Facility Audits Provide Regulatory Structure

Published: March 15, 2020

Author: Theresa Espejo

With Canada legalizing adult access to both medical and recreational cannabis, its top-down approach brings with it a complex regulatory environment.  One where decisions at the federal and provincial/territorial level, as well as municipalities, can be occurring simultaneously and sometimes inconsistently.

As a new and emerging industry – many identify the market opportunity as a cash cow and look to cash in as the rules of engagement, while numerous, are often ambiguous at best.  As companies designed their facilities and looked to start their operations, often choices are made to meet the numerous application requirements as quickly as possible.

Facilities are repurposed from existing farm buildings and warehouses or out-of-business wineries are purchased for their existing greenhouses.  Key pieces of equipment used in the extraction processes are bought in Europe or China and reconfigured to meet the process needs.  All this is to say that in order to succeed, modified systems were put into place and “new operations manuals” were developed.  At the moment, there is very little precedent in how to build a successful operation, and in some cases there is virtually no experience or expertise in what makes a successful cannabis business.

As the legal cannabis market in Canada matures, standards and regulations will likely continue to shift. For an organization to succeed, they may need help navigating those regulations.

The regulations, at all levels of government (federal, provincial/state and municipal), were a tremendous challenge – starting with the application process all the way to receiving the start-up licences to be in business in the legal cannabis industry. It can be difficult just to know where to start.

“The cannabis industry faces challenges in globalizing their business,” said Joseph Hosey, vice president and general manager for United Laboratories (UL) in Canada. “The cannabis supply chain is extremely integrated and will become more global as the industry evolves, creating new challenges. We’ve spoken with key players who are building premium brands and the safety and security of their operations is paramount.”

In early 2018, cannabis investors, regulators, supply chain contributors and industry stakeholders came together to develop the very first National Standard of Canada through the consensus process strictly regulated by Standards Council of Canada.    Outside of the cannabis product itself, the primary concerns for a start-up business are the safety of the building, security of the premises and the equipment to be used for operations.  These are all addressed in ‘CAN/ULC-S4400:2019, the Standard for Safety of Premises, Buildings and Equipment Utilized for the Cultivation, Production and Processing of Cannabis’, which was published in March 2019.

With this standard, a quasi-benchmark was established in order for all participants to engage in a level playing field, and for regulators to use standard metrics to evaluate the safety and security of not just the building and operations of a cannabis company but the well being of the community it is located.

To complement this standardization approach, UL developed an audit service to further provide interested parties with a single resource to navigate every step of the complex regulatory requirements, with the goal of enabling safety and security compliance for a cannabis business.

This facility audit service is targeted at operations that are looking to apply for any type of cannabis licence – federal, province or local municipality and are looking for help understanding how to comply with the required regulations.  It’s important to note that obtaining a cannabis licence at the federal and/or provincial level does not necessarily mean that the “Open For Business” sign can be turned on.  A cannabis business is still a business and therefore understand and attention needs to be paid to not only the provincial and local requirements as they relate to cannabis but also general business regulations – from general safety concerns to Codes (building, fire, electrical, etc.) to workplace health and safety.

A facility audit aims to help businesses:

  • Address knowledge gaps in the regulatory framework that may be inhibiting success
  • Identify and address regulatory compliance risks that may exist at a cannabis facility
  • Provide the general public with peace of mind that a local facilities’ conditions are safe

As a nascent industry with eyes from all over the globe closely monitoring it, a strict regulatory framework is crucial to establishing a market that is responsible, effective and sustainable.

Theresa Espejo is the Program Manager for Building and Life Safety Technologies with UL Canada.