FAL CHAPTER Ill Cannabis Industry Segmentation

A > KR I P FAL CHAPTER Ill Cannabis Industry Segmentation potency, moisture content and the presence of contaminants, such as residual solvents, heavy met- als, mycotoxins, microorganisms and pesticides. Testing, labeling and certification requirements vary widely across jurisdictions, but increasingly are being required by state law and demanded by supply- chain intermediaries and consumers. Uniform standards for testing and reporting are expected to emerge as scientific understanding of cannabis increases and as industry consensus about cannabis- related health and safety concerns develops. Providers of extraction, manufacturing and testing services generally must obtain state and local cannabis licenses and are exposed to risks related to federal legal violations. Composition and Potency Laboratories ordinarily test cannabis for the specific amounts of 10 to 15 cannabinoids and more than 30 terpenes. Cultivators and production intermediaries rely on these test results to identify and track cannabis varieties and to monitor the quality and consistency of production methods. Retailers and consumers use test results information to assist in purchasing decisions. Almost all consumer products now include labeling that, at a minimum, indicates the amounts of THC and CBD. Pesticides Controlling and disclosing the presence of pesticides in cannabis products is increasingly becoming a focus of regulators and producers. Even cannabis grown under organic conditions can be exposed to pesticides inadvertently, so many states now require all cannabis products to be tested by a state- licensed laboratory for pesticides. Pesticides can be especially problematic in cannabis concentrates; studies have shown extraction processes may concentrate pesticides at a rate higher than cannabinoids and terpenes. Microbiological Organisms Certain molds, other fungi and bacteria found in and on the cannabis plant can damage the plant or certain cannabis products and can be harmful if consumed by humans. Mold is a problem most commonly found in indoor growing environments and during the cannabis drying and curing process. Organisms found in cannabis and identified by testing includes aspergillus, salmonella, pseudomonas and E.coli. Residual Solvents Most extraction processes use solvents to extract the active compounds from cannabis plant material. Commonly used solvents include butane, carbon dioxide, ethanol or propane. Residual solvents are those trace amounts of solvents that remain in a cannabis concentrate after the extraction process. Some residual solvents can be harmful if consumed by humans in sufficient amounts, and others should not be consumed in any amount. © 2017 Ackrell Capital, LLC | Member FINRA/SIPC S7 HOUSE_OVERSIGHT_024673