Fly By Night: do your erasers catch red eyes?

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The global vitamin supplement market is projected to grow at a compound annual growth rate (CAGR) of 6.2% to reach $71.37 billion by 2028, with the fastest growth currently occurring in the gummy vitamins segment. Gummy supplements are expected having the fastest CAGR at 12.6% to exceed $33 billion by 2028. Originally developed for young people, gummies are now preferred by all age segments as an alternative to tablets, capsules and pills.

As you might expect, cannabidiol (CBD) gummies are also projected to grow rapidly at a CAGR of 30.7% to reach $13.9 billion by 2028. In terms of the actual number of CBD gummies produced last year, a rough estimate would be at least 1.7 billion . For a perspective that equates to 53 gummies being produced every second, 24 hours a day, 365 days a year. One could reasonably ask:So where do all these gummies come from?” and “Who manufactures them and under what conditions and quality assurance standards?

There is no short answer to these questions or certainty that all cannabinoid gummies are made to a minimum set of safety and quality standards. Recipes and gummy ingredients are readily available online, and there’s no shortage of hobbyists making small batches for family, friends, and to sell at pop-ups and farmers’ markets. There are a number of well-known brands that started in home kitchens and garages. In terms of production scale, at the other end of the spectrum are companies like Bloomios, Inc. (OTCQB: BLMS), which operates a 51,000 square foot current good manufacturing practice (cGMP) facility in Florida.

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A variety of CBD products on the market today

For the home grower, they often start to come out of their kitchen and take over part of their garage or basement and while the entrepreneurial spirit is admirable, most consumers wouldn’t be at it. comfortable with manufacturing their pharmaceuticals, supplements, or even groceries. in these conditions which are often lacking:

  • Rigorous sanitary practices
  • Measures to mitigate contaminants entering production areas
  • Quarantine, chain of custody audit and testing of active ingredients used in production
  • Standardized and rigorous quality assurance testing of the finished product
  • Certificate of Analysis (COA) for active ingredients in finished product for certainty of dosage levels
  • Labeling and packaging standards to ensure product information and volumes are correct
  • Procedures for collecting, maintaining and auditing batch record data.

However, hobbyists make up only a very small fraction of chewing gum production today, and they generally take great pride in their work and show great care in production practices. So when demand begins to outpace home-based craft production capacity, many growing brands turn to contract manufacturers to help scale the production side while the brand focuses on sales, marketing and distributing the business. This is an ideal solution as a high quality product can be produced in volume in cGMP facilities, which improves consumer experience, product confidence and further increases brand value. This is the best case scenario of small, emerging brands that care deeply about their reputation and customer experience by ramping up production and growing responsibly.

The opportunists

The real underbelly of commercial chewing gum production is characterized by producers looking for pure profits who set up semi-permanent production lines in flexible industrial spaces not suitable for food handling, with limited building for the environment. isolation of each production step. This process includes: storage of materials, preparation of weights/measures, mixing of ingredients, molding, dewatering, coating, sorting and filling, labeling and finishing packaging. In the absence of cGMP compliant facilities and practices, they neglect or completely fail to maintain batch records, certificates of authenticity or chain-of-custody practices and have limited ability to deal with defective products once in the trade flow. Let’s call these manufacturers theOpportunists.

Opportunists see the current gummy cannabinoid market for what it is. It’s an emerging market that’s only really taken shape since the 2018 Farm Bill legalized hemp-derived cannabinoids. As such, it is well into its “gold rush” phase with many participants just entering the industry. Many participants have adopted ad hoc practices without explicit federal standardization or oversight, as the FDA has yet to recognize cannabinoids under its Generally Regarded as Safe (GRAS) standard.

FDA logoAdditionally, the FDA has excluded CBD products from the Food, Drug, and Cosmetic Act (FD&C) definition of dietary supplements. Under FD&C law, if a substance is an active ingredient in a drug product that has been approved or cleared for investigation as a new drug, products containing that substance are excluded from the definition of a dietary supplement. . Until now, the demand for gummy cannabinoids has continuously outstripped supply, resulting in attractive margins with little oversight. The opportunistic mindset has focused on maximizing profits while they can before regulation drives up costs, squeezes margins and squeezes profits.

Opportunists have more hedging to seek profit maximization instead of incurring the cost of setting up cGMP facilities and adhering to rigorous standards due to the fact that brands that consumers recognize are often made by one or more third-party processors. Some brands also want to maximize short-term profits, and manufacturers with a lower cost structure can compete more effectively on price than on quality.

As demand grows, some brands are supplementing their third-party cGMP product with additional products from opportunists and “recycling” their cGMP product’s valid COAs without even the cGMP manufacturer or consumers noticing. know. With lax regulatory oversight, these brands are inclined to turn a blind eye to the production practices of their contract manufacturers as long as high-volume orders are delivered on time and cheaply.

GMPFor gummies produced by opportunists, if there are product defect issues, consumers are unlikely to be able to trust batch record data and alleged COAs linked to/from QR codes on the container, many of these COAs were recycled from legitimate products. batches or simply doctored and reproduced rather than batch generated. There is little or no audit trail and recalls are unlikely to be effective, even if initiated. A refund is the most likely solution a consumer has, which may leave a larger amount of defective products in the market unaddressed. Additionally, brands that suffer from reputational damage due to quality issues can simply launch a substitute brand with a similar look through its same distribution channels and retain much of its market share.

Best Practices

If today’s CBD gold rush sounds a lot like the Wild West, you’d be right. However, as more consumers become aware of the health and wellness benefits of cannabinoids in addition to recreational uses, this larger and more diverse consumer base is raising the bar and demanding more transparency and certainty about manufacturing practices than ever before.

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Around 1.7 billion CBD mannequins were produced last year

How are the leading manufacturers of cannabinoid-based nutraceuticals proactively responding to consumers’ desire for high-quality, rigorously tested products made to the standards already imposed on manufacturers of nutritional supplements and prepared foods? While the answer may be simple, the implementation and ongoing compliance is not.

The answer is the voluntary adoption and adherence to the same regulations that apply to manufacturers of non-cannabinoid dietary supplements. Since the FDA has not yet recognized cannabinoids as dietary supplements, certain aspects of dietary supplement regulation cannot be complied with, such as notifying the FDA of structure/function claims when new products are released. on the market or notice of new food ingredients. On the other hand, many regulations can and must be adhered to by cannabinoid nutraceutical manufacturers to ensure its orderly, seamless, and safe growth.

The main FDA requirements that Bloomios and other major manufacturers adhere to are:

  • Register with the FDA as a food handling and production facility.
  • Adopt current Good Manufacturing Practices for dietary supplements that establish uniform standards necessary to assure quality throughout the manufacturing process and verification of the identity, purity, strength and composition of their products .
  • Undertake at least annually an independent third party cGMP audit of their facilities and procedures.
  • Follow the supplement label requirements of the Code of Federal Regulations (21 CFR 101.36) to ensure the ingredient list is accurate and the contents match the amount declared on the label, among other information.

The most significant challenge in adopting all of the above best practices is the qualification of cGMP facilities and continued compliance. cGMP standards require features, equipment and, of course, standard operating procedures specific to building facilities. There are significant additional costs to bring a cGMP facility online, additional time and experienced personnel required who can implement operating procedures and recertification whenever a production line configuration is changed or augmented with additional equipment.

Bloomios annual cGMP audit was conducted in August and over 130 specific requirements were assessed and scored. Although Bloomios has passed the audit and assessment, what is far more important is that cGMP practices are part of a company’s culture so that these high standards are maintained year-round and are not not rushed into practice just for the audit.

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