State struggles with pot industry
Early last December, the Oklahoma Medical Marijuana Authority followed up on a tip and inspected a licensed marijuana lab suspected of malpractice.
What regulators found alarmed them. Dirty dishes, open chemical containers and food cluttered the counters, inspectors said in court records. Some of the chemicals showed expiration dates in the 1990s. Marijuana samples were unsecured and vulnerable to contamination. Regulators also questioned the condition of the testing equipment in the building, a former McDonald’s restaurant turned laboratory for Nationwide Engineering and Testing in Oklahoma City.
OMMA officials notified the Oklahoma City Fire Department, which then issued a stop work order a day later on account of the unsafe work environment, according to court records.
But the lab did not stop work and over the next few months falsified test results for thousands of pounds of marijuana, OMMA officials said. Some samples failed for results of E.coli, mold, yeast and more, but were given passing grades. Others were simply not tested at all, and yet were still issued certificates of compliance to be sold to consumers at dispensaries.
Even with the evidence of blatant misconduct, which Nationwide denies, the OMMA didn’t revoke the lab’s license.
“There is nothing that we have in our ability to take immediate action,” said Lee Rhoades, the OMMA lab oversight director. “We cannot issue a cease and desist.”
OMMA’s inability to crackdown on the lab in this case underscores the state’s failure to keep pace with one of the nation’s most expansive marijuana industries.
The agency oversees licensees for Oklahoma’s marijuana industry, and approves business license applications. But the OMMA currently lacks the legal authority for immediate revocation of licenses, Rhoades said.
Under current regulations, only a judge can issue an order to suspend or revoke a medical marijuana lab license, Rhoades said. This means a lab’s license is valid through the entire judicial process until a final ruling is made.
In Nationwide’s case, the only thing acting to stop work was the fire department’s order. But a precautionary spot check by the OMMA in early February confirmed the lab was ignoring the mandate, Rhoades said.
Nationwide owner Kris Agrawal disputes the OMMA’s claims.
The lab has always been in compliance with OMMA standards, Agrawal said. He also believes his lab made the adjustments required by the fire department directly after the visit and there was no follow up by the department to give the all clear.
Agrawal believes the initial tip was simply a complaint made to the OMMA by a disgruntled former Nationwide employee. He believes his testing was up to standards.
“Is there something wrong and somebody got sick and they died and they went to the hospital, show me one of those,” Agrawal told The Oklahoman. “If that didn’t happen what the (expletive) are you (the agency officials) thinking.”
But inspectors said in court records that a logbook found in a return visit to the lab indicated evidence that test results connected to more than 10,000 pounds of weed were falsified, and all of that marijuana may have ended up in the hands of consumers.
“At this time, we have no way of determining if that testing allowed tainted product to go on the streets to be sold,” said Terri Watkins, former spokeswoman for the OMMA. “It’s going to be impossible to tell.”
Currently, Nationwide’s license is revoked on account of a ruling handed down in April by a judge, concluding an emergency show cause hearing requested by the OMMA in March. Agrawal is trying to determine his options to regain his operations.
“So, what are my choices? I have no idea,” said Agrawal.
Opportunity for fraud a growing problem in medical marijuana industry
While there are state laws governing marijuana quality, many in the industry are noticing there is little enforcement of these standards.
Despite an emphasis on hiring more inspectors by December, the OMMA currently relies on only about two dozen site inspectors to monitor more than 12,000 marijuana businesses, which is more than the state’s total number of Walmart, Starbucks and McDonalds locations combined.
The state only has about 20 labs, but those still only currently get inspected once annually, Rhoades said. If there is suspected malpractice, the OMMA will preform additional inspections at the lab in question.
With additional hires, the Authority expects to up the regular inspections to twice annually. It will also be granted new powers to issue stop work orders beginning on Nov. 1, thanks to House Bills 2904 and 2646 that were signed into law by Gov. Kevin Stitt in May.
But, to this point participants in Oklahoma’s marijuana industry are forced to largely rely on the honesty of their counterparts.
“There really does have to be throughout the entire chain of custody a lot of trust and integrity in the system of who’s handling it, how they’re handling it, and kind of a trusting of you know that they’re testing it, and hopefully giving you accurate feedback,” said Brandon Phelps, lead cultivation manager at Rooted Zen, an Oklahoma City grow operation.
