This is a guest post by Lisa Haag. The original was published on August 24 at this link on Krautinvest.de.
Let’s play a mind game: The year is 2030. Large parts of the world have legalized cannabis, at least for medical purposes, and patients across the globe are receiving medical care. Hemp has regained its role as raw material and is again part of a global ecosystem. There is also a market for legal cannabis. Countries with a legal market have agreed on how to regulate and organize the cannabis business. In countries where cannabis is grown and consumed legally, the value chains are transparent, the products are safe and the black market has decreased or is no longer there.
Transparency for the future: Direct to Consumer 2.0
This, or something like this, is one possible scenario that Luc Richner can envision for cannabis. He is the founder and managing director of the Swiss software company Vigia. Luc recently completed his master’s degree in digital leadership. His thesis was based on such future scenarios, outlined in the form of a strategic foresight scenario. However, his personal utopia does not end with cannabis, for which he and his team are currently building the SaaS solution Cannavigia. In addition to cannabis, he observes other topics such as palm oil, a structurally non-transparent market in which products should be better tracked along the value chain. Luc and his co-founders Elias Galantay (on the left in the cover picture) and Philipp Hagenbach (on the right in the cover picture) have developed software that not only makes work easier for companies on a bureaucratic, procedural and organizational level, but can also guarantee transparency, security and interaction from “Seed-to-Sale ”
“Today’s consumer wants to know more and more: What’s in it? Where does it come from, how was it made? We see that this need of end consumers is also the case for legal cannabis products from Switzerland, which now have a market volume of several million CHF. We use the possibilities of a digital system in combination with existing standards to make cannabis transparent and traceable from cultivation to the end consumer or patient, “says Luc Richner:” Cannabis is particularly complex and demanding, our goal is to improve the processes and to simplify value chains through digitization and to make interfaces more dynamic. In this way, the consumer can practically track the steps and stations the product has gone through from the seed to the purchase. It also offers manufacturers the opportunity to enter into dialogue with their customers. It creates trust and we hope that this will prevail as the new normal ”.
Global standards as a logical consequence for consumer protection
The transparent cannabis company that gives insights into its processes and promises its customers quality is not currently a reality. Most of the world’s cannabis is traded illegally on the black market. Legal markets such as Canada or Colorado are the exception. The maximum THC values vary from country to country or from region to region (e.g. EU 0.2% THC vs. Switzerland 1% THC). Industrial hemp and CBD hemp are partly legal or organized in a semi-legal market. The medical market is based on existing pharmaceutical standards. The common denominator: All of these markets are based on one and the same plant, for which there is currently no global standard. A common barrier to trade that the plant has across markets is its status – its definition as an illegal drug by international drug treaties.
Nevertheless, more and more international countries such as Colombia, Lesotho or Denmark are now active in the cultivation of medical cannabis and as export countries, and global value chains are emerging. New markets are also opening up for hemp.
Luc Richner: “We think that the logical consequence is consumer protection and we must develop global product safety standards for cannabis. It is currently difficult to say what this will ultimately look like. Medical cannabis is grown according to the G.A.C.P. standard and then safely brought to the patient along the value chain in compliance with “good practice”. We see similar requirements for growing CBD cannabis. The consumer absorbs the products directly into the body. We think security is one of the most important factors. This applies to a minimum level of security, e.g. when it comes to heavy metals or mold. Due to the lack of standards, missing limit values, and unclear market conditions, the products are not 100% safe. We want to enable our customers and patients to do just that: to understand what they are consuming, where it comes from, and how to deal with it. “
Compliance and transparency software for the European cannabis industry
In more developed markets such as Canada or in legal states in the USA, some providers such as MJ Platform or Strimo are already competing in the hotly contested market. However, these are not or currently only partially prepared for the European market and are primarily aimed at their home markets and the requirements there. These companies, too, first have to assert themselves in Europe and understand the highly complex requirements associated with the trade of cannabis and hemp in Europe.
“When we started we were heavily oriented towards the pharmaceutical standard for medical cannabis. We also see other standards that are relevant, such as the ISO standard, food standards such as FSS or our own standards for CBD at the Swiss national level such as the Swiss Certified Cannabis Label of IG-Hanf in Switzerland (SCC), or the American cannabis compliance standards. It quickly became clear to us that we needed our own solution here in Europe, adapted to European value chains, ”explains Richner on how the software came about. “We looked closely at the various compliance and security standards and realized that we are not where we should be. Why shouldn’t there be a uniform standard for cannabis? In fact, the standard that ultimately ensures a safe and clean end product for the patient or consumer. “
Harmonization? Yes but when?
