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New Lab Rules Are Killing Oregon’s Craft-Scale Companies

November 21, 2016
A pipette and microwell plates
If you’ve been in an Oregon cannabis shop lately, you may have noticed that many of your favorite non-flower products are missing. That pain-relieving topical or chronic-infused ice cream you’ve come to love? Gone and gone. Shelves are empty, budtenders across Portland are apologizing for the slim product selection, and a date for the return of the missing products seems hazy at best.

What’s going on?

In a nutshell: Craft-scale infused products companies across Oregon are being killed by state lab testing rules that went into effect on October 1. That’s when the OLCC (Oregon Liquor Control Commission, the agency that regulates cannabis) implemented new testing rules for all products sold at adult-use cannabis stores. Prior to Oct. 1, there were more labs available to do testing, with faster turnaround time, cheaper pricing, and higher thresholds for failing a test.

“Testing now costs more than the entire product batch.
Trista Okel, owner of Empower Bodycare

The OLCC put together a rules advisory committee that made recommendations for consumer safety and quality control measures. Labs were then required to upgrade equipment and testing procedures to a higher standard known as ORELAP (Oregon Environmental Lab Accreditation Program).

Mark Pettinger, a public affairs official with the OLCC, said the new rules were needed because “up until  October 1st, labs did not need to be accredited, equipment did not need to be calibrated, and employees did not need to have specific training. In short, there were no requirements for labs. This resulted in ‘lab shopping’.” That is, some companies would hop from lab to lab, looking for the results they desired. “The new rules look for a broader range and concentrations of pesticides, which emerged from HB 3400, the follow up [legislation] to Measure 91.”

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But those new rules made the cost of testing all but prohibitive for smaller independent producers.

“The cost to test per sample can be anywhere from $200 to $400, and you’re testing 30 samples in three lots,” said Ashley Preece Sackett, co-founder of Cascadia Labs. “The cost for a company can come close to $30,000 just to verify that their products are consistent. And licensees have to continue regular batch package testing after verifying conformity.”

That’s extremely time-consuming for lab employees, added Preece Sackett. “It’s cost-prohibitive for most craft-scale cannabis processors, as many of these business are still in startup mode.”

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Trista Okel, owner of Empower Bodycare, has produced a well-regarded line of THC and CBD infused oils and soaking salts since 2013. But she doesn’t know if she can continue operating given the new lab costs.

“We make our Empower Soaking Salts in small batches to ensure product freshness, and I just got a quote on testing the potency for $2600,” she said. “If we make 80 pounds of salts at a time, the wholesale value of the product is around $2000. The small batches ensure that we have the highest quality products on the shelves, but potency testing costs more than the batch of product. This is not a public safety issue, this is a greedy lab issue.”

Okel suspects that the new lab rules were written with an assumption that industrial-scale companies could afford to pay for the new lab tests.

“My small, woman-owned business was doing just fine until these big, out-of-state cannabis businesses showed up to take over the market,” she said. “My educated guess is the new testing regulations won’t ease up until the majority of the small, local businesses are gone, and big business takes over. That said, we are going to fight to stay in the Oregon market. We care about Oregonians’ health and well-being. Big, out-of-state money does not.”

“Tests that used to cost $150 now cost $2,000.”
Andi Bixel, CEO of Drip Ice Cream

Andi Bixel, founder and CEO of Drip Ice Cream, faces a similar situation.

“For Drip to get our oil simply batch tested (the bare minimum we can do to be able to use the leftover oil inventory we have already in house) would cost us $1,500, vs what used to cost $150,” she wrote in an email. “For us to get our ice cream tested (just one flavor) will be $2,000 vs. what used to be $150. We went from $300 to get product on the shelf, to $3,500. And that doesn’t make us good forever, that’s just for a single batch.”

“The OLCC, OHA, and ORLAP didn’t do an economic analysis before pushing this rule through,” Bixel added, “and the most frustrating part has been that they have called us in for testimony, asked for letters, and have been absolutely zero responsive to letting us know whether things will change or not.”

Drip Ice Cream has been shut down for the past seven weeks. Bixel, like other small craft-scale operators in the Oregon infused-products industry, has had to lay off the majority of her staff. “This big push back is unfortunately making folks employed by cannabis companies feel wary about the stability of their future if they choose to continue working in this industry.”

One lab has told customers to hold off testing, indicating a change may be in the works. Hopefully that’s the case, as this isn’t a sustainable situation for producers, patients or consumers. There are people counting on access to these products, and it’s beyond the pale to not make them available.

“Here is my solution: Hit the pause button on the new testing rules while the agencies figure the rest out.”
Amy Margolis, Head of the Oregon Cannabis Association

Amy Margolis, head of the Oregon Cannabis Association, recently expressed frustration at the situation. The Oregon industry “is slowly grinding to a halt due the serious and systemic problems with the new testing regime,” she wrote. “The OLCC and the OHA have been fielding concerns from the cannabis business community since before the October 1st deadline letting them know that the labs are simply not ready for the capacity, that the protocols are not appropriate, the process validation doesn’t make practical or economic sense, the batch sizes are off and the absence of an on-ramp to the new system is serious and reckless. At the end of the day those voices appear to have been drowned out by the push to implement at whatever cost.”

“The agencies appear to now recognize this and held an ‘all hands’ meeting with stakeholders,” Margolis wrote. But that was in mid-October—four weeks ago.

