Quality Agreements in Cannabis
By Karina Lahnakoski, Vice-President Quality Regulatory
Cannabis Compliance Inc.
As the complexities of the cannabis industry and supply chain are changing at light speed, it is important to step back and ensure that your supply chain is complying to the regulations. That means having in place quality agreements with your vendors and your customers to align expectations. This document is already commonplace in pharmaceuticals, primarily because pharma companies will get cited by the regulatory agency if operating without them. It is so instrumental to the operation of the drug supply chain that FDA had published a Guidance document just on Quality Agreements and they are strictly enforced. This standard is going to make waves in the cannabis space.
A Quality Agreement delineates responsibility between two parties to ensure compliance. These agreements do not cover general business terms such as costs, delivery or limits of liability. They are normally a separate agreement, signed between the two quality units to come to terms with the regulatory compliance of both parties’ activities. They can also outline any specific requirements in place as well as how to deal with quality issues should they arise.
Pharma has already learned their lesson as to what can happen when proper agreements are not in place – many preventable issues if two organizations had just put an agreement on paper. Having two quality units battle it out/meet after an actual quality event/issue, is just too late. The first introduction between two quality units should ideally be with the review of a draft Quality Agreement and having the discussion and collaboration it takes to finalize the draft into a solid document.
The introduction of a Quality Agreement to the supplier-customer relationship is where the supplier organization is required to take a hard look at their quality management system and really figure out: can they meet the customer requirements? For example, what testing requirements are needed when a product transfer is involved between the two parties? Can the supplier meet reduced timelines for recall reporting, so the customer can in turn, meet the Health Canada requirements? What changes can a supplier make without informing the customer, and do they have the systems in place to trigger the customer notification of change? These are all questions best agreed before product is flowing through the supply chain and there is pressure to release it to market.
The Quality Agreement becomes even more critical in the cannabis industry as the web of companies gets larger and deal-making becomes the norm, the licensing regime is changing, and product types requiring multiple licences are on the horizon (NHP’s, edibles, etc). For example, an oil manufacturer launching into Canada will have a solid strategy buying GPP-compliant wholesale flower and extracting/selling oil under the ACMPR. But once that same company wants to sell that oil into the edible market, the supply chain is going to need to conform to the Food Regulations as well. The best way to ensure this is with Quality Agreements – an ounce of prevention with a proper Quality Agreement is far more valuable than even the best expertise post-mortem..
At CCI we advise our clients on Quality Agreements – from complete write up, review and advisement on areas of potential concern. We also advice corporate groups on terms and tonditions related to quality and how they may be improved to ensure supply meets their expectations. Contact us today to start a conversation.