California’s $11 million cannabis lab is off to a rocky start

California has a new tool in its effort to regulate the state’s unruly pot industry: an $11 million cannabis testing lab, run out of the University of California, San Diego. The lab’s first task? Shutting down labeling fraud in California’s multibillion-dollar pot marketplace.

Pot labels have become deeply controversial in California. The state’s Department of Cannabis Control (DCC) requires every marijuana product to be tested by a private lab for safety and potency, and then labeled with the percentages of several components, including THC, the primary intoxicant in cannabis.

Although such testing facilities are licensed by the DCC, industry insiders have for years accused labs of fraudulently inflating THC levels to lure more customers. In the past month, rumors turned into court action, when lawsuits hit some of the state’s largest pot companies over claims they’ve been lying about how much THC their products contain.

The DCC claims the new UCSD lab will help clean up the state’s testing industry, in part by creating standardized methods for measuring THC in pot products. Interviews with insiders, though, paint a less rosy picture. The lab is off to a rocky start, over a year behind schedule and still only partially operational. Three experts told SFGATE the standardized methods being developed by the UCSD lab won’t stop testing fraud in the real world, leading to questions over whether the state is effectively using its new multimillion-dollar lab effectively.

Josh Swider, CEO of San Diego’s Infinite Chemical Analysis Labs, said that “in no way” will a standardized method prevent unethical labs from inflating THC results.

“I can use the DCC method and produce any result for you without getting caught,” he told SFGATE.

‘The inflated THC crisis’

The state’s first pot lab opened in 2009, at Oakland’s Harborside Health Center (now Harborside), a pioneering medical cannabis dispensary on the edge of the San Francisco Bay. At the time, there was no legal requirement to test cannabis, but Harborside’s owners wanted to make sure they weren’t selling pot laced with dangerous contaminants – particularly because many of their customers were fighting illnesses like cancer, according to Harborside co-founder Andrew DeAngelo.

“We were worried about mold; we were worried about things that could get in people’s lungs that could hurt them,” DeAngelo told SFGATE. “The lungs are very fragile, and if you get mold in there, and you have a compromised immune system, it’s one of the only ways cannabis can kill you.”

Within a year, more pot labs opened across the state. In 2018, under the state’s new recreational cannabis rules, lab testing became a legal requirement for all pot products sold in California. Since then, the DCC has certified more than 60 for-profit labs to test samples of the over $5 billion worth of pot, edibles and other cannabis products sold here every year.

These labs now play a fundamental role in the California cannabis industry. The state makes the rules – which contaminants render cannabis unsalable, for instance, and what has to appear on a product’s label – but the private labs actually enforce those rules, making them responsible for both accuracy in labeling and ensuring contaminated products don’t end up on retail shelves.

State law requires that all cannabis products be tested for nine different substances, including the presence of contaminants like heavy metals, mycotoxins and residual pesticides, as well as the percentages of active compounds like CBD and THC. That potency testing gives labs influence over how much wholesalers and retailers can charge for the products: The prices for legal cannabis products, on average, correlate with the amount of THC listed on the products’ labels, according to data provided to SFGATE by cannabis software company Flowhub.

Despite their vital place in the legal cannabis infrastructure, pot labs have been a regular source of scandal, including getting caught falsifying safety tests and fraudulently inflating THC test results – possibly as a way to drum up more business from pot farms, their biggest customer base.

THC potencies listed on labels in California have skyrocketed in the past two years. In 2020, 11% of California’s legal pot had reported THC values above 28%. Today, that number has more than doubled, to over 25% of the state’s legal pot, according to Flowhub data. This stunning increase isn’t because pot farms are suddenly better at growing weed, according to DeAngelo and other critics. Instead, it’s a sign that pot labs are increasingly inflating THC results for the products they test.

“People are now competing for the highest percentage of cannabinoids in the product, and people are incentivized to commit fraud in the system,” DeAngelo said.

Earlier this year, the directors of three cannabis labs conducted their own investigation, purchasing and retesting more than 150 pot products from California dispensaries. They found that over 87% of the products had inaccurate THC labels, and they also reported that at least one lab was advertising its business by promising “great potencies.” The group published its results in the Cannabis Industry Journal, in a report titled “The Inflated THC Crisis Plaguing California Cannabis.”

Swider, one of the three lab directors behind the investigation, told SFGATE that pot companies are so accustomed to fraud that potential customers regularly call him and demand that he guarantee his results will show a minimum of 35% THC in the cannabis flower he tests.

“I’ve been told [by cannabis companies], if you want this contract, you need to give us 35%… Otherwise, we will go with another lab,” he said.

