Despite last year’s pandemic challenges, Nevada’s cannabis industry has remained resilient and is now poised to make a resurgence this year due to strong demand.
Observers have deemed that the long-term potential of the cannabis industry remains intact across the country despite perceived economic uncertainties.
A recent report from Marijuana Business Daily projected that the total U.S. sales could rise as high as $37 billion by 2024. It further cites Nevada as among the most promising markets, including Florida, Maryland, Oklahoma, and Pennsylvania.
Insiders, however, are privy to the hurdles that continue to pose risks against the industry’s growth in the state.
What’s holding us back
The cannabis lab testing segment, an essential part of the cannabis ecosystem, has been marred with controversy in recent years.
In Nevada, some labs have been involved in results manipulation, “lab-shopping,” and other fraudulent activities. These bad practices diminish the involved lab’s reputation in the industry and others in the segment.
The controversy now threatens to stunt the growth of an industry with so much potential.
“(The labs) are supposed to be the ethics of the program, the watchdogs,” said marijuana policy lobbyist and Scientists for Consumer Safety Executive Director Will Adler. “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.”
Earlier this year, a Las Vegas-based marijuana testing lab was found to have been:
- Routinely passing samples that had previously failed testing for pesticides, mycotoxins, heavy metals, and microbials, all regulated contaminants. Samples, which are supposed to be tested once, were sometimes tested up to five times before “passing.”
- Routinely inflating THC levels up to 5 percent higher than the actual THC levels. THC potency is known to drive higher retail prices.
- Failing to properly dispose of more than 12,000 samples.
- Failing to properly train lab employees, who were found to lack competency in, not only conducting tests but, analyzing data.
- Failing to provide proper security and record-keeping at the lab facility.
A complaint filed by the Cannabis Compliance Board noted: “Rather than protecting consumers through accurate and honest testing, Cannex implemented testing processes that were designed to protect the monetary assets of their clients without regard for consumer safety.”
Clinical lab expert Malorie La Fuente pointed out that ensuring the safety of cannabis goods is akin to protecting the industry as a whole.
“Even as a recreational substance, more and more people are choosing cannabis and if we don’t protect the industry, we could potentially risk moving backward from the progression we have already worked so hard to create,” she noted.
La Fuente, however, clarified that it’s not always the laboratory’s fault.
“Basically businesses were and, in some states, still are allowed to say, ‘I don’t like the results from this lab so I’ll have another lab test my products’.”
She also added that some of the manipulations of the results may have been more innocent than originally portrayed.
“They had the wrong staff running the place or were using unreliable testing methods, etc. Flowers with the highest THC concentration are always the biggest sellers so whatever lab gave the highest results was the most popular. Based on my experience, laboratories and their staff are not always portrayed as the good guys. We are often misunderstood but I consider us lab professionals as heroes that work behind the scenes.”
The issue has become a prevalent problem in other parts of the country as well, leading experts to call for a standard lab testing practice in the U.S.
Finding, offering solutions
La Fuente, who has a decade of experience in managing and operating hospital pathology and reference laboratories have founded her own lab testing startup Desert Cannalytix.
“Protecting the industry means regulating and maintaining transparent and safe goods for consumers,” she noted.
In establishing her own lab facility, La Fuente also intends to address other issues experienced by cannabis businesses in both recreational and medicinal industries.
“I have heard that lab customers have to wait extensively for results, some report up to two weeks before testing completes,” she lamented. “My view is that the lab testing and methods used should not take that long. I can’t even imagine the trouble we would have been in if lab tests took that long for patients. Turnaround times are strictly monitored in a clinical setting, where delaying results could mean the difference between life and death or inappropriate treatment.”
La Fuente commended the creation of a Cannabis Compliance Board to govern Nevada’s cannabis industry as it has held any labs accountable for their wrongdoings.
She recommended that it would be helpful if labs themselves report unacceptable results directly to a governing body to remove any conflict between a lab and its customers.
“If there’s mold growing in a product, for example, this sort of thing needs to be monitored,” she explained. “If one specific cultivator consistently is not meeting standards with making unsafe products, this should be investigated further.
She also proposed that the compliance board should have its team of inspectors who are qualified to inspect any facility in the cannabis space.
According to La Fuente, not even half of the labs that have operated initially in Nevada are still operating. Those who have, have stagnated and stayed pretty much the same when they started at the beginning of cannabis legalization.
When she visited some of the more established labs, she reportedly cringed at some of the things saw.
“I also noticed they were using a regular kitchen fridge to store samples and reagents. There are specific refrigerators and freezers specifically made for the lab/ pharmaceutical industry with alarms that alert if temperatures fall out of range.”
She noted how everything had to be planned for from the beginning as there are lab safety standards that call for having sufficient space.
Initiating change in the CBD/hemp lab testing segment
La Fuente revealed she knows exactly where to start to create an immediate impact.
“Nevada was one of the original pioneers in cannabis legalization,” she said. “Knowing this, and already living in Las Vegas, I almost immediately saw an opportunity to jump in and be a part of the cannabis revolution.”
The plan is for the startup to build a state-of-the-art testing lab in Las Vegas to initially serve the CBD/Hemp industry before expanding to other markets.
“I had an idea to change our business model to strictly service the CBD/hemp market and any other future plant medicines potentially coming down the pipe. I knew the market was just as large, if not larger for CBD/ Hemp.”
According to La Fuente, her team plans to revolutionize the industry with the latest testing technologies and protocols, which includes a proprietary machine-learning app that organizes, maintains, and tracks all processes.
“We really feel our app has the potential to benefit the industry by connecting all of its parts into one source. We pride ourselves in our transparency of knowing what is going on at every step of a process. It’s a way to incorporate the beauty of AI to monitor trends and maintain organization within huge operations. Most successful companies and industries are incorporating this same technology into their workflows. It’s time to get real-time tracking into an industry in deep need of a central source of information.”
Desert Cannalytix is also hoping to influence change by setting a good example.
“By having open & transparent relationships with the cannabis industry and its governing bodies, it’s a form of giving back to not only the laboratory profession but to the community. Transparency is one of Desert Cannalytix’s core company values.”
To fulfill La Fuente’s vision, Desert Cannalytix is currently raising money via equity crowdfunding on the FINRA-regulated Fundanna.com, where everyday investors can invest as little as $150.
“Well-operated cannabis testing labs are the most secure investment to make in the cannabis space. The cannabis industry is definitely glamorous and can have passive trends, but testing isn’t going anywhere. Other future plant medicines and its producers are future customers.”