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Marijuana Stocks

Marijuana Testing labs are the mystery of the marijuana / cannabis industry.  Marijuana Stocks / Cannabis Companies rely on these labs to determine the level of THC in their products or give them a pass with regards to mold, pests, or pesticides.  The problem is that not all labs are created equal.  The labs themselves aren’t inspected or graded by any agencies and customers have no idea whether products were tested at a reputable lab.  Some believe that the problem is standardization, but there are plenty of state standards.  The real problem is enforcement.

Marijuana consumers tend to equate THC levels with price.  They believe if an edible has a low THC level, it should be cheaper and conversely, if it has a high THC level, it should cost more.  They are looking for more bang for their buck.  Can I get something with 25 mg of THC as cheaply as possible?  The producers know this is just plain wrong.  The process for extracting THC is the same whether the amount is small or not

Many customers prefer a smaller level of THC in order to go about their day without being extremely impaired.  However, because of this developing value trend, some producers are incentivized to get their products listed with higher THC levels and some labs are willing to help them get there.

Dylan Hirsch, executive vice president of a lab corporation said, “Many of the labs will sometimes say they can get better results. It can be so subjective for results on THC.” Sometimes, it’s the growers who are unscrupulous.  They may bring a different product than their own to the lab for testing, one that could have higher THC.  He stated, “There is no assurance that what the lab tested and what they are now selling to someone else is the same product.  Hirsch suggested that there needs to be a tighter supply chain.

Part of the challenge is that the lab’s business model makes it difficult to be profitable.  The machinery is expensive and their staff scientists are well-paid professionals.  For example, testing equipment may cost $600,000, but then they may only be testing 2 samples a day for maybe $100 each.  Hirsch also pointed out that the lab may have expensive testing equipment, but then the testers might not be that great.

Garyn Angel, CEO an infuser machine company, said that different testers give different results.  He believes that another part of the problem is that there are no standard operating procedures for testing marijuana and infused products.  Angel said, “Everything in science works on standard operating procedures.  True science is repeatable.  Testing cannabinoids though is not like testing blood.”  He believes the problem is that the labs don’t want to share their methods and feel it is proprietary because of the competition among labs.

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Private Medical Marijuana labs are restricted from testing properties on the plant for one year, according to Ohio’s new law. During that time, public universities would test medical cannabis produced within the state to make sure it is safe for consumers. The problem is that no other state tests medical marijuana like this. That’s because many university officials are wary of losing money from a federal government that still labels cannabis as among the most dangerous, illegal drugs, at the same level as heroin.

Rob Ryan, executive director of the Ohio Patient Network and a Blue Ash councilman stated, “If there is no testing, then there is no program. We are very concerned.” Even if Ohio’s universities want to test medical cannabis, the cost is $2,000 for an application fee and an $18,000 fee to operate a testing lab. Those numbers could change before the rules are finalized by September. Buying testing equipment, cameras, and other tools would cost at least $1 million, depending on what the university already had in place, said Jeffrey Raber, CEO of The Werc Shop, which tests cannabis in California, Oregon, and Washington. And to buy equipment or finance lab work, professors often rely on grants, many of which come from government entities.

Other concerns include whether universities would have the capacity to handle all medical cannabis grown in Ohio or whether they can safely secure the plant to prevent theft. “There are too many unknowns to rely exclusively on learning institutions,” said Chris Lindsey, senior legislative counsel for the Marijuana Policy Project, which pursued a ballot initiative to legalize medical marijuana in Ohio in 2016 but dropped the idea after lawmakers passed their plan. “Private labs are in better positions to respond.” It is unclear whether any in-state, public universities are interested in laboratory testing. At this point, officials at University of Cincinnati, Ohio State University, Cleveland State University, and Kent State University are not planning to provide laboratory testing of medical cannabis, spokespeople told The Enquirer. That could change, but universities in other states have avoided medical cannabis.

In Maryland, for example, only universities with academic medical programs were permitted to dole out cannabis. But none were interested so legislators reworked the program. University of Illinois’ Chicago campus announced in 2015 that they would start testing medical marijuana but shortly after, officials changed their minds. Kerry Francis, Ohio Department of Commerce spokeswoman stated, “We can’t speculate as to which universities will apply.” The Ohio Department of Commerce has not yet set a deadline for applications.

