Industry Professionals Urge Congress to Regulate CBD and Hemp-Derived Compounds in 2023 Farm Bill

Editor’s note, 5:11 p.m. ET, July 29: This article was updated to include additional information from Ben Rosman on contaminant testing in Michigan, current public access to testing data in the U.S. and why he believes more testing data should be publicly available.

On the heels of a federal RICO lawsuit alleging cannabis potency inflation in Arkansas, the issue is top of mind for many industry members.

While a ruling in that case remains to be seen, Cannabis Business Times recently spoke with cannabis testing lab executives about the topic of purposely altered lab results. Potency inflation is one of those issues, though sources told CBT that they also include hemp growers requesting potency deflation, as well as cannabis businesses seeking lower contaminant percentage results.

For this story, CBT spoke with Josh Wurzer, president and co-founder of SC Labs, a cannabis and hemp testing lab that operates in California, Colorado, Illinois, Michigan, Oregon, Pennsylvania and Texas, and Ben Rosman, a licensed attorney who is CEO and co-founder of PSI Labs, which operates in California and Michigan. Wurzer is based in California, while Rosman is based in Michigan.

CBT also spoke over email with a representative from the California Department of Cannabis Control (DCC), who forwarded us this July announcement and stated the DCC will be answering our questions. (Refer back to CBT’s site for updates on this topic.)

Photo courtesy of SC Labs

What’s Going On With Potency Inflation?

Ongoing testing issues across the industry come in the forms of potency inflation, when cannabis businesses in the supply chain and testing labs report a higher THC percentage than is accurate, and the related problem of lab shopping, when cannabis businesses search for labs that will deliver inflated potency results.

In California, there was some potency inflation before the passage of Proposition 64, which legalized adult-use cannabis, and the regulated industry that began in 2018, Wurzer said. Pre-Prop 64, in California’s compassionate-use program, he said the issue was mainly with cannabis businesses misrepresenting samples.

“When regulations came along,” Wurzer said, “we started seeing certain labs that just started getting a reputation for higher cannabinoid results, or that didn’t really have any of their samples failing for any of the kind of contaminate testing.”

Wurzer pointed out that the potency inflation and lab shopping issues have mainly involved flower and concentrates. He hasn’t seen the incentive for labs to provide inaccurate results for infused products.

Rosman said he saw the issue occurring in California but less so in Michigan. Then it became apparent that it was happening in the Great Lakes State.

“I know in Michigan, … before there was a regulated industry, you had to have at least 20% potency on flower before any dispensary would buy it,” Rosman said. “That was just the bar that was set. But it wasn’t based in any science. That was just essentially marketing.”

Wurzer and Rosman said they have had potential customers asking them to inflate potency and current customers telling them they’re switching to another lab because they will receive a higher potency result. Neither SC Labs nor PSI Labs honor these requests, Wurzer and Rosman stated.

“We’ve consistently, throughout at least since legalization, on the adult-use side, seen some pushback from some growers, like, ‘Hey, there are some labs out there that will increase potency. Can you guys help us out?’” Rosman said. “And it’s not something we’re willing to do. But that does mean that we lose clients over it. This is something that happens all across the country.”

Even the legally distinct hemp industry is not immune.

While some state-legal cannabis businesses seek inflated THC results, Wurzer said a portion of hemp producers look for lower potency figures so they can meet the federal 0.3% THC limit.

Why Is Potency Inflation a Problem?

Photo courtesy of PSI Labs

Potency inflation raises multiple problems for the market, according to CBT’s sources for this story. One of them is that it misrepresents the desirable attributes of cannabis, Wurzer said, adding that terpenes are a better determination of quality. Another concern is that it sets an unrealistic bar for others in the industry who are following the rules, Rosman said.

“Growers and manufacturers and the cannabis industry in general can do everything they can to try and educate consumers on what a high-THC result on an inhalable product really means,” Wurzer said. “THC isn’t your quantitative quality indicator for cannabis. That’s going to be the terpenes. The terpenes are what’s going to give cannabis its flavor, its aroma, the nuances and its effect. Those are really the quantitative quality indicators for cannabis.

“Anything that the industry can do to promote what really makes cannabis desirable is a win. And when you’re inhaling a product like cannabis, whether it’s a 30% flower or whether it’s a 15% flower, you’re exhaling 90-some-percent of the cannabinoids right back up. So, I can smoke a 30% flower and exhale it or smoke a 15% flower and hold it in a little bit longer and then exhale it and get really the same amount of THC into my system.”

