Tactics used by California cannabis businesses as they transition to new testing requirements

marijuana testing

In January, California’s licensed marijuana cultivators and concentrates and infused product manufacturers will be required to test all harvested cannabis and marijuana products under the new so-called Phase 3 rules, which are detailed in this related story.

These are the latest in the state’s cannabis compliance testing and are already causing some marijuana businesses concern.

Sources shared the following tips for California’s cannabis cultivators and product manufacturers that are navigating this transition.

Start testing now.

All cannabis goods harvested or manufactured before Dec. 31 can be sold if they meet Phase 1 or Phase 2 testing requirements. But that doesn’t mean companies should delay testing for Phase 3.

Industry experts suggest businesses should expect longer turnaround times for products – at least initially – as cultivators, product manufacturers and laboratories adjust to the new requirements.

Make appointments to have products sampled for testing as soon as possible, advised Lori Glauser, the chief operating officer of Evio Labs, a multistate laboratory with a Berkeley location.

John Oram, the president and CEO of Nug, a vertically integrated cannabis company in Oakland, said now isn’t too late, or too early, to start Phase 3 testing.

Conduct R&D tests.

Research and development testing – also known as in-process testing – allows cultivators and manufacturers to have products tested for all required categories, but the results aren’t reported to the state.

Only the results of final compliance tests are reported to the state, and failed final tests cannot be appealed.

Product that fails compliance testing must be remediated – flower sold to be processed for extraction, for example – or destroyed.

Many cultivators, manufacturers and lab workers recommend doing R&D tests.

R&D tests can give a company more time to consider how to remediate a large failed batch of flower or can prevent a business from using contaminated oil in infused products or manufacturing equipment, said Clayton Coker, the cofounder and head of product at Somatik, an infused products manufacturer in San Francisco.

The key to a good R&D test is obtaining a representative sample of the product, said Emily Richardson, the vice president of business development at CW Analytical, an Oakland-based cannabis testing laboratory.

A few grams of trim from one large batch is likely not representative of the batch, Richardson said. A lab should be able to tell a company how to take a representative sample, she added.

Glauser at Evio Labs said she also recommends growers purchase their own water-activity meters to verify water content in their flower before they package it.

“This is a modest investment and easy to perform in advance of a sampling,” she noted.

Bank inventory so you don’t slow cash flow.

“Some cannabis businesses, including mine, have been around more than 10 years, but we’re all still startups,” Nug’s Oram said. “And with any startup, cash flow is more important than anything else.

“When you get product to market and when you get revenue back in is important. When you include testing in the cash-flow picture, it slows things down, and Phase 3 is going to slow it down even more.”

To survive, he said, businesses should have inventory to draw from to place big orders.

“My strategy and my advice to others is to move away from ‘just-in-time’ production, sales and distribution models, and to move toward having compliant standing inventory,” he said.

“Even if there’s a backlog at labs, you can preserve cash flow because you have standing inventory to draw from. That’s a huge fundamental shift and a different way of thinking for some cannabis businesses – but a successful cannabis business has to.”

Joey Peña can be reached at [email protected]

One comment on “Tactics used by California cannabis businesses as they transition to new testing requirements
  1. Rick on

    Excellent article. And great business advice, too, considering that Phase 3 testing will probably become the national standard when cannabis is federally legalized.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *