Exactly what the new regulations will entail is still up in the air, but we do have some indications about changes that will be implemented based upon the current draft rules. The draft includes, amongst other things, a list of 66 pesticides, 22 solvents and heavy metals that we will test for. Regulators have also provided some color on the proposed California process which happens to be similar to what we are currently doing in Oregon.
We are also aware that new pesticide rules will be released in November, which will provide some additional clarity on the upcoming regulatory environment. It is anticipated that the next iteration of pesticide rules when they arrive next month will increase the action levels (the levels at which pesticides result in a test failure). In Oregon, approximately 25% of extracts and concentrates failed during the first months of new, stringent pesticide testing rules, and the action levels in Oregon are higher than what California is proposing.
This is particularly important for growers to recognize and address as quickly as possible because failed tests obviously eat into the bottom line. The good thing is that there is a decrease in the failure rate throughout the year as growers learn what not to do with their plants with regards to pesticides and manufacturers become more discerning about their source of product.
Although it’s a lengthy list of solvents that we will test for, we don’t run into too many failures from qualified manufacturers, provided they make sure that their product is finished well. In Oregon, ethanol was finally taken off the list because it is impossible to have a tincture without it.
We also will be testing for the heavy metals Lead, Arsenic, Mercury and Cadmium; microbiologicals (i.e. salmonella, aspergillus, e. coli); mycotoxins; water activity and flower moisture content; and filth and foreign material to ensure a consistently safe consumer product. When it comes to plant matter, testing for water activity is done first. If the water content is too high, the sample fails and we won’t test again until the flower is sufficiently dry.
In general, we suspect the process is likely going to be similar to other states today. A typical scenario goes something like this. A distributor contacts us to request testing. The distributor is responsible for chain of custody and thus indicates in METRC that samples are properly prepared for testing. They will complete documentation indicating requisite testing.
Our personnel prepare a sampling plan based upon the provided testing information and then go pull samples from batches at the distribution point. The temporary rules in CA provide guidance on the sampling process, such as pulling product at specific increments randomly throughout each batch. Again, the distributor is responsible METRC input, with our team tagging and labeling product.
At the lab, the comprehensive testing process begins, with each test requiring its own methods and equipment. We duplicate each test and look for variances to ensure the results are consistent, without large deviation. Lastly, we analyze the data, run it through a long list of quality checks, prepare and deliver certificates of analysis to the customer electronically and submit notification of test results in the METRC tracking system.
We use an online portal (www.confidentcannabis.com), where customers can see all the test results, as well as utilize other services, such as viewing testing statistics from across the U.S. and a wholesale price module that allows for market price comparisons of similar products.
Once the data is uploaded in METRC, the batch is officially able to be released for sale and transfers of tested product are allowed through METRC.
That’s the condensed version and we’ve drawn some conclusions based upon our expertise of laws in states that we already conduct business, our best practice policies and draft proposals already brought forth in California. One thing is certain; it’s going to be a dynamic, vibrant marketplace, the biggest in the world in fact, and we foresee very regimented regulatory oversight with respect to all aspects of the market, including the testing arena.