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Traceability and compliance: what they mean for the hemp industry

Canxchange explores why traceability and compliance are vital for the hemp and cannabis industries.



Traceability and compliance: what they mean for the hemp industry

The hemp and broader cannabis industries are re-emerging after a generation of the war on drugs. Safety and legal compliance are at the core of the industries’ future successes.

Traceability and compliance: what they mean for the hemp industry – Live on the Canxchange website.

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 and 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 and 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.

Public safety

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.

Product recalls

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’re 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 specialised 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.


0.3% agricultural THC level adopted in Europe

The new Common Agricultural Policy has been adopted in Europe that will allow a maximum THC level on the field of 0.3 per cent.



0.3% agricultural THC level adopted in Europe

The European Industrial Hemp Association (EIHA) has announced that the Common Agricultural Policy (CAP) proposal has been adopted by the Council following the final vote at the European Parliament on November 24.

From 1976 to 1999 agricultural hemp producers in Europe were able to plant seeds with a maximum level of 0.3 per cent THC, which was then lowered to 0.2 per cent in order to prevent illicit cannabis cultivation. This reduction put Europe at a competitive disadvantage in the industry.

In October 2020, the European Parliament voted in favour of restoring the level to 0.3 per cent. The EIHA, which represents the interests of hemp farmers, producers and traders working with hemp fibres, shives, seeds, leaves and cannabinoids, announced that the final proposal for the Common Agricultural Policy (CAP) was adopted on 2 December, 2021, following discussions to agree on compromises.

The new CAP will enter into force on 1 January 2023.

Daniel Kruse, president of the EIHA, commented: “I have been fighting for this moment for over a decade. My special thanks go to our amazing team in Brussels, who have made this possible.

“This is a great day for the hemp sector and another step towards a greener future for Europe. However, if compared to other countries worldwide, 0.3 per cent is still a low limit; for instance, Switzerland, in the heart of Europe, has a higher number, and other EU countries already work with higher limits as well.

“Scientific studies and many years of experience prove that higher limits pose absolutely no safety risk for consumers. The EU lays the foundation for a growing, green and sustainable industrial hemp sector across our Union and it has the chance to achieve a level playing field again in global competition when it comes to the industrial hemp sector.”

The new policy recognises the possibility for farmers to receive Direct Payments for hemp varieties registered in the EU Catalogue that have a maximum level of THC of 0.3 per cent, a change that entails a potential enlargement of the number of hemp varieties accepted under the EU Catalogue.

However, this level only applies if farmers want to receive direct payments, meaning that in Europe it is possible to plant hemp with THC level on the field over 0.3 per cent given that it is authorised by national regulations.

Lorenza Romanese, EIHA managing director, added: “I am proud of what has been achieved today. We worked hard to ensure that hemp had the recognition it deserves in the Common Agricultural Policy. I would say that this small step reflects that EU legislators are closer to fully acknowledging and recognising the existence of a legitimate European hemp sector.

“However, as I have said other times, this is not it. We need to keep working together, as there are still other areas where hemp deserves to be better regulated, but we are on the right track.”

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First and only medical cannabis cultivation licence granted in Guernsey

The first licence for cultivating medical cannabis in Guernsey has been granted to 4C LABS. 



First and only medical cannabis cultivation licence granted in Guernsey

4C LABS has received a licence to cultivate medical cannabis by the Bailiwick of Guernsey Cannabis Agency (BGCA).

4C LABS received the first medical cannabis cultivation licence to be granted in Guernsey after its application was reviewed jointly by the BGCA and the UK Home Office.

The new company, which is building a vertically integrated infrastructure for producing and delivering cannabis therapeutics in the UK and the EU, will now begin the construction of its 40,000 sq ft pharmaceutical-grade indoor cultivation facility ion the island. 4C said that the facility will utilise organic cultivation techniques underpinned by modular design and automation, which is based on two decades of cannabis genetics that have been developed alongside the establishment of the Canadian medical cannabis market. 

CEO of 4C LABS, Greg Dobbin, commented: “4C LABS was established in 2018 to cultivate and process cannabis-based medical products which address specific medical conditions to improve patients’ quality of life.

“We are delighted that with the approval of our cultivation licence, we can take the next steps in the development of our business and our vision to cultivate GMP craft medical cannabis, and establish a series of medical clinics accessed through a user-friendly technology platform to better service patients.

“We are seeking to lower the cost of cannabis-based therapeutics and improve efficiency in access for patients in the UK and Channel Islands, operating within the regulatory framework and with a core focus on patient safety. A further objective is, through our genetics library and our unique cultivation technologies, to improve the quality of flower from that which is currently available in the UK.

“Poised to be at the forefront of the development of the Medical Cannabis industry in the UK, we are also seeking to broaden our investor base as we develop and execute our growth strategy.” 

4C has said it is positioned to begin cultivation in 2022, with the first 4C LABS Medical Flower therapeutics available in the first quarter of 2023.

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Cannabinoids supplier expands operations into Europe

American cannabinoid manufacturer and supplier is expanding to supply the European market.



Cannabinoids supplier expands operations into Europe

Supplier of high-quality cannabinoids, Open Book Extracts, is expanding its operations into Europe with the establishment of OBX Europe. 

Based in North Carolina, Open Books Extracts is on a path of global expansion. Through the establishment of OBX Europe, the company will be able to fulfill regional orders of all sizes, serving as a borderless gateway to the European cannabinoid market. The company recently established OBX Asia, headquartered in Hong Kong, and selected Peter Bodill Agencies as its principal distribution partner in South Africa.

Logistics and supply chain professional, Najeeb Qazizada, will serve as director of supply chain for OBX Europe, located in Almere outside Amsterdam. Locating the main distribution centre in the Netherlands will allow the company to support local warehousing of its ingredients and finished goods in Europe to create supply chain efficiencies for the its UK and European clients. It will also offer additional options for contract manufacturing in the UK and Europe.

Qazizada commented: “With the demand for cannabinoids products in Europe growing rapidly, it is paramount for leading brands to have a reputable, quality supplier like Open Book Extracts. 

“OBX is cGMP certified, a member of EIHA and its Novel Food Consortium, and is well versed in international market distribution and regulations, ensuring that we will meet the UK and European market demand for high quality, safe cannabinoid products.”

The company’s 76,000 sqft, cGMP-certified research and production facility near Durham, North Carolina, enables the manufacture of cannabinoids including CBD, CBN, CBC, CBG, CBGa, CBT, CBDa, CBDv, and THCv. 

OBX joined the European Industrial Hemp Associations’ (EIHA) Novel Food Consortium in March 2021, and is now joining forces with other companies to pursue safety studies to provide safe and ready access to cannabinoid-based products throughout the UK and EU.

“Quality and consistency are paramount in the European market, and we are committed to bringing the highest quality standards to the European cannabinoid market and beyond,” said Dave Neundorfer, OBX CEO. 

“The establishment of an on-the-ground presence helps us provide the best service and support to current customers in the region as well as new ones that understand the tremendous opportunity in this burgeoning market.”

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