For quality control purposes, the OMMA uses a process called parallel testing in which the state’s lab, Metis, runs its own tests on reserve samples submitted by each commercial lab twice a month to compare results and keep an eye on the work being done across the state.
Parallel testing works in conjunction with inter-laboratory testing, a process in which Metis sends a test sample to each lab. Commercial labs run their tests and return their results, which are compared to what was reported by other commercial labs.
An inter-laboratory test sent to Nationwide last October was still sealed when the OMMA inspected the work place in December, even though the lab reported conducting the tests and sent in the results over a month earlier.
These test results were not detected as being fraudulent by the OMMA initially. Nationwide effectively fooled the inter-laboratory quality control program run by the state. It wasn’t until the agency found the unopened sample that were supposed to be tested, that regulators learned the tests had never been performed, the agency said in court documents.
“Well, let’s just say we’ve learned an awful lot with the Nationwide experience,” said Rhoades.
Opportunity for fraud exists in other links of the supply chain
OMMA officials acknowledge their lack of an enforcement arm leaves the potential for growers to skirt the rules and sell marijuana that has failed state standards under the table.
A grower must select and send their sample to a commercial lab for inspection, but there is financial incentive for bad behavior from growers, just like labs. For a grower to pass inspection and prevent loss of crops, unrepresentative samples are sometimes chosen and submitted, according to interviews with growers and lab operators.
“Right now we are just relying on the grower or the processor’s word that this sample is what they say it is, and that it is representative of their whole batch when maybe it’s not.” said Abigail Burkhart, lab director at Highgrade Labs in Oklahoma City. “Maybe (the growers) were picking and choosing the buds that looked really pretty, or maybe you had a little mold over here, and you left that sample out, you know. So, it’s very much like the labs are at the mercy of the sampling being done.”
Even if there is nothing wrong with the samples, consumers demand high-THC level products. THC is the psychoactive chemical that results in marijuana’s signature “high.” The greater the content, the higher the price a consumer is willing to pay.
Because the chemical makeup differs from plant to plant, so too does THC content. A grower might try to provide an unrepresentative sample in order to exclude any flower they feel will hurt THC potency results.
Labs are supposed provide guidance on how to collect a representative sample, but there’s little to no enforcement.
“(Labs) are supposed to provide that (guidance) to their customers,” Rhoades said. “And the customers are supposed to follow that. Sometimes the trick is, how do you enforce that?”
With dispensaries buying higher-potency products to stock their shelves, many growers approach labs in hopes of getting the best potency results.
“With each and every one of our clients that comes in the door, that’s what they want. We explain to them that that’s really not what this is about in a medical market,” said Burkhart. “We know that’s a driving force for price, for selling and for what dispensaries are going to pick up or not pick up.”
Further complicating the issue is that not all labs end up with the same results.
Nailing down accurate potency results is tricky as it takes a clean process from start to finish, a sample that represents the whole crop, and appropriate care in the lab to prevent cross contamination.
“Not all the labs test the same. Not all the labs have the same equipment. Not all the labs have the same amount of cleanliness,” said Tiffany Sheffield of Sheffy’s Farm dispensary in Bryan County.
Testing facilities can detect whether or not product has elevated levels of pesticides, or heavy metals like lead, arsenic or mercury, but those facilities have no control over whether a failed batch is ultimately destroyed.
When a sample fails testing, marijuana businesses must comply with OMMA and local city ordinances on disposal of the entire associated crop, which means many growers and processors within city limits contract with one of the state’s 10 licensed marijuana waste management companies.
Businesses operating in rural areas not constrained by additional ordinances are allowed to burn marijuana waste, which includes plants that fail lab testing.
There is no external oversight during the process, third party access to records or follow ups from the testing lab or OMMA to verify the harvest has been destroyed. It’s nearly impossible to determine what happens to failed products.
“Especially in a medical program, where I think medical patients are ultimately looking for integrity and an alternative medicine, as opposed to other pharmaceutical pills and whatnot for their ailments,” said Phelps. “You want to have accountability and trust in the system, but it’s hard to not have questions.”