Our take on Lab Shopping and Bogus Lab Purity Results

The one concept that convinced even the most resistant politicians to cannabis legalization was the argument that, if cannabis were to be legalized, at least cannabis consumers could feel safe from any possibility of toxins hidden in their Medical Marijuana and be certain of the percentage dose of THC in the cannabis products they were buying. However, Lab shopping showed up. Lab Shopping is the practice of offering (shopping) a cannabis product to different testing labs and then ultimately partnering with the lab that offers the most favorable test results¹. Lab shopping can lead to fraudulent products, consumer deception, and loss of trust in the regulated market².

Lab shopping is still a thing in the US in 2023, but it has become more difficult and riskier due to several factors, such as:

• The implementation of prescription drug monitoring programs (PDMPs) in all 50 states and the District of Columbia, which track controlled substance prescriptions and help identify suspicious patterns³.
• The adoption of laboratory information systems (LIS) that enable electronic exchange of laboratory data among different stakeholders, such as regulators, labs, and producers⁴.
• The introduction of standardized testing protocols and methods for cannabis labs in some states, such as California, which require all labs to use the same cannabinoid test to ensure consistency and accuracy⁵.

However, these measures are not enough to eliminate lab shopping completely. Some experts suggest that consumer education, industry collaboration, and stricter enforcement are also needed to address this issue⁶

Due to out of control “Lab Shopping”, THC inflation and most importantly, bogus lab purity statements, many cannabis consumers in legalized states, still don’t know what they’re getting. And from the production end of the cannabis industry, many licensed growers and producers have been left wide-open to heavy losses after government audits of their products FAIL.

A licensed indoor grower for example, puts his trust and money to pay a government licensed or “accredited” independent laboratory to make sure his product is compliant, that it has an accurate THC percentage count and is free of toxic biological and chemical impurities like pesticides, herbicides, mold, and microbial infections.

His lab comes back with a glowing report that the THC count is higher than expected AND is clean—that is, free of any toxic impurities. Then a random state government lab audit is run on a sample from the same batch—which in most cases is in the hundreds of pounds—and the sample is found to be lower in THC than claimed, AND also includes sky-high levels of toxic impurities way over state limits. The grower is ordered to recall and destroy the whole batch and in many cases is slapped with a huge fine, while the lab itself loses its license or “accreditation” and is put out of business.

It’s not a pretty picture. Sadly, this scenario still occurs in states where cannabis has been legalized but mostly in the original legalized states of California, Oregon and Washington. Millions of dollars in potential profits for licensed growers, concentrate producers and dispensaries have been lost and literally go up in smoke due to fraudulent laboratory reports.

Outdoor growers know they cannot be insured against these heavy losses.

Indoor growers however, including greenhouse growers and concentrate producers who can obtain Product Liability policy coverage by specialty cannabis insurance agencies but delay in doing so, (thinking surprise government audits and inaccurate lab reports will never happen to them), are hurt financially when they are forced to recall and destroy their uninsured products.

Licensed indoor producers however, who have the foresight to obtain Product Liability insurance realize they need a cannabis-specialty insurance agency to successfully fulfill their insurance claim, should they need to make one.

Standard insurance agencies are not equipped, and do not have the knowledge or expertise needed to prove their clients were not at fault for trying to sell their tainted products because they unknowingly hired a lab which fraudulently passed their products for purity.

The irony of these situations is that, by the letter of the law, labs are not doing anything illegal at all because lab testing for purity, and THC percentages is such a new science, that labs are allowed by most states to make up their their own rules and parameters for determining purity levels and THC percentage content!

“How the scientist interprets the output and reports the results, is up to them.” Oregon Health Authority audit, 2019, Oregon Secretary of State

When a grower can fire its lab for producing true scores at say, 16% THC and hire a new lab to give them a much higher score of 30%, this is called, “Lab Shopping”. Many large licensed growers can afford to PAY EXTRA (bribery) for licensed labs who are willing to inflate the THC percentage content of their indoor products. Higher THC percentage content is perceived by cannabis consumers to be more potent, and therefore, more “valuable”.

Producers can then print that percentage number on their product labelling legally because their accredited lab of choice tested it for that. But then, when the product is government audited by its own scientists, and found to be WAY below in THC percentage at true numbers of 16% for example, compared to the 30% on the labelling, the producer FAILS compliance and as a result, is forced to pay heavy fines for doing so. In these situations, the labs themselves lose their accreditation, go out of business, but by then its too late for uninsured producers to recoup their losses.

These labs that go out of business can ironically get back into business under a new company name—legally. They do so because the lucrative opportunity outweighs the risk of being busted again. For labs willing to take that risk, their doors are open to many growers willing to bribe them to inflate their THC percentages and the whole cycle just repeats itself!

Oregon and Washington still do not require ISO certification and this could explain why they are still plagued with Lab Shopping and bogus purity ratings.  In fact, both states actually hire outside vendors to “accredit”—not “license”—labs. The Washington State Liquor and Cannabis Board (WSLCB) for example, doesn’t even employ a single chemist! Instead, it’s all “private enterprise” and their vendor, RJ Lee, runs the show and has “accredited” 13 labs all doing, “their own thing.” 

When it comes to compliance in cannabis purity issues, licensed indoor growers (greenhouse growers are considered indoor growing facilities), and concentrate producers who operate under full compliance, but mistakenly choose a lab with questionable laboratory procedures, can still get nailed for marketing toxic, impure product by state auditing.

But there is a redeeming light at the end of this gnarly tunnel of lab corruption…

Licensed indoor growers, concentrate producers and the dispensary businesses who rely on the latter two, can still be protected!  If they operate under the strict letter of the law, and are fully compliant, but get audited by their state’s regulator, and FAIL in the audit, they may still be able to recoup their losses.

Fortunately, businesses can be saved, and their losses covered IF and only IF they have taken out insurance policy coverage with Product Liability from a reputable cannabis-specific insurance agency.

Cover Cannabis, is the leading cannabis-specific insurance agency and protects licensed cannabis businesses from coast to coast in the United States. Cover Cannabis can insure your indoor facility products with “Product Liability”. This policy protects businesses from loss should their cannabis products be audited and fail for THC % count and, or impurities such as mold, chemical toxicity and microbial counts exceeding state limits due to inept, corrupt or questionable laboratory procedures.

No cannabis business is perfect and even when you are fully compliant and following all of your state government’s regulations, we at Cover Cannabis understand that you can still unknowingly release a “bad batch” into the market. When you put your trust in a lab and end up “flying blind” when it falsifies your test results and passes your product for purity, relying on the likelihood your products will never be audited, but ARE, your lab will suffer the consequences.

But with Product Liability working on your side, your business doesn’t have to!

With over 12 years of experience and expertise specializing ONLY in the cannabis industry, Cover Cannabis is here to help protect your unique cannabis business should you fail compliance, or a purity audit through no fault of your own due to false lab testing.

If your cannabis business is not insured yet or does not have this one crucial cannabis-specialized policy in place, call Cover Cannabis today. Our agents are friendly, knowledgeable professionals who can expertly guide you around the pitfalls like third party laboratory fraud, with our custom Cannabis Product Liability Coverage so you can stay profitable on your exciting journey of business growth in the legitimate cannabis industry.