WEEDING OUT TESTING ISSUES Regulators hope state-run lab can help restore trust in cannabis industry

e Michigan Cannabis Regulatory Agency hopes a new state-run marijuana testing lab can build trust in an industry in turmoil and ultimately root out potential corruption.

e Legislature is expected to approve the state budget in the coming weeks, which includes a $4.4 million earmark for the CRA to establish, build and sta its own reference testing lab. e state believes the new lab will boost regulators’ ability to stymie illicit product entering the legal market, audit private sector labs and optimize standard testing methodologies.

“ e challenges facing the test- ing industry have been widely reported,” CRA Executive Director Brian Hanna told Crain’s. “ ere is no unbiased lab in existence in Michigan currently, so our goal is to be able to provide those services that will ultimately make the industry safer and save them money.”

Under state rules, marijuana growers are required to test 0.5% of a harvested batch of marijuana at an independent lab before it can be sold for consumer use. Batch sizes max out at 50 pounds under the regulations. In March alone, labs tested nearly 103,600 pounds of marijuana ower and shake with a consumer sales value of $11.3 million, based on CRA data.

But not all batches of marijuana sold in the legal market are being tested. Hanna was hired in September last year to step up enforcement as the legal industry bemoaned oversupply due to illegal marijuana making it into the legal market. The outcry for enforcement occurred after adult-use prices plummeted to $80 per ounce of flower in January this year from more than $512.05 per ounce in January 2020, according to CRA data. Prices have since climbed to $86.87 per ounce last month, which Hanna credits to increased CRA enforcement.

They contend that disgruntled competitors could “weaponize” the state labor department by filing frivolous complaints against companies that win prevailing-wage projects.

Backers say the changes were needed to clarify what had been a vague law and to ease the agency’s ability ensure people are paid accurately.

The new law, Public Act 10 of 2023, will take effect in 2024. It will, among other things:

 Give the Michigan Department of Labor and Economic Opportunity authority to enforce the law and to write implementing rules.

 Allow LEO to levy a fine of up to $5,000 for each violation, plus an additional 10% penalty.

 Make contractors and subcontractors jointly and severally liable for violations.

 Allow workers who are not paid prevailing wages or benefits to sue contractors or subcontractors for damages, including costs and attorney fees.