When Grow Ohio of Zanesville, OH, prepared to become one of the first companies to bring licensed medical marijuana products to that state in 2019, it discovered that packaging for cannabis is just like that for any other product, and yet very different. While functionally the same in many ways, packaging for marijuana must meet much more stringent pharmaceutical requirements—one of the most challenging being the inclusion of compliance data. But unlike pharmaceutical regulations, those for medical marijuana are in their nascent stages, with requirements continuously being reinterpreted, making compliance labeling a moving target.
In mid-2016, the Ohio legislature legalized the use of medical marijuana in that state. In November 2017, it handed out a relatively small number of provisional licenses to those startups having solid business plans. Grow Ohio was among 40 companies to be awarded with one. Just over a year later, the company put its first marijuana plants “in the ground,” in a new $20 million facility.
Grow Ohio is a dual-licensed Level 1 marijuana cultivator and processor, with the Level 1 distinction meaning it falls into the category of facilities that are 25,000 sq ft or larger—Grow Ohio’s plant is 60,000 sq ft. Within its walls—and its full-perimeter, chain-link security fence— 100 employees, including a team of experienced cultivation and processing experts, work together to produce a range of products. Among them are flower, tinctures, lozenges, capsules, gummies, oil syringes, and vape cartridges.
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In preparation for the opening of the first medical marijuana dispensaries in Ohio in January 2019 and the subsequent release of its first product, a tincture, in April 2019, Grow Ohio was focused on marketing, packaging, and product distribution. As is the case with many new product launches—both Consumer Packaged Goods and pharmaceutical—labeling was an afterthought. But as the delivery date drew near, the company realized it needed a consistent way to ensure it complied with state law across its varied range of products and packaging while at the same time satisfying its own brand standards. As the first to market, Grow Ohio found itself navigating a complicated process.
A brand with ripple effects
Grow Ohio was established with a dual purpose that is reflected in its name. Literally, the company is in the business of growing marijuana, in a grow facility, in Ohio. But beyond the financial opportunity presented by the legalization of medical marijuana, its founders—three Ohio business experts with experience in startup enterprises, including a food processing company—were motivated by a more altruistic goal: the wellbeing of Ohioans.
“The big idea was that, in Ohio—one of the areas hardest hit by the opioid crisis—if this is an alternative way to get people medicine and to help them, why not, as Ohioans, come together and put together a proposal that will give us one of the best grows in this part of the state,” says Justin Hunt, Executive Vice President of Grow Ohio. Hunt was formerly the Chief Legal Counsel at the Ohio Department of Commerce, where the majority of the medical marijuana program is housed.
Grow Ohio is also looking after the wellbeing of Ohioans by providing growth opportunities for the local community—an aspect of its business that Hunt says differentiates it from other cannabis companies. “Roughly ninety-six percent of our staff is from the Muskingum County, Zanesville, area,” he says. “When we built this place, all of our contractors were local, with the exception of one. So, everything we do and the events we continue to be involved with are about giving back to the community. That’s been a big focus we’ve highlighted in our marketing efforts and something we’ve committed to as part of our mission and our vision.”
Another differentiator, he adds, is Grow Ohio’s strict production and quality control measures, which result in a safe and consistent supply of high-quality medical marijuana products. The company markets its products under the Butterfly Effect brand, which is described as “a premier boutique brand for the patient and connoisseur focusing on quality.”
Due to the range of product types under the Butterfly Effect brand, Grow Ohio requires a number of different packaging formats as well. These are sourced from suppliers specializing in cannabis packaging, such as Kush Supply Co. and eBottles.com, as well as from traditional packaging suppliers such as JohnsByrne and Stephen Gould.
Among the package types used by Grow Ohio are:
· A 30-mL/1-oz frosted glass bottle with 1-mil dropper, packed in a secondary paperboard carton, for tinctures.
· A 75-cc round, high-density polyethylene “packer” bottle a with child-resistant, induction-sealed cap that holds gummies and capsules.
· A plastic CR snap case—described as being similar to an Altoids package—for lozenges.
· An aluminum can in 2.83-, 5.66-, and 14.15-g sizes with a CR reclosable cap for cannabis flower.
· A vape cartridge held in a snap case with a custom foam insert to hold the vape parts in place.
· An oral syringe for raw cannabis oil, packed in a Secure Sack tamper-evident, CR pouch from Dymapak.
A number of considerations went into selecting each package format, based on state regulations, functionality, product protection, and consumer convenience. For regulatory purposes, the primary marijuana packaging has to be tamper-evident and CR. If not, a secondary package is required, e.g., the pouch for the oral syringe. At the same time, Grow Ohio needed to consider ease of use for patients in terms of opening and dosing.
