US company Cend is in talks with Medicinal Cannabis Industry Australia (MCIA) to run a pilot project testing its blockchain-backed product certification, logistics and distribution services in the Australian market ahead of a planned Asia-Pacific launch later this year.
The firm’s president and CEO Erik Holling attended the Australian Medicinal Cannabis Symposium on the Sunshine Coast last month, and is understood to have had productive discussions with both MCIA and the Therapeutic Goods Administration (TGA) about its services.
Cend was created as an end-to-end solution for both importers and exporters of medicinal and adult-use cannabis globally. It is currently working with 38 countries across North America, Europe and Latin America with plans to make Australia its Asia-Pacific hub in late-2022.
The company works with regulators to understand the local rules that apply in the countries where it operates, then uses its regulators to ensure import/export shipments comply and move seamlessly through the country’s systems.
Each part of the supply chain is audited, from the facility producing the material to the financial probity of the companies involved in the transaction, what Holling described as “a complete vetting of the entire process”.
He told Cannabiz: “We physically go to the facilities in the buyers’ and sellers’ locations, and audit them. We take pictures. We make sure they’re doing what they say they’re doing. If a party says they’re GMP, we make sure that they’re actually following GMP protocols within their standard operating procedures.”
Holling said the firm is also planning to have its own independent testing laboratories in facilities to ensure products meet contractual requirements and comply with regulations in the buying country, the selling country “and any hops in between”.
Its fees are based on a percentage of the wholesale cost of the transaction.
“We become the single point of contact,” he said. “You have an exporter of record and an importer of record. We bring those parties together in a trusted ecosystem, allow them to exchange pricing information, volume needs, and predictability of supply. Then they create a contract between themselves and we charge a fee based upon the wholesale value of that contract.
“Our ecosystem allows buyers and sellers to find each other and know there is a baseline trust and transparency already in place because all parties have been Cend certified. The companies do what they do well (cultivation, processing, manufacturing, distribution) and we handle the rest.
“That includes all of our certification, our ecosystem, as well as the security and logistics of moving that particular product from country A to country B, and doing all the paperwork in between.”
Holling predicted changes to medicinal cannabis quality, packaging and labelling requirements unveiled in March and effective from July 2023 will make Australia a large market for Cend’s services. The TGA and US Drug Enforcement Administration have expressed interest in seeing the results of the MCIA pilot, he added.
The company is also building its own import/export accreditation scheme, with a view to suggesting to governments that any cannabis shipments in their geography pass through an accredited agent. Holling said Thailand and Uruguay are among the countries considering that type of regulation.
“I’m not saying Cend would be the sole agent,” he explained. “Just an agent that has a particular skill set, experience in doing certifications, with a blockchain backbone. To provide an independent auditing and transparency layer that spans the globe.”
Holling said it was vital to have transparency in the industry due to the stigma around cannabis and the risk of bad actors spoiling it for bonafide companies. He added cannabis consumers, and consumers in general, are demanding more knowledge about the products they are putting into their bodies.
“You need to control the movement of this particular product through transparency, tracking and tracing. Unfortunately, when something goes wrong, it only takes one problem in a particular country to bring the industry to a screaming halt and force them to rebuild.
“To do it up front, in a very structured way, will far outweigh the risks that you take when a few bad apples are in there.”
The company plans to set up its Asia-Pacific hub in Australia by the end of the year, including its own licensed testing lab.
Hollling added: “We see Australia as having huge potential for both exporting and importing of finished product and raw materials, based on its agricultural, pharmaceutical and health and wellness heritage. We see it as being more advanced than many other countries so it’s of primary interest to us.”