Industry experts say suggested changes to the rules would open the door to pesticide tainted cannabis on Oregon’s dispensary shelves while others accuse labs of collusion to keep prices high
By Keith Mansur
Oregon Cannabis Connection
Oregon Health Authority (OHA) is proposing more administrative rules changes that would significantly dial back pesticide testing on cannabis flower and concentrates. Their proposal would reduce pesticide testing of concentrates to a single annual test on concentrate processors, and screening of only 20% of the cannabis flower batches for the recreational market—currently it’s 33%. The OHA and Oregon Liquor Control Commission (OLCC) both suggested these changes are needed due to a backlog in pesticide testing by the few pesticide certified labs in the state. But, though the backlog at labs contributed to a severe market shortage on extracts and edibles originally, recently it’s due to pesticide test failures and not a lab back-up.
Oregon Cannabis Connection covered the issue surrounding testing labs last year and focused on the lack of certified labs available to test cannabis, which was especially difficult when the rules changed at the time of outdoor harvest. It was caused by adding the requirement to use an only an Oregon Environmental Laboratory Accreditation Program (ORELAP) approved laboratory. The move was disastrous. Many people explained that it was not tenable, including the former ORELAP administrator Gary Ward, who warned last year that the ORELAP program was, “on the verge of collapse.”
“Because of the lack of resources, the accreditation of both cannabis labs as well as drinking water labs were going to be seriously affected,” Ward explained to the Statesman Journal in September, 2016.
His prediction was accurate. It became a complete mess and, according to Ward, the additional stress from his position and the narrow timeline brought about a heart attack which made him decide to step down in January.
Over the past months we saw a flower shortage in October and November as the logjam blocked the flow from labs to dispensaries. Eventually, the flower supply recovered. We still see a shortage in concentrates on shelves but it is now due to pesticide testing failures. Since edibles are made mostly from concentrates, the edible companies have struggled to keep products on the shelves, as well.
How We Got Here
The culling of inadequate laboratories and changes in testing costs were to be expected. Oregon had a requirement for testing cannabis, but no regulation over the labs for nearly two years, which allowed many unscrupulous labs to set up shop and operate with inferior equipment, untrained personnel, and few, if any, standards for operating. It was the “wild west” and it was created by a requirement to test the cannabis yet no regulations on laboratories. The cost for a “full screen” test was ridiculously low with some labs setting rates at $100.00. At that price, no laboratory could properly perform the needed tests accurately and at a profit.
But, the “wild west” was brief and dusty. The new requirement to be NELAP/TNI certified meant most labs did not qualify to test cannabis, especially for the full battery of required tests. The National Environmental Laboratory Accreditation Program standards are the first step in Oregon’s lab standardization process, along with other rules to help labs operate uniformally. Most labs did not have the procedures in place that are required to be certified, and that need to be strictly followed, to insure accuracy. The good and reputable labs hunkered down and weathered the storm. They understood the new accreditation requirements meant the shoddy labs would soon be gone and testing prices would rise to proper, sustainable levels.
Light was shed on the looming backlog problem in 2015 when suggestions were made that ORELAP should not be the only certifying body for the labs. There are a number of independent certifying agencies that were ready and willing to do accreditation across the state, which would have dramatically sped up the process insuring many labs were ready when the harvest deadline occurred. During the shortage, OLCC was given authority to change the testing rules if the market demanded.
ORELAP received nearly 30 applications for lab certification, but by the October 2016 testing deadline only 4 had been fully approved to do the full array of required tests, including pesticides. 6 months later, 19 labs have been certified to do at least a portion of testing, but there are still only 7 labs capable of doing the pesticide testing in-house and only 6 labs capable of doing all the full array of testing required by law. Even so, the backlog is now basically gone and most labs are turning around tests in a week or less.
OHA Change of Tune
After months of dictating rules to the industry, and making changes with emergency memos repeatedly, usually with disregard for the industry or cannabis marketplace, the OHA decided that their public health and safety mandate should take a back seat to the needs of the cannabis market forces.
Johnathan Modie, Lead Communications Officer with OHA Public Health Division, told Oregon Cannabis Connection back in December 2016, at the height of market shortages, “OHA’s goal is to ensure marijuana consumers aren’t exposed to potentially dangerous chemicals in pesticides, solvents and other contaminants, not to ensure that there is a sufficient supply of marijuana products on the market.”