“In a medical market, the consumers may be elderly patients with arthritis,” says Hunt. “It can be hard to find something that’s child-resistant but simple for an elderly patient or someone who doesn’t have full use of their thumbs to open.
“You also have to be aware that some patients are younger and have a caregiver. And so, from a tincture standpoint, you have to ensure the caregiver can easily determine the dose that needs to be administered.”
Grow Ohio also had to consider the properties of each product when picking out the best package. For liquids, such as the tinctures, light-resistant packaging must be used to preserve the integrity of the product. Hence the tincture’s frosted glass bottle. For gummies, their stickiness required a package that would make it easy to break them apart for consumption.
“We’re constantly revisiting our packaging solutions,” says Hunt. “We’re looking at customer complaints, if there are any, to see how we can get better.”
Compliance versus branding
One of packaging’s primary jobs is to market the product inside, with graphics that help it stand out on shelf. Displayed within a dispensary full of competing brands, medical marijuana packaging is no different. What is different is the amount of compliance data that needs to be added to the package at the time of filling to meet state regulations. This can limit the space available for branding and can make branding across multiple products and packaging challenging. And, when the regulations around compliance labeling change, it means medical marijuana packagers must quickly alter their labeling strategy.
Says Hunt, while Ohio’s regulations around medical marijuana haven’t changed, the interpretation of the regulations have. “Everything in this market needs to be approved by the State of Ohio Board of Pharmacy [which operates the dispensaries], even though they aren’t a regulator, or else we can’t deliver it to a dispensary,” he explains. “So a good example is the THC logo. They may require it to be on every unit, whereas before they were happy with it being on the label itself or on the compliance label. So you always need to be keeping an eye on that.”
The Board of Pharmacy requires that compliance labels for medical marijuana in Ohio must contain very specific information and must be prominently visible and clearly legible. Information required includes the lot number, in case of a recall; a product ID number assigned to each product—for example, one ID number for a blue raspberry gummy, another for a strawberry gummy; the potency in milligrams of THC (the main psychoactive compound in marijuana) and CBD, or cannabidiol, along with the dosage; the company’s license number; the testing lab name and ID number; product ingredients; the expiration date; and a 2D barcode. In addition, as mentioned, the red, diamond-shaped THC logo must also be used on the package.
Compliance labeling presented Grow Ohio with two challenges: first, how to properly format the compliance data and get it onto a label at the point of packaging, and second, how to add the label to the packaging while preserving the brand’s upscale image and keeping a consistent look across all package formats.
Partnering with barcode and labeling systems supplier Adaptive Data Inc. (ADI), Grow Ohio found solutions to their challenges. ADI helped the company execute its labeling requirements by supplying it with label printers, label design software, and label stock, as well as strategizing on how to approach the branding and compliance labels for each package type to minimize costs and waste.
The right labeling solution for each package
The partnership between Grow Ohio and ADI began in January 2019. “The benefit of working with Adaptive Data was that it made us aware that cannabis isn’t different from a compliance label or packaging standpoint,” says Hunt. “It’s just finding the right solutions that have worked in other industries and applying them in the cannabis space.”
For the challenge of formatting data for the label, ADI provided Grow Ohio with BarTender label design software from Seagull Scientific combined with a user interface that provides drop-down lists, date pickers, and calculated results. This means Grow Ohio only has to enter data in five to 10 fields, depending on the product, which reduces the amount of potential “fat finger” errors, says Hunt.
“Until there is a direct API [application programming interface] through the state system and an affordable way to use that system, you’re always going to have some sort of manual input,” he adds. “So we have operators trained on each product who go in and pull the compliance information that doesn’t populate and finalize all that information, and then it’s QC checked.”
As the system evolves, the compliance data will be taken from METRC, the state-approved inventory system that tracks all medical marijuana plants and products grown or produced in Ohio.
The next step is labeling, which may involve adding a preprinted brand label and printing and applying a separate compliance label, or printing and applying a compliance label to a preprinted package, depending on the package type. In the future, Grow Ohio is looking at the possibility of using a preprinted label that has white space where the compliance information can be added at the point of packaging. Another option being evaluated is the use of an extended-content label.
Branding labels feature the Grow Ohio logo, along with the Butterfly Effect brand name and a stylized graphic of a butterfly with two leaves for wings. Lozenge containers, cans, and cartons have a ghosted image of a butterfly in the background. Brand colors are black, blue, and white, with graphics printed flexographically or digitally on paper labels. According to Mike Barker, Manager – Client Solutions for ADI, the decision to use flexo or digital is based on how quickly the labels are needed and the run length, with digital better suited to quick-turnaround, short-run jobs and flexo being more economic for longer runs.
