The cannabis industry is currently in a state of flux, which inevitably means most businesses are in a state of panic. It’s essentially been this way since the onset of the Medicinal And Adult Use Regulatory And Safety Act (MAUCRSA). But the industry recently faced another deadline implemented by the Bureau of Cannabis Control (BCC) that reignited the mayhem. July 1 marked the end of the transition period, meaning all products require testing to be sold in retail stores. The products on shelves, however, must be removed from the store and destroyed, unless they’ve been tested by a licensed lab and have the paperwork to prove it. As a result, dispensaries have offered month-long sales offering as much as 80 percent off to get the products off their shelves—better enjoyed than destroyed, right?
According to New Cannabis Ventures, in March 2018 there were 599 licensed manufacturers, 892 cultivators, and over 800 dispensaries, but less than 30 licensed lab-testing facilities. Somehow, those 20-someodd labs are supposed to fulfill the needs of all the licensed manufacturers and cultivators. Since January it’s been speculated that licensed cannabis companies will experience major problems since most labs are predicting a shortage of testing services, long waits for results and, of course, delays in getting approval to sell the products.
Labs aren’t backing down to the tidal wave of work, however. Located in Santa Ana, Cannalysis (pronounced analysis with a hard-sounding “c” at the beginning) is one of the 30 licensed labs ready to take on the challenge. It’s currently the only lab in Orange County, which is fine for now because most of OC upholds prohibition. But that doesn’t mean Cannalysis isn’t slammed with work.
We caught up with Swetha Kaul, the chief scientific officer at Cannalysis, to talk about all things lab testing, the issues she sees with the current lab testing requirements and if everyone actually destroyed all their products after July 1?
OC Weekly: When was Cannalysis founded?
Swetha Kaul: The company was actually founded in Costa Mesa back in 2015 by Co-Founders Brian Lannon and Tyler Autera. Obviously this was pre-regulation, but they started with the idea of the new law being on the horizon and lab testing being an important piece of the puzzle. So they began to build something that would be at the forefront of that. But we began our licensing process to open Cannalysis in Santa Ana back in January, and we didn’t receive our city and state licenses until a month ago. It’s been a journey.
OCW: How has business been over the last month?
SK: We are experiencing an influx of business right now! We have over 200 different accounts. A limited amount of them are actually licensed, though, so we are coaching them. But we can’t provide services to them yet. Of the ones that are licensed, we’re going to have quite a few samples to test so I guess that kind of makes up for the difference
OCW: What makes Cannalysis different from the other few labs that exist?
SK: One way is that we are also a tech company. We build software to make data analysis and all the processes easier. We try to eliminate manual data entry and anything where the lab technician has to write something down as much as possible. We use barcodes to link all of our samples to each other in the lab. So, every vial you pick up or see will have a barcode on it, and when you scan the code it’ll tell you exactly what the product is, who manufactured it, and what primary sample it’s linked to.
We are big on using technology to the point where now we’re expanding and have a director of robotics and operation. So that’s a huge piece of the puzzle of getting compliant and ready for the next coming year, and using as much robotics and automation as much as possible to make the processes better and more efficient.
OCW: What’s been the biggest struggle about getting licensed?
SK: So, last November the Bureau of Cannabis Control released the Emergency Regulations, which everyone in the industry’s been abiding by. Then, this past June 8, they released a revision to those regulations. That is now the new law everyone must abide by in order to be compliant. There were things that changed and with the July 1 testing requirements, it created a very small window of time to alter and fix things. There were some changes that we needed to implement in our lab to by July 1, which made me wonder if they’d thought about the timeline on all this? It takes a lot of work getting all things in place. And they haven’t released the final regulations yet so who knows if there will be changes to come that we’re going to have to implement. But change is the essence of this industry, so we’re maneuvering through it as best we can.
OCW: How does the July 1 transition period cut-off effect you?
SK: There was a lot of misunderstanding around the July 1 deadline. People just assumed that they didn’t need to test until July 1. But what the regs actually say is that all product that was harvested or manufactured before Jan. 1, 2018 doesn’t require testing. But if you’d manufactured or harvested between Jan 2018 and July, you’re required to have those products lab tested. So all products require testing as of July 1, which is a big change. It doesn’t matter what the product is, if it is on a retail shelf it needs to have a full compliance test. And if it doesn’t, you’re responsible for either re-testing and remediating or destroying that product.
But let’s be honest. I mean, how many people are actually going to destroy their product? Or are we actually just helping the illicit market by doing it this way? I’m not sure. I don’t know how they would know for sure if a product was destroyed, considering Metric, the name of the state’s track-and-trace system, isn’t up and running yet for people with temporary licenses—and labs only have temporary licenses.
OCW: Are there any areas of the lab testing requirements that need to be changed?
SK: I already know there are things in the testing requirements that are going to need fixing. So I come from the pharmaceutical and food industries, and we usually test the total count of pathogens. So, you’re looking at total yeast and mold, or total E. coli and chloroform. But for some reason the BCC is not doing that.
OCW: Oh, please elaborate.
SK: So, we’re supposed to test solvents and pesticides and all of those things, but the BCC decided to only go with four Aphrogillus mold species, salmonella and shigatoxin E. coli. So those are the only things outside of pesticides and residual solvents we’re testing for. But, because of my scientific testing background, I still test for the total counts of things—the way we do in the pharmaceutical and food industries—and now I’m in a situation where I’ve had product that’s tested positive for yeast or chloroform or even different kinds of mold, but they don’t test positive for the specific species the BCC outlined. The client will be like, ‘So I passed, right?’ and I’m like, ‘NO ONE SHOULD BE SMOKING THIS!’
OCW: So there’s a loophole?
SK: Exactly. So the basis of this problem isn’t that the microbial regulations identify the species level of what needs to be watched out for. The problem is that the species list the BCC identifies is very narrow, which creates a loophole in which all of the other stuff can slide by because it’s not going to show up. So, for instance, one of the most common molds that attack cannabis is botrytis, but we’re not even testing for that. People shouldn’t be ingesting this kind of stuff. Although yeast or mold might not kill you, it’s definitely not good for you. And if you have long-term exposure to it and change its chemical makeup by heating it up, there could be some negative consequences down the line.
OCW: How can we fix this problem?
SK: Education. We need to let the BCC know. Scientists and those working in labs have a responsibility to bring this up to them. But I want to be clear that I’m not asking for more testing. I’m just genuinely curious as to why we are not looking at more than just these very narrow listed of species outlined in the regulations. Also, here’s the thing: the tests to look for the species in the regulations requires equipment that can look at DNA, which are expensive. But when you look at total counts, all that needs to be done is see what grows petri dishes, which is very cheap and easy to do. It’s the traditional way testing’s been done, and it can reduce the cost of the microbial testing for businesses. Most importantly, though, it gives you an overall idea of what kind of crap is actually in your stuff. I think this is more relevant for a new industry. It’ll help us collect the proper testing data, too. That’s why this issue exists: because we don’t have the proper data of what we really should be looking for.