They seem to have made a major shift in their approach. Oregonlive reported March 2nd:
Andre Ourso, manager of the Oregon Medical Marijuana Program, said industry complaints about the cost of testing and delays faced by concentrate and extract makers getting their products to stores drove the proposals.
Also, more testing means more expense for the consumer, he said. By law, the state is supposed to consider consumer cost, as well as public safety, in drafting its rules.
He said the public may comment on the rules between March 15 through April 30. New rules are expected to go into place June 1.
“The agency will evaluate the public comment,” he said. “If it comes out that this is not something the public wants, the agency won’t adopt” the changes.
Recently, Modie explained to Oregon Cannabis Connection (OCC), “The best way to ensure compliance with rules intended to protect public health is by making sure they’re not overly burdensome to the point that most of those required by law to follow them can’t actually do so.”
Their new proposed testing rule changes discount the need for pesticide free products and consumer safety and value the need for cannabis businesses to make money. Instead of focusing on the real problem—pesticides tainted products—they have decided to address the shortage by simply, and drastically, reducing the number of tests needed.
Pesticide Found Everywhere
The backlog has decreased at the labs and turnaround times are returning to normal. Most labs have a turnaround time of under two weeks if doing in-house pesticide testing. The real motivator behind these changes is being driven by a large volume of pesticide tainted concentrates.
Since the bad laboratories have been removed from the equation regarding pesticide testing, and the OHA requires notification of pesticide test failures, a huge number of contaminated products popped up. Some of the newly accredited laboratories reported a 70% failure rate on concentrates they were testing, and over 20% on flower. The failure numbers reported from the OHA are 26% of concentrates and 10% of flower. The new, more accurate results sent a shock wave through the cannabis community in Oregon. Some concentrate processors and growers risk significant loss of product, and they were not prepared for that.
One of the more common contaminates being found is Carbaryl, the active ingredient in the pesticide Sevin. Its especially toxic and is found surprisingly often. There are a number of other common ones being found, and the rate of failure has been especially high at many labs, putting the low numbers reported by the OHA at odds with results by a number of reputable labs.
Roger Voelker, Lab Director of OG Analytical explained, “We find pesticides on about one third of flower and about 70% of the concentrates. [Testing frequency] is risk based because of the horrible problem we have right now.”
Voelker, who is a former Oregon Department of Agriculture laboratory chemist, said that the entire subject is complicated and requires an attention to detail which has not been present in the rule making process.
“Part of what we are dealing with is that it is complicated and no one wants to deal with the details,” explained Voelker. “We don’t have enough involvement from the Department of Ag, who knows these rules, and we don’t have enough education for those being impacted. It’s, unfortunately, technically complicated but we don’t have the luxury of over simplifying it.”
An example of other risk based assessment is found in the regulation of shellfish and the biotoxin domoic acid, a common contaminate found in Oregon. The Oregon Department of Agriculture routinely shuts down the harvest of clams and shellfish due to high levels of the toxin being detected by frequent testing. Although it’s a naturally occurring compound, the frequency of it’s occurrence in the shellfish demands that the shellfish be tested…frequently.
Accusations Without Merit
One reaction of many in the industry has been to blame the cannabis testing laboratories. With tainted product, processors and growers that are struggling to get products to market are throwing around unsubstantiated accusations at the labs, accusing them of collusion, creating regulations to benefit themselves, and price fixing. There is even chatter of a class action lawsuit against some labs for collusion and market tampering.
Don Morse, President of the Oregon Cannabis Business Council (OCBC) told the Oregonian, “They want the most testing at the highest cost they can charge.” He accused the laboratories of protecting their pocketbooks.
According to their website, the Oregon Cannabis Business Council (OCBC) is a small industry association representing about 50 “post-cultivation” cannabis businesses including processors, and dispensaries. Morse is also owner and a founder of Human Collective dispensary.
Oregon Cannabis Connection (OCC) asked Morse about the shortage problem and if he had any proof of his accusations that the labs have fixed the rules and are overcharging.
“The OHA rules, as written, were over-the-top and they were written by a group of people who did not fully comprehend their impact on the industry, which has been catastrophic,” explained Morse on the current rules. “People can’t get their product to the market…it’s too cumbersome and too expensive.”
He admitted that the flower shortage has mostly subsided, but pointed out that other areas of the industry are seeing problems.