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The number of women in executive positions in the marijuana industry is astonishing. According to a study of 632 marijuana executives conducted by the Marijuana Business Daily in 2015, women are in leadership positions in 63% of labs that analyze the safety and potency of the substance, and in nearly 50% of companies that make other cannabis-infused products. How do those numbers measure up to the ratio in other industries? Among venture capital-financed, high-growth technology startups, just 9% are led by women, according to a July 2016 Harvard Business Review article. Women are majority owners of 36% of small businesses, they filled 22% of senior management positions in mid-size US companies, and 5.4% of CEO jobs at Fortune 1000 companies in 2014, according to a 2015 Pew Research report.

Taylor West, deputy director of the National Cannabis Industry Association in Washington stated, “The data tells a really great story about what’s happening in the cannabis industry, and it tells a really stark story about business overall.” Why do women seem to be running the show in some segments of the cannabis industry? Some say this business draws liberally minded rebels who are less likely to uphold gender traditions. Furthermore, West notes that the legal pot business is brand new, and therefore unhampered by established business networks that in other industries seem to be navigable only by insiders. She stated, “In long-established industries you have generations of business that has been dominated by men, and that creates structures of advancement that are dominated by men.”

Yet in other areas of the marijuana industry, particularly in farming and investment, women leaders remain scarce. While the Marijuana Business Daily study indicates that 28% of executives in the cannabis investment industry are women, Greta Carter’s experience doesn’t jibe with those findings. Carter, who is an investor in 10 companies in Nevada and California that grow, process, and sell cannabis stated, “I walk into a room and time after time it’s 20 men and me. I don’t want to give the country a fallacy that there’s not a glass ceiling in the industry, because there is.”

Ms. Carter, a former vice president at Citibank, has noticed that many women in top positions work for businesses that support the marijuana-growing industry. She said, “I think it’s because the threshold to get into this industry is really low if you’re in the ancillary businesses.” Unlike these support services, wholesale farming requires heavy capital investment and more risk tolerance, which some say could be drawing more men entrepreneurs. Also, women might shy away from cultivation because there is a stigma associated with it. Leah Heise, chief executive of WomenGrow and attorney stated, “The stigma is something that we continue to fight and are going to have to continue to fight.”

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Forensic labs throughout Canada will most likely be overwhelmed with samples of blood, urine, saliva and hair as soon as recreational marijuana becomes legal. This is what Public Safety Canada is concerned about as the government moves forward towards legalization of marijuana. Prime Minister Justin Trudeau promised legislation will be finalized by spring and a distribution system should be in place by the beginning of 2018.

Ottawa said that it expected an increase in the amount of people using marijuana as it becomes legal; therefore, meaning more people abusing marijuana. Public Safety Canada published documents Monday morning stating that as usage increases, police may be doing more testing for the presence of weed.

“It should be expected that the number of samples requiring lab analysis will increase dramatically once cannabis is legalized, simply because the police will be reacting to the new regime with a similar approach as they do for driving under the influence of alcohol,” the documents note.

“Roadside checks and random screening of drivers for drugs will likely occur more often, thus increasing the number of samples that will need to be tested for drugs.”

The government is looking to hire an outside contractor to find out if labs across Canada can handle the large amounts of samples anticipated. 80 labs to be surveyed’ As per the documents, the contractor will send out questionnaires to approximately eighty Canadian labs as well as some American labs. The final report should provide suggestions for avoiding backlogs.

Christine Nielsen, CEO of the Canadian Society for Medical Laboratory Science (CSMLS) says that the fact that American labs are being included in the study implies Canada may be looking for help to keep up with the increased workload. “They may already know there’s no capacity in Canada,” Nielsen said. “That would be what we call a ‘send out.’ That means it has to go somewhere for timely testing.”

She adds that different provinces will have different capacities of testing samples, depending highly on the form of test that will be utilized to measure the drugs in one’s system.

“Especially when you’re dealing with a justice case, (the tests) are life altering,” Nielsen said. “We just want to make sure that the facilities that are assigned this work have the proper standards in place.”

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While in some states marijuana has become legal, it remains classified as a Schedule I substance. This is the ranking given to drugs with no medicinal value and the greatest opportunity for abuse. The only way the drug will be removed from this classification and legalized nationally, will be federal standards on testing cannabis to guarantee quality and safety.