“Here is my solution,” Margolis added, “Hit the pause button on the new testing rules while the agencies figure the rest out. Feel free to put a sticker on products not tested to the higher standards. No. Big. Deal. Then, agencies, take all the time you need to hold meetings, make phone calls, shoot shit about it over cocktails, accept and read 10,000 letters. Whatever. But people need a reprieve right now. I have other suggestions for a long term, meaningful fix but this is my ‘today-is-right-now-and-things-are-going-off-the-rails’ solution.”

Mark Pettinger of the OLCC said the agency is “always listening, learning and modifying based upon industry feedback,” so while “some rules may change, other rule changes cannot occur until the legislature meets again in early 2017.” He was unable to say exactly which rules could change and which could not, as some fall under the purview of the Oregon Health Authority.

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Joshua Jardine's Bio Image

Joshua Jardine

Joshua Jardine writes "Cannabuzz: The Week In Cannabis News" for the Portland Mercury newspaper. He is the founder and CEO of Oregon's Cannabis Concierge.

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  • Jim Wilson

    My feeling,is corporate greed for gold is worming their way into our

    infrastructure fouling up things for conman man. They cant fine us cause
    its legal now, but they are going to rip us off over testing causing
    problem for poor people to obtain cannibus. They will get it from the
    streets word up just saying kiss my ass big pharna and the Oha they both
    are greed sucking bastards thank you have a good day.

  • William Wallace

    Have you heard of http://www.3144Labs.com . I believe they are offering a very powerful and low cost solution to this challenge in the cannabis industry.

  • originalone

    Losing shelf space-as in none-during this wait out, guarantees that the business go under, as well as the consumers loose out too. It’s not easy to start up, let alone restart any business today. Will the consumers who have been left in the lurch by this, come back later when the issue is resolved? Questionable.

    • Jim Wilson

      the i fivers out of state bob marely distributors and the like will come take over pre packed in wrappers you cant smell it it will be high priced and we will take their word on testing it who nos where it will come from. why because they payed a lot to run the little producers here out of business so they can scoop up the business like the mafia does?

    • tnetcenter

      The consumers will revert back to illegal sales in a HEARTBEAT and Oregon will be right back where it started 5 years ago!!!

      • originalone

        Interesting thought. That said, it reminds me of a hat I used to wear way back in the last century, which read: “the government hates competition”, so considering who controls the distribution through out the world, it’s no mystery who’s behind this.

  • Open Minds

    Obviously you want safe products but imagine if new tech companies had to pay $$$$ to test their products before they could go to market, it would kill start ups. Oregon needs to address this ASAP.

  • Merlin

    Anyone who has lived in Oregon for any length of time could have told you that the OLCC is poison. Oregon legislatures from times gone by put way too much power in the hands of way too few, those few wield it like Thor’s hammer to make themselves rich, and it has had devastating effect for at least the last 30 years. My vote is to disband the OLCC.

    • Jim Wilson

      I agree with what you said here. Time folks unite. disband the r
      Oha to. Make rules that apply to the times we are living in. Big corporate has our REPS in their pocket they are puppets for gold. we need changes

  • Robert Smith

    Not too surprising. In Oregon, always, always, follow the money when the state is involved. The OLCC doesn’t give a rats ass about anyone or anything as long as they can figure a way to garner all the money for the state. I find Oregon to be the greediest place I have ever seen. How about the theory that the powers at be are really subverting the passage of the legalization laws. Yea, it’s the law but they are restricting it so bad that it is a mute point. And each county is allowed to have their own rules regarding the growing restrictions. Like, just when the hell is a law not a law. Well when it is in Oregon or course.With each county having their own power to do whatever they want, then how and why the hell would anyone respect them. It is impossible to keep track of what they have done this week. Horrible for the businesses that have put out many many thousands of dollars and thousands of hours of work and then some stupid uninformed jackass that managed to get himself elected changes something and the poor business owner loses. Not a good situation for anyone. It only promotes the black market and the really BIG players in the business that can absorb such loses. Who pays? Who do you think is going to pay? Prices at the Dispensaries are going to be not affordable for the average working man.
    And just how are they going to enforce all those restrictions. Each county could go broke just trying to do so. Great example of people passing local regulations about things they know not one damn thing about. Did somebody say RECALL?

    • Jim Wilson

      where is all the money the profit from weed going show us some information about that olcc taxes paid by citizens for weed where is that profit you gold sucking bastards i thout so, no info available himm interesting how uninformed we are kept. . so we are sheep uninformed uneducated just like the government wants us fuk it brother im disgusted.

    • tnetcenter

      Of course Oregon is that way, LIBERALS are in charge – That NEVER works in the long run!!

      • OrG

        Go to kansas.conservatives are firmly in control there.

  • Oregon’s testing requirements are spot on. Testing is not unnecessary, it is crucial to promoting health of users. Pesticides are a real issue for users, particularly patients. It is disingenuous to call Cannabis a health or wellness product but then strip away testing to prove its safety. As we move toward a national standard for safety testing, we should be looking toward Oregon as a model. Further, given the profits that Cannabis businesses accrue, whining about spending $30,000 on testing is just criminal. If you’re going to compete with Pharma on the usefulness and safety of Cannabis, you have to step up and at least prove that it’s safe.