“The testing rules…are certainly taking a much larger toll on processors and edible makers and topical makers,” said Morse. “That’s where it’s really hurting the industry. They’re using distillates and they’re using concentrates or they’re just selling concentrates and it’s harder to find [clean concentrates].”
He said the flower may pass testing requirements but the final product ends up at levels that are too high due to the nature of concentration, which, as its name implies, is derived from a process that concentrates the compounds found in and on the marijuana. He also questions the low concentration levels and the high number of pesticides that are screened for and required in the rules.
Morse believes these “over-the-top” rules were deliberately set by the labs and that the labs had control of the process.
“The people at the table originally coming up with these rules was the labs and some healthcare people and some poison control people,” Morse said. “There was no industry there, it was the labs, and while some may be believing that they are acting in the best interest of health and public safety, I don’t think it’s a stretch to say, without opposing points of view there, that some might be interested in making rules that were in the best interest of their industry.”
“Anybody in business is in it to make money…it’s just that I happened to choose a line of business that involves protecting the public, that’s it,” Voelker of OG Analytic explained. “I don’t apologize for having that motivation.”
The Facts About Testing Rules
We asked OHA about the undue influence that the labs could have had on the rules. Modie at OHA explained that the process for rule making, which was open to public comment and went through numerous Rules Advisory Committees (RAC) and a RAC testing sub-committee, involved numerous people, including other “industry” people, along with at least three agencies.
“The RAC did include representatives of marijuana testing labs, but also representation from other parts of the industry, including processors, dispensaries, patients, caregivers. Labs have no more influence over the rulemaking process than other members of the RAC,” explained Modie. “Additionally, the rules are OHA’s, under advisement of the RAC, and ultimately OHA is responsible for writing and filing the final rules for consideration.”
We also asked Modie specifically about the batch sample sizes and testing, which drives the higher cost on concentrates. Since a homogeneous mixture is difficult to insure, a greater number of samples need to be tested.
“Sample sizes are technical issues, and are determined to best achieve the purposes of randomized and representative sampling,” Modie explained. “They were presented to the Rules Advisory Committee (RAC) and subject to public comment. Initially, they were discussed by the first RAC in a testing subcommittee.”
In the end, it was ORELAP that had the major input on the final rules, as Modie explained, “They were presented again to the current RAC for discussion and advice, but ultimately ORELAP staff provided the best advice and expertise to set sample sizes.”
ORELAP is imminently qualified to make the major decisions on the final rules. They are one of only 14 NELAP certified state agencies in the entire United States, and one of the most respected of those.
“Actually, the original recommendations were that we go much higher frequency and take much more material,” Voelker said. “What we’ve got right now is the result of gross concessions relative to what experts were saying.”
Testing Cost Overblown
Morse also claims that currently a quarter of the retail cost to consumers for concentrates can be attributed to testing.
“By the time a product gets to a retailer and is sold to a customer 25% of the cost of that product is attributable to testing.” explained Morse. “First you have to pay the testing on the flower, then you have to take it and test the oil again, and that’ s where the cost increases dramatically.”
He explains that the initial cost of the testing gets multiplied by normal business mark-up, though it is a struggle to follow his math. We are not alone. John Thompson, better known as J.T., of Sublime Solutions in Eugene, Oregon thinks the accusations of collusion are ridiculous.
“That’s completely a fallacious and scurrilous argument,” said J.T. Of Sublime Solutions. “With Process Validation approval, soon I will be able to make batches of 28,000 grams. What my client is going to pay is just a few pre-screening costs and for the compliance test, which will cost about $700.00.”
The testing and batching cost of the cannabis flower is .10 to .20 cents per gram according to most growers and labs. Some batches that are larger can be as low as a nickle per gram. A very small garden can expect to pay no more than .20 cents a gram to test and bag their cannabis flower by a lab. A batch test on concentrates can be more expensive due to the sheer number of tests required, but a “batch” can be many pounds which can bring the cost to well under a dollar per gram on concentrates. The absolute worst case is $5.00 per gram for testing, which is admittedly high for 16 ounces, or 454 grams, of shatter.
But, the reality is, after a few tests a reputable processor can submit a control study which will allow concentrates to be tested for the same rate per gram as flower. Eventually, with the more robust Process Validation method the OHA recently temporarily replaced with the Control Study method, a cost of under .03 per gram for testing would be normal.
