What Are the Costs and Benefits of Cannabis Compliance Testing?

There currently are 37 states, three territories and the District of Columbia that allow the medical use of cannabis products, and 19 states, two territories and the District of Columbia have enacted measures to regulate cannabis for adult recreational use. Cannabis is still classified as a Schedule I narcotic by the federal government and any possession or sale is a criminal offense under federal law. As a result, cannabis businesses in compliance with state regulations still face unique obstacles, legal concerns and uncertainties on a day-to-day basis. 

Thankfully, the conflict between state and federal laws has led to a type of detente, with the federal government largely taking a hands off approach. The unusual state of limbo allows cannabis businesses in states with legal adult recreational sales to prioritize compliance with state laws, instead of operating in constant fear of federal intervention.

The Role of Cannabis Testing Labs

With the lack of federal legality comes an absence of guidance from federal agencies about how to create and adapt scientifically recognized standards. States set specific rules, guidelines and action limits, as well as requirements for obtaining ISO accreditation. It is up to the labs to validate methods or work with third party organizations such as AOAC to ensure methods are accurate and appropriate. Some states require the use of AOAC approved methods, while others allow for broader criteria for validation. Generally speaking, the development of analytical testing methods specific to cannabis products has fallen on third party organizations and individual licensees to validate that they meet the standards of safety, quality and labeling requirements for cannabis products.

As mentioned above, these requirements can differ dramatically between states. For example, cannabis regulations in California require testing for 66 pesticides, while cannabis rules in Michigan only require testing for 58 pesticides. It is up to accredited labs in the legal-use states to properly test the products to ensure they meet all of the state quality, safety and labeling requirements.

Costs of Cannabis Testing

Labs that perform required state government compliance tests are independent private companies operating in a highly competitive industry. That intense competition has incentivized a system where those willing to manipulate the rules can make a great deal of money by inflating potency and reducing the detection of harmful contaminants—this process of shopping for results regardless of their accuracy is known as lab shopping. If a client is not satisfied with the results received from one lab, there is almost always a less reputable lab willing to produce results more in line with what the client wishes to see.

This process has hurt participants across the industry and comes at a cost for growers, manufacturers and labs. And all parts of the cannabis supply chain are under pressure to deliver certain products with favorable results to the detriment of consumers, who might not be getting what they have paid for or what they consider to be their appropriate dose in the medical market. Better regulation and enforcement from the state (and eventually the federal government) will help realign incentives, protect end consumers and reduce this cost to the system.

Outside of the excess product that has been introduced to the market due to over-passing of products (which drives down the unit price due to oversupply), there are also costs associated with missed signs of plant health or manufacturing related issues. Well executed onsite compliance visits might show underlying issues with equipment or facilities such as a source of mold from an undetected leak, or issues associated with plant health such as stunted potency resulting from a virus. Conversely, working with a lab that does not properly conduct those visits or provide accurate results, can lead to much more significant costs and consequences down the road.

Benefits of Cannabis Testing

The core benefits of cannabis testing come to light when clients work with a lab that prioritizes accuracy. These labs assist with identifying existing and potential compliance issues and provide solutions related to the improvement of overall operations. That type of proactive assistance can propel the growth of a grower, processor or brand by assuring its quality and elevating its presence in the marketplace.

Just as consumers incur the final cost of inaccurately labeled products resulting from erroneous test results, they also stand to benefit in a system where accuracy is both prioritized and effectively enforced. Ideally the industry will continue to develop in a manner that protects consumers and encourages safe products and accurate labels resulting from proper lab testing. The founders of PSI Labs launched the company to address a lack of trust surrounding testing, and to ensure that consumer products were evaluated properly and with a certain standard of excellence.

The elevation of high standards fuels innovation, as processors and manufacturers ask questions about their products that lead to additional research and development. The result: lab-sparked innovations that enhance the entire industry and provide the ultimate benefits to consumers.

Learn more about cannabis compliance testing at PSI Labs.