The True Cost of Quality: Why GMP Certification is a Business Imperative for the Cannabis Industry
– By the Cannabis Safety & Quality (CSQ) Team
The cannabis industries, both marijuana and hemp, are rapidly evolving, with increasing regulatory scrutiny and consumer demand for safe, high-quality products. Good Manufacturing Practices (GMPs) have emerged as a critical framework for ensuring product safety, regulatory compliance, and long-term business success. In the grand scheme of things, GMP certification doesn’t just make sense for cannabis businesses, it makes money. This article explains why by highlighting the benefits of GMPs, the costs of neglecting quality assurance, and the importance of accreditation in ensuring the credibility of certifications.
The Benefits of GMP Certification
A GMP certification is often misunderstood as a marketing tool or a burdensome regulatory hurdle. However, GMPs are far more than that—they are a commonsense approach to quality management that delivers tangible business benefits.
- Lower Operating Costs: By implementing GMPs, businesses can streamline their operations, reduce waste, and improve efficiency. This leads to significant cost savings over time. For example, a well-structured quality management system (QMS) helps identify and address inefficiencies, reducing the need for costly rework or recalls.
- Improved Compliance: GMPs provide a clear framework for meeting regulatory requirements, making it easier for businesses to navigate the complex landscape of regulations. This not only reduces the risk of fines and penalties but also ensures smoother interactions with regulators.
- Risk Mitigation: One of the most significant benefits of GMP certification is its ability to mitigate business risks. By adhering to GMP standards, companies can avoid costly recalls, fines, and reputational damage. This is particularly important in an industry where consumer trust is paramount.
- Market Legitimacy: A GMP certification signals to consumers, investors, and regulators that a business takes product safety and quality seriously. This enhances the company’s credibility and stability in the market, making it more attractive to potential partners and investors.
The Costs of Lacking GMPs:
While the benefits of GMP certification are clear, the costs of neglecting quality assurance are even more striking. Absence of GMPs can harm a business in a variety of ways, such as:
- Inefficient Operations: Without a robust QMS, businesses often face longer incident investigations, inefficient use of personnel and resources, and difficulty tracking deviations and non-conformances. This lack of visibility into operating costs can lead to increased waste and smaller margins.
- Increased Testing and Waste: In the absence of GMPs, waste becomes more difficult to pinpoint, leading to unnecessary testing and higher operational costs. Additionally, critical data may be lost, complicating process validation and increasing the risk of errors.
- Financial Penalties: Non-compliance with GMP standards can result in significant financial penalties. For example, FDA fines can reach upwards of $500,000, and non-conformances can cost businesses $2,000 per day. Violations can range from $500 to $15,000 per citation, while compliance infractions can cost between $5,000 and $200,000.
- Reputational Damage: Perhaps the most significant cost of lacking GMPs is the damage to a company’s reputation. Recalls, fines, and other compliance issues can erode consumer trust and lead to a loss of revenue and investor confidence. In severe cases, businesses may even face license revocation.
These deficits aren’t pulled from thin air as a scare tactic, they stem from real-world scenarios. For instance, a Michigan operator misrepresented products in its inventory and failed to follow requirements for storage, security, and waste disposal of nearly 900 products. This improper tracking of cannabis products led to an $85,000 penalty.
In Massachusetts, one licensed operator had a mold outbreak at their cultivation facility for more than a year and instead of fixing it, they found a testing laboratory willing to provide passing lab results. This Massachusetts operator was later fined $200,000 for knowingly selling moldy cannabis. These examples underscore the importance of GMPs in avoiding costly mistakes.
The Risks of Non-Conformance
Non-conformance with GMP standards poses significant risks to businesses. Several potential consequences, including:
- Rework and Recalls: Non-conforming products often require rework or, in severe cases, recalls. These processes are not only costly but also time-consuming, diverting resources away from core business activities.
- Fines and Penalties: As mentioned earlier, non-compliance can result in substantial fines and penalties. These financial burdens can strain a company’s resources and hinder its ability to grow.
- Loss of Revenue and Reputation: Recalls and compliance issues can lead to a loss of revenue and damage to a company’s brand reputation. In an industry where consumer trust is critical, this can have long-lasting effects.
- Loss of Investor and Consumer Trust: Investors and consumers alike value transparency and reliability. Non-conformance with GMP standards can erode this trust, making it more difficult for businesses to attract investment and retain customers.
- License Revocation: In extreme cases, non-compliance can result in the revocation of a company’s license to operate. This is a worst-case scenario that can effectively shut down a business.
Again, these risks are not just theoretical—they are based on real-world examples and should serve as a wake-up call for businesses that have yet to adopt GMPs.
Investing in the Future
GMP certification is not just a short-term expense—it is a long-term investment in the future of a business. GMP certification can be seen as a capital expenditure (CAPEX) with a return on investment (ROI). While the upfront costs may seem significant, the long-term benefits far outweigh them.
Not only does GMP certification provide a business with legitimacy and stability, making it more attractive to investors, regulators, and consumers, GMPs save businesses time and money in the long run by improving efficiency and reducing waste.
A GMP certification also helps businesses future-proof their operations by ensuring compliance with evolving regulations and industry standards.
Like many long-term investments, it’s important to allow time for growth and to be patient, as cultural shifts and operational efficiencies take time to develop.
Conclusion: The True Cost of Quality
Ultimately, GMP certification is a strategic investment in the future of a business and a commitment to consumer safety. By adopting GMPs, cannabis businesses can improve efficiency, reduce costs, build a reputation for quality and reliability, and keep consumers safe. In an industry where consumer trust is paramount, GMP certification is not just a good idea—it is a business imperative.
To learn more about GMPs and quality management, sign up for the CSQ QMS Workshop, an educational seminar that’s free for all MOCann Trade members taking place on May 22nd in St. Louis. CLICK HERE to register today!