Coronavirus And Cannabis Businesses: A Catalyst For Natural Selection?

By Arnaud Dumas de Rauly, CEO of The Blinc Group and Chair of the  ISO & CEN Vaping Standards Committees.

In 1859, Charles Darwin set out his theory of evolution by natural selection as an explanation for adaptation and speciation. This is the case with the Covid-19 coronavirus which evolved from its original form as part of its own Darwinian adaptation. (Coronaviruses range from the common cold to MERS and SARS).

Cannabis is a nascent industry affected by the usual external forces: political, economic, sociocultural, technological, legal, and environmental. None of those factors can be controlled, yet there were certainly mitigation processes that should have been implemented.

Natural selection was bound to happen in this “perfect storm” comprised of the cannabis market “bubble,” the vaping crisis and now this novel coronavirus outbreak. As Darwin might agree, those cannabis businesses that survive will be the fittest ones, stronger than ever, and having adapted, the most likely to thrive in the new industry environment.

Most cannabis companies purchase ancillary products from China, whether they know if or not, and are affected by this outbreak on multiple fronts, both internal and external, including: 

  • Staffing Issues
  • Procurement/manufacturing Issues
  • Shipping Issues
  • Communication Issues

Staffing Issues

Unless the outbreak gets out of hand in the Western economies, staffing challenges are mainly impacting Chinese suppliers for now. Beijing wants all of the manufacturers to be back online as of March 1rst. The problem is that they are putting the burden on the provinces, on the cities, and on the industrial parks.

As an example of the common factory reopening paper trail – Beijing has a list of three documents that are required for approval to reopen; the provinces will add another three documents to that; the city then adds another three documents; and finally, the industrial park also adds three more documents. That’s a total of 12 documents that manufacturers need to provide to commence operations.

Another issue, which we’ve seen over the past few weeks, is the lack of key personnel. If key managers of assemblers or manufacturers who have obtained approval are not back to work yet, there will be performance issues. This is the “stay home, don’t get sick, and get back to work” conundrum.

Imagine if the quality control manager or the quality assurance manager hasn’t made it back to the factory because of travel restrictions. In many cases, the manufacturer will not stop taking orders or wait for him/her to be back to start production. This might lead to QC or QA issues during manufacturing which in turn might either impact production schedules, timing of clients’ orders or the manufacturers’ capacity to keep up the pace. In some cases, less scrupulous manufacturers will skip these steps altogether and still try to deliver potentially non-compliant products to cannabis businesses in the US and Canada.

This is why experienced and thought-leading businesses have set up their own QA and QC teams on the ground in China in order to be able to prevent or mitigate these issues. Doing so not only helps streamline production on a day to day basis, but also acts as a redundancy measure during situations like the coronavirus outbreak.

Another added value resides in the possibility for these internal QA/QC teams to assist and educate manufacturers. Until this week, Blinc’s QC team has been filling in for one of our manufacturers’ internal team until they return, thus enabling streamlined production …

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