As for pesticide levels, J.T., has had no problems with pesticides since they started strictly pre-screening materials before processing. Before that, they had one batch fail, which prompted the implementation of their strict pre-screening protocols. Now they operate under a control study which validates their methods and allows for two sample test to cover up to 4,000 grams of product. At $700 to $800 for the two tests, the cost for concentrate testing drops to .20 cents a gram.
“This current push about pesticides, it’s coming from a small number of people that are crying ‘oh it’s so expensive’ and it actually isn’t when you consider what the margins are,” explained J.T. “This is normal business cost, and if you can’t budget for it, and have a model that’s going to make you competitive, that’s your fault and you’re not going to be competing on the playing field too long.”
In reality, the tests could be more comprehensive than they are, which would drive up the costs even more. The OHA dropped mold testing all together, which seemed extreme to many, but that removed a time-consuming test from the regime. They still must do half a dozen chemical analyses of the plant—including solvents, cannabinoids and water activity—and screen for a number of pesticides.
“We are looking for only 59 compounds. In the ‘other world’ of testing, like under the FDA, there are almost 300 compounds that you have to look for,” Voelker explained.
The main changes in the rules will require concentrate manufacturers use flower that tests clean of pesticides, which any reputable processor should already be doing, but only have a single batch screened for pesticides annually. That is a dramatic difference from 8 separate sample tests per batch of concentrate, especially when a minimum of 26% of the concentrates are failing pesticide screening, and very likely a much higher percentage than that. Its also very dramatically less than the very cost effective control study method that most reputable concentrate manufacturers are receiving. Morse himself admitted that concentrates products are testing positive from cannabis that was supposedly clean which just demands the final product needs testing.
A Step Backward For Oregon Cannabis
“These draft rules are absolutely 180 degrees the wrong direction for health and public safety in Oregon,” explained Caleb Hayes of Oregonians for Public Health and Safety, a new Political Action Group advocating for safe cannabis testing and funded by growers, processors and laboratories.
“But Also, these rules are also 180 degrees the wrong direction for the cannabis industry in Oregon. This is going to lead to news stories of contaminated cannabis in the market, and that will have a chilling effect on our economy in the cannabis space.”
There is a growing sentiment that tainted cannabis will cost Oregon’s cannabis market a lot, in the end. The image would not be good for the market and could draw the attention of federal regulators if Oregon has a state sanctioned system with pesticide contaminated products being sold to the public. Eventually, an interstate market would depend on clean cannabis, as well.
Cedar Grey, a grower and processor from Williams, Oregon who sits on the Rules Advisory Committee that recently met regarding the testing, believes its a terrible decision to relax testing rules. His sungrown cannabis and extracts from Siskiyou Sungrown have no trouble passing the testing regime.
“Its apparent there’s a problem,” Grey explained to OCC. “Over 50 percent of the concentrates and extracts [my lab] tested from OLCC licensees failed for pesticides…In my opinion its barely better than no testing at all.”
One problem the industry has seen in Oregon, and elsewhere, are pesticides on cannabis in the market. NBC Channel Four in Los Angeles exposed a pesticide problem in California’s cannabis market. Without a regulated testing system there is no way to prevent similar problems here, or clean up the ones that already exist.
“For good actors in the industry these rules are not necessary, but you see from the amount of banned pesticides in products that there are bad actors in the industry and these are the ones these rules are intended for,” Grey explained. “So if we remove the requirement to test every batch of pesticides and concentrates then we are removing the incentive for the bad actors to change their practices and clean up their product.”
“The problem with these new proposed rules is that it cuts out the entire portion of the rules that actually promoting the development of appropriate good manufacturing practices,” Voelker from OG Analytical told OCC.
With a turnaround time of a week, there is no longer a “back-up” at Oregon’s cannabis testing labs. Even with a pesticide test failure rate of 33 percent at some labs, cannabis flower is in pretty good supply on dispensary shelves. The shortage of cannabis extracts and concentrates is due to pesticide failures, not a testing backlog. The facts don’t seem too support the recommended rules changes that are being considered unless you favor the businesses bottom line to consumer health and welfare. The realities beg for no changes at all, and possibly stricter reporting requirements from laboratories on pesticide failures and even expanding the list of pesticides for which they should screen.
THEY ARE TAKING PUBLIC COMMENT ON THESE CHANGES
Comment period on these changes runs from March 15 through April 30. Email firstname.lastname@example.org
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