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The New “Business as Usual” with COVID-19

Written by Tara Sweeney

Food & Facilities Episode on The New “Business as Usual” with COVID-19

The COVID-19 virus is forcing businesses in critical industries, like food processing and manufacturing, to make many changes very quickly. Closures and new operating procedures are popping up throughout all of commerce, and new information is constantly emerging. Updated versions of this article will be available through our website. This article contains current COVID-19 information that will help you and your company adapt to this shifting business landscape. To help you adapt to the temporary, new normal created by the COVID-19 outbreak, this article contains the following: 

  • WHO Symptoms for COVID-19
  • If You Contract COVID-19
  • Facts About COVID-19 that the CDC is Emphasizing
  • FEMA Factchecks
  • How COVID-19 Could Affect Workplaces
  • Jobs and Exposure Risk
  • Federal Critical Infrastructure Sectors
    • Manufacturing
    • Food & Agriculture
  • The Families First Coronavirus Response Act (FFCRA) 
  • Assistance for Small Businesses During the Outbreak

The Coronavirus disease 2019 (COVID-19) is a respiratory illness that spreads from person to person through close contact (within 6 feet) and respiratory droplets from an infected person through coughing or sneezing. The first US case was reported on January 21, 2020.

WHO Symptoms for COVID-19

It is essential to understand that the COVID-19 virus affects different people in different ways.  It is a respiratory disease and most infected people will develop mild to moderate symptoms and recover without requiring special treatment.  However, people who have underlying medical conditions and those over 60 years old have a higher risk of developing severe disease and death. The WHO has outlined what the typical symptoms are, along with additional, less common symptoms.

Common Symptoms Include:

  • fever
  • tiredness
  • dry cough

Other Symptoms Include:

  • shortness of breath
  • aches and pains
  • sore throat
  • and very few people will report diarrhoea, nausea or a runny nose.

Lowering your chances of contracting Covid-19 is simple: avoiding contact with persons who are sick; avoiding touching your face (eyes, nose, mouth); washing your hands frequently with soap and water for at least 20 seconds. However, the CDC has outlined steps to take if you do contract COVID-19 despite taking precautions.

If you contract COVID-19:

  1. People with mild symptoms who are otherwise healthy should self-isolate and contact their medical provider or a COVID-19 information line for advice on testing and referral.
  2. People with fever, cough or difficulty breathing should call their doctor and seek medical attention.
  3. Call ahead before visiting your doctor.
  4. Separate yourself from other people and animals in your home.
  5. Avoid sharing personal household items.
  6. Wear a face mask.
  7. Cover your coughs and sneezes with your elbow.
  8. Wash your hands often, for at least 20 seconds.
  9. Clean all “high-touch” surfaces (phones, doorknobs, steering wheels, etc.) daily.
  10. Monitor your symptoms.

With these precautions if you contract COVID-19, it is also important to recognize misinformation taking footholds during the uncertainty of this crisis. Both the CDC and FEMA have responded to some of the most common misconceptions that have been circulating.

Facts About COVID-19 that the CDC is Emphasizing:

  1. Diseases can make anyone sick, regardless of their race or ethnicity.
  2. Some people are at increased risk of getting COVID-19. (Above 60 years of age and those with pre-existing conditions.)
  3. Someone who has completed quarantine or who has been released from isolation does not pose a risk of infection to other people.
  4. You can help stop COVID-19 by knowing the signs and symptoms.
  5. Using protective precautions to keep yourself and others safe is simple.

Visit the CDC website for the latest information: www.cdc.gov/coronavirus/2019-ncov.

Where the CDC is emphasizing information directly related to the disease outbreak, FEMA has had to rebut disease tangential misinformation. It is important to check your primary information sources credibility and to not assume secondary information sources are factual. During times of uncertainty, it’s more important than ever to verify the source of the information.

FEMA Factchecks

  1. Hantavirus is not a new disease. Transmission from one human to another may occur, but is extremely rare. It is primarily contracted through touching waste products of infected rodents. Visit https://www.cdc.gov/hantavirus for more information.
  2. There is no national lockdown. It is being determined at the state and local levels. The fifteen day shelter in place suggestion is to minimize exposure and prevent the continued spread of the disease. The latest information and resources are available at www.coronavirus.gov
  3. FEMA does not have military assets. Like all emergencies, response is most successful when it is locally executed, state managed and federally supported.  Each state’s governor is responsible for response activities in their state, to include establishing curfews, deploying the National Guard if needed and any other restrictions or safety measures they deem necessary for the health and welfare of their citizens.
  4. Stockpiling groceries and supplies is not suggested. Food supplies are likely to spoil and you want to minimize chances of contact. Demand is high for grocery, household cleaning, and some healthcare products–stores need time to restock.
  5. The U.S. Government is not mailing checks in response to COVID-19 at this time. If you’re contacted about such a check, at the moment, it’s a scam. Keep an eye on the FTC website for more information about this and other common COVID-19 related scams. 
    1. The Coronavirus Aid, Relief, and Economic Security (CARES) Act has passed both the house and Senate and been signed by President Trump on March 27th. Both  CNN and Fortune Magazine report that it could take five to six weeks for the federal government to cut checks and send them out. The $2 trillion package includes a provision to send checks directly to many Americans. The amount is based on annual income: individuals earning up to $75,000 and heads of household up to $112,500 will receive a $1,200 rebate from the federal government. Whereas, couples who earn up to $150,000 will receive $2,400. Above those income levels, the benefits are gradually reduced by $5 for every additional $100 income. This will be capped at $99,000 for individuals, $146,500 for heads of household, and $198,000 for couples. Parents are eligible for a $500 rebate per child.

With these foundational facts on the disease and clearing up tangential misinformation, it is also  imperative to take precautions in the workplace to prevent spreading the virus. OSHA has issued guidelines on how to prepare workplaces for COVID-19. It focuses on the need for employers to implement engineering, administrative, and work practice controls and personal protective equipment (PPE), as well as considerations for doing so. Aside from safety compliance, the outbreak has affected which industries are still running and can affect the operations of those that are.

How COVID-19 Could Affect Workplaces

  • Absenteeism. Workers could be absent for many reasons: they are sick;  they are caregivers for sick family members; they are caregivers for children if schools or daycare centers are closed;  they have family members to at-risk people at home, such as immunocompromised; they are afraid to come to work because of fear of possible exposure.
  • Change in patterns of commerce. Consumer demand for items related to infection prevention (e.g., respirators) is likely to increase significantly, while consumer interest in other goods may decline. Consumers may also change shopping patterns because of a COVID-19 outbreak. Consumers may try to shop at off-peak hours to reduce contact with other people, show increased interest in home delivery services, or prefer other options, such as drive-through service, to reduce person-to-person contact.
  • Interrupted supply/delivery. Shipments of items from geographic areas severely affected by COVID-19 may be delayed or cancelled with or without notification.

The OSHA COVID-19 webpage offers information specifically for workers and employers: www.osha.gov/covid-19.

Jobs and Exposure Risk

OSHA outlines the different job industries and their risk of exposure to the virus by very high, high, medium, and low exposure levels. 

  • Very high exposure risk jobs are those with high potential for exposure to known or suspected sources of COVID-19 during specific medical, postmortem, or laboratory procedures. 
  • High exposure risk jobs are often peripherally related to very high risk exposure jobs. 
  • Workers in the medium exposure risk category may be in contact with the general public (e.g., in schools, high-population-density work environments, and some high-volume retail settings). 
  • Low exposure risk groups do not require contact with people or are infrequently exposed to the general public.

OSHA also outlines five steps employers can take to responsibly prevent their workers from being exposed to COVID-19.

  1. Develop an Infectious Disease Preparedness and Response Plan
  2. Prepare to Implement Basic Infection Prevention Measures
  3. Develop Policies and Procedures for Prompt Identification and Isolation of Sick People, if Appropriate.
  4. Develop, Implement, and Communicate about Workplace Flexibilities and Protections
  5. Implement Workplace Controls
    1. Engineering Controls
    2. Administrative Controls
    3. Safe Work Practices
    4. Personal Protective Equipment (PPE)

Despite the pandemic, many industries are considered too critical to close, and must remain in operation during closures with limitations.

Federal Critical Infrastructure Sectors

The Cybersecurity and Infrastructure Security Agency has comprehensively outlined the specific sectors that the Federal Government has deemed critical. Two such sectors are manufacturing, along with food and agriculture.

