Traceability & Compliance and What They Mean for the Hemp Industry
Hemp is still straddling the same legal zone as other members of the Cannabis family. However, many countries around the world are starting to open up to hemp cultivation, specifically. Even in notoriously strict countries when it comes to cannabis, the cultivation of plants with almost no THC whatsoever is now legal. While stigma still surrounds all cannabis plants, hemp’s health and environmental benefits can no longer be overlooked. In addition, long overdue research on hemp is also underway and has already produced very promising results. In order to accommodate this trend, the hemp industry needs to meet regulators’ traceability and compliance requirements.
What Are Traceability & Compliance?
Traceability is the ability to trace an item. For hemp, it means that all steps of hemp cultivation “from seed to sale”. Each plant is accounted for. This ensures that the final product is safe and compliant. Compliance means that each step from seed to sale is conducted per all relevant regulations. These concepts are simple, but the current reality of the hemp and broader cannabis industry places a different level of responsibility on businesses.
The Importance of Traceability & Compliance
Unsafe, low-quality products are a stain on any business. But in an industry as freshly emergent and promising as the hemp industry, these factors are the key to its future. This is about more than a simple inventory audit.
Traceability establishes the safety and legal grounds for hemp businesses. Without well-traced and compliant production processes, many issues can develop along the supply chain. When hemp production is well-controlled, safety standards can be met. Any emergent problems can be discovered and remedied quickly. You can then provide the paperwork that proves your business complies with health regulations and can avert health risks.
To the average consumer, the word “recall” sparks images of reports of cars with defective batteries or headlights that catch fire. These recalls are incredibly costly, but with traceability, the damage can be minimised and corrected at a minimal cost. Of course, the auto industry isn’t the only one that goes through recalls. No matter how cautious you are to comply with all safety standards, sometimes a recall can’t be avoided. When regulators deem a product is defective, they will order it to be removed from the market. Okay, so now your hemp is being recalled. Your profits are likely being destroyed, alongside your reputation. How can you fix the issue and recover? This is where traceability comes into play. You know what’s wrong with your product, but where and how did it go wrong? Which aspect of your process failed? Which products are a part of the defective batch? With good traceability in place, you can quickly trace the details back to your point of failure. Then, you can fix the issue and recover.
Traceability gives way to many aspects of compliance. However, you also need to make sure you are compliant with all regulations. Compliance with the law is a hot topic in the hemp industry. Failure to comply can lead to serious fines and the loss of licenses.
How It Will Unlock Doors for Big Industry Players
The future for hemp businesses is bright, so long as traceability and compliance are taken seriously. Fortunately, there are plenty of automated solutions to the traceability issue. Software can be used to automatically track each step of the process, all the way from the seed purchase to the final customer/patient. Each jurisdiction has its own set of requirements for cannabis cultivators. Many small businesses have operated throughout the various stages of cannabis legalisation in the US. But now, governments everywhere are being faced with the question of the coming industry shift: big business in hemp. In 2019, Peru added sweeping regulations to the cannabis industry, from psychoactive cannabis to CBD to hemp. However, the changes specifically identified non-psychoactive cannabis and took them off the controlled substance list. This allows businesses without licenses to take part in the market. The changes also specified that hemp and other non-psychoactive cannabis follow the same traceability guidelines as the psychoactive crops.
As a result of these changes in cannabis regulation, large businesses have been provided with a path towards large-scale and legal activity through:
- Scientific research licenses
- Wholesale import licenses
- Production licenses
Following this, one Peruvian company and four international companies including Canada’s Canopy Growth moved into Peru to set up sales and distributions operations. While Peru is taking advantage of its ideal location and climate for cannabis cultivation, its model is one to follow. Traceability and compliance concerns aside, the legislation can be put in place to unlock the doors for big, risk-averse businesses.
Key Tech Start-ups Operating in This Space (Cannavigia Is One Operating Out of Switzerland)
Traceability and compliance are both entire endeavours on their own. In the cannabis industry, it takes a special level of proficiency to achieve both. But, as we’ve covered, there are many software solutions to traceability issues. For example, seed-to-sale POS (point of sale) systems are designed for the unique POS needs of cannabis businesses. The new legal environment around cannabis, and hemp, in particular, has created the need for specialized and comprehensive new solutions.
Cannavigia is one of those key start-ups. This company is the European markets’ solution to compliance software. They offer one of the most comprehensive traceability solutions on any market. Their solution traces, secures, and simplifies transactions at every level of the supply network. They integrate their software with local standards such as Swiss Certified Cannabis for Switzerland, the certification for the industry in their country.
In the US, various consultancies have emerged in the cannabis industry. Similarly, they also offer software solutions to automate compliance and traceability. Companies like 365 Cannabis offer complete seed-to-sale solutions, tracing transactions from the farms to the dispensaries.