“The federal government is watching the transition of cannabis in certain states from an illegal substance to a legal and regulated consumer product very closely,” commented William Waldrop. William Waldrop is the CEO of Signal Bay, which is a Life Science company whose EVIO Labs are a leader in the growing cannabis quality control testing market. Signal Bay currently operates five of its EVIO Labs in Oregon and California. The company has plans to add 18 more EVIO Labs in California by the end of 2018.

“Critical to the eventual national legalization of marijuana for recreational consumer use will be the federal government’s confidence that there is a strict cannabis testing architecture to ensure that cannabis is regulated, standardized, and safe like alcohol or any other consumer product. This is a responsibility that we at Signal Bay take very seriously, and we believe that we are perfectly positioned to capitalize on the growing need for cannabis quality control testing both in the states in which marijuana is now legal, and for the inevitable legalization of cannabis nationwide.”

Signal Targets a $850 Million Cannabis Testing Market
Investors should be looking at the cannabis quality control testing as the industry is growing and profitable. The industry is expected to reach $850 million by 2020. There are not a lot of leaders in the industry because it is harder to enter the market. Signal Bay knows that this industry is about to grow and have been aggressively buying testing space in Oregon and California. California is the largest legal cannabis marketplace in the world.

Signal Bay’s business model is unique and is similar to an industry leader in clinical laboratory services.
“It’s the hub and spokes model,” simplifies Waldrop. “In each state we have one centralized testing laboratory with other ancillary testing facilities in local markets statewide. The core centralized lab handles the bigger, high dollar testing functions while the smaller localized labs handle collection, sampling, and other testing services. This enables us to develop networks of testing laboratories that operate efficiently within each state.”

By the end of this year, Signal Bay plans to have 5 of its EVIO labs in operation, thus doubling revenues. Signal Bay hopped on the bandwagon at the right time and are going to make a lot of money once this industry picks up even more.

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You might have seen stories about on the news about people blowing up their apartment building tying to make butane hash oil or other concentrates. The explosions result in injuries, plenty of property damage and other times death. While these seem like crazy flukes and people not understanding how to use chemicals, it is not only people’s homes who are having these incidents. Higher Level Concentrates in Oregon had a recent explosion as well. These cases have caused Oregon Health Authority to lay down the law and enforce strictly the recent regulations put in place concerning the production on concentrates.

“In Oregon, as of January 1, if your operation is not in compliance with state public safety regulations working with volatile gases — butane, hexane, any of these gases that can create hydrocarbon gas — you are going to be out of business,” Dano Keys, CEO and Founder of FlexMod Solutions, told The Marijuana Times.

“Across the nation, hundreds of licensees that have gotten by with the equipment they had, are now not going to be able to. When they were just ‘getting by’ they were lucky no one got hurt. When an accident occurs with butane gas and you read about people blowing themselves up, they’re not following protocol and they don’t have a safe environment.”

The real problem facing companies is figuring out a way to meet the regulations while maintaining the company’s bottom line. However, it isn’t cheap to find materials or spaces to make cannabis concentrates, after all you can’t just go to Lowe’s and pick up a shed. This is why FlexMOD designed their modular extraction labs. Imagine everything you need to be compliant with the laws and safe rolled into a space where you can work. Like the Easy-Bake oven provides a safe space to create, is compliant with government laws, and is the most cost-efficient option, the FlexMOD does the same.

Most cannabis business owners don’t have the time or expertise to create their own compliant extraction rooms. That is why FlexMOD did the research and work for them. As Dano explained to us, compliance and safety cost money.

“The components that are built into these labs, are very expensive and getting them engineered to work together in this system is difficult,” he said. “The components are manufactured for Class 1 Division 1 hazardous environments and are built not to create a spark. Our labs also have a specialized computer system that regulates it all. You put all these together and you know you got a pretty specialized room.”

Dano described some of the modular extraction lab’s key features:

“Let me give you a little bit of the mechanics of this room, so you get a better idea. Everything in here is very specialized for preventing an explosion or a blast. The way the room is designed is to also create an environment that’s conducive for cannabis extraction. We made sure this works well for someone working with plant material and so it’s been specially designed for that, and there’s a slight breeze that’s constantly flowing through. It’s enough wind current to disperse gas.”