Critical Manufacturing Sectors

Critical Manufacturing Industries with Sub Industries

Primary Metals ManufacturingIron/Steel Mills and FerroAlloy

 Alumina and Aluminum Production and Processing

Nonferrous Metal Production and Processing
Machinery ManufacturingEngine and Turbine

Power Transmission Equipment

Earth Moving, Mining, Agricultural, and Construction Equipment
Electrical Equipment, Appliance, and Component ManufacturingElectric Motor

Transformer

Generator
Transportation Equipment ManufacturingVehicles and Commercial Ships

Aerospace Products and Parts

Locomotives, Railroad and Transit Cars, and Rail Track Equipment

Products made by these industries are essential to many other critical infrastructure sectors. The Critical Manufacturing Sector focuses on the identification, assessment, prioritization, and protection of nationally significant manufacturing industries that may be susceptible to manmade and natural disasters. CISA has an existing plan from 2015. For more information, please contact the Sector-Specific Agency at criticalmanufacturing@hq.dhs.gov 

Critical Food and Agriculture Sectors

Homeland Security has recognized Agriculture as a critical industry. As such, these closures do not apply to this sector.  The Food and Agriculture Sector is almost entirely under private ownership and is composed of an estimated 2.1 million farms, 935,000 restaurants, and more than 200,000 registered food manufacturing, processing, and storage facilities. This sector accounts for roughly one-fifth of the nation’s economic activity.

The Food and Agriculture Sector is critically dependent on many sectors, but particularly with the following:

Water and Wastewater SystemsClean Irrigation and Processed Water
Transportation SystemsMovement of Products and Livestock
EnergyPower the Equipment Needed for: Agriculture Production and Food Processing
ChemicalFertilizers and Pesticides Used in the Production of Crops

For resources available to Food and Agriculture Sector partners, visit the Department of Agriculture and the Food and Drug Administration websites.

The Families First Coronavirus Response Act (FFCRA)

The Department of Labor is administering new paid leave requirements effective through December 31, 2020. Each covered employer must post in a conspicuous place on its premises a notice of FFCRA requirements. Employers may not discharge, discipline, or otherwise discriminate against any employee who takes paid sick leave under the FFCRA and files a complaint or institutes a proceeding under or related to the FFCRA. Employers in violation of the first two weeks’ paid sick time or unlawful termination provisions of the FFCRA will be subject to the penalties and enforcement (Sections 16 and 17 of the Fair Labor Standards Act. 29 U.S.C. 216; 217.)

FCRA Coverage and Qualifying for Leave

CoveredNot Covered
Certain public employers, and private employers with fewer than 500 employees.Most Federal employees are not covered by these expanded provisions for family and medical leave, but are covered by paid sick leave. 
Small businesses with fewer than 50 employees may qualify for exemption.

Qualifying for Leave

Full-TimePart-Time
Up to 80 hours paid sick leave.Paid sick leave equal to hours worked on average over a 2-week period.
If Workers are Unable to Work or Telework Due to:
1) Being subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
2) Being advised by a health care provider to self-quarantine related to COVID-19;
3) Experiencing COVID-19 symptoms and is seeking a medical diagnosis;
Employees taking leave shall be paid at either their regular rate or the applicable minimum wage, whichever is higher, up to $511 per day and $5,110 in the aggregate (over a 2-week period).
4) Caring for an individual subject to an order described in (1) or self-quarantine as described in (2);
5) Experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury; or.
Employees taking leave shall be paid at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $2,000 in the aggregate (over a 2-week period).
6) Caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19.,Full-time employees are eligible for up to 12 weeks of leave at 40 hours a week

Part-time employees are eligible for leave for the number of hours that the employee is normally scheduled to work over that period. 

Employees taking leave shall be paid at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $12,000 in the aggregate (over a 12-week period—two weeks of paid sick leave followed by up to 10 weeks of paid expanded family and medical leave).

Assistance for Small Businesses During the Outbreak

Covered employers qualify for dollar-for-dollar reimbursement through tax credits for all qualifying wages paid under the FFCRA. Qualifying wages are those paid to an employee who takes leave under the Act for a qualifying reason, up to the appropriate per diem and aggregate payment caps. Applicable tax credits also extend to amounts paid or incurred to maintain health insurance coverage. For more information, please see the Department of the Treasury’s website.

Opportunities and resources for emergency funding outside of these tax credits are available through the CalAsian Chamber of Commerce (CACC). Their Business Triage Center has a dedicated team to help small businesses get access to capital by packaging their loans and providing credit enhancement services, supporting applications to Small Business Administration’s (SBA’s) Disaster Loans and the IBank’s Small Business Disaster Relief Loan Guarantee Program. They can also help direct applicants to one of their various lending institution partners.  Additionally, the CACC created a survey to determine how to best assist small businesses statewide. Your input will better enable them to prioritize your business needs during these uncertain times.

CalAsian Chamber of Commerce Business Triage Center contact information.

The U.S. SBA is offering low-interest federal disaster loans for working capital to small businesses in designated states or territories suffering substantial economic injury as a result of the Coronavirus (COVID-19). SBA Disaster Loans are limited to federally declared disaster states or territories. Therefore, your State or Territory may not yet be eligible for assistance. However as of March 17, 2020 they have issued revised criteria that makes more businesses eligible for the loans.

Under newly revised criteria

  • States or territories are only required to certify that at least five small businesses within the state/territory have suffered substantial economic injury, regardless of where those businesses are located.
  • Disaster assistance loans will be available statewide following an economic injury declaration. This will apply to current and future disaster assistance declarations related to Coronavirus.

As of March 20, 2020, all 50 states, the District of Columbia, five territories and one tribe are working directly with FEMA under the Nationwide Emergency Declaration for COVID-19.

The USDA extended the application deadline for the Rural Business Development Grant (RBDG) program and the Rural Energy for America Program (REAP) to no later than April 15, 2020. Contact the Rural Development office for the RBDG deadline in your state. For additional information on the REAP deadline, see page 16925 of the March 25, 2020, Federal Register.

Knowing the symptoms and preventative measures is only the start. Businesses must take responsibility for their employees’ health by adapting their daily operations, and are required to provide sick leave when prevention is not enough. In light of these responsibilities, business owners are not without help: the Federal government will be providing tax breaks to employers for those companies impacted by the outbreak and Chambers of Commerce, like CalAsian Chamber of Commerce, are providing assistance in acquiring additional funding. Be sure to visit our website wcismag.com and social media to read real-time updates to this article, curated content from other industry information leaders, and share how COVID-19 is affecting your business.

Be sure to contact CACC or your local SBA office to see what assistance your company may qualify for. Email CACC with “COVID-19 IMPACT – Technical Assistance Needed” in the subject line. Cha Xiong: 916-389-7489, cxiong@calasiancc.org; Linda Thor: 916-389-7478, lthor@calasiancc.org

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Digital Traceability: Reducing Risks and Finding Efficiencies

Written by Alex Lewis, Parity Factory Corp.

The ongoing crisis has shed light on the need for innovation in the food space, even in the most fundamental processes.

If someone were to ask you which industries were most important to our daily lives, what would you say? Along with things like communications, construction, and clothing, one of the first things that likely comes to mind is also one of the most basic: food. The agricultural and food processing industries provide for our most key needs and enables our continued growth. It is unlikely anyone would argue against the importance of the food and beverage industry to our society, however 2020 has brought us a loud and clear reminder of just how crucial it is, in the form of the COVID-19 pandemic. 

In just a few short months, food and beverage manufacturers saw demand increases that haven’t been seen in a lifetime. At the time of writing, sectors of the food industry have experienced spikes in volume ranging from 32% in milk, 30-47% across the snack sector, and a staggering 77% increase in demand for meat, and this trend holds true for nearly every vertical within the industry.

The stay-at-home orders announced by most governments have sent consumers rushing to the store, clearing shelves and placing new strain on food and beverage processors. As they struggle to keep up with their order volume, many manufacturers are looking for new ways to improve their efficiency and reduce their liabilities. As it turns out, one of the most effective methods may also be the simplest: digitizing their lot tracing.

What is digital lot tracing?

All food and beverage manufacturers track their lots. In fact, it is one of the basic requirements for running a food processing business, with the specific standards and protocols defined at the federal level by organizations such as the FDA. By requiring tracking of all material that is involved in making a product, down to the packaging used, it ensures that recalls can be performed swiftly and protects the health of the public. Manufacturers manage their tracing using a variety of methods, from pen and paper, to Microsoft Excel, to fully integrated traceability software, with many using a combination of methods. Digital lot tracing simply means that a company is capturing and managing their tracing data on a digital platform, often integrating scanning and barcoding into the process. This approach has a drastically lower error rate than more traditional methods and tends to be significantly more efficient.

Despite tracing being a common daily task that all processors contend with, there has been surprisingly little momentum towards automated lot tracing in food. By some metrics, only 1 in 5 operations have fully automated their lot data capture, with a bit more having partially implemented the process. The food industry has always been slow to adopt new processes, but as demand and competition skyrockets, many are finally feeling the need for an upgrade.

The risks of a recall

Executing recalls, specifically executing them quickly and efficiently, is one of the biggest challenges that food and beverage manufacturers face. Under current FDA guidelines, food and beverage processors need to be able to perform a recall within four hours. Many of the major retailers demand even more of their suppliers; if you want your product on the shelves in a Walmart or Costco, you must be able to perform the same process in as little as two hours. The unfortunate reality is that for processors tracing on paper, particularly those producing at scale, these targets are difficult to hit. Also, the human element involved in manual tracing can allow errors to find their way into data, and this has become especially true for those who are dramatically increasing their throughput to keep up with new demand caused by COVID-19. Without true, reliable data, a recall can quickly go from difficult to impossible.