RELATED: THC or Terpenes?

Rosman also commented on how potency inflation isn’t doing any favors for industry members who are producing quality product with lower THC percentages. He stated, “Ultimately, it’s really not good for anyone, and it’s especially not good for growers, because growers with some of the best weed out there then have to compete with mid-grade growers who have so-so weed.”

How Much THC Is Unrealistic?

As labs and cannabis companies claim THC percentages over a certain point, those claims become more questionable, according to Rosman and Wurzer.

California requires cannabis to have test results calculated by dry weight. So, in California’s market, the THC percentage is higher for flower than if that exact same flower were to be tested in another state that doesn’t calculate by dry weight.

Rosman pointed out that Michigan labs do not calculate potency by dry weight.

Over the years, Wurzer said cannabis breeding developments have allowed cultivators to achieve higher potency figures.

“When I got into this 12 years ago now, … the super-high flowers were 24, 25% THC. That was kind of where the genetics topped out,” Wurzer said. “Now, over the years, with [some] breeders breeding just for THC content, and the improvement in breeding techniques and in different techniques to sort of massage out high concentrations of THC, the top flowers are in the [percentages with] high 30s or even low 40s with the way California calculates THC by dry weight, which also gives the THC values a 3-, 4-percentage-points boost.”

Despite scientific advancements, Wurzer said potency claims become less believable as they inch further up over 40% THC.

“Anything over 40%, you’re starting to get into crazy territory,” he said. “I’ve seen labs reporting 47% THC flowers, and I would say that’s highly suspect.”

How Is Potency Inflation Being Done?

Both labs and cannabis producers have a history of inflating or attempting to inflate potency, per Rosman and Wurzer.

One way labs have done this is through equipment calibration, noted by both Wurzer and Rosman.

“There’s a bunch of different ways that you can stack different measurements all in one direction,” Wurzer said. “In every type of measurement we take as an analytical lab, there’s a certain amount of uncertainty—there’s a plus or minus attached to it. If you pile all those pluses or minuses in one direction, well, then, you’re giving someone an edge.”

Another method involves inserting concentrates into test samples, and before the passage of Proposition 64 in California, Wurzer said cannabis growers themselves were nudging the test in that direction. 

“[Growers] can’t really pull things like they did before regulations, where we would have customers that would take and inject concentrate right into the inside of the bud,” he said. “Then you would go to break up the bud, and in the middle, there would be all this concentrate. And we’d have to call up the customer, be like, ‘Hey. You can’t be doing this. And if you keep doing this, we’re going to have to fire you as a customer.’

“We fired a lot of customers in the early days, just telling them, ‘We’re not going to test for you because you keep trying to trick us. And we’re not going to have our name tarnished by your funny business.’ But that stuff is tough to do now in California because we’re doing the sampling.”

Rosman said other labs have increased potency results on their end by adding kief. He said they’re “adding a little kief in and saying, ‘Well, kief falls out during the grinding process, so we want to add that kief back in because that kief should be part of the flower. So, because the kief fell out, we’re going to put that kief right back on top, and then that kief is going to be part of our diluted sample that we’re going to subsample from and that will add 20, 30% of potency to it.’”

What Are the Contaminant Concerns?

One lab testing issue that has the potential to directly affect consumer health is inaccurate contaminant testing.

In California, Wurzer said some issues cropped up a few years ago with some labs getting up to speed with certain testing protocols. As far as cannabis companies seeking labs’ help to deflate test results, he said operators have indicated to SC Labs that they get more favorable contaminate testing results from other labs.

“We’ve seen it with micro[-biological] testing for different pathogens, where we’ll … ding someone for having aspergillus in their facility and it shows up in all of their products,” Wurzer said. “And we’re like, ‘Hey, you’ve got to address this mold situation. It’s not going to go away.’ And then they say, ‘Well, I’m going to go over to this other lab. They don’t see it when they test it.’ So that certainly is an issue.”

What Can Be Done to Solve These Issues?

To help solve the potency inflation issue, Rosman suggested all cannabis testing data be made publicly available to universities and data statisticians.

Rosman pointed to one study, published in the Journal of Cannabis Research in 2021 that outlines “unusual shifts” in potency testing data in two states. Author Michael J. Zoorob, a then-postdoctoral research associate at Harvard University who is currently employed by Meta, analyzed THC results in Nevada and Washington. Zoorob states in the paper: “There is a statistically unusual spike in the frequency of products reporting just higher than 20% THC in both states consistent with economic incentives for products to contain at least 20% THC.”

