By Michael Good
Vice President of Marketing & Sales Operations
Cannabis growers and merchants have been slow to recognize that doing business in the retail industry comes with legal responsibilities for protecting consumers from potentially harmful products. The spate of cannabis recalls in the last few years shows that quality control measures need to extend far beyond the cultivation and quality of the marijuana strain, oil, or edible.
Cannabis recalls have become chronic in Colorado since legalization, with hundreds of thousands of cannabis-infused edibles, vape pen oils, and marijuana strains found tainted with unapproved or above-limit pesticides. Maine began recalling tainted strains back in 2015. Canada’s medical marijuana industry has also experienced a number of recalls over the past year. And Oregon issued its first recall of recreational marijuana in March 2017.
It’s an understandable situation on two fronts: First, the legal cannabis industry is young and inexperienced. Second, it lacks the decades and even centuries of regulatory compliance and knowledge of best practices found in other retail segments.
More importantly, the U.S. cannabis industry is currently operating in a sort of feudal regulatory limbo. To date, 36 states have legalized cannabis for medicinal and/or recreational use. Yet the federal government – which typically oversees nationwide recalls through the Food and Drug Administration (FDA), Department of Agriculture (USDA), and other government agencies – does not recognize cannabis as legal.
As a result, the industry is operating without any consistent federal standards to guide it, such as those found in the food industry. Recalls are driven by a variety of state and local agencies, such as the Denver Department of Environmental Health, or the Marijuana Enforcement Division of the Colorado Department of Revenue, or the Oregon Liquor Control Commission, or Massachusetts’ Cannabis Control Commission, to name a just a few. This lack of oversight presents a host of challenges for the industry.
The need for a recall plan
There will inevitably be more recalls as the fledgling cannabis industry tries to get a foothold on acceptable pesticide usage and other cultivation issues that could impact product safety. Cannabis growers and merchants would be wise to learn from progressive manufacturers in other segments who have established rapid recall plans to protect their brand, their customers’ safety, and the integrity of their business operations.
Having a recall plan in place can help growers and merchants avoid or minimize severe regulatory fines, civil liabilities, and lost revenue. There are four best practices that lay the foundation for efficient recalls.
- Create a recall plan before you need one
Be prepared. A recall can happen at any time. Having a plan in place can help make the recall notification process less painful and faster. It’s important to consider likely scenarios that may occur.
- Develop a team and system for immediately retrieving affected products in consumers’ hands, as well as removing products from stores and dispensaries, including:
- Speed – Delayed responses have the potential to expose growers and merchants to litigation, brand damage, and regulatory scrutiny. In an industry looking to gain and maintain traction, responding quickly and efficiently is crucial.
- Accuracy – Brand value is becoming increasingly important for cannabis companies as market competition heats up. With a company’s image and reputation on the line, accurately retrieving all affected products is vital for the integrity of the brand. If products remain on the market, in back stock, or in homes, a company’s liability increases along with the risk of regulatory action and brand damage.
- Efficiency and Effectiveness – Retail and dispensary employees are typically trained to keep product stocked, not remove a limited number of products due to a recall. Assigning this task to internal teams can leave retailers vulnerable. With a third-party partner, a field force can perform the retrieval or provide effectiveness checks to ensure all the affected products are removed.
- Scalability – During a retrieval event, the amount of product that needs to be retrieved can vary from one extreme to the next. Cannabis companies can have recalls that require them to pick up anywhere from one product at a customer’s home to a number of items at state-wide retailers and distributors. Because retrievals are not always a part of an organization’s day-to-day activity, it can be costly and prohibitive to hire and maintain a field force or to require existing staff to assist with this process. When a situation does occur, companies need the flexibility to handle any type of event at a moment’s notice.
- Quality – To protect the integrity of the brand, growers and merchants must ensure that representatives picking up product act as an extension of their team. It is important for them to meet the highest quality standards and document every step of the process, from transporting and storing products with a secure chain of command, to handling subsequent product testing or product recalls in a regulatory compliant manner.
- Regularly review recall plans
Growers and merchants should periodically audit their recall effectiveness to identify any gaps in their processes and update their plans accordingly. It is important not to rely solely on what systems show, as these can be inaccurate. There is no substitute for examining inventory to ensure the removal of recalled product is as accurate as possible.
- Communicate early and often with customers and regulatory bodies
There are steps growers and merchants can take to make the process more effective and demonstrate their dedication to the safety of their customers. An example would be creating loyalty rewards programs which they can later use to reach out directly to customers who have purchased affected products. To avoid any issues with regulators, retailers must document everything. Records of retrieval processes and effectiveness checks can support the company’s efforts.
As the cannabis industry grapples with achieving consistent product quality, consumer safety must always be the top priority guiding the recall process. The most urgent task for growers and merchants is to remove affected product as quickly as possible.
Close cooperation between growers, merchants, and their representative regulatory body can prevent wasteful and expensive movement of salable product. Through methodical, targeted, and cooperative processes, growers and manufacturers can curb recall expenses and preserve their brand value.