The consequences of a botched recall can be dire: the average recall costs a manufacturer $10 million, not including possible fines from regulators, or losing the aforementioned Walmart or Costco contract. One of the biggest losses is one that may not be immediately obvious: consumer confidence. Over half of consumers will quit purchasing a product once it has been recalled, and studies have shown that a company’s stock price will typically drop as much as 22% following a major recall. Once that confidence is gone, it can take months or even years to get it back, if it can be regained at all.

All these problems can be mitigated, if not completely prevented, through digital lot tracing. With a capable solution in place, recall times can be measured in minutes, not hours, as a few quick searches replaces shuffling through endless forms to find the lot in question (if it was recorded correctly at all). This guarantees compliance with even the most demanding of rules and regulations and eliminates all fear when inspectors and auditors show up for routine recall tests. In addition, the ability to execute a speedy yet thorough recall when problems arise minimizes the risk to both consumers, and the manufacturer’s reputation. The bottom line: most food manufacturers are going to face a recall at some point. It is crucial to have the systems in place to react appropriately when that time comes.

How does it increase efficiency?

Due to the huge importance of lot tracing, manufacturers using manual systems often have some of their most competent and experienced employees devoted to the task. Even if these staff would be better suited to other areas, it’s just not worth taking the risk of assigning less experienced employees to the job. Digital lot tracing solves this by drastically simplifying the tracing process. Scanning a barcode and letting software do the rest is far quicker, easier, and less error-prone than meticulously creating and tracking hundreds of lot codes by hand. Meaning that you end up spending less time on tracing, and therefore less money, while winding up with data that is significantly more reliable. This both frees up an operation’s most capable employees to pursue new opportunities and allows anyone in the operation to take part in the tracing process. New employees can be trained and onboarded quickly, which is particularly useful for processors hiring huge amounts of new labor in the wake of COVID-19. 

All of this allows for greatly increased flexibility when it comes to staffing, and as COVID-19 turns the industry on its head the value of that flexibility has become crystal clear. While many of us have had the luxury to transition into working from home, that’s just not an option for many working in the food space. When employees are unable to attend work, for example if they are sick, someone else must step in. This can be a major threat to efficiency when the few people in your operation qualified to handle lot tracking are missing. In dealing with turnover and staff redistribution, there’s tangible benefit to having a system that allows employees to be effective, regardless of their experience level. 

For those looking to digitize their lot tracing, there is no shortage of solutions to accomplish that task. However, a sufficiently robust solution should go beyond just traceability. If you are tracking each lot as it moves through your facility, it creates great possibility to capture additional data such as yields, storage locations, and quality information. In this way, digital lot tracing can be viewed as a foundation on which to build even more extensive efficiency improvements. These additional features are some of the most important considerations for any manufacturer to make when choosing between available systems.

Preparing for an uncertain future

COVID-19 has proven that swift, unpredictable changes can happen in any industry, even one as foundational as food and beverage. With new issues such as shifting demographics, climate change, and the variable nature of trade on the horizon, it is likely that changes will become more frequent and even the smallest efficiencies will be essential to thrive.

Customer consciousness is also changing rapidly, and businesses that want to stay competitive have no choice but to change with it. As consumers and regulators demand ever more transparency and accountability from the food industry, reliable tracing data is becoming ever more crucial.

Manufacturers will undoubtedly rise to these new challenges in the future, just as they are rising to the challenges of today. And along the way, many will find a comprehensive digital lot tracing system to be one of their most valuable tools. 

Sources/Further Reading:

Acorn Surfaces & Treatments
for Concrete Restoration Products and Services

Breaux, Randy. “COVID-19 Shows the Need for Automation.” Foodprocessing.com, Food Processing Magazine, 2020, http://www.foodprocessing.com/articles/2020/power-lunch-covid-19-shows-the-need-for-automation/. 

Deloitte. Recall Execution Effectiveness: Collaborative Approaches to Improving Consumer Safety and Confidence. 2010.

Demetrekakes, Pam. “How the Coronavirus Is Affecting Food Processing.” Foodprocessing.com, Food Processing Magazine, 2020, http://www.foodprocessing.com/articles/2020/how-the-coronavirus-is-affecting-food-processing/.

Lelieveld, H. L. M. Hygiene in Food Processing. Woodhead, 2017.

Stier, Richard F. “How Food Processors Can Create a Plan for Traceability and Recalls.” Food Engineering RSS, Food Engineering, 11 May 2020, www.foodengineeringmag.com/articles/98026-how-food-processors-can-create-a-plan-for-traceability-and-recalls.

Torero, Maximo. “How to Stop a Looming Food Crisis.” Foreign Policy, 14 Apr. 2020, foreignpolicy.com/2020/04/14/how-to-stop-food-crisis-coronavirus-economy-trade/. 

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The Case For a Makerspace in Downtown Fresno

Written by Janelle Smith Ozeran

Fresno Ideaworks, established in 2012 in downtown Fresno, California, is a source of a myriad of tools and creative opportunities. But, like makers everywhere, we also value our friendships, collaborative projects, the comfort of our “third space”, and the therapeutic value of getting our hands dirty as we mold clay, wood, metal, textiles, electronics, or plastics into something new and wonderful. 

Over eight years Fresno Ideaworks has grown from a small group of friendly hackers into a community workshop full of curious and creative people, eager to learn and hone new skills and share them with anyone who comes through our doors.  But since the 16th of March 2020 our doors have been closed to all regular activity – a crushing situation for people who come to the Shop for any reason, and a threatening blow to our survival as a non-profit, all-volunteer, member-driven organization. 

We immediately joined the ranks of makerspaces all over the country, manufacturing PPE for healthcare professionals and other essential workers. Collaborating with two other non-profits in Fresno – Root Access Hackerspace, and Pi Shop Fresno – we designed, manufactured, and delivered more than 4000 pieces of PPE by the first week of May to everyone from hospital nurses to bus drivers, and from mail carriers to food service workers.  We are very proud of our role in helping protect our neighbors and caregivers, but we are also very proud of the collaborative effort. We are already trying to imagine what new projects we can undertake together when our spaces are open again! 

Meanwhile, we have lost nearly 15% of our membership, and watching our family shrink is breaking our hearts. A goal for the immediate future is to establish a sponsorship fund for those former members facing financial hardship because of the COVID-19 experience. Although our membership fees are among the lowest for similar spaces, they are suddenly an impossible luxury for some, even though the emotional health benefits of making and creating would go a long way to ease the anxiety those same people are experiencing. 

We also have to focus more intently on the facility upgrades that will enable us to welcome more members with a greater diversity of skills and abilities throughout the entire space. Maintaining a historic building is already a huge challenge (one we makers welcome), but opening the whole structure to more makers will require the help of angels that embrace our mission. Downtown Fresno, and our Cultural Arts District neighborhood in particular, have suffered the adversity of economic downturn for several decades now. Ideaworks is relentlessly dedicated to being part of the growth of both the economic health of the neighborhood, and, through skill-building and fellowship, part of the economic and emotional well-being of everyone who comes through our doors. 

Please help however you can. Donations to Ideaworks general fund can also be made through our website at https://ideaworksmakerspaces.org/Donate, through Venmo at @Fresno-Ideaworksthrough, or through Givebutter (https://givebutter.com/KbPYYR). And thank you, in advance, from all of us at Fresno Ideaworks.

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You’ve Received an SBA Paycheck Protection Loan: Now What?

Written by Jeffrey Markarian, CPA: Dedekian, George, Small & Markarian

COVID-19 has had a devastating effect on the American economy, and agriculture has been especially hard hit.  To help provide economic relief, various federal legislation has been enacted, including the Coronavirus Aid, Relief and Economic Security (CARES) Act.  As part of the CARES Act, the Small Business Administration (SBA) received funding and authority to establish the “Paycheck Protection Program” (PPP).  The PPP is a forgivable loan program that was established as an incentive for small businesses to keep their workers on payroll during this financially difficult time.  As of June 5, 2020, the SBA had received total funding from Congress in the amount of $659 billion, and had approved 4,525,081 loans totaling approximately $511 billion.   

If you are one of the many small business owners in the agricultural industry that has received a forgivable PPP loan, you must apply for forgiveness of your PPP loan by submitting an SBA “Loan Forgiveness Application” to the lender servicing your PPP loan, as the loan is not automatically forgiven.  As a result, it is imperative that you plan now to maximize the forgiveness of your loan.  

The SBA has continued to provide additional guidance throughout the PPP in response to ongoing requests for assistance and clarity.  Also, on June 5, 2020, the Paycheck Protection Program Flexibility Act (PPPFA) was enacted, which provides PPP loan recipients with increased flexibility in utilizing PPP loan proceeds.  Most significantly, The PPPFA has extended the period to use funds from eight weeks after the date of receipt of loan proceeds to twenty-four weeks.  Borrowers receiving PPP loan proceeds prior to June 5, 2020, retain the option to use an eight-week covered period if desired.  Please note that all of the following information includes the changes resulting from the PPPFA.