Compliance information is printed on either direct-thermal or thermal-transfer label stock and includes the compliance data, a 2D barcode that will later be used to connect with dispensaries’ point-of-sale systems, and the red THC logo.
The labeling strategy for each package format is different, with some having gone through several iterations. One prime example is the frosted glass tincture bottle. Originally Grow Ohio was using blank bottles. ADI supplied the branding labels with the Grow Ohio and THC logos preprinted. The compliance data was then added using a Zebra ZT620 thermal-transfer label printer, configured to work with an Auto Labe wraparound label applicator that added the labels to the bottles.
Now, the bottles are preprinted with the Grow Ohio branding, and compliance labels are printed on-demand using a Zebra ZD420 desktop thermal printer and a Zebra ZT230 direct-thermal/thermal-transfer desktop printer. Label application is done by hand to ensure the labels don’t cover the logo when applied.
“The point here is that when starting up new production and labeling, things change and evolve,” says Barker. “Labels are part of that, so the ability to be flexible and fast with label changes is key.”
In another application, aluminum cans are filled manually and are then run through an N2 Packaging Systems LLC machine that weighs the can, doses it with nitrogen for freshness, and then seams it. Two label applicators from N2 are integrated into the system: One adds a preprinted label to the top of the can, and one adds a preprinted wrapround label to the can body. Compliance labels are printed on-demand using a Zebra printer and are added to the bottom of the can manually. Taller cans are wrapped with a preprinted labels using the Auto Labe applicator formerly used for the tincture bottles.
The round plastic packer bottles for gummies and capsules are preprinted and manually filled. Compliance labels are printed using two Zebra ZD420T printers with peelers, two Zebra ZT230s, also with peelers, and one Zebra ZT620 with an I/O interface, so it can be used with the Auto Labe applicator, if required. Currently the compliance labels are hand applied.
The plastic snap cases for lozenges are also supplied decorated by the manufacturer, and compliance labels are printed at the point of packaging using a Zebra ZD420, after which they are manually applied to the bottom of the case. A ZD420 label printer is also used to print the labels for the cannabis oil, which is packaged in syringes that are then placed in pouches. The label is applied to the outer pouch by hand. The same process is used for the vape cartridges as well, where the label is printed on the ZD420 and applied manually on the outer case.
Eventually Grow Ohio plans to bring all label printing in-house. “We had a meeting with a couple of our partners to figure out when’s the right time to get equipment for in-house printing capabilities,” says Hunt. “I personally think we’ll know by the numbers. We’re monitoring sales, we’re looking at our costs of goods sold, we know what it costs for some of these higher-quality labels. So what is the break-even point of bringing label printing in-house? We’re not there yet. My guess is probably within 2020 we’ll look to ADI and some of our other partners and say, ‘Okay, we’re doing this in house. What do we need?’”
When that time comes, Hunt says Grow Ohio will be looking for equipment that is flexible enough to print six different label sizes, dimensions, and types on one unit. Adaptability to print both compliance information and high-quality brand labels will also be vital.
Anticipating exponential growth
Likewise, Grow Ohio is watching the numbers to determine how and when to automate other packaging processes that are now being done manually. Hunt says the company has six packaging lines, for gummies, flower, lozenges, tinctures, syringes, and vape cartridges. However, the only things currently automated are liquid filling of tinctures, can dosing/seaming, and label printing and application.
“It’s so easy when you’re early on in a new operation to make a bad decision on packaging and labeling equipment before you really know what it is you’re fully going to be doing,” says Barker. “You can spend a whole lot of money and then regret it. So I think Grow Ohio chose the right path by easing into it. Plus, their demand starting out was in small batches that needed to turn quickly—so it really didn’t lend itself to automated machinery.”
Hunt is optimistic about the future growth of the medical marijuana market in Ohio. “Sales to date have been right around $50 million since the program started, which is about one year, but the potential is much higher,” he says.
“In year one, for any medical market, you’re going to see a very slow rollout. It’s what people in the industry refer to as ‘hockey-stick growth.’ So think of a hockey stick position: In the first and second year, you’re going to see a little bit of growth. And then it typically just takes off year three. The reason for that is, the first year you’re getting the licensees operational. The second year, patients are getting a feel for the market. Prices might be a little bit high, so the patient numbers aren’t quite as high. But then as prices come down, patients will start to explore this as an alternative medicine. You’re going to see more people buying, you’re going to see more people producing, that competition will help regulate the pricing, and you will ultimately see much higher sales numbers in that third year,” Hunt explains.
With the ability to harvest from 5,000 to 7,000 lb of flower per year, with only half the facility utilized, Grow Ohio is well positioned to supply the market when it does begin its exponential growth. And, with its labeling strategies in place, it is also very well equipped to adapt as the market evolves.