Cannabis Cultivation

California cannabis industry braces for next phase of testing costs in 2019

A new round of regulations in California will cause laboratory testing fees to increase more than 40%-55% for some of the state’s licensed cannabis cultivators as well as makers of concentrates and infused products, according to industry experts.

The so-called Phase 3 rules take effect Dec. 31.

They require all harvested cannabis and marijuana products to be tested for heavy metals and mycotoxins, or toxins created by mold. Products whose labels make terpene claims will also be subject to terpenoid tests, and solid and semi-solid edibles and inhalable cannabis products will be subject to water activity tests to measure the amount of available water in them.

The regulations are the state’s latest effort to phase in tougher testing standards for growers and manufacturers.

They already are raising concerns among MJ businesses because:

  • Phase 3 testing “is another absolutely enormous burden” on cannabis businesses, said Clayton Coker, the co-founder and head of product at Somatik, an infused product manufacturer in San Francisco.Some are worried there are too few labs prepared to do the new tests.
  • The cost of compliance testing for marijuana and cannabis manufactured goods is increasing significantly.
  • Heavy metal tests are a wild card and could cause many products to fail, sources said.

However, MJ businesses will get some wiggle room at the outset, sources noted.  All cannabis goods harvested or manufactured before Dec. 31 can be sold if they meet Phase 1 or Phase 2 testing requirements.

Here are three concerns marijuana businesses confront ahead of the new testing regulations:

1. There may be a shortage of testing labs.

According to state data, there are thousands of licensed cannabis cultivators, processors and product manufacturers in California and 52 licensed laboratories.

Only 14 of those laboratories confirmed they are currently offering Phase 3 compliance testing. Six labs are not offering Phase 3 testing, more than a dozen others didn’t respond to a request for information, and some could not be contacted for comment.

The numbers illustrate a massive disparity in the number of testing labs that are prepared to serve California’s cannabis industry.

“My sense is there are not enough qualified laboratories that are able to do (Phase 3 testing),” said John Oram, the president and CEO of Nug, a vertically integrated cannabis company in Oakland.

Labs might not be prepared because they lack the capital needed to start the new testing. Moreover, lab operators must ensure the services they offer correspond with industry demand for such services.

“You have to be ready to test before the deadline. But you have to be able to afford the equipment and the infrastructure upgrades first,” said Emily Richardson, vice president of business development at CW Analytical, an Oakland-based cannabis testing lab.

To Read The Rest Of This Article By Joey Peña on Marijuana Business Daily

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Published: December 20, 2018

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