The original intention of the PPP was to keep employees paid for the eight-week period beginning with the date loan proceeds are received.  As mentioned above, recent legislation has extended this to a twenty-four-week period.  Expenses to be paid with loan proceeds include payroll costs and specific non-payroll costs. 

Payroll costs include the following:

  • Salary, wages, commissions, or tips (limited to $15,384.62 per employee for the covered period)
  • Employee benefits (including payments for vacation, parental, family, medical, or sick leave; allowance for dismissal or severance pay; group health care benefits; payment of retirement benefits; and state and local taxes assessed on compensation)

Non-payroll costs include the following:

  • Interest on mortgage incurred before February 15, 2020
  • Rent on lease agreement in force before February 15, 2020
  • Utilities (including electricity, gas, water, transportation, telephone or internet) for which service began before February 15, 2020

To be eligible for full loan forgiveness, at least 60% of the loan must be used for payroll costs and not more than 40% for allowable non-payroll costs.  If less than 60% of the loan is used for payroll costs, the borrower is still eligible for partial loan forgiveness.  The first iteration of the PPP required 75% of the funds to be used for payroll or only part of the loan would be forgiven, but the PPPFA decreased the required percentage.  

What happens if your PPP loan is not forgiven?  Any portion of your PPP loan that is not forgiven will be required to be paid back over a 2-year period at 1% interest, with payments deferred for ten months from the date of the PPP loan disbursement.  However, for PPP loans approved by the SBA on or after June 5, 2020, the PPP loan maturity is increased to 5-years.

Dynamic Coatings Inc.
Industrial and Commercial Flooring Solutions

On May 15, the SBA released its long-awaited PPP forgiveness form and instructions for borrowers to apply for forgiveness (please note that a modified forgiveness form is pending as a result of the PPPFA).   The form also provides detailed information related to the documentation required to be provided with your loan forgiveness application. It is important to review the documentation requirements; as extensive documentation may be required to be submitted depending upon your eligible expenses submitted for forgiveness.  Although the release of the form by the SBA brought with it significant changes to the interpretation of some components of forgiveness that were not previously known, additional guidance and clarity is still needed on some of the components of forgiveness.  Changes were made to the following components of the program based on the release of the form:

Covered payroll periods – Under original guidance, the covered payroll period began immediately after loan disbursement and lasted eight weeks. The PPPFA has increased the covered payroll period to twenty-four weeks.  For those with payroll schedules that did not align with the disbursement and covered period, this generated many questions and concerns. However, this latest guidance indicates that the eight-week period may begin starting with the borrower’s first payroll following disbursement, not necessarily on the day of disbursement. This alternative period only covers payroll costs, not other allowable expenses, although adjustments do exist for other allowable expenses.

Incurred and/or paid expenses – The CARES Act originally indicated that, for costs to be covered under PPP, they would need to be incurred and paid during the eight-week period (increased to twenty-four weeks by the PPPFA). The latest guidance, however, forgives costs that are incurred, but not paid, as long as they are paid on or before regular billing date. This expansion applies to costs such as mortgage interest, rent, utilities, and payroll incurred during the loan period. Payroll costs incurred during the last payroll period but not paid during the covered or alternative periods (mentioned above) may be forgiven if those payroll costs are paid on or before the next regular payroll date. 

Full-time equivalent (FTE) employee counts and wages – The guidance also included several clarifications to the FTE employee count and wage calculations necessary for forgiveness including:

  • FTE calculation can be rounded to the nearest tenth – The formula to calculate an FTE is average number of hours paid per week per employee/40, rounded to nearest tenth (differs from Affordable Care Act calculation).
  • Wage reductions must be analyzed on a per employee annualized basis – Salary or hourly calculations should be done on an average annualized basis compared to period of Jan. 1, 2020, to March 31, 2020. If the average for the twenty-four week period is 25% less than first quarter of 2020, loan forgiveness will be reduced, unless the reduction is restored at equal to or greater levels by December 31, 2020, then forgiveness will not be reduced.
  • Safe harbor exists for borrowers who rehire lost employees by December 31, 2020, at the same level as of Feb. 15, 2020. Forgiveness will not be reduced. 
  • Safe harbor exists for borrowers who made good faith written offer to rehire employees who then refused. Forgiveness will not be reduced.
  • Safe harbor exists for borrowers who fired employees for cause, voluntarily resigned, or voluntarily requested and received reduction in hours. Forgiveness will not be reduced.

Here is a quick rundown of the changes made by the PPP Flexibility Act.

CriteriaPrior GuidanceCurrent Guidance
Covered Period*8 weeks from PPP loan disbursementThe earlier of 24 weeks from date of loan disbursement or Dec. 31, 2020
Usage of FundsMinimum of 75% of funds must be used for payroll to with a maximum of 25% for non-payroll costs to achieve forgivenessMinimum of 60% of funds must be used for payroll with a maximum of 40% used for non-payroll costs to achieve forgiveness. If 60% of loans are not used for payroll, forgiveness is calculated on a sliding scale.
Extension of Safe Harbor for Compensation & FTE ReductionsSalary or hourly wage reductions must be reinstated by June 30, 2020, to avoid reduced forgivenessSalary or hourly wage reductions have until Dec. 31, 2020, to be restored to avoid reduced forgiveness
Deferral of Loan Payments6 months from loan origination dateEarlier of 10 months after the last day of Covered Period or when SBA remits the loan forgiveness funds to lender
Loan Maturity2 yearsLoans originated after June 5, 20205 yearsLoans originated prior to June 5, 2020 – Borrowers and lenders may mutually agree to extend the maturity date of loans to 5 years
Safe Harbors Based on Employee Availability, Rehiring, New HiresNoneForgiveness would not be reduced if borrowers can document in good faith:-Inability to rehire individuals employed on Feb. 15, 2020-Inability to hire similarly qualified employees by Dec. 31, 2020
Safe Harbors Based on Employee Availability in Compliance with HHS, CDC, or OSHA guidelinesNoneForgiveness would not be reduced if borrowers can document in good faith the inability to return to same level of business activity as before Feb. 15, 2020, due to compliance with requirements issued by HHS, CDC, OSHA from the period of March 1, 2020, to Dec. 31, 2020

Also of note:

  • *Borrowers may elect to stick with the 8-week covered period for loans originating prior to June 5, 2020. However, it is not clear if the June 30, 2020, safe harbor deadline still applies.
  • The amount of any Economic Injury Disaster Loan (EIDL) refinanced will be factored in when determining the percentage of proceeds for payroll costs.
  • It is unclear whether compensation limits formerly prorated based on 8 weeks now prorated based on 24 weeks.
  • It is unclear if the covered period may end prior to 24 weeks if funds have been used.

Further rules and guidance are expected to be issued from the SBA, including a modified borrower application form, and a modified loan forgiveness application that will included the changes resulting from the recently enacted PPPFA; however, please do not hesitate to contact us for further assistance with your PPP loan questions and help maximizing your loan forgiveness.  

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Fresno, California 93711-5797
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She Built This City: Demi Knight Clark

She Built This City logo

STEM careers are experiencing low employment due to an industry skills gap. A whitepaper by Alexander Mann Solutions suggests, “While there is overwhelming evidence that women continue to be underrepresented in STEM fields, the reasons go beyond traditional stereotyping. Women may ‘shy’ away from these careers for both cultural and educational reasons, while a lack of role models doesn’t help the cause.”

She Built This City founder, Demi Knight Clark

Demi Knight Clark established She Built This City (SBTC) in December 2019 in Charlotte, South Carolina to address the labor shortage by closing the gender equity gap in construction and manufacturing. SBTC does that through scholarship-based trade
workshops, camps & clubs – hitting the “life cycle” of generations: exposing the trades to girls as young as nine, and women at any age.

SBTC is proud to have momentum thanks to donors who saw their passion and mission – such as Lowe’s Home Improvement, Novocure, and private donors – in January. “We’ve seen our “proof of concept” camps – Explorer Girls and Builder Girls Club have wait lists; and Women@Work Trade Circle & Expo events host over 200 women and male allies in Charlotte.”

She Built This City, Explorer Girls class working with representatives from Lowes.

SBTC’s program is built upon three foundational pillars. The Explorer Girls pillar is a weekend workshop for girls ages nine to twelve, providing foundational math skills, an understanding of scientific theory, and basic power tool etiquette with the opportunity to explore. Their Farm to Architecture unit has been a success by combining the necessary skills with technology. The Builder Girls Club is an in- school program for middle school girls. They spend their last period working on bigger concepts and
projects. SBTC is not targeting high school ages due to the saturation of Career Technical Education (CTE) courses available to this age group. The third pillar is the Women@Work Trade Circle that offers the “power of many” for a consortium of professional women in the construction and manufacturing industries. They also offer apprenticeships to women looking to change careers or networking for those looking to continue to climb within the industry.

SBTC is proud to partner with the following organizations: SEED20, Yale SOM, United Rentals, Duncan Parnell, NAHB, Novacure, and National Association of Women in Construction. They also participate in local events, like Women in Trade Expo, Homeowners Association Women in Building Week, and Rail Lines Classroom America.

