The state’s cannabis industry needs greater regulatory oversight to combat testing fraud

BY BRADLEY TUSK

Although it took a decade longer than in Colorado, Washington and other states, New York late last year permitted retail sales of cannabis. Finally—and for now at just a couple of locations in Manhattan—we New Yorkers can buy recreational cannabis at licensed dispensaries.

But New Yorkers can confirm that, for many months now, cannabis has been openly sold at storefronts that do not have a dispensary products. license. And what’s been sold at the illegal storefronts hasn’t been good.

Right now cannabis testing fraud is a widespread problem.

Of the 21 states that have legalized recreational cannabis, laboratory fraud has been found in at least 10 of them. In Massachusetts, THC levels were found to be regularly inflated by as much as 33%. Hundreds of thousands of tests performed in labs across Nevada, Oregon and Washington found that THC counts were off by more than 20%.

I’ve spent decades working at the crux of the public and private sectors. Usually, I’m helping companies navigate, or fight back against, regulations and politics that hinder their growth. But in this case, I believe the industry still needs greater regulatory oversight. As more dispensaries become legal, consumers should be guaranteed access to safe, high-quality

Public lab data in Washington state found clear, systematic differences in results obtained by different testing facilities—results that could not be explained by variations in the strains or samples received. In other words, the results were made up. We have two problems: Scores of illegal stores are allowed to operate without any of their products undergoing testing, and the testing utilized by legal producers is rife with fraud.

Addressing the problems requires a coordinated effort. Here’s what needs to happen.

● Cities and states must crack down on illegal dispensaries, and they need to institute much higher standards for labs that test cannabis, regularly holding the labs accountable.

● We need new laws and regulations that ensure truth and transparency in testing.

● Labs need to know that if they deliberately inflate or misrepresent ingredients and potency, they will be held accountable. That includes facing fines, license revocation and criminal charges.

● Cannabis companies need to know that they will be held accountable for fraud. No lab chooses to doctor the results without first being asked to do so by the company. When people on both sides of the equation start facing real consequences, that’s when behavior will change.

● Cannabis investors need to be a lot more careful than they’ve been so far. Much better diligence has to start taking place, and harder ques- tions have to be asked. Does the company you’re looking at have a history of compliance issues? Who does their cannabis testing, and do they conduct audits for their labs? Can this company still succeed if it’s not misstating potency?

Any major cultural shift, such as legalizing retail cannabis, is going to come with a lot of challenges. But the only way to make the underlying change worthwhile is to address and attack the challenges proactively. Our failure to do so would harm consumers, time after time, city after city, state after state.

In the United States, licensed cannabis retail has been around for more than 10 years. It shouldn’t take another decade to get testing right. ■

Bradley Tusk is chief executive of Tusk Holdings, whose Tusk Strategies has cannabis clients. He is also an investor in Vice Ventures, an early-stage venture capital fund.