New Technologies Help Cannabis Business Meet Compliance

Since the recreational cannabis market in California opened on January 1^st, 2018 cultivators, manufacturers, dispensaries, and testing laboratories have been getting to grips with new testing requirements. Following a ‘grace period’ by July 1^st all products sold in California had to be lab-tested. California has become the world’s largest regulated cannabis market, and some estimates place California to account for half of an expected $50 billion legal cannabis industry for the US by 2026. While costly, slow, and inconsistent testing procedures threaten this growth, new technologies are emerging in response.

An Overview of Regulations and Testing

When thinking about regulations around testing cannabis and cannabis products, it is essential to keep in mind two types of key actors. First, we have the cultivators, manufacturers, and dispensaries who need to test their products. Second, there are the independent laboratories who are paid by that first group to undertake the testing of their products.

Both these groups of actors must adhere to testing standards.

In the California context, as of July 1^st, this first group must have products tested for the following things:

• potency
• residual solvents
• processing chemicals
• residual pesticides
• microbials (e.g., E.coli and mold)

Come December 1^st, 2018 the final class of testing requirements will be rolled out in the state, including those for terpenoids and heavy metals.

Laboratories which undertake these tests must adhere to an updated ISO standard which outlines general requirements for the competence of testing labs. Proficiency tests (PTs) are used to assess a lab’s ability to undertake analyses.

Issues with Meeting Compliance

Around July 1^st California experienced a bottleneck due to a lack of sufficient lab facilities to process the large volume of product. The slow-moving nature of the testing process is exacerbated by its stringency, perceived as unreasonable to some.

Since July 1^st nearly 20% of cannabis products have failed tests for potency and purity in California. Failure can lead to the destruction of the product even if the solution is as simple as a label change. People are unable to challenge lab testing results, and the process is generally costly, costing a small, outdoor marijuana farm between $5000-$10,000.

These issues with costly and slow testing inhibit the growth of the industry and do little to disincentive the state’s unregulated black market.

How can new tech help?

New tech is set to help the cannabis industry meet compliance, and it can do this by targeting different actors along the cultivator-to-consumer timeline.

1. Use tech to improve lab services

LabVantage Solutions previewed its newest product, LabVantage Cannabis, at the 2018 Cannabis Science Conference in Portland, Oregon. As a cannabis-specific laboratory information management systems (LIMS): primarily, it uses to computational informatics to make labs run more efficiently, reducing implementation time, effort, cost, and risk. Through its inherent flexibility, it can respond to the changing industry and regulatory demands.

LabVantage has been providing LIMS solutions to labs for over 30 years and has spent the last few years working with cannabis labs to configure the most suitable LIMS for this environment. Managers of labs will be able to modify workflows without needing to write code, dramatically simplifying and speeding up the testing process.

1. Use tech to improve the testing experience for cultivators, manufacturers, and dispensaries

Cannalysis, a cannabis lab in southern California and recipient of a $1 million seed fund from Snoop Dog’s venture capital firm Casa Verde, has created an easy to understand and visually appealing platform which allows clients to have real-time information about the status of their sample.

Their platform is fully integrated with Weedmaps to improve marketability and displays the lab results in simple yet effective pie-chart type graphics.

The role of inter-lab communication in improving testing procedures

Inter-lab PTs are the key to establishing benchmarks for cannabis testing, according to Emerald Scientific who host the only inter-lab comparison PT. The bi-annual Emerald Test has seen a steep increase in participating labs with a 25% increase over the fall 2017 tests in comparison with Spring 2018.

Many of the participating labs are repeat participants, and Emerald Scientific speaks of the collegial attitude of those involved in the Test who are seeking to make cannabis testing the best that it can be.

Over its years of running, the Emerald Test has steadily introduced more and more types of tests offered, with its Spring 2018 version including testing of potency for both cannabis and hemp.

As with LabVantage, Emerald Scientific is cognizant of the need for flexibility, and therefore they have stated they will continue to introduce new proficiency tests as regulatory demands and lab requests develop.

The increase in participating labs in the Emerald Test suggests the desire from labs to improve the cannabis testing procedure and speaks to the dynamic nature of the cannabis industry in California.

Cannabis Testing: A Benefit, Not a Burden

While cannabis testing in the California context has had a burdensome introduction to the recreational industry, its central purpose (ensure quality and safety of product) and the new tech which is emerging around the process works to benefit the industry as a whole.

Increasing interest by cultivators and by consumers to understand what their product is made up of leads to improved education about cannabis in general. For example, the testing of terpenes (not currently required by state law) enables cultivators to market their product more precisely and for customers to understand what it is they particularly like about specific products.

Furthermore, if California acts anything like the Oregon market, the slowness and costliness of testing will decrease with time: Oregon saw failure rates as high as 25% drop to below 5% within a year.

The role of new tech in improving the testing procedure is something to watch.