She Built This City, Explorer Girls class working with representatives from Lowes.

Clark says that her favorite accomplishment with SBTC is giving girls the confidence for these fields. “By far, it’s seeing the ‘light bulb’ moment come on in girls who have never held a power tool or equipment. They go from being semi-terrified or at least intimidated, to saying, ‘GIMME ANOTHER ONE!’ after drilling their first screw with a power driver. It’s empowering, and it’s definitely affecting that we’re creating ideas in their heads of other things they feel confident to build or spearhead.” She states that the biggest challenge SBTC faces is funding: connecting with the right people to support these programs.

SBTC has a three year plan to scale to five major cities with all three pillars of programming, and hit their first $10M in funding by year three. “It’s the kind of impact we have to strive for if we want to change the statistics shorter-term in the industries. That helps us scale to at least 30,000 women and girls!”

Clark wishes more people knew what the construction and manufacturing industries had to offer in leadership potential. “I’ve always loved the fact that if there’s a job to do, anyone can raise their hand, just like that little girl with a power driver – and say, ‘gimme another one!’ You can rise through the ranks very quickly by taking on tasks that are short-handed or short-staffed, or challenges needing to be solved. It’s how I shaped my career in the industry. So those light bulb moments are prevalent – we need to showcase them and onboard the next generation.”

Please visit their website for more information and a full list of future events http://www.SheBuiltThisCity.org.

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CBD in Food and Dietary Supplements: What is the legal status?

Written by Natalie Rainer
Counsel, Keller and Heckman LLP

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Since the Farm Bill of 2018 changed the definition and regulatory status of hemp from an agricultural perspective, confusion and misinformation has been rife on the U.S. Food and Drug Administration (FDA) regulatory status of hemp and its products—including cannabidiol (CBD), a non-psychoactive cannabinoid.  Despite there not being a clear basis for concluding that CBD has an appropriate FDA regulatory status for use in food, CBD has gained mass popularity, and it is not uncommon to see CBD sold in chocolate, oils, and even pet treats in your local stores.  In this article we have summarized the current status of CBD in food and dietary supplements and the hurdles that lie in the path of supporting a suitable FDA status for such uses.

Impact of 2018 Farm Bill

When Congress passed the 2018 Farm Bill (formally known as the Agriculture Improvement Act of 2018), there was widespread misunderstanding that the law legalized substances derived from the Cannabis sativa L. plant, including CBD, for use in food and dietary supplements.  In fact, the relevant provisions of the Farm Bill merely removed hemp from the Controlled Substances Act definition of marijuana.  The 2018 Farm Bill defined “hemp” as Cannabis sativa L. with less than 0.3% tetrahydrocannabinol (THC, a psychoactive component of cannabis) on a dry weight basis (1) and affected the Drug Enforcement Administration’s authority over hemp farming.  The change granted more authority to states to regulate the growth, production, and distribution of hemp products.

The 2018 Farm Bill had no effect on FDA’s authority to regulate CBD or other hemp products; it also did not change the regulatory definitions of “food additive” and “dietary ingredient” to facilitate the use of ingredients like CBD in food and dietary supplements. (2)  FDA continues to have authority to regulate products containing cannabis and cannabis-derived compounds, including those classified as hemp. (3)  Therefore, CBD is subject to the same regulatory requirements under the Federal Food, Drug, and Cosmetic Act (FFDCA) as other food additives and new dietary ingredients.  

Current FDA Position on CBD

FDA has consistently taken the position that it is unlawful to sell a food or dietary supplement containing CBD in interstate commerce because CBD is not eligible for use in those products under the FFDCA, as CBD had been studied for possible “drug” uses before it was marketed in foods or dietary supplements.  These clinical studies led to FDA’s 2018 approval of Epidiolex, which contains a purified form of CBD, as a drug for use in the treatment of seizures associated with Lennox-Gastaut syndrome (LGS) or Dravet syndrome.  Pursuant to Section 301(ll) of the FFDCA, FDA is taking the position that it is unlawful to market foods that contain an added “drug” that has been approved by FDA or “for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public.”   (While there are exceptions for substances that were in foods before they were approved or studied as drugs, such as caffeine or baking soda, FDA has determined that CBD does not fall under such exceptions.) (4) Likewise, FDA has cited Section 201(ff)(3)(B)(i) of the FFDCA, which explicitly excludes approved drugs or those substances that are the subject of publicly-disclosed clinical studies, from the definition of “dietary ingredients,” as being the basis for CBD not being permitted for use in dietary supplements.  Thus, FDA’s current position is that marketing foods or supplements containing CBD violates the FFDCA and, because of this, that such products are adulterated.  

That said, FDA thus far has taken enforcement action only against foods and supplements containing CBD when such products make drug claims concerning the prevention, diagnosis, mitigation, treatment, or cure of disease.  Specifically, FDA has sent warning letters to a number of companies making claims that CBD can treat conditions such as cancer, Alzheimer’s disease, opioid withdrawal, pain, pet anxiety, arthritis, and other conditions. (5)

In early March 2020, FDA released a Congressionally requested report (6) on the agency’s progress toward developing a regulatory framework to allow CBD in conventional foods and dietary supplements.  To the frustration of many, however, it appears that little actual progress has been made.  The most significant revelation from the report is that FDA is considering developing a risk-based enforcement policy that could clarify FDA’s enforcement priorities.  Given the widespread availability of such products, however, an informal policy of enforcement discretion has essentially been in place for some time.  

Congress Tries to Intervene

FDA has received considerable pressure from Congress, particularly members like Senate Majority Leader Mitch McConnell of Kentucky whose states have invested in hemp agriculture, (7) to permit CBD to be legally sold in foods and supplements.  In September 2019, bipartisan Congress members sent a letter to FDA urging the Agency to provide legal clarity and establish a regulatory pathway for food products containing hemp-derived CBD. (8)  They expressed concern with FDA’s estimate that rulemaking on this topic could take between 3 to 5 years and asked for more expeditious measures, like announcing a policy of enforcement discretion and using an interim rule to establish a regulatory framework.  Several bills have been introduced to create a legislative fix for this issue.  One proposed solution, outlined in a H.R. 5587 introduced by Representative Collin Peterson of Minnesota, would amend Section 201(ff)(3)(B)(i) of the FFDCA (discussed above) to exempt “cannabidiol or a hemp-derived cannabidiol containing substance” from the prohibition on marketing approved drugs as dietary supplements.

Lack of Safety Data

As of yet, there have been no proposed Congressional fixes that address the second hurdle to an appropriate FDA status for CBD:  the definitions of “food additive,” “new dietary ingredient,” and related definitions of adulteration in the FFDCA.  These aspects of the law require FDA to evaluate CBD based on a robust safety data set and do not provide FDA with the authority to authorize CBD for use in food and dietary supplements in the absence of such information.  

“Food additive” is defined under Section 201(s) of the FFDCA as substances that are intended, or may reasonably be expected to result, directly or indirectly, in its becoming a component or otherwise affecting the characteristics of any food.  While food additives require FDA premarket clearance so as not to be found to adulterate food, there is an exemption from the definition of “food additive” for substances that are “generally recognized as safe” (GRAS) for their intended use.  GRAS status can be supported by either common use in food prior to 1958 (which is not relevant to CBD) or general recognition of safety through scientific procedures—generally requiring the availability of published safety studies in peer-reviewed journals.  Similarly, supplements containing new dietary ingredients are considered adulterated unless they contain only ingredients “present in the food supply as an article used for food in a form in which the food has not been chemically altered” or if, 75 days before marketing, the company submits to FDA evidence to show the dietary ingredient “will reasonably be expected to be safe” for human consumption under labeled conditions of use.  In any case (i.e., to obtain premarket clearance or to support a GRAS position), there must be a robust data set supporting the safety of CBD for use in food.  While FDA has had no questions concerning the use of hulled hemp seeds, hemp seed protein, and hemp seed oil as ingredients for use in human food based on existing safety data (9), to FDA’s knowledge, there are not adequate safety data for CBD.(10)

Setting aside the lack of safety data, FDA is aware of potentially adverse safety data regarding CBD.  FDA has noted that taking CBD may increase or decrease the effects of other medications, as well as the risk of liver injury (a side effect observed in its review of Epidiolex). (11)  Studies performed on laboratory animals found potential male reproductive toxicity concerns (e.g., a decrease in testicular size, inhibition of sperm development, and decreased testosterone). (12) Any safety data developed to support CBD’s safety would also need to adequately address these adverse data to satisfy FDA’s requirements for the safety of food additives and new dietary ingredients.  

The current regulatory framework under the FFDCA does not allow FDA to affirmatively evaluate the safety of CBD for use in foods and supplements, nor does FDA have funding to sponsor the necessary studies to support the safety of CBD.  Rather, FDA is waiting for the necessary safety data to be developed to evaluate CBD’s safety.  While FDA held a public hearing on cannabis in May 2019 and opened a public docket to gather comments and data for FDA review (through which the Agency received approximately 4,500 comments), FDA has yet to receive the necessary safety information to allow it to agree that CBD has a suitable status for use in food and dietary supplements. (13)

What about the States?