Additionally, Rosman told CBT, “I was talking to one of my colleagues in the industry … who’s doing his own secret-shopper studies and going out to a number of different dispensaries and just asking for the highest-potency stuff [they] have, and then testing it in his own lab. He sees results with variances of 30% to upwards of 70%. We do our own secret-shopper studies, and we see similar results.”

Rosman said Freedom of Information Act (FOIA) requests for public testing data have been denied in many states.

“It is my interpretation that publicly available data will translate to more accurate lab results,” Rosman said. “Transparency is fundamental in science, in general, and is a critical component of accuracy overall. Entire data sets need to be analyzed to come to a true understanding of these lab results. 

“Publicly available information creates a culture of accountability—when the public is aware, regulators are forced to act which will impact how labs and cultivators operate. Consumers with access to data are able to evolve the conversation and help the industry grow.”

Wurzer said more enforcement is needed to remedy the problems. He said July 7 that California’s former Bureau of Cannabis Control—now consolidated into the Department of Cannabis Control (DCC)—did in 2021 revoke one lab’s license for contaminant testing, which a judge overturned—but that regulators in the state have “taken a hands-off approach” to potency inflation.

“I’m not aware of the state taking action on any laboratories in California for inflated THC results,” Wurzer said July 7. “It’s a hard thing to prove, but really, if you don’t have the regulators really effectively enforcing this, what’s stopping the labs? It’s almost incentivizing the good labs to start doing the same thing too, because they’re losing business to these labs that are inflating THC results. But then you look at a state like Michigan, … they’re taking action.”

California is working to standardize lab testing. In 2021, California Senator John Laird (D-Santa Cruz) introduced Senate Bill 544, and it passed the legislature and was signed into law by Gov. Gavin Newsom later that year. The bill requires the DCC to develop a standardized cannabinoid testing method for labs by Jan. 1, 2023.

In a July 8 press release, the DCC noted industry concerns about potency inflation and lab shopping and is seeking public comment on proposed rulemaking for standardizing lab methods until 5 p.m. Pacific Time on Aug. 2. The DCC will also host a public hearing Aug. 1. (Those interested in joining the Aug. 1 meeting, from 9 a.m. to noon Pacific Time, should email Charisse Diaz at Charisse.Diaz@cannabis.ca.gov or 916-465-9025 by July 29 at 4:30 p.m. Pacific Time.)

Regarding SB 544, Wurzer said it is “well-intentioned but misguided.” He explained, “The idea was, if everyone’s using the same testing method, they should all get the same results. But a lot of the tricks that you can use to stack the results in your favor, you can do just the same with a standardized method.

“And now, all you’re doing is sort of pigeon-holing all the labs into a single method where they can’t innovate, they can’t add new analytes to measure, they can’t improve the accuracy of their test or improve the speed or make it cheaper or less wasteful or whatever. They’re just all kind of stuck using the same method. But the cheaters can still cheat. So, … most states are trying to do something to address it. It just really takes engagement from the regulators to do a good job.”

Addressing the importance of terpene content, Wurzer said SC Labs has partnered with Napro Research to create a cannabis classification system called PhytoFacts that was used to categorize entries at the 2022 Emerald Cup and at the California State Fair. A system based on terpene content, Wurzer said he believes it represents how cannabis should be classified. (He noted that he is biased toward the PhytoFacts classification but that there are other companies in the industry that have created terpene classifications.)

“Most of the different flavors you can attribute to cannabis can break down into one of about four to five different broad categories,” Wurzer said. “Then, within those categories, there’s three to four kind of subgroupings that you can do based on terpene content that allow you to put cannabis into buckets based on the flavors that [industry members] have all come to categorize cannabis qualitatively.”

When it comes to lab shopping and inaccurate test results, Wurzer said bad actors represent a small portion of companies in the cannabis industry and that most don’t want to mislead consumers.

“Most of the laboratories that I’ve talked to and that I compare data with, are doing a good job, too,” he said. “They’re just looking for a way to solve this problem so they don’t go out of business because they’re not willing to sacrifice their integrity.

“So, I think it falls on all of us to try and find a solution. Part of it is educating these consumers, highlighting the importance of flavor and terpenes over high-THC results. But I don’t think it’s all doom and gloom. I think in the end, the cream will rise to the top and the good actors will prevail.”