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Wednesday, March 29, 2023

States Seek Solutions for Testing Lab Troubles

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More state regulators with legal cannabis marketplaces want to tamp down on privately run testing labs, as the nascent industry continues to reel from a compliance landscape lacking true federal guidance.

The move toward state-run “reference labs” looks to address a few issues:

  • Contamination and inaccurate results from improper handling or preparation of samples.
  • Potential falsification of results.
  • Withholding information from clients.

All of these issues, which have been seen in various parts of the cannabis market, can undermine trust in the industry.

But the solution isn’t always such a sure thing, as legacy states with more established state-run labs still face accusations of testing fraud.

Roger Brown, president of ACS Laboratory, runs one of the largest testing companies in the industry.

“You have to have a balance of laboratories to producers and sellers,” he said. “Otherwise, you create an unequal marketplace where laboratories have an incentive to give clients what it is they’re looking for rather than what the reality is.”

A “perfect” example, Brown said, is the state of Oklahoma, which has double the number of licensed laboratories needed for the amount of cannabis business the state holds.

“So, they’re all eating each other up with not only price, but also with pumping up their THC numbers to be able to get the business from the growers,” Brown said.

Too many laboratories and not enough growers creates an overly competitive environment. Too many growers and not enough testing space fuels backlogs. Both dilemmas can spurn bad behavior.

“It’s a delicate balance in any industry,” Brown said. “We don’t have a problem with competition, as long as everybody’s on a level playing field.”

For an industry still in its infancy, there is currently no universal standard for cannabis testing methods, which often lead to inconsistencies between labs and makes it difficult to compare results.

Regulatory oversight can help ensure that labs adhere to strict quality controls and provide reliable results. State-run reference labs can act as watchdogs, but establishing such operations are costly.

Michigan Gov. Gretchen Whitmer asked the legislature in her 2024 budget proposal for $4.4 million to fund a lab, according to mlive.com.

The director of the state’s Cannabis Regulatory Agency, Brian Hanna, told the outlet that the goal is to have the lab housed within the agency’s own division to shield it from foul play.

Florida health officials are also moving toward rolling out the state’s own labs, especially as it gears up for a possible 2024 adult-use passage, though the operations could take a few years to build out.

Brown believes public labs can work with private labs in the interim, lending expertise and testing capacity to meet state department goals and prevent backlog.

“The only way that the regulators have the ability to enforce good behavior – not necessarily incentivize good behavior – is by punishing those that are obviously doing the wrong thing,” Brown said.

And the only way regulators could monitor that on a regular basis is by building their own reference labs to random audit batches “and start questioning everything,” he said.

“But again, it’s a year or two away for that stuff.”

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