For the foreseeable future, it does not appear that CBD will have a suitable FDA status for use in food and supplements, and cannabis containing more than 0.3% THC remains an illegal narcotic under the Controlled Substances Act. (14) But how are states handling this issue?

The legality of cannabis state regulation is varied.  Some states, like California and Colorado, have completely legalized recreational cannabis, which includes CBD products.  Other jurisdictions, such as Vermont and Washington, DC, have legalized marijuana but do not allow sales.  Others have decriminalized it or only allow medical use. (15) A number of states, like Texas and Wisconsin, continue to regulate marijuana as an illegal drug.  Individual states handle issues such as age restrictions, dosage, labelling, testing, and licensing of marijuana differently.  Further complicating matters, individual cities and counties can impose different rules, with some completely banning the growing, manufacturing, and selling of cannabis.  As a result, in many jurisdictions, there is a conflict between the federal government and states that permit the marketing of CBD products.

* * *

Regulations concerning CBD remain in flux.  It remains to be seen how Congress and FDA will address the legality of CBD in food and dietary supplements under the FFDCA.  However, the CBD industry should be aware that robust safety data will most likely be required to ultimately convince FDA to permit CBD in food and dietary supplements.  This endeavor will take a considerable amount of time and financial resources and will need to overcome existing data on adverse health effects.    Despite these issues, we expect to continue to see CBD readily available in food and dietary supplements, provided that such products do not bear drug claims.

The author gratefully acknowledges the assistance of Paula Pastuskovas in the preparation of this article.

1.What You Need to Know (And What We’re Working to Find Out) About Products Containing Cannabis or Cannabis-derived Compounds, Including CBD; FDA (March 5, 2020), available at: https://www.fda.gov/consumers/consumer-updates/what-you-need-know-and-what-were-working-find-out-about-products-containing-cannabis-or-cannabis 

2. Contrary to Popular Reports, Farm Bill Will Not Affect FDA Status of CBD; Daily Intake, Keller and Heckman (December 13, 2018), available at: https://www.dailyintakeblog.com/2018/12/contrary-to-popular-reports-farm-bill-will-not-affect-fda-status-of-cbd/

3. Remarks at the National Industrial Hemp Council 2019 Hemp Business Summit; FDA (August 12, 2019), available at:  https://www.fda.gov/news-events/speeches-fda-officials/remarks-national-industrial-hemp-council-2019-hemp-business-summit-08132019 

4.  FDA warns 15 companies for illegally selling various products containing cannabidiol as agency details safety concerns; FDA (November 25, 2019), available at:  https://www.fda.gov/news-events/press-announcements/fda-warns-15-companies-illegally-selling-various-products-containing-cannabidiol-agency-details

5. Id.  See also FDA warns company marketing unapproved cannabidiol products with unsubstantiated claims to treat cancer, Alzheimer’s disease, opioid withdrawal, pain and pet anxiety (July 23, 2019), available at:  https://www.fda.gov/news-events/press-announcements/fda-warns-company-marketing-unapproved-cannabidiol-products-unsubstantiated-claims-treat-cancer.

6. Report to the U.S. House Committee On Appropriations and the U.S. Senate Committee on Appropriations – Cannabidiol (CBD) – Report in Response to Further Consolidated Appropriations Act, 2020 – U.S. Food and Drug Administration (undated) (public existence disclosed on March 5, 2020), available at: https://hempsupporter.com/assets/uploads/FDA-CBD-Report.pdf.

7. Senator Mitch McConnell, Leader McConnell Discusses Tobacco 21 Legislation, Hemp and CBD with FDA Commissioner Nominee (November 20, 2019), available at:  https://www.republicanleader.senate.gov/newsroom/press-releases/leader-mcconnell-discusses-tobacco-21-legislation-hemp-and-cbd-with-fda-commissioner-nominee.

8. Congress Continues to Seek Regulatory Clarity on CBD from FDA; Daily Intake, Keller and Heckman (September 24, 2019), available at: https://www.dailyintakeblog.com/2019/09/congress-continues-to-seek-regulatory-clarity-on-cbd-from-fda/

9. Remarks at the National Industrial Hemp Council 2019 Hemp Business Summit; FDA (August 12, 2019), available at:   https://www.fda.gov/news-events/speeches-fda-officials/remarks-national-industrial-hemp-council-2019-hemp-business-summit-08132019 

10. FDA, FDA Regulation of Cannabis and Cannabis-Derived Products, Including Cannabidiol (CBD) (March 11, 2020), at https://www.fda.gov/news-events/public-health-focus/fda-regulation-cannabis-and-cannabis-derived-products-including-cannabidiol-cbd. 

11. What You Need to Know (And What We’re Working to Find Out) About Products Containing Cannabis or Cannabis-derived Compounds, Including CBD; FDA (March 5, 2020), available at:https://www.fda.gov/consumers/consumer-updates/what-you-need-know-and-what-were-working-find-out-about-products-containing-cannabis-or-cannabis 

12. Id.

13. Id.

14. Cannabis remains a Schedule 1 drug under the Controlled Substances Act. This means that it cannot be used on federal lands within the states as it remains unlawful under federal law.  Let’s Talk Cannabis; California Department of Public Health (November 17, 2017), available at: https://www.cdph.ca.gov/Programs/DO/letstalkcannabis/Pages/legal.aspx.  This is because of the Cole memorandum that was issued in 2013. The memorandum was sent to all United States Attorneys that the Justice Department would not enforce the federal marijuana prohibition on states that legalized marijuana in some form and implemented effective enforcement systems.  Cole Memorandum; U.S. Department of Justice (August 29, 2013), available at: https://www.justice.gov/iso/opa/resources/3052013829132756857467.pdf.  After a brief rescission of the Cole Memorandum by Attorney General Jeff Sessions in 2018, current U.S Attorney General William Barr made a pledge not to go after companies growing or manufacturing marijuana that was in compliance with state laws and with the Cole Memorandum. Cannabis Quick Hits; Daily Intake, Keller and Heckman (February 1, 2019), available at: https://www.dailyintakeblog.com/2019/02/cannabis-quick-hits/.

15. About Marijuana; NORML (last accessed March 11, 2020), available at:  https://norml.org/marijuana 

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California Hemp Farming and Products Start to Take Shape

Written By Robert W. Selna,
Founder Selna Partners Law Firm

Interview with Robert Selna as a webinar.
Listen to the interview with Robert Selna as a podcast episode through Spotify.
Gloved hand holding leaves of five leaved plant, potentially hemp or cannabis.

California hemp cultivation registrations skyrocketed in 2019 and are expected to increase further this year due to federal hemp decriminalization and a perceived demand for hemp-derived CBD and other hemp products. A mature statewide hemp industry is a ways off however, due to unfinished regulations and the on-going effort to overcome a federal ban on food and beverages infused with hemp-derived CBD.  

“Ninety-nine percent of the hemp being grown in California right now is for CBD and, at the moment, the only legal hemp CBD products are topicals and smokable hemp,” said Brian Webster, Founder of CA-Hemp, an advocacy group that supports the growth of the hemp industry. “There needs to be an expansion of the topical and smokable products while the feds and the state issues around hemp CBD in food and beverages get worked out.” 

Hemp is defined as cannabis with extremely low concentrations of THC (not more than 0.3 percent on a dry weight basis). The Food and Drug Administration (FDA) prohibits CBD in food, beverages and cosmetics, regardless of whether the CBD is derived from cannabis that includes THC (the psychoactive constituent of cannabis) or from hemp.

CBD, short for cannabidiol, is a chemical compound from the Cannabis sativa (L.) plant that is widely accepted as exhibiting therapeutic properties, including anti-anxiety and pain-reduction effects. Unlike THC (short of tetrahydrocannabinol), CBD is not psychoactive. 

The U.S. Department of Agriculture (USDA) currently is reviewing public comments submitted in response to its October 2019 draft interim rule for domestic hemp production. The interim rule, which, despite its singular name includes scores of regulations, is a key step to implementing the 2018 Farm Bill. The Farm Bill legalized hemp nationwide after it had been criminalized by Congress in the early 1900s along with marijuana.

The 2018 Farm Bill left it up to states to decide whether to legalize hemp farming within their state’s borders, but required that, at a minimum, cultivated hemp could be freely shipped across all state lines. States that want to permit hemp cultivation either must adopt the federal regulations, or create their own that are consistent with the federal regs. The USDA’s publishing of the first draft of the interim rule has allowed states, including California, to start writing their regulations. 

Federal and State Laws

Outline of west coast states with California highlighted with image of hemp or cannabis filling its shape.

In 2019, as California’s fledgling hemp farmers waited for the federal interim rule to be published, they closely monitored two bills that state legislators introduced to take advantage of a vast new hemp business opportunity created by the 2018 Farm Bill. As the legislative session came to a close last year, results on the bills were mixed.

