Navigating the risks in the hemp and cannabis industry

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June 14, 2023 - The hemp and cannabis industry is continuing to gain momentum worldwide and is projected to see a compound annual growth rate (CAGR) to US $51.28B in 2023 and an annual growth rate (2023-2027) of 15.77 percent, resulting in a market volume of US $92.1B by 2027.

It's now imperative to recognize and understand the unique risks and challenges that come with operating in this dynamic sector. Let’s explore these risks around quality control, sourcing, and transportation in the supply chain and strategies needed to mitigate them effectively to ensure sustainable growth and consumer safety.

Quality control

The consequences of mishandling or product contamination make quality control an essential aspect of the industry. Implementing third-party testing protocols ensures that potential pesticides or contaminants are identified in the product before product sale, lessening the risk of breaking regulations, costly recalls, and safeguarding consumer health.

Ensuring sufficient security measures within processing or manufacturing facilities, particularly if the substance is being turned into a food product, is highly recommended. This will better prevent the product from being adulterated, either intentionally or accidentally. Access to areas where packaging is handled should also be monitored to prevent tampering. If an incident does occur, establishing chain of custody will provide better traceability to figure out the source. PAS 96 on Food and Drink Defense can be a good starting point.


Raw materials, cultivation, and manufacturing in hemp and cannabis supply chains require secure sourcing practices to mitigate risks. Understanding regulations and following the latest guidance, such as the Food & Drug Administration’s (FDA) final Cannabis and Cannabis-Derived Compounds: Quality Considerations for Clinical Research, is a first step towards avoiding legal complications. Companies should also have a robust process for selecting, vetting, and monitoring their suppliers to ensure continued compliance.

Eighty-seven percent of consumers choose to buy from companies that match their ethical beliefs, and the hemp and cannabis industry is no exception. Obtaining certifications such as USDA Organic and incorporating sustainable practices into the supply chain can increase buyer demand, enhance trust, and bolster brand reputation, leading to higher sales and a competitive edge.


Reliable, skilled transportation partners are important when it comes to keeping products safe and secure during transit and final distribution. Trusted partners will work to mitigate security risks, comply with regulations, and ensure timely and reliable deliveries.

Whether a transportation or packaging partner, vetting at the beginning of the process ensures less risk of issues further down the line. If a company has sustainability standards, they need to ensure that their suppliers meet quality and security standards as well. Use of Good Distribution Practice (GDP) guidelines can help cannabis companies in this area.

When evaluating quality operations and performance metrics, it's crucial to include sustainability metrics and other supplier management metrics on an annual or quarterly basis.

Cannabis is a relatively new but rapidly growing industry. As such, companies may be having difficulty scaling their operations and supply chains in a safe, secure, and sustainable way. Effective quality control systems, paired with robust supplier vetting and management, can ensure that companies can grow in a sustainable fashion while avoiding the quality and supply chain issues that hamper growing companies.

Register for Tony’s upcoming webinar Supply Chain Risks in Hemp and Cannabis on June 27. Read 2023 Supply Chain Insights: Part 1: Diversify to de-risk your supply chain to learn more as Tony examines the benefits of diversification to reduce risks within your supply chain.

For more BSI insights on other supply chain, digital trust, and environmental, health, and safety topics, visit our Experts Corner. For real-time updates on top supply chain issues, register for BSI’s Connect SCREEN tool; this platform provides daily analysis on the latest and most relevant global supply chain trends.