As the global cannabis industry expands, those in the supply chain are facing increased risk of security threats.
The cannabis industry is growing rapidly across the globe.
As the sector expands, so does the number of grow operations, warehouses and dispensaries which all house high-value, highly regulated substances that many are willing to risk prosecution to lay their hands on.
It comes as no surprise then that cannabis companies are at a high risk of security threats such as robbery and theft.
And it’s not just the products themselves that are at risk.
In the US, as cannabis remains illegal on a federal level, many firms struggle to open business accounts with mainstream banks, meaning that dispensaries often require its customers to pay in cash. This only adds to the sector’s susceptibility to break-ins.
Unfortunately, cannabis companies must also be wary of their employees. As the black market continues to thrive in spite of legalisation efforts, dispensaries and cultivators have to keep an eye on their employees who may see an opportunity to swipe their employer’s products to sell on the illicit market.
Due to these risks, some US territories have made it mandatory for cannabis dispensaries to submit their security plans to local law enforcement for approval before being allowed to open.
Cannabis Health sat down with security expert Scott Thomas over Zoom to find out more about the security challenges faced by the cannabis sector.
Thomas is the national director of signature brands at Genetec, a security company that has become a popular choice in North America for cannabis companies looking to keep their premises safe and secure.
Currently, in the US, 16 states have legalised cannabis for recreational use and 36 states have legalised medical cannabis. On a national level, the substance is still illegal, so regulations can differ significantly from state to state.
Thomas said: “Each one of those states is going to have very specific regulations and requirements.
“They want to make sure that the product is totally safe from seed to sale, that it is absolutely contained and that there is no potential harm or any type of additives that can be put into the crop.
“They also want to make sure that all the sales are done legally, they want to make sure that there’s proper verification of the age of the purchaser, and they want to make sure that if it’s from a medicinal standpoint, there’s an actual prescription. There are quite a few physical security requirements to guarantee that those regulations are followed.”
Thomas breaks down the security requirements into three categories; video, access control and intrusion notification.
What sets the cannabis industry apart from other regulated markets, he said, is the requirement for video retention in many US jurisdictions, some of which ask for a record of up to two years of video footage.
As any discrepancies in inventory could lead to large fines and other penalties, Thomas stressed the importance of keeping products under constant surveillance at every stage of the seed to sale process.
Thomas said: “[One of] the most fundamental requirements, and this is absolutely germane across all the jurisdictions, countries and states that we deal with is video.
“There needs to be video evidence, and this is where some of these regulations vary quite a bit.
“In some cases, they will require the entire cultivation growing area, the processing area where the product is packaged for consumption or possibly turned into other products, the retail area where it is sold and the warehousing or the storage area where it is kept.
“All of those things need to be under observation. If there are any discrepancies in inventory they need to be able to go back and try and identify where it happened.”
If a camera is to go offline for any reason, the company is required to make the regulator aware as soon as possible and have a backup device on hand to ensure video footage continues to be captured.
“All cameras and systems have built-in ‘Genetec Health Monitoring’ inside of them. If, for example, a camera were to stop working for whatever reason, it gives them that notification.”
Access control is another key factor in keeping cannabis operations secure, Thomas continued: “This includes locked doors, credentialed employees, limiting access and the ability to audit who has the authority to enter those areas and make sure that only those people go into those restricted parts of the establishment.”
The cannabis sector is one of the fastest-growing industries in the world right now. Companies are expanding quickly and as an increasing number of territories are legalising the drug, cannabis firms are eager to expand into these new regions. But, with that comes yet another set of regulations.
Thomas uses one of Genetec’s clients, an unnamed US company that is trading publicly on the New York Stock Exchange, as an example: “What they have done is looked at the most stringent regulations they’re currently using in a given state and then mirrored that across all of their different locations.
“Their thinking is that regardless of regulations getting more stringent or eased up, they’re going to be absolutely protected across that entire enterprise; none of their sites will fail to meet that regulatory requirement.”