In the long term, a market worth billions seems to be developing here in Europe as well. The legal situation in different countries could be harmonized within the framework of EU legislation. The ECJ ruling on cannabidiol at the beginning of the year and a court decision from France that the marketing of cannabis sativa is legal regardless of the condition point in this direction. In Switzerland, the home of Luc Richner, CBD products have been legal for several years. “We can see from our local CBD industry: After a certain period of time, the market will consolidate. In the meantime, the wheat and the chaff are separating. “
If you manage to be *compliant * with the specifications, you will be able to stay in the market for the long term. However, it is not only the Swiss market that is of interest to companies. Our customers export to and import from a wide variety of countries, including those that have the same definition of hemp with up to 1% such as Uruguay. I am of the opinion that we should manufacture and sell the products as regionally as possible, but this is not always possible or sensible, because the demand for cannabis products is increasing globally. We are currently seeing a strong increase in international trade. For me, with my background in logistics, it means that more trade is happening and possible for cannabis. The products come to Europe from all over the world, but there are also national borders within the European Economic Area. The market has not yet been harmonized and the issue is difficult to deal with for authorities. This means a high level of bureaucratic effort in customs clearance, with the authorities and the associated paperwork. These processes are less time-consuming if they are handled in a structured manner and organized transparently. “
Vigia chooses a holistic approach for its software: During development, the focus was on the value chain, embedded in an ecosystem and secured with an appropriate infrastructure. The system is structured in four modules 1. Cultivation, 2. Manufacturing, 3. Distribution and 4. Customer Engagement. The team has paid particular attention to interfaces and works with cannabis-experienced laboratories, with specialized service providers and experts. Another goal was to make the processes transparent not only for outsiders, but also for the companies themselves. The software also enables companies to optimize their internal processes, implement quality standards, identify process gaps and increase earnings.
Switzerland: A different legal framework
In Switzerland we are set up differently in terms of the legal situation than in other countries, which is why the differentiation is necessary for CBD. A model project will also become a reality here in the near future. We are at a point in our home market where we are slowly experiencing saturation or overproduction. This is a phenomenon that you can also see in other international countries, e.g. Canada. The most important thing is that the products are preserved for the legal market, that there is no manipulation and that nothing is lost in to the illegal market. We have now tracked 1,451,691 plants on our platform. Software is not only useful for large companies, we also have small customers” emphasizes Luc Richner. “We set up the basic framework with a Swiss organic hemp manufacturer. Since we are all entrepreneurs in our team, it was important to us to develop something that can also be used as a kind of management tool. For us, the digital aspect is the key to transparency, traceability, and profitability.
Digitization, blockchain, cannabis, mainstream?
For the software, Cannavigia relies on blockchain technology for security through timestamps and on the global barcode standard GS1. “At the beginning we wanted to write our own blockchain-based solution, but then we had to realize fairly quickly that it was not scalable with the volume of data being processed. We didn’t want to switch to a private blockchain, as it is more like a database and we didn’t see the value in it. Ultimately, we focused on developing a cloud-based SaaS solution. Our servers are triple backed up and stored in different servers in Switzerland. Nevertheless, we use the advantages of the blockchain for ourselves, because it offers useful options for securing the supply chains and maintaining the sovereignty of the processes. We secure the processes on three different blockchains using time stamps. This makes them virtually unchangeable, and even if manipulation does take place, the documentation would be doubly secured in another location, ”explains Richner.
Is there a global standard?
Medical cannabis is most likely to be standardized,, but there is still no global standard. The International Narcotics Commission Board (INCB) also met at the beginning of the year to discuss cannabis – especially with regards to international standards for the control of the cultivation, production and use of cannabis for medical and scientific purposes. The INCB is an independent, judicial body that has the task of promoting and monitoring compliance by governments with the three international drug control conventions. These were last updated in 2020 in relation to cannabis, but not as much as it should have been.
We see harmonization around cannabis, coupled with the general desire for transparency in the supply chains on the consumer side. There is a lot of movement in this direction. This applies not only to the hemp markets but also to the emerging new markets or countries that are discovering the cultivation and use of medicinal cannabis for themselves. This will hopefully result in clear framework conditions and best practices that enable international trade in certain products. For our software, we, therefore, assume that we are building an agile system that covers all the essential aspects and standards. We enable companies to meet these requirements and to design the interfaces in such a way that they can safely locate the product at any point in the value chain. This makes it transparent and traceable for everyone involved in the process. In the long term, companies will be able to act on the market that secure, control, and adheres to the high standards, ”said Richner about developments on the international market.
“Our software offers a digital solution, especially for the up-and-coming European cannabis system, that brings added value for everyone involved in the process. This becomes even more important as the legal cannabis product industry develops and cannabis legalization advances across the globe. We can see that it is currently not sustainable that saturated individual markets develop quickly. The only way out of this is to enable a global flow of goods industry. For this we need valid procedures, sensible standards, practical and central guidelines – otherwise, it won’t work. I think we are well on the way there. Digital tools like ours are accelerators that scale this development and make it centrally controllable. We are excited to see where the industry will develop in the long term. “
About Luc Richner: Luc was born in Switzerland but grew up in Asia. After completing his training and studying in Switzerland, Luc followed his calling to become an entrepreneur. Based on his experience in the areas of logistics and management, Luc dedicated himself to the upcycling of used materials into high-quality furniture and decorative items in his first company. In the years that followed, he ventured into the global logistics industry, founded a consulting firm that connects worlds, and founded a unique, local and sustainable farm-to-table restaurant in Bali, Indonesia. Luc is currently one of the few graduates of the pioneer class for the Executive MBA in Digital Leadership at the HWZ Zurich University of Applied Sciences in Business Administration. He is the founder and managing director of the Swiss Vigia AG.