Traceability Meltdown in WA – Impact on Product Quality

Product quality has many facets.

In Washington, the quality of regulated Cannabis is largely defined by the QA and Potency testing conducted by state-certified labs.

The regulated market in WA does not allow direct consumer interaction with product prior to sale.  The pretty packaging can be admired but the product cannot be smelled.  It cannot be tasted.  It cannot be touched.  It cannot be sampled.  The consumer can often, however, get a feel for how the product looks through either a window in it’s packaging or a picture on it’s label.

The consumer can neither taste, nor smell, nor experience the effect of product prior to sale (as an aside, this biases the market to smaller packages — e.g., grams over 1/8^ths).

Hence, the importance of the QA and Potency information on the product label.  The simple presence of the product on the shelf tells the consumer that the product has passed a number of Quality Assurance tests required in order to ensure product safety and purity.  The required cannabinoid levels inform the consumer how much THC and how much CBD the product contains.

In the contingency plan laid out by the LCB this week, the labs testing state-legal Cannabis in Washington will begin recording their results in spreadsheets that they will have to maintain daily and submit weekly.

The current version of that spreadsheet allows for the reporting of a single QA pass/fail score, a single level for THC and a single level for CBD.  Under this system, the labs will be reporting only whether the sample passed or failed QA testing.  There will be no ability to centrally report which of the multiple QA tests were failed.

The more important point falls from the decision of the LCB to not compile weekly submissions into an accessible form, like a database.  Simply, put, the LCB will largely be blind to what the labs are doing.  During the 2-month meltdown period, they will only be able to look up test results by sifting through the appropriate spreadsheets looking for the appropriate lab’s filings for the week(s) of interest.  Given that they can expect over 25,000 samples to be tested over that time by the 15 or so active labs, it is likely that only a small portion of reported test results will be investigated.

It is the Holiday Season, people!  The LCB investigative and enforcement folk are going to be very busy as it is.  THEY WILL NOT BE ON TOP OF THE LAB TESTING DATA FOR THE REST OF THE YEAR.

OK, since the regulators are largely out of the equation (surprise audits and complaint-driven investigations aside), what is a lab to do?

That may depend on how Friendly each lab wishes to for their clients during the Great Traceability Meltdown of 2017.

My bad … I should not have said that.  I take it back. 

The strange irony of all this is that, to the extent that the labs that I once called Friendly now represent the bulk of lab-testing in the state, they will be differentially impacted by the new manual spreadsheet reporting system.  Perhaps Karma applies here, after all.

I see at least three potential problems with the contingency reporting system being deployed for lab reporting.

• The proposed contingency system represents a wonderful window of opportunity for cash-strapped farmers to bring product to market without spending the money to have it tested.  Tests are expensive.  Photo-shopping old Certificates of Analysis is not.  Labels have to be printed anyway.  The LCB is busy and distracted.
• Even after the spotlight had turned to the irregularities in WA lab reporting and in the presence of a real-time integrated database of test results tied to farms and strains and stores, the LCB seemed unable to or unwilling to provide meaningful oversight of the labs.  In a world where the LCB is flying virtually blind for at least 2 months, one can only wonder what the labs may choose to do with respect to their testing and reporting.  We may yet see 75% bud.
• Finally, a “seed-to-sale” traceability system is not just intended to ensure that product is not diverted out of the system.  Certainly, the presence of one helps to enforce against diversion.  A robust traceability system also enables the tracking of where products are being sold at retail.  This comes in handy if a product needs to be recalled for some reason (oops, we accidentally put rat poison in that batch of 10,000 edibles).  The absence of an integrated seed-to-sale traceability database presents an acute threat to public safety and health.  Should a product recall become necessary (for whatever reason), without a central repository of test results it will be difficult to execute.  It MAY be possible to trace where specific failed product might be in the system but, if so,  neither easily, quickly, nor (frankly) practically.

If a farm chooses to stop testing and fakes out Certificates of Analysis (those things that all retailers are supposed to have for all product on their shelves) using Photoshop or an alternative, what is to stop them?  Perhaps if the LCB were to audit them, they would be found out. If the LCB were to audit them, they likely WOULD be found out (eventually).

I submit to you, however, that the LCB is not going to have the available resources to audit many farms or processors for something like this.  That portion of the enforcement/investigative efforts of the LCB that they are able to wrestle away from alcohol and nicotine this Holiday Season will likely be focused on minimizing the huge DIVERSION opportunity afforded by the traceability-by-spreadsheet solution that has been put forward.  When they are worried about pickup trucks full of bales of fine Washington Cannabis driving out of the state, I doubt they will be overly concerned with a little detail like ensuring that QA and Potency testing was actually done … or that it was done well.

That last statement is reinforced by the current status quo (I shit you not) in which the LCB appears to be turning a blind eye to the fact that at least one lab has, since the QA testing requirements were changed on Aug 31, been conducting product tests and passing products on those tests for tests ON WHICH THEY ARE NOT YET CERTIFIED.

Put another way, the LCB appears to be allowing untested product that they know to be untested to flow to the shelves of retailers near you (assuming you reside in Washington, Idaho, Oregon, or Western Canada).  Was it tested?  Maybe.  Even if it was, it was tested by a lab not certified to do the test.  In a regulated world, that is UNTESTED product.  Either that, or I do not fully understand the fungibility of regulations in this state

Since the LCB appears to be OK with untested product flowing to consumers when traceability IS working, why should anyone assume that they will give a damn when traceability is down and it would be much more difficult for their overworked selves to look into the problem?

Ignore the problem and it will go away.  Maybe 100% of the wholesalers and labs will do the right thing and not take advantage of the situation that the LCB has engineered.

Regardless, this situation further degrades the one true advantage of the regulated market.  If assurances of product quality and safety cannot be trusted, then what is to stop consumers from seeking alternate sources of product?  Well, the law, I guess. 

How ironic, then, that “the law” (in the form of the LCB) seems to be enabling one of the very things that State-legal Cannabis was supposed to address – the Black Market.

Happy Holidays and Happy Traceability Meltdown.