The Future of Labeling in the Legal Cannabis Industry

Sponsored Content provided by CLS Holding USA Inc.


The legal cannabis industry is currently guided by a patchwork of state-level regulations, mandating rules for everything from taxes, methods of consumption, labeling and beyond. While the industry lacks national standards for all of the aforementioned regulatory issues, creating a national standard for labeling would empower consumers and ease the minds of apprehensive outsiders.

With legalization happening on a state-by-stay basis and no overarching regulatory agency to devise and implement national standards for labeling, the torch has to be picked up by manufacturers that see long-term value in establishing labeling practices that regulators and consumers can trust and understand.

Planning with the future of federal legalization in mind, CLS Holdings USA Inc. (OTCQB: CLSH) is preparing to implement some of the highest known standards in the legal cannabis industry.


Regulatory Precision

Establishing a completely new and fully functioning legal industry is a monumental undertaking, which has made it difficult for some states to craft standards that would be up to par for national and international good manufacturing practices.

If the industry hopes to establish a national standard for labeling, acute care has to start with word-level precision within a state’s regulations. Conditional clauses won’t cut it.

“Some state regulations don’t mandate certain things, they say, ‘you should do this,’ or statements of that nature, and that’s why vital information is absent from some cannabis product labels,” explained Jeff Binder, CEO of CLS Holdings.

As observed by Ray Keller, founder of CLS Labs, “Any time there’s a regulation, the word ‘if’ needs to be the farthest word away from that regulation, but you will find that word ‘if’ in many regulations at state levels.”

Ambiguities aren’t any better. Keller explained, “You have to remove the vague. You have to be specific about what you say. In using words like ‘may,’ ‘should,’ ‘can,’ ‘must’ and ‘always,’ you can be very descriptive or you can cause a lot of trouble.”

When regulatory language for labeling is left open to interpretation, market entrants can cause trouble by inadvertently tarnishing the industry’s image with negligent practices.


Labeling Powered by Process

Standard operating procedures direct procedural uniformity in regards to risk, production, testing and distribution, among other procedures. Whether SOPs are based on company-wide or industry-wide recommendations, they are a company’s lifeblood and need to be crafted in such a manner that enriches a company’s existence and protects its future.

While legal cannabis may be a frontier market, entrants can’t lower their standards—professionalism matters. According to Keller, at CLS Labs, “Each department will do their job according to SOP and then they will relinquish their internal product to the next step in the process.”

The green-rush mentality surrounding cannabis has likely convinced some participants to enter the market prematurely, but establishing SOPs is a way to remind current or prospective cannabis companies that you have to learn to walk before you can run.

“With each step of the process followed per SOP and each of the recordings made appropriately, at the end of the whole procedure we have a product produced by CLS that can be labeled accurately.”

Standard operating procedures are at the crux of best practices in other legal manufacturing industries; if advocates, entrepreneurs and investors want to expedite federal legalization, then the cannabis industry needs to prove it has taken a page from the SOPs of mainstream manufacturers.


Third-Party Verification

While regulatory precision and robust SOPs will keep governmental agencies happy, consumer trust in legal cannabis will be built upon products containing a cannabinoid profile panel whose information has undergone third-party verification.

Consumers need to know that a labeled product’s contents have been tested by the manufacturer and then independently certified by a third-party lab because it isn’t enough for a “touch-the-plant” cannabis company to say, “you have our word.”

With 35 years of laboratory experience, Ray Keller knows that good intentions in a lab environment mean nothing if test results haven’t been verified by an independent testing facility. “We have to have third-party confirmational analyses. We can do everything completely right inside our facility; however, that is still the wolf guarding the hen house. Somebody else has to say, ‘yes, they’re doing it right.’”

Operating an in-house testing facility and submitting test results for third-party verification may not seem essential to some, but as Jeff Binder noted, “When you protect cannabis consumers by giving them information, that’s good for everybody because it helps to dispel the stigma facing the industry today.”


Label It Like the Feds Legalized It

The maxim “less is more” does not apply to labeling legal cannabis products, especially in an industry that is under such intense scrutiny. While there isn’t enough real estate on a cannabis product label to give a laundry list of chemical cannabis compounds, cannabis companies can take a page from other federally regulated industries and proactively implement similar labeling practices.

According to Ray Keller at CLS Labs, “The regulations for producing dietary supplements, CFR 21 part 111, are very QC-heavy and that is where I would suggest everyone start.”

Keller is referring to Title 21 Part 111 of the FDA’s Current Good Manufacturing Practice in Manufacturing, Packaging, Labeling, or Holding Operations for Dietary Supplements. By using the FDA’s regulations on production and process control systems for dietary supplements, CLS Holdings is able to develop standards in anticipation of federal protocol.

CLS is improving upon these regulations by giving the cannabis consumer a detailed profile of both the nutritional and cannabinoid facts. Keller explained, “With edibles, it makes sense to have two panels—the nutrition panel and the cannabinoid profile panel, with the profile panel addressing THC, THCA, CBD, CBDA and CBN content.”

As you can see in CLS’ label design below, the nutrition facts are clearly demarcated so consumers can easily identify the specific details for the amount per serving, including total fat and cholesterol, among others. To the right of this, there is a slightly smaller panel for the cannabinoid profile per serving, which details the specific measurements for five of the main chemical components of cannabis.

While such detail is certainly intended to protect the inexperienced cannabis consumer, it is also specifically designed to help those who are using cannabis as a medical supplement. As Keller explained, “If somebody is eating that candy bar because he’s having chemo therapy and he’s ill all of the time, he’ll want a high CBD content, and he won’t want so much THC.”

Consumers need to be able look at the back of a cannabis-infused chocolate bar and find answers. CLS Holdings wants to give them those answers, and in turn, show the nation that the adoption of good manufacturing practices leads to a label the public can trust.


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