As the country grapples with the COVID-19 pandemic and drastic changes to the business environment, some cannabis companies have decided to pitch in and use some of their manufacturing and processing capacity to produce hand sanitizer. In California, companies such as CannaCraft and The Galley have converted portions of their processing facilities to produce hand sanitizer. In Massachusetts, the Commonwealth Dispensary Association partnered with the Massachusetts Health & Hospital Association to produce sanitizer, and its members believe they may be able to produce as much as 5,000 gallons of sanitizer per week, if needed. North of the border, Canadian extractor and processor The Valens Company recently announced that it will begin production of hand sanitizer liquid and plans to donate 40,000 bottles to frontline health care workers.
Cannabis processors that use ethanol in their extraction processes can easily pivot to the production of hand sanitizer, as ethanol is one of the three key ingredients used in most hand sanitizers. However, any cannabis business that wishes to get involved in the production of hand sanitizer should consider some important issues.
First, in order to avoid any issues with the Food and Drug Administration, all hand sanitizer products should be prepared in accordance with the guidance recently released by the U.S. Department of Health and Human Services, titled “Temporary Policy for Preparation of Certain Alcohol-Based Hand Sanitizer Products During the Public Health Emergency (COVID-19) – Guidance for Industry.” A copy of that policy can be found here. Per the policy, sanitizer may only be prepared using the specified list of approved ingredients and in accordance with the formula detailed in the policy, and any company that produces hand sanitizer must register with the FDA as an over-the-counter drug manufacturer.
The other issue for cannabis companies to consider is their insurance coverage, since the production of hand sanitizer could be considered a change in the company’s line of business. The first step is to review your current policy to see if it already covers other manufacturing activities. If not, the next step would be to contact your insurer to revise the policy. If hand sanitizer is produced in accordance with the HHS policy described above the insurance company may not have any issue, as it may view those activities as a lesser risk than cannabis processing. In that case the insurance premiums should, at worst, remain steady.
It’s great to see cannabis companies doing their part to alleviate shortages of hand sanitizer, and attorneys at Fox are ready to help protect those companies that choose to produce sanitizer to protect others.