Before recreational marijuana became legal in Nevada, one of the main arguments for legalization was consumer safety.
If there was a legalized market, the product would be regulated, consistent and, above all, safe. That was the goal, said state politicians and officials at the advent of the market in 2017.
It’s become clear, however, that consumers are not always getting what they’re paying for. Some labs are doctoring test results, according to recent public notices from the Nevada Department of Taxation, which regulates the legal marijuana market.
Labs appear to be hiding flaws, such as spikes in mold and yeast in the marijuana, and inflating the readings of tetrahydrocannibinol, or THC, the compound that both gets people high and often makes pot more valuable.
One lab in Sparks had its license temporarily suspended in November for misrepresenting THC tests, and a Las Vegas-based lab this past weekend had its license indefinitely suspended after state officials discovered elevated levels of yeast, mold, fungus and bacteria in products that were tested at the lab. Taxation officials sent out a corresponding health advisory regarding possibly affected products.
„(The labs) are supposed to be the ethics of the program, the watchdogs,” said Will Adler, executive director of Scientists for Consumer Safety and a marijuana policy lobbyist. „The whole point of the (state) program is the lab testing. What is the point of the program without it? Then you’re just buying off the street.”
State officials thus far have not been telling consumers the extent of the issue, either. It’s unclear how many tainted products have been sold to consumers.
„It becomes a public safety issue that everyone should be concerned about,” said Jim MacRae, a Washington state-based data analyst who in September notified Nevada officials that their own records indicated a corrupted industry. „(Nevadans) are paying good tax dollars for this market, too.”
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State officials later confirmed to the Nevada Current that MacRae appeared to be right: Certain labs likely were manipulating their data.
Two days later, the state notified labs that they would be inspected. The results of those inspections have yet to be released.
„People are looking for a competitive advantage,” said Alec Garcia, managing partner of 374 Labs in Sparks, one of the nearly dozen labs licensed to test cannabis in the state.
As a lab that has been keeping its numbers true, Garcia said, 374 Lab has found it frustrating since clients — marijuana growers — are comparing their numbers to other labs whose numbers might be advantageous, albeit false. Not to mention, Garcia added, the consumers are the ones who could be adversely affected if they consume product that hasn’t been properly vetted.
„There are loopholes, and industry will find those,” Garcia said.
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While labs that are falsifying test results are being scapegoated for a tainted market, industry experts say that the labs are not entirely to blame. Cultivators that grow the marijuana plants are often the ones pressuring labs to alter the numbers, and dispensaries are often the ones pressuring cultivators for the most potent product possible.
„The pressure is there, but we have to identify where the pressure is coming from: That’s coming from the consumer,” said Chris Rebentisch, CEO of a Las Vegas-based cultivator and producer, 1933 Industries.
Because the legalized marijuana market is still relatively new, many consumers are simply looking for the highest THC content possible.
„What the consumer is asking is: What’s the highest potency for the lowest cost? If that’s what (dispensaries) are hearing all day, then they’re telling the (dispensary) purchasing manager this is what we need,” Rebentisch said.
While the state Department of Taxation temporarily suspended the license of a single lab, Certified Ag labs, for THC manipulation in November, there’s no disclosure of the scale of test fraud. The lab has already reopened after being fined $70,000 and tasked with a corrective plan.
Additionally, there’s no disclosure of what came from those inspections at nearly a dozen labs statewide in October. Consumers are in the dark.
That may be the biggest problem right there, said MacRae.
„Transparency would correct these situations pretty damn fast,” said MacRae.
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How it works
Here’s how lab testing works: A marijuana grower, who is looking to sell to a retail dispensary, by law must first get the product tested.
The lab is required to visit the cultivation site so that the cultivator doesn’t cherry-pick the best product.
„No one is going to send in a bad sample,” said Garcia, of 374 Labs.
The lab randomly selects 10 grams of flower, or raw plant, from a lot, which is usually three to seven plants.
„Visually, you can tell this is a pretty bud, but that doesn’t correlate to bad microbials or pesticides,” said Garcia, who said the lab cannot visually tell which plants are going to pass or fail a test.
The lab tests the sample for THC and other compounds as well as pesticides, heavy metals, mold and yeast.
Tests for THC and cannabidiol, or CBD, are largely to help determine the value of a plant to a consumer. The latter panel of tests — known as quality assurance tests — are to guarantee that the product is safe for consumers.
THC and CBD levels will vary by strain. Quality assurance too will vary, especially if you’re trying to grow a new strain and it may be more prone to mold or yeast, for example.
„It’s not plug and play like people think. We’re trying new things all the time, and if it’s not giving us what we want, we have to go through failure. Failure is progress. You’re going to have to go through failure all the time,” Rebentisch said.
Rebentisch said marijuana cultivation, at the end of the day, is just agriculture. You’re going to have bad batches sometimes, and it’s the labs’ job to catch those.
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„A lot of people think it’s a science; it’s more of an art. There’s a lot of variables,” said Rebentisch, who recalls a time when a fragrance led to a false test for THC in one of the CBD lotions. „We’ve really had to work with the labs.”