The FlexMOD modular extraction labs are armed with a gas detection alarm system. When minimal levels of hazardous gas are detected, the alarm system will initiate an indicator on the alarm. If gas levels continue to increase, the system will trigger a loud alarm, initiate an auxiliary exhaust system, and shut down power to the equipment inside the room. These things will take place long before the regulatory standard dangerous gas levels are reached.

The lab is designed to prevent sparks that cause explosions and everything in the lab works towards preventing dangerous occurrences. Every unit has spark-proof exhaust fans. These fans, along with the temperature controlled air unit, use 100% outside fresh air to deliver the essential air flow rate over the equipment. The system uses slightly negative pressure within the lab to stop hazardous gasses
gasses from leaking into nearby areas.

The electrical distribution panel is weatherproof and located on the exterior of the unit, therefore out of the hazardous area. The entry door is made of steel and has an automatic close, panic exit device, and more weather seals. The creators of this product thought of everything and nothing was left to chance. The FlexMOD is the future of safe extraction labs.

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Laboratories in Oregon claim that their marijuana supply undergoes more testing than food, in addition to being safer than most food products for consumers. This month, a bunch of labs have received their accreditation to start testing and working with cannabis. Within the United States, Oregon has the most rigorous standards regarding marijuana. A laboratory worker, Molly Lyons, points out “Residual solvents, terpenes, and pesticides over there”, referring to all the different machines and products they use to test the large number of cannabis samples on a daily basis.

One of the first accredited marijuana labs, GreenHaus Analytical Labs, tests a large number of samples from each harvest of marijuana along with the contents of that marijuana such as the oil to make sure they are up to standard. From there, the oil can also be tested for levels of pesticides, mold, and THC content. GreenHaus also tests the edibles that have been made with the marijuana to make sure that each edible does not go over the 15mg THC limit enforced by the state. In the event that a product fails to pass two tests, it cannot be sold to the public and the money invested in growing the cannabis used to make the product is lost.

“If you can’t sell your product, that’s a big motivator to find a new product that is safe and possibly organic so you can pass your test and have your product on the shelf,” Lyons said. “I could only wish our food was tested to the highest standards as cannabis.”

Lyons also states that the restrictions set in place by the state offer consumers peace of mind and allows them to know that the products they are consuming are of the highest quality.

“There’s a lot of people who have never consumed cannabis and now that it’s legal, they want to try it for all different reasons, and they need to know what they’re consuming,” Lyons said.

The test that gets failed most frequently is the test for pesticides, failing around 25-30% of all samples.

“When we first started testing for the full panel of pesticides, customers were upset about those fails. I think it helped push them in the right direction before stricter laws came to be.”

Lyons also claims that Oregon’s high level of rainfall and long rainy seasons increases the likelihood of finding mold in marijuana grown outdoors. The difference being that if you were growing tomatoes, you would spray something on it to prevent mold, however marijuana growers are shifting to growing organic and choose not to use pesticides, leading to a safer product for consumers.

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Close to 5 explosions at marijuana extraction “labs” have been reported in Riverside and San Bernardino counties in 2016, causing injuries as severe as third-degree burns. The labs have running illegally – and often times dangerously – in homes, garages and other locations across the state as the demand for the strong marijuana concentrate known as wax or honey oil has risen. In an effort to prevent people from running the labs under hazardous conditions, and to provide a structure for legitimate marijuana manufacturers, a law was recently approved that allows the extraction process under certain conditions.

“It kind of takes that industry out of people’s garages,” said Coachella City Manager David Garcia, whose office helped draft the bill. “It continues to make (unlicensed extraction) illegal but also (allows) a safe, licensed process to be in place.”

AB 2679, which will be put into effect in 2018, highlights a strict protocol for running an extraction lab and says patients, pot identification cardholders, caregivers, collectives and cooperatives will not have to endure state criminal penalties if they follow the new rules. The regulations include having a licensed engineer certify the system, ensuring the system doesn’t allow highly flammable solutions to escape and complying with local ordinances.

Since ordinances in the of majority of the Inland Empire that band the sale of medical marijuana also outlaw the production of medical marijuana, licensed labs would be authorized only in Cathedral City, Coachella and Adelanto. Running a lab without obtaining a license and following the new regulations would result in the same fines and punishments that were in place before the law was passed.