In mid-October, Governor Gavin Newsom approved SB 153, which provides the funding and timetable for California to draft a state hemp cultivation plan that conforms with the USDA interim rule. That work has started, but can’t be completed until the feds release their final draft.  

In contrast, state lawmakers failed to decide on AB 228, which would have legalized the statewide manufacture and sale of food, beverages and cosmetics that include hemp-derived CBD. The bill died in the Senate Appropriations Committee without a vote.

Following the lead of a handful of other states, including Colorado and Oregon, California Assemblymember Cecilia Aguiar-Curry (D-Winters) tried to address the federal CBD disconnect through AB 228. AB 228 contradicted the FDA, which deems products with CBD as “adulterated,” and prohibits them from being introduced into interstate commerce.

The FDA’s position is based on its decision to approve CBD as an active ingredient in the pharmaceutical drug Epidiolex, which treats a rare form of epilepsy. In turn, the FDA deems CBD to be like all other active drug ingredients, which may not be added to food and dietary supplements. 

Despite seemingly broad support, AB 228 did not make it out of committee by the end of the 2019 legislative session. Aguiar-Curry brought back a new version of AB 228 in January 2020 and hemp industry advocates had hoped the bill would be approved by late March. 

An early 2020 approval timetable proved unrealistic as advocates say that the Governor’s office and legislators still need more education about hemp, a crop that was ubiquitous from the founding of the Nation to the early 1900s, but that had been illegal for more about a century after being lumped together with marijuana. 

Thus far, the California Department of Public Health (CDPH) has followed the FDA’s restrictions on hemp-derived CBD. Meanwhile, one can find hemp-derived CBD wellness products in small health food stores, as well as large chain supermarkets, which has caused confusion among consumers. As noted by CA-Hemp’s Brian Webster, most of the hemp CBD products on those shelves are lotions, creams and other topicals — a type of product the FDA has not regulated.  

The FDA and CDPH prohibition are seen by many as inconsistent with the spirit of the 2018 Farm Bill, which approved the cultivation and sale of hemp, as well as the interstate commercial transfers of hemp and hemp products, including hemp-derived CBD. However, the Farm Bill did explicitly confirm the FDA’s authority to regulate hemp-derivatives in food and beverages. 

Representatives in Congress are starting to awaken to issues surrounding the FDA’s CBD prohibition. Senate Majority Leader Mitch McConnell has taken baby steps to resolve the problem. In mid-September, McConnell introduced a bill that could result in the FDA adopting a more lenient framework for hemp-derived CBD products. Specifically, the legislation directs the FDA to issue “an enforcement discretion policy” that would give the agency latitude and possibly lead to recognition that CBD products are safe.

Industry Growth 

Chart showing change in California Hemp Growers registered with the USDA from 74 in June 2019 to 558 in February of 2020.

Legislative hiccups and regulatory confusion aside, the California hemp industry is gaining momentum. Q4 statistics from the California Department of Food and Agriculture show that the number of registered hemp growers in California increased from 74 in June 2019 to 558 as of February 4, 2020. In addition, there are now at least 1,165 registered hemp cultivation sites and 38,464 acres associated with growers and seed breeders.

Under the 2018 Farm Bill, counties may only allow limited cultivation pilot programs until the USDA confirms that their state’s hemp plan conforms with federal rules. However, until the USDA’s interim rule issuance on Oct. 29, there was a chicken-and-egg problem. California and other states struggled to draft federally compliant hemp plans not knowing exactly what to expect in the interim rule. As a result, at least half of California countries have temporary bans or restrictions on hemp cultivation.

The federal interim rule clarifies states’ hemp regulation responsibilities, including practices for record keeping, methods for testing hemp to ensure that it is below the legal THC limit, and plans for the proper disposal of non-compliant hemp. In addition, the interim rule makes it clear that states and Native American tribes may not prohibit the interstate transport of hemp that has been legally grown under federal and state laws.

California is said to now be working on its hemp conformance plan. SB 153 aids that effort by adding testing, enforcement, and other administrative provisions and providing a deadline for completing a federal hemp conformance plan as May 1, 2020.

California’s nascent hemp industry is incrementally taking shape. 2020 promises to be a big year as federal and state hemp regulations are finalized and the State Legislature debates legalizing hemp-derived CBD products. 

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Innovating Dairy Digester Research

Author: Chris M Brunner
Originally Published on UCANR Food Blog

This episode of Food & Facilities, our host is joined by Chris Brunner and Heather Johnson of Western Institute for Food Safety and Security, and Dr. Pramod Pandey of UC Davis’ School of Veterinary Medicine to discuss innovating dairy digester research.
Open in Spotify to listen.
Dr. Pandey checking samples of biogas collected at UC Davis School of Veterinary Medicine’s lab.
Samples of biogas collected at Dr. Pandey’s lab at the UC Davis School of Veterinary Medicine.

California leads the nation in agricultural production, producing nearly all the nation’s leafy green vegetables, most nut and fruit varieties, and is ranked first in egg and dairy production.

What that means is that California also produces a lot of agricultural waste materials, including lots of manure.

Historically these waste materials have been used as a rich source of compost. However, researchers at UC Cooperative Extension are researching innovative uses for this material. 

Dr. Pramod Pandey, a faculty member and Cooperative Extension specialist at the UC Davis School of Veterinary Medicine, focuses on better ways to manage waste material for both large and small farms. Dr. Pandey researches how to convert the organic matter in manure and other waste materials into a renewable energy source that can be used to power our state.

Converting manure to renewable energy

California gets over 27% of its energy from renewable resources like solar wind, and hydroelectric. Our goal is 50% renewable energy by 2030. California is taking steps towards this goal by building a network of dairy digesters which use bacteria to break down dairy manure and convert it into biogas. Clean burning fuels, such as biogas, are a sustainable source for generating energy because when they are burned, harmful by products are not produced.

California currently gets 27% of its renewable energy from solar, wind, and hydro-electric sources. California hopes to reach 50% renewable energy by the year 2030, and 100% by 2045.

Big bonus

Dr. Pandey holding dry manure material, ready for reuse as fertilizer.

A bonus is that the solid material left after the digesters have done their job is a fertilizer that can be used to grow the fruits, vegetables and nuts that our state is famous for. This type of fertilizer contains nutrients that are more readily available for plants because the digestion process breaks up organic materials more efficiently than traditional composting. The digestion process also helps reduce the number of harmful bacteria found in manure, making it much safer for use on plants grown for human food.

Dr. Pandey and Tim Van Beek (Van Beek Brothers’ Dairy) inspect the contents of a dairy digester together.

California leading in discovery and innovation

When we think about where agriculture has been and where it is going, innovation, efficiency and environmental sustainability are hallmarks of our approach in California. People like Dr. Pandey are driving forward research and technology to minimize the impact of agriculture production on the environment. When we think about where agriculture has been and where it is going, innovation, efficiency and environmental sustainability are hallmarks of our approach in California. His multidisciplinary approach to solving this complex problem of agricultural waste materials and water/air quality helps improve the economic wellbeing of farmers, and benefits Californians by providing nutrients for safe, healthy, and nutritious food.

While the importance of California’s agriculture might be huge, its footprint on the environment doesn’t have to be, and it is researchers like Dr. Pramod Pandey who are ensuring our state leads in discovery and innovation for many harvests to come.

Dr. Pandey and Tim Van Beek stand in front of dairy cows at the Van Beek Brothers’ Dairy.
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Hand Washing: Sanitation That Saves Lives

AnnMargaret Dwyer
Originally Published in Food Safety

We can all agree that handwashing is important. We know that washing your hands prevents you from getting sick, helps prevent the spread of germs, and helps keep our food safe. But time and time again we see people choose to not wash their hands, knowing full well they should be. Why does this happen? It is important to understand why people do not wash their hands, that way more effective techniques can be created to enhance your facility’s handwashing culture.

The Psychology of Not Washing Your Hands

Many people do not wash their hands after they go to the bathroom. But why? Pol Rodellar from VICE chose to ask people why exactly they don’t partake in this sanitary process in the article “People Explain Why They Don’t Wash Their Hands After Peeing”. A few responses to note were:

“People just wash their hands because that’s what they see in films. I sometimes do it in front of people who I saw just washed their hands-I suppose it’s out of respect for others. I guess I don’t do it for myself, but for them.”

Sara, 26

“It’s a fact that washing our hands is just something we do to fit into society. This morning, while I was using the urinal, a colleague who had just finished peeing started thoroughly washing his own hands. So when I finished, I had to do the same so that guy- who continued to wash and dry them as if he had just come out of a mine – didn’t think I was some filthy urchin. So here’s to wasting water and soap and a disposable paper towel just because I can’t be bothered to explain my toilet habits to my colleagues.”

Jordi, 30

“I normally wash my hands before I pee because they’re always dirty due to my job. I only wash my hands afterwards if I splash myself. And to be honest, I’ve stopped worrying about contracting things down there.”

Martin, 28

“I don’t have time to be constantly washing myself. I actually think we all clean ourselves too much – it can’t be good for our skin. Our society is too sterilized and it’s not natural.”

