-party laboratory. The testing results must be documented and reported in a certificate of analysis that the product passed all the pre-determined testing requirements, from cannabinoid and terpenoid potency to heavy metal testing, microbiology and pesticide residue. These testing results will be the basis for the information declared on the product label, Ferrarese says.

“The state cannabis authority requires that a product must pass mandatory testing requirements before it can be sold to a consumer,” he says. “Each product must also be labeled with an expiration date. Product expiration dating must be based on stability testing. Expiration dates are critical because they alert the consumer to a date when the product will no longer perform as labeled. Cannabinoids and terpenoids are unstable products and are susceptible to contamination by microbes—temperature fluctuations can accelerate the process. It’s important to have documented stability data so you can predict product performance for your customers.”

Having documentation to support your label claims is like having hindsight in advance, Ferrarese adds.

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