The firm has also centralised its security operation centre – known in the industry as a ‘sock’ – which, according to Thomas, is “unique” for companies of this type: “By doing this, they’re able to understand if there are violations of their own protocols with regards to people trying to access areas that they shouldn’t and they have our intrusion alarm integration built into that system so if there’s a break-in they’ll know.
“These are some of the unique things that we’ve built. With the Genetec platform, we’re able to put all of that into a single pane of glass. And since we are software, our product scales very easily.”
Another common problem faced by cannabis dispensaries in particular is people attempting to purchase more cannabis products than is allowed under local regulations.
Some states, for example, prevent individuals from purchasing more than a certain amount of cannabis over a given time. This means verification and identification is vital to ensure cannabis dispensaries are not enabling unlawful sales.
Genetec interfaces its video system with identification information to prevent a customer from using a fake, borrowed or stolen ID to buy more than their allowance.
Based in Montreal, Genetec became involved in the cannabis sector as the plant started to gain acceptance in Canada several years ago. The company produces software platforms to support physical security devices and since launching in 1997, it has become the largest manufacturer in the world of this type of technology.
The company now works across the North American continent, keeping cannabis grow-ops, storage facilities and dispensaries safe and secure.
Currently operating in the US and Canadian cannabis sectors, Thomas says that Genetec intends to expand into the EU market, including the UK, as the cannabis sector continues to open up.
Thomas added: “We will absolutely be at the forefront of trying to work with the folks that want to start businesses there and get them up and rolling.
“We anticipate the same security requirements would be applied in these different countries and jurisdictions as we’re seeing in the US and Canada.”
Panaxia to expand its Malta production plant with $6m investment
Panaxia’s investment in the country is a “milestone” for Malta’s medical cannabis industry, says Minister for the Environment, Energy and Enterprise.
Israel-based Panaxia is set to expand its medical cannabis production facility in Malta and will export its first products to Germany in the coming weeks.
Panaxia is set to deepen its connection with Malta as it plans a further expansion to its local production plant now the company has obtained its EU-GMP licence.
The company received an official license from the health authorities in Malta to manufacture finished medical cannabis products in May, 2022.
The news of Panaxia’s $6m (~£4.95m) investment was announced during a visit to Panaxia’s Ħal Far plant by Malta’s Minister for the Environment, Energy and Enterprise Miriam Dalli.
Panaxia aims to enrich the Maltese production portfolio with products aimed for both Europe and Latin American markets. To do this, its Malta facility will diversify into an array of products ranging from the production of tablets, oil and extracts, as well as carrying out clinical trials, stability experiments and research and development.
Minister Miriam Dalli described Panaxia as an early success story for one of Malta’s newest economic niches.
Minister Dalli commented: “Malta Enterprise has been in discussions with Panaxia since the early days after the enacted legislation in 2018. Today, Panaxia is only marking the start of its actual production, but it is already planning an expansion in its facilities.
“This is another milestone reached for our medical cannabis industry – an industry which further enriches our wider pharmaceutical sector. Malta is the ideal location for such operations, whereby specialised products are developed for the global healthcare supply chain.”
CEO of Panaxia, Dadi Segal, commented: “I am impressed with the role of Malta Enterprise in their support to our Malta team at Panaxia on various levels, not just the financial assistance but also the constant communication and facilitation.
“We had to build this facility from scratch and the process was long but soothed through Malta Enterprise’s constant guidance.”
Panaxia also operates from locations within the United States, Canada and South Africa, and is currently in the process of registering products in Portugal, Greece, Poland and Brazil amongst others. Its range of pharmaceutical products, over 60 in all, are mainly based on cannabis plant extracts and treat a variety of ailments including nausea, anxiety and depression.
Groundbreaking agreement to supply Czech patients with cannabis extracts
The agreement will enable Czech pharmacies to prepare personalised medicines for patients.
Prague-based pharmaceutical company, Motagon, will be the first company in the Czech Republic to supply medical cannabis extracts to patients.
Motagon has secured the agreement with Europe’s biggest indoor cannabis producer and one of the first cannabis extracts and formulations producers Phcann International.
Phcann International is an EU-GMP vertically integrated, multinational pharmaceutical cannabis company headquartered in Warsaw, Poland with an established footprint portfolio of countries like UK, Germany, Poland, Italy, Israel, Portugal, Australia and Brazil.
