As traditional consumer packaged goods manufacturers look toward cannabis — and as startups enter the market — these companies will need to bring standardized cannabis ingredients into their supply chain.
The quality, consistency and efficacy of these ingredients will be what allows them to tap into the potential of cannabis-infused food, nutrition, beauty, pharmaceuticals and other markets, says Matthew Anderson, CEO, Vanguard Scientific, Aurora, OR.
“The ability to unlock these markets is highly dependent on the quality of the supply chain, the consistency of the ingredients, and ultimately, the formulations that (product developers) spend their life defining,” he says.
Anderson offered insights on the challenges cannabis ingredient suppliers and buyers face from seed to sale during Cannabis Products Exchange, held virtually July 30-31.
Unlike corn and other natural ingredients that have undergone extensive breeding and propagation, Anderson said the supply chain for cannabis is still under development. This has the potential to affect every step in the manufacturing process.
“That need for consistency of feed stock moves all the way through the supply chain, for consistency of processing, formulaic definitions, certain protocols and applications. And since this is a plant, with fats, waxes, lipids, sugars, plus the cannabinoids and phytometabolites that were seeking to extract to create finished products, there’s no one uniform process that’s enabling this to happen without application definition.”
Ingredient suppliers need to consider not only their customers’ needs but also those of the end user. Anderson said end-users buy products that are “true to label” — what’s outlined on the label is what they’ll get — in addition to buying safety, consistency and brand attributes that align with their lifestyles and beliefs.
Meanwhile, the business-to-business ingredient buyers are seeking products that meet their demands for quality with minimized risk. Anderson said manufacturers are looking to establish reliability through long-term power purchase agreements (PPAs) on which they can build product formulas and brand promises.
Supply chain traceability and visibility are also key, but without federal regulation, it’s up to suppliers to hold themselves to standards of quality, Anderson says.
“It’s on the onus of the supply chain participants to self-regulate above the standards that would be expected from the FDA,” he says.
That in itself is a problem, as state-by-state legalization has caused cottage industry manufacturers to slowly scale their supply chain. It has led to a “lack of professionalism” in quality control, Anderson says. He says federal guidance will likely be too rigorous for some of these suppliers to meet.
Anderson added in the “supply chain of the future” the supply of quality, consistent cannabinoids would meet demand, and cultivation, extraction and formulation would be specialized to meet product specifications. Good Agricultural and Collection Practices (GACP) and Current Good Manufacturing Practices (cGMP) will be the industry standards.
“We’re really excited to see where the industry is going tomorrow,” he says.