The Importance of Standards, Regulations, and COAsBy now, it’s not news that the cannabis industry operates without any national or global regulatory oversight. The lack of industry-wide standards or protocols has led to the development of a patchy network of similar, yet unperfected, regulated markets. It's an unstable framework which has led to a frustrating and repeating pattern of scandals, many of which are entirely avoidable.
Each state (or in the case of Canada, country) grapples with the task of standardizing and regulating a formerly illicit industry. Regional laws seem to evolve organically, into unique skeletons of legislation and compliance measures. Derek Bell, CEO of California-based CBD company Bonavibe, told Cannabis Tech that, because of the one-by-one approach, "Right now, in some aspects, the entire vertical is a guessing game."
One glance at the headlines over the last few years and it's clear there are problems with the current system. From dangerous synthetic cannabinoids discovered in CBD in Virginia in 2018, to the state of Michigan shutting down a testing facility for faking test results in 2019, the lack of overarching regulatory protocols on a state-by-state basis is failing consumers and damaging the legitimacy of the sector.
As the industry explodes, the lack of standards, regulations, and variable certificates of analysis are only becoming more noticeable. Not only do consumers suffer from a contaminated and possibly dangerous product, but the industry as a whole suffers from a hit to its reputation.
Falsified Results and the Importance of a Credible COA
There is no better example of how the lack of regulation is failing cannabis than with lab testing. The recent laboratory scandal in Michigan is far from the first time a lab has come under fire for faking or selling results.
In 2018, state inspectors discovered that Sequoia Analytical Labs in Sacramento, California, had faked results, putting hundreds of lab tests into question. A year earlier, the most extensive testing facility in Washington was accused of boosting THC results for its clients. The lab reported significantly higher than average THC rates than industry standards, leading to the investigation.
In at least three states, the industry has suffered essentially the same scandal: fake and inaccurate lab testing. So why isn't one market learning from the mistakes of another? It's a stark example of how national (or international) standardization would come in handy. Standardization of testing would eliminate the redundant and dangerous rollout of scandals.
Bell has a particular opinion on lab testing. Based on his own experience and research for Bonavibe, he has identified a glaring loophole in current testing requirements.
As he explained, only labs that provide full-panel testing are fully accredited by the state of California. Full-panel tests cover more than potency and pesticides. According to Bell, they include all residuals like solvents, molds, mildews, herbicides, pesticides, and even harmful bacteria like E. Coli.
However, full-panel testing is not a requirement in the California cannabis sector. This loophole has meant that many non-accredited labs are popping up offering cheaper, less vigorous testing services. Technically, a low-quality product could fail a full-panel test yet pass at another facility.
Any company selling low-quality cannabis in the state of California can skip the frustrations of robust testing to purchase cheaper results from an unaccredited lab. Bell warns consumers to always demand full-panel testing results for any product they are buying.
Damage to the Industry from the Lack of Standardization
The current model, a patchwork of disconnected markets, is causing unnecessary headaches for consumers, regulators, and businesses. Years of the same scandal, repeating the same pattern, aren't doing anyone any favors. The already fragile public perception of the plant is taking a beating from the waves of scandals scrolling across our news feeds.
Bell is an advocate of an international set of measures to regulate the entire industry, from seed to sale. Bell envisions structures on appropriate cultivation methods, testing protocols, and manufacturing standards, among other areas in dire need of improvement.
He believes that the Food and Drug Administration (FDA) or another regulatory body should develop a list of “dos and do-nots” for the industry. Having a set of go-to guidelines would immediately 'weed' out the low-quality manufacturers flooding the market today.
Beyond full-panel testing and lab accreditation, how else are brands, makers, and cultivators building consumer confidence? Some are seeking high-tech solutions to improve traceability: blockchain for the backend and QR codes for the consumer-facing side are just two such examples.
Blockchain technology slides seamlessly into track and trace systems already implemented at the state (or national) level. It's a technology that improves the transparency, efficiency, and scalability of a system already struggling under the escalating demands of the current industry. One needs only to hear about the woes of Washington State's recent tracking outage to find blockchain's promise appealing.
Many companies are hopping on the blockchain bandwagon. One recent example is RYAH Medtech, a big data and medical vaporizer company, who recently announced their intention to team up with a blockchain company to build transparent and instant traceability into their business model. Shoppers Drug Mart, a national drug store in Canada, is also expected to use blockchain in its cannabis rollout.
On the consumer side of the equation, QR codes are increasingly useful tools used by companies like Bonavibe to provide instant test results to their customers at the final point of sale. An easy scan with a mobile device and all the crucial, behind the scenes information on the product, including test results, becomes instantly available.
Tech-Based Solutions Available, but We Still Require Standardization
Despite innovative tech solutions like QR codes and blockchain track and trace, not all companies are eager to adopt them. Regulators are slow to learn from the mistakes of other markets and have yet to work tech into compliance measures in any meaningful way.
Blockchain, in particular, solves many of the current dilemmas, spanning banking to legality to supply chain management. Many industry insiders have pushed for its adoption, for many different applications, but regulators have yet to get on board.
With cannabis expected to make $40 billion globally by 2024, regulation and standardization are increasingly urgent. Certificates of analysis, while crucial to consumer confidence, are only one piece of the puzzle.
If the same set of scandals continue to play out, and we fail to learn from the mistakes of the past, it will become increasingly challenging to move forward. The industry urgently needs a global framework to build on, one that is focused on transparency and consumer safety.