Missed deadlines, questionable standards

The new lab at UCSD is a key part of the state’s plan to rein in testing fraud. In February 2021, the state signed a deal promising the university $11 million over five years to build and operate a “reference laboratory” for legal cannabis inside UCSD’s Center for Medicinal Cannabis Research, including $2.3 million in laboratory equipment the first year and just under $1 million each year for staff.

The lab, run by university professors Igor Grant and Jeremiah Momper, has struggled with delays; despite receiving initial funds in February 2021, it has yet to meet a single deadline for testing capabilities. That includes a July 2022 deadline to complete International Organization for Standardization (ISO) certification proving the lab’s staff and equipment are capable of running contamination and potency testing. Swider said the process for ISO certification, a baseline requirement for any cannabis lab in the state, is uncomplicated.

“If you can do paperwork, you can get ISO,” he told SFGATE.

In response to emailed questions about the delays, DCC spokesperson Moorea Warren wrote that the agency expects all of these milestones to be met by 2023 and blamed the missed deadlines on “COVID-related delays and supply chain disruptions.”

“Despite this, the CMCR Reference Laboratory has made progress building out the all-new laboratory facilities, purchasing equipment, and hiring staff,” Warren wrote.

Grant, the lab’s co-director, said in an emailed statement, “There were many downstream effects of the pandemic, including significant supply chain issues (e.g., delays in receiving equipment and supplies) and longer times for regulatory reviews.” He said he expects the lab to satisfy the remaining milestones in 2023.

Despite the lab’s lacking ISO certification, the California legislature has already put the lab to work, passing a law that requires the DCC and its new reference lab to establish a standardized process for testing pot by the end of this year. State Senator John Laird, a Santa Cruz Democrat who sponsored the bill, said at the time that standardization would make “cannabis and cannabis products safer for all,” because “a lack of standardization means that one batch can produce inconsistent results between and even within testing facilities.”

But the DCC and its new lab have stumbled in their attempts to meet the law’s demands. In June, the agency released its first attempt at a single standardized method for testing all cannabis products, from infused foods to pre-rolled joints – one that industry experts called deeply flawed.

In September, the California Cannabis Industry Association, a trade group representing over 400 businesses, said the proposed method would create serious testing errors, including significantly underreporting THC potency in edible products.

“This means that a gummy which tests at .5mg of THC, could actually contain up to 10 times that amount,” the association said in written comments. In addition, Swider told SFGATE the state’s original method wouldn’t be able to differentiate between delta-9 THC and delta-8 THC, two closely related but chemically different cannabis compounds.

In October, under pressure from the industry, the DCC backpedaled, reducing the scope of the standardized method to smokable products like flower and pre-rolled joints. The agency has yet to publish its final version of the standardized method, with less than two months before the deadline.

‘Plenty of room to cheat’

It may seem obvious that, if test results are being questioned, having every lab in the state follow the same testing method would fix the problem. But several experts told SFGATE that shows a fundamental misunderstanding of testing fraud. It’s not that labs aren’t capable of conducting the tests accurately, experts say; it’s that some labs are intentionally doctoring their results.

Labs can still commit fraud by rigging scales or simply recording the wrong numbers in spreadsheets, even if everyone is required to use the same methods, according to both Swider and Josh Wurzer, president of SC Laboratories, a multistate cannabis operator based in Santa Cruz.

“The bad actors will still have plenty of room to cheat the system while the vast majority of laboratories who are doing things the right way already will have their hands tied in trying to innovate and improve their services,” Wurzer said.

Swider agreed, saying that having a standardized method sounds better than it really is.

“This whole method was put into effect because non-science people hear these keywords like ‘standardized method,’ and they sell it to everyone else, but it doesn’t work,” Swider said.

Maria Luisa Cesar, a DCC spokesperson, wrote by email that the agency still believes a standardized method will improve the state’s testing industry.

“The intent of requiring all testing laboratories to use the same testing process is to reduce variations amongst laboratories’ test methods. This should produce more consistent and accurate results,” she wrote.

According to Swider, though, writing standards down on paper and hoping labs follow the rules will never be enough to stop misconduct. Instead, he argues, the state needs to actively police the labs by checking their work, including by randomly retesting products already on shelves. If there’s a discrepancy in the results, then the state should go after the lab that did the original testing.

Cesar wrote that the agency is actively investigating the lab industry, including retesting retail products and investigating allegations of misconduct. The department has already investigated multiple labs and sent “letters of warning,” she wrote, though she declined to share specifics about any of this investigative work.

Swider told SFGATE he doubts THC inflation will stop until the agency publicly penalizes labs that cheat.

“The DCC is just so slow and scared to act that nothing happens,” he said.

Lester Black