Through the agreement, Czech cannabis patients will now be able to access Motagon’s dried cannabis flowers and extracts to treat a number of health conditions including neuropathic pain, spasticity in multiple sclerosis, chronic pain, vomiting and nausea in the context of conventional cancer treatment, complex palliative care, or treatment of symptoms in neurological diseases such as Parkinson’s.
Additionally, Czech doctors are extended the option to work with an effective form of cannabis medicines, namely standardised extracts with more precise doses of CBD and THC cannabinoids.
With the extracts, pharmacies will be able to prepare personalised medicines for specific patients, including creams and gels for topical application, oils and capsules for oral consumption and rectal and vaginal suppositories.
Motagon’s chairman and executive director of Heaton, Motagon’s parent company, Jaromír Frič, commented: “We are extremely pleased that in a relatively short period of time we have managed to commence the import, sale and distribution of high-quality medical cannabis to pharmacies in the form of dried flowers, but our aim from the start was to offer more effective forms such as extracts to Czech patients as soon as possible.
“I believe that doctors and especially patients will appreciate this fundamental change, as well as the fact that there will be a broad extracts portfolio with a wide array of THC-CBD formulations, targeting a wider range of patients.
“I would also like to express my great appreciation to our team at Motagon who have successfully managed to comply with all the legislative requirements of the regulatory authorities.”
Motagon CEO Jan Mehner, has stated that the range of extracts on offer should cover the needs of the vast majority of cannabis patients in the Czech Republic:.
Mehner commented: “We plan to immediately introduce extracts with high THC content and a group of balanced THC-CBD extracts, allowing us to target patient populations that aren’t responding to treatments from existing traditional medicines.
“We’ll then broaden our portfolio (and patient base) to include high CBD and balanced products with a slight predominance of THC or, conversely, CBD.”
Phcann International CEO, Zlatko Keskovski, commented: “The agreement with Motagon will provide both companies with the first mover advantage in the Czech market where we will be able to set and implement the highest standards of quality and consistency that will meet expectations of the Czech patients.”
The first cannabis extracts are expected to be available in Czech pharmacies as early as September 2022.
Swiss CBD investment company secures £26.23m funding
Pharma Tech Holding has obtained a capital commitment agreement from LDA Capital.
Pharma Tech Holding SA has secured a CHf30m (£26.23m) investment from global investment group LDA Capital Ltd – with expertise in cross-border transactions including the agriculture, Agri-tech, and CBD industries – which will support its portfolio investments.
Pharma Tech Holding SA invests in innovative businesses with high technological value and scalability potential, mainly in Switzerland and Europe, with a focus on the health-tech, agri-tech, and functional food.
The CHf30m investment from LDA Capital will allow the company to invest and support its portfolio company Blue Sky Swisse SA, which focuses on the extraction of natural active principles from vegetable matrices, vegetable waste, and renewable sources to deliver B2B products under the form of CBD oil, terpenes and waxes.
The factory, located in Biasca, will be built with state of art of extraction technology using supercritical CO2, and will be self-sufficient through the use of solar photovoltaic panels and district heating.
CEO at Pharma Tech Holding, Sabina Del Nigro, commented: “We’re thrilled with this partnership and are so glad that LDA Capital recognises the value of Pharma Tech Holding and its portfolio company, with the aim of creating one of the most innovative hubs for health-tech, agri-tech and functional food.”
Blue Sky Swisse will make high-quality CBD due to a proprietary extraction process, starting from the farming, performed under strict control and culminating with the immediate freezing of the flowers after harvest.
It will also sell “all natural” formulations to increase bioavailability and will invest in the agricultural raw material chain, as well as creating an aeroponic greenhouse in Ticino, to deliver a high-quality GMP pharmaceutical CBD oil.
LDA Capital agreed to commit an amount of up to CHf30m in cash within a maximum of three years. This Capital Commitment will be released based on drawdowns by Pharma Tech Holding, which Pharma Tech Holding has the right to exercise at its sole discretion.