Lucia, 22

But Why?

In a study conducted by scientist Thomas Berry and his colleagues on a university campus, Berry wanted to analyze whether or not gender played a role in handwashing behaviors in the bathroom. The team observed 170 subjects in a public restroom and found that the action of hand washing and for how long were based on the activities the subjects conducted in the restroom. In the study, 91% of women washed their hands. This was attributed to all the women using a cubicle to go to the bathroom. When looking at the men, 87.5% of men washed their hands when using the cubicle but only 59.4% washed their hands when using the urinal. The conclusion was that to the subjects, going to the bathroom in the cubicle warranted more hand washing.

In addition to whether each subject washed their hands, those that did were timed. An important note is that the median time for handwashing showed both men and women washing their hands for less than ten seconds. This is troublesome since the Center for Disease Control (CDC) suggested time for handwashing is 20 seconds. This study shows that if your staff is more likely to use a urinal when going to the bathroom, a greater emphasis on handwashing procedures must be put in place to protect food from being contaminated.

When to Wash Your Hands

The more someone washes their hands, the less likely they are to spread germs and disease. In a manufacturing facility all employees should wash their hands before or after the following:

  • Before beginning work
  • Before preparing food
  • Before handling an injury such as a cut
  • After using the bathroom
  • After sneezing or coughing
  • After touching your hair or face
  • After taking out the trash
  • After using cleaning materials
  • Before changing jobs handling raw and ready to eat food

How to Wash Your Hands

As directed by the Center for Disease Control(CDC):

“Follow these five steps every time.

Wet your hands with clean, running water (warm or cold), turn off the tap, and apply soap.

Lather your hands by rubbing them together with the soap. Lather the backs of your hands, between your fingers, and under your nails.

Scrub your hands for at least 20 seconds. Need a timer? Hum the “Happy Birthday” song from beginning to end twice.

Rinse your hands well under clean, running water.

Dry your hands using a clean towel or air dry them”.

The Science Behind Handwashing

Not washing your hands after going to the bathroom is a leading cause of the spread of infections and diseases. Feces is a common source of Salmonella, E.coli 0157, and norovirus, and can also cause certain respiratory infections. “A single gram of human feces—which is about the weight of a paper clip—can contain one trillion germs”. For this reason, in your facility, it is important to ensure that handwashing practices always remain front of mind by having handwashing diagrams with instructions at every hand washing station.

In addition to germs being spread because hands are not washed after using the bathroom, germs can also spread is animal feces inadvertently on raw meat. Cross-contamination and poor sanitation practices can cause these invisible germs to spread.

The Impact Hand Washing Can Have

“Teaching people about handwashing helps them and their communities stay healthy. Handwashing education in the community:

Reduces the number of people who get sick with diarrhea by 23-40%

Reduces diarrheal illness in people with weakened immune systems by 58%

Reduces respiratory illnesses, like colds, in the general population by 16-21%

Reduces absenteeism due to gastrointestinal illness in schoolchildren by 29-57%

https://www.cdc.gov/handwashing/why-handwashing.html

It is not easy to establish a handwashing program that works. To do so you need an engaged staff who feels a sense of ownership for your company’s food safety culture and understands that they are a determining factor in whether your company produces safe food. Hand washing training and seminars need to be part of your “always-on” food safety program because ultimately your entire staff affects your end product and the bottom-line.

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California League of Food Producers (CLFP) Annual Meeting April 30

News Release

California League of Food Producers

For more information:  Lisa Jager, 916-640-8150, lisa@clfp.com

CLFP Annual Meeting April 30

The California League of Food Producers (CLFP) will hold its 2020 Annual Board of Directors Meeting on April 30 via webinar. The meeting will be presided over by outgoing 2019-20 chair Ross Siragusa, The Kraft Heinz Company. Michael Mariani, Mariani Packing Company, Inc., is expected to be elected and welcomed as the 20-21 chair.

Siragusa is Head of Agriculture & Seed for Kraft Heinz and works out of its Stockton, CA, office. Mariani is a Partner with Mariani Packing, which is based in Vacaville, CA.

Members will hear legislative and regulatory updates from CLFP’s Government Affairs Directors Trudi Hughes and John Larrea, as well as information on how the coronavirus is affecting California’s food
processing industry.

CLFP is an association representing the interests of both large and small food and beverage processors throughout the state. CLFP works to help ensure a favorable and profitable business environment for its members and the food processing industry. The association also has affiliate members that provide a wide variety of products and services to the industry

The Food Processing Expo is produced each February by CLFP, and is the largest event of its kind in California. The 2021 Expo will be held February 9-10 at the Sacramento Convention Center.

For more information, visit CLFP at www.clfp.com and the Expo site at www.foodprocessingexpo.org

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Food Labeling Requirements for Manufacturers and Updated Compliance Dates

By Michael Shabaka, Ph.D., Manex Director of Sales and Innovation Excellence

On May 27, 2016, the U.S. Food and Drug Administration (FDA) published the final rule amending food label requirements.

The final rule amends the labeling regulations for conventional foods and dietary supplements to provide updated nutrition information on the label to assist consumers in maintaining healthy dietary practices with a compliance date of July 26, 2018 for manufacturers with $10 million or more in annual food sales, and July 26, 2019 for manufacturers with less than $10 million in annual food sales.

The FDA recently extended these dates to January 2020 and January 2021 respectively. The FDA has created a Small Industry Compliance Guide to help companies better understand who needs to be compliant and how to become compliant. The FDA does not intend for the document to serve as legal advice and refers to this document as recommendations for compliance. Upon review of the 38-page document, it notes that all food, including supplements and infant foods must be compliant with the new labeling requirements, but there are some exceptions.

Under 21 Code of Federal Regulations (CFR) 101.9(j), product exceptions to the new label requirements generally include:

  1. foods offered for sale by a retailer who has annual gross sales made or business done in sales to consumers that is not more than $500,000;
  2. foods offered for sale by a retailer who has annual gross sales made or business done in sales of food to consumers of not more than $50,000;
  3. medical foods; and
  4. foods that contain insignificant amounts of all nutrients (e.g., coffee beans, tea leaves).

If your small business does not manufacture foods that fall within these four exceptions, then you must be fully compliant with the new rules by January 2021.Compliance with the new labeling requirements can be confusing. For example, section V titled: “Which Nutrients Must Newly be Declared, and What Changes Have Been Made to Nutrients Previously Required or Allowed to be Declared?” provides an example of how to address added sugars and what is considered added sugar.

The guideline states that added sugars are defined as sugars that are either added during the processing of foods, or are packaged as such, and include sugars (free, mono- and disaccharides), sugars from syrups and honey, and sugars from concentrated fruit or vegetable juices that are in excess of what would be expected from the same volume of 100 percent fruit or vegetable juice of the same type, (21 CFR 101.9(c)(6)(iii)). This definition includes single-ingredient foods, such as individually packaged table sugar (see Section V.A.1.(a).(i) and Ref. 1). But there appears to be another twist that can make the new rules confusing and why I believe the FDA is giving smaller manufacturers more time to comply.

For example, the following do not fall under the definition of added sugars. Sugars in fruit or vegetable juice concentrated from 100 percent juices that are sold to consumers (e.g., frozen 100 percent fruit juice concentrate) (21 CFR 101.9(c)(6)(iii)).  Sugars in fruit juice concentrates that are used to formulate the fruit component of jellies, jams, or preserves in accordance with the standards of identities set forth in 21 CFR 150.140 and 150.160 (21 CFR 101.9(c)(6)(iii)). Sugars in the fruit component of fruit spreads (21 CFR 101.9(c)(6)(iii)).  Sugar alcohols and Sugars in juice concentrates that are counted towards percentage juice label declaration under 21 CFR 101.30 for 100 percent juice or 21 CFR 102.33 for juice beverages (21 CFR 101.9(c)(6)(iii)). Sugars in juice concentrates that are used to standardize the Brix values of a single species juice consisting of juice directly expressed from a fruit or vegetable in accordance with 21 CFR 102.33(g)(2) (21 CFR 101.9(c)(6)(iii)). Naturally-occurring sugars found in milk and dairy ingredients, except lactose as defined in 21 CFR 168.122.

The food labeling laws can be a daunting task, especially if there are product changes or reformulations. The additional year that the FDA has provided to ensure manufacturers are compliant can help businesses become fully compliant with the new food label requirements. Does your business understand the new label rules, and will your business be fully compliant with the new food label requirements on January 1, 2021?

About the Author

Michael Shabaka, Ph.D., is the Director of Sales and Innovation Excellence for Manex. He has over 20 years of business development, sales and marketing experience, spanning several industries including biotech, high tech, publishing, environmental lab services, and the non-profit sector. Dr. Shabaka holds a Ph.D. in Organizational Behavior with a concentration in Transformative Learning and Change from the California Institute of Integral Studies, San Francisco. He also holds a Master of Business Administration degree in Marketing and Finance and a Bachelor of Arts degree in International Affairs from Holy Names College, Oakland. He can be reached at mshabaka@manexconsulting.com.