Oregon cannabis regulators approved a final rule Nov. 17 to address gaps in the regulated laboratory testing sector that have drawn licensee complaints about THC potency numbers in the competitive state environment.
Under the new rule, the Oregon Liquor and Cannabis Commission (OLCC) may require a licensee to submit samples identified by the commission to a laboratory of the commission’s choosing to be tested in order to determine whether a licensee is in compliance with the cannabis testing.
Despite a push by some industry players to offer education on terpenes and minor cannabinoids, and how those compounds embody the benefits and effects of the cannabis plant, consumer demand trends continue to gravitate toward THC potency. In turn, producers and processors fighting for shelf space have driven lab testing business by shopping around in many state-legal markets.
In Oregon, where state regulators implemented a cannabis licensing moratorium earlier this year in response to a “crowded marketplace,” OLCC officials took action last week to address the validity of cannabis test results, especially for THC content, and to fill the voids that have led to lab shopping.
“There’s a lot of voices that don’t want THC to be the sole factor, and the skewed THC is something the consumer fixates on, and it’s not fair,” OLCC Commissioner Matt Maletis said in a news release.
While the OLCC has had audit testing authority since the inception of Oregon’s cannabis program, gaps preceding the rule change include a lack of clarity on:
what happens if a discrepancy between an original test and audit test exists; and whether OLCC can require licensed labs to provide samples directly for testing.
The rule change, which will take full effect on Jan. 1, 2023, will resolve those ambiguities, TJ Sheehy, OLCC director of analytics and research, said during last week’s commissioners meeting. He stressed the new rule is in addition to the other regulatory tools OLCC currently has and will retain.
“The proposed rule closes these gaps by, one, clarifying laboratories’ role in this as well as requiring them to retain samples for a minimum period of time after they report results, so we have access to the actual material tested,” he said. “And then, second, creating better structure and clarity of what happens in regards to potency testing if we identify a big difference, and when that difference is ‘big enough’ to take action.”
Sheehy went on to explain the competitive advantage of high-potency numbers and how the rule change comes as there has been a “significant” uptick in complaints from labs about other labs as well as licensed producers/processors about other licensees related to the “gaming” of potency testing.
“The laboratories do the sampling of material, but they’re also selected by the licensee to do testing,” he said. “So, that creates an incentive structure where licensees vote with their feet to get the highest results so that they can get the best shelf space.”
The new rule will also establish a round-robin testing program where all compliance tests done on or after the Dec. 1 effective date would be eligible to be checked under the program.
With testing as a cornerstone to the legal cannabis industry to help ensure consumers know what they’re buying, Sheehy said the incentive structure for lab results needs to be flipped.
“Again, the fundamental problem here is the incentive structure in the industry,” he said, “which this rule is trying to flip, so that instead of going for the highest result it’s going for the most accurate result.”