MacRae, on the other hand, said there’s really not that much variation, and it’s all about the numbers.
What became noticeable when reviewing state records, MacRae said, is that some labs were never giving failing marks to their clients, the growers.
Based on his analysis, MacRae said it was clear that certain labs had an extremely low rate of samples that they failed. Those same labs were testing samples that had very high THC rates.
In one graphic, MacRae shows that, over time, those labs start to test more and more samples, which could mean their clients are getting bigger, or that the lab is getting more clients.
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„You have to make the argument that every good grower is going to one lab,” said MacRae in a phone interview with the Reno Gazette Journal. „Then you start asking, 'Why is every good grower going to one lab?’ When you start looking at the lab shopping; the growers are going to the labs because they’re coming back with higher numbers.”
The motive for labs to manipulate numbers isn’t complicated: They are trying to generate business, and keep it.
„People don’t like to see bad news,” said Garcia, who added that he’s had clients upset by test results before.
„At the end of the day, they’re farmers. Like in traditional agriculture, you live and die by the harvest,” Garcia said.
If a sample fails any of the quality assurance tests, it could cost a grower $10,000 to $15,000 to lose that harvest, he said.
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„For us, though, we want to help them with quality. We want to help them resolve those issues in the future,” added Garcia.
Because labs are not just gatekeepers of the industry, they also can be assets to the cultivators. They can encourage the growers to cross breed one strain with another to make it more potent, or maybe less vulnerable to mold, said Garcia.
But some growers want to see their samples pass tests and exhibit high THC numbers every time.
„Shelf space isn’t easy to get. That’s why we’re seeing a lot of (business) failures. Knowing how to sell in a legal market is a lot different than putting a sticker on a bag,” said Rebentisch. „To rectify that, the lab is trying to survive and make money too.”
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After state officials announced in October that they suspected certain labs might be altering data, specifically THC, growers started calling up the labs that they tested with.
They called because they wanted to find out whether the labs were doctoring the data.
„The labs that are ethical, are like, 'No, why would we do that?”’ said Adler, executive director of Scientists for Consumer Safety. „And the cultivators are like, 'Why not?'”
„The cultivator would call up Lab B and say, 'Hey, I hear you have higher THC testing scores.’ The day that they move to that new lab, the scores skyrocket from 16 to 22.”
Without the aid of manipulation, cultivators were not nearly as competitive. That’s why Nevada’s retail market, upon first impression, looks quite desirable.
In 2015, when medical marijuana dispensaries first opened in Nevada, 15 percent THC was considered relatively potent, when it came to flower, or raw cannabis plant.
„Now, it’s unsellable,” Adler said. „You have to hit 18 to 20 percent just to get on the shelf.”
More desirable are the 30 percent THC buds, which Adler says are by and large fake.
„The state needs to address this,” said Adler. „Overall, we’re safe, but what we do see here is market fraud.”
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Need for transparency
Those who are looking to quash the corruption in the legal marijuana industry insist transparency is the key.
„It’s challenging for us, and it’s challenging for our clients,” said Garcia. „As the industry matures, though, and bigger companies come online, I think you’re going to see more transparency, and you can only hope that the cream rises to the top.”
But it’s not clear that increased transparency is in the industry’s future any time soon. While MacRae was encouraged that the state responded to his analysis with an investigation of labs, it took MacRae nearly a year of repeated efforts to receive the records that he did, and they were largely blinded, meaning he couldn’t identify the bad actors if he wanted to.
„In Washington, farms using bad labs can be identified and the stores selling product tested by bad labs can be identified and brands using bad labs for testing can be identified and consumers can be informed. Good system. It certainly works for me,” MacRae wrote on his analytics blog.
In Washington, which had similar issues with its lab industry in the beginning, transparency helped consumers become the watchdogs for their own benefit.
They were able to know what they were getting, where it came from, and who tested it.
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Since state officials have begun investigating labs, THC numbers are already starting to dwindle, said Adler.
Rebentisch said he’s noticed that dispensaries too are being more careful about what they buy, and where it comes from.
„They told us if you use this lab, then we won’t buy from you. If you use these labs then we’re comfortable with your test results,” he said.
For the labs that say they have been behaving the whole time, they’re just hoping that it will become apparent that their businesses are honest ones. Without transparent data, however, it’s hard to prove that.
„The regular consumers probably don’t follow this as closely as those that are in it,” said Garcia, agreeing that consumers need access to the data.
State officials could not be reached to clarify whether it would require an act of legislation to disclose more information about lab inspections and test results.
„(The marijuana industry) has this mystique because it’s a new industry,” Garcia said. „But it’s a cutthroat industry.”
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Jenny Kane covers arts and culture in Northern Nevada, as well as the dynamic relationship between the state and the growing Burning Man community. She also covers the state’s burgeoning cannabis industry (Check out her podcast, the Potcast, on iTunes.) Support her work in Reno by subscribing to RGJ.com right here.