Arizona is the first state to have a statewide testing program for cannabis. The program has been in effect for one year, but there are concerns that it may not be effective enough to protect consumers.
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The medicinal marijuana industry in Arizona has been operating for more than a decade, but the state just began mandating shops to test its cannabis for safety about a year ago.
SB 1494, the legislation that started the testing, was enacted in August 2019 and took effect on November 1, 2020. Before being put on the market, medical marijuana products must be tested for potency and a variety of pollutants, including microbiological contamination, heavy metals, pesticides, herbicides, fungicides, growth regulators, and residual solvents.
Proposition 207, which legalized recreational marijuana in Arizona, was approved by Arizona voters on November 3, 2020, only two days after SB 1494 took effect. (The recreational cannabis testing procedures in Proposition are identical to those in the law.) COVID-19, which found the Arizona Department of Health Services — which oversees all legal marijuana in the state — distracted by the demands of a pandemic, added to the uncertainty. The Arizona Dispensary Association and other stakeholders urged the governor and ADHS to delay the implementation of SB 1494 until a sufficient number of laboratories were ready for the challenge and recreational sales were started as the November 1 deadline neared.
However, the legislation went into force, and laboratories all across the state started to experience a significant increase in business. Two things were clear: the epidemic was making it impossible for laboratories to get the materials they need, and some dispensaries had been putting off ordering supplies.
“We all began being flooded with samples on Oct. 31, and ADHS was still attempting to codify the rules,” said one lab owner who did not want to be named. “Everyone was trying their best, but it was during COVID, so we couldn’t obtain supplies: we couldn’t get the vials and syringes we needed for testing since they were the same ones they were used for vaccinations.”
The high amount of cannabis being tested caused a backlog, with findings taking weeks to complete in certain instances. To remedy this, ADHS enacted a regulation mandating a one-week turnaround; otherwise, the lab would be penalized the cost of the tests, with the money going into the state’s medicinal marijuana fund.
However, following the first rush, sales dwindled to a trickle, prompting several lab owners to complain.
“We had to cope with it and get through it, and then January 1 rolled around,” one lab owner said. “I’m not sure what occurred, but [company] simply ceased to exist.” Then, on January 28, 2021, the Arizona Department of Health Services (ADHS) stunned the cannabis industry by announcing that recreational sales may begin immediately – far sooner than even insiders had anticipated.
While most dispensaries planned to start selling marijuana in March at the earliest, a few, like 15 Harvest locations run by Tempe resident Steve White, had lineups that extended for blocks. A significant marijuana scarcity was said to exist throughout the state. The worry of shortages faded as the market balanced out — some in the testing industry think revenue fell because dispensaries were ignoring the law and skipping testing entirely — but there were still issues with the system as it tried to achieve equilibrium.
In March, Channel 5 news aired a story on what seemed to be an industry in chaos, with distributors breaking the laws and untested cannabis finding its way onto dispensary shelves, all while state authorities stood by and did nothing.
In the months preceding up to the commencement of obligatory testing, many laboratories spent millions of dollars on state accreditation, according to the article. Three of the six accredited laboratories indicated that testing was down 65 percent to 95 percent in May 2020, one claimed that business had leveled off, and two did not reply to queries for information. Ryan Treacy, the owner of C4 Laboratories, and Barbara Dow, the owner of Pure Laboratories, both claimed that testing had decreased substantially for their labs; Treacy said that testing had decreased from 200 samples per week in November to 80 samples per week in February. They blamed the sharp decrease on suppliers cutting corners and failing to test for everything required by law. Vendors were also accused of switching laboratories or just ceasing testing when they didn’t like the findings.
However, many people on both sides of the dispensary and testing argue that this isn’t a true depiction of what happened. They claim that when the market develops and the regulations change, the issues will be resolved.
“The truth is that Nov. 1, 2020, was less than a year ago, and our member dispensaries have been open for nearly a decade,” said Arizona Dispensary Association Executive Director Sam Richard. “Our members have been working with the people at ADHS for the better part of a decade on regulatory and compliance issues. As a result, I believe the lab community will experience a great deal of dissatisfaction. And I believe that [lab owners] are often venting their anger on the incorrect portion of the ecosystem.”
Several dispensaries voluntarily recalled a few of items tested by OnPoint Laboratories in Snowflake that were suspected of having salmonella and Aspergillus (mold) in June, despite the fact that ADHS is still investigating the issue. Because the OnPoint inquiry is still continuing, ADHS Communications Director Steve Elliott declined to comment. “When significant industry changes occur, such as the new state legislation and the availability of laboratory testing, our first emphasis is on identifying problems and providing technical assistance to help licensees come into compliance,” he said in an email. “This is the situation.”
He noted that penalties might be imposed if a dispensary continued to be inadequate, but that revocation of a dispensary license would need “unwillingness to comply with the law.” OnPoint did not respond to emails or phone calls, but in the aftermath of the May recall, OnPoint CEO Jeff Cardot praised DHS and its testing requirements, saying, “While this recall was issued out of an abundance of caution, it exemplifies the excellent teamwork of the agency, the labs, and the cannabis companies that serve Arizona consumers.” Although this is the first time the testing program has shown any issues with Arizona’s cannabis supply, many in the industry think it is just part of the business’s learning curve.
“Watching dispensaries perfect their art while toeing the line as regulations are determined upon and pushed out has been very impressive,” said Nate Allen, proprietor of Delta Verde Laboratory in Phoenix. “On the rare occasions when we’ve discovered something potentially dangerous in a quantity or that indicates a discrepancy with a label claim, I’ve seen firsthand the lengths to which these license holders and industry go to correct it, not only to ensure it doesn’t end up on retail shelves or in the hands of a consumer, but also to methodically seek out the source of it and work to prevent it.
Delta Verde is the state’s oldest testing facility, but going into that line of work is not for the faint of heart, since it requires millions of dollars in buildings, equipment, and highly trained personnel. Delta Verde is not completely accredited, although it may offer clients with “full-scope compliance” testing. The regulations, according to Allen, enable him to contract out heavy metals testing, which is the one thing he can’t perform in-house. Testing costs dispensaries hundreds of dollars each month, with tests ranging from $500 to $600. According to Richard, an average dispensary/licensee needs 100 to 150 tests each month.
Richard thinks that the flow of business to the laboratories is built in part on long-term connections, and that everyone wants safe goods on the shelves at the end of the day. “The majority of operators have identified a lab partner with whom they are pleased to collaborate,” he added. “We do all we can to be compliant and completely legal participants in a regulated market because that is what distinguishes us from the illegal market.” Even system opponents think ADHS is on the right road, but that it should be more open to sector input and more aggressive in enforcement. C4 Labs founder and CEO Ryan Treacy stated, “I believe there’s some tightening up that has to be done for us to have a more dependable and strong program.” “There has to be education, enforcement, and normalization for individuals who are testing goods, as well as for ADHS to those who are accountable for ensuring sure the testing is done as it was set out in the law and as intended,” says the author.