Garcia stated that Coachella officials supported the bill after issuing a permit to Irvine-based cannabis branding firm Cultivation Technologies Inc. to build a 6-acre, $24 million “cannabis industrial complex” in the city. In addition to growing and testing facilities, the complex will feature a 9,000-square-foot manufacturing facility where concentrates will be made. The facility’s proposed closed-loop, food-grade extraction system would fall in line with the new law’s regulations, Garcia said.

“It establishes a safe, regulated environment for the manufacturing of cannabis-related products,” Garcia said.

The new law does other value as well, including authorizing a University of California research program to research marijuana’s impacts on motor skills. Furthermore, agencies that issue medical marijuana-related licenses will have to include additional information on denials and complaints in their annual reports.

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More than two years after Washington state initiated the sale of legal marijuana, they have been planning to test marijuana for banned pesticides on more regular basis. The increased screening is expected to start early next year and will test and review marijuana where regulators have reason to assume illegal pesticides have been used.

“Testing for pesticides is a complex and costly process,” Rick Garza, the board’s director, stated “Labs need specialized equipment and highly-trained staff to carry out the tests. This agreement will satisfy those obstacles. It will send a strong message to any producer applying illegal pesticides that they will be caught and face significant penalties, including possible cancellation of the license.”

Washington has demanded to test for mold and other contaminants since Washington State allowed the sale of recreational marijuana back in 2014. But like Colorado and Oregon, the other two states with recreational marijuana sales, it has struggled to figure out how the best ways to regulate and test for pesticides.

The three states have lists of pesticides that are presumed OK to cultivate marijuana with, but so far no state of the 3 is administering regular tests for banned pesticides, which has increased public health concerns even though there’s little or no evidence of people becoming sick because of pesticides in legal marijuana products.

In Oregon and Colorado, certified laboratories will test for pesticides along with other contaminations, however, the labs are still being accredited to handle those tests. In Washington, private, accredited labs administer tests for mold, bacteria, insects and potency – but not pesticides.

After the first legal, recreational marijuana grows were licensed in early 2014, the state has conducted close to 50 investigations of pesticide misuse, stated Justin Nordhorn, chief of enforcement with the Liquor and Cannabis Board. By contrast, the new equipment will allow the state to screen 75 samples per month for more than 100 unapproved pesticides, with results coming back in 15 to 30 days.

“This should be a real game-changer for the industry in terms of public safety,” said Agriculture Department spokesman Hector Castro. “They’re on notice that we’re going to be on the lookout for this.”

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Under Oregon’s recreational marijuana operation, starting Oct. 1, all marijuana sold to the public must be tested by an accredited lab for potency and purity. These testing compounds must be certified by the Oregon Environmental Lab Accreditation Program and licensed by the Oregon Liquor Control Commission. Currently, there are only two labs that exist that are accredited to test a lot of marijuana and harvest season is right around the corner.

Gary Ward, who is the ORELAP administrator, stated in a memo documented by OregonLive that the Oregon Health Authority has not produced the necessary resources to undertake the job of accrediting marijuana testing labs and that the agency is “On the precipice of collapse.” The testing program, designed to address pesticide contamination, is a part of Oregon’s health authority, which also accredits labs that test drinking water, air, and industrial waste.

The Health Authority published a statement saying it is “Committed to taking steps to ensure environmental laboratory accreditation even with growing demand.” Meanwhile, Oregon Liquor and Control Commission inspectors are hard at work to get hundreds of indoor grow compounds licensed before the end of 2016, noting that licensing outdoor grow compounds took longer than anticipated, KOIN6 reports.

The slow pace of accreditation means consumers may see fewer products than expected on the shelves when the state rolls out its recreational program on October 1st. Amy Margolis, an attorney who represents marijuana businesses, said without additional accredited labs, the industry’s viability is threatened.

“If they don’t get funding and resources, the entire industry will come to a full stop,” Margolis warns.

Not if Green Leaf Lab, one of only two licensed labs in Oregon, can help it.

“When we started, nobody in Oregon really knew what cannabis testing was,” lab owner Rowshan Reordan told KATU 2.

Green Leaf chemist Emily Weatherford stated she feels like she is keeping cannabis users safe: “I’m thinking about the cancer patient who can’t risk smoking weed that has mold on it because they have a compromised immune system.” Currently, Oregon health authorities need to approve the nearly two-dozen other labs that have applied for testing licenses so everyone is safe and to ensure marijuana store shelves will be fully stocked on October 1st.

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