by Rick Thompson/from The Rolling Paper December 2021
I fear the end of the year brings less joy than usual, for many in the cannabis industry. In mid-November the Marijuana Regulatory Agency issued a massive recall of products from a single testing lab. Tens of thousands of pounds were affected, to the best of our knowledge at the time of this writing. Hundreds of stores across the state were included in a 30-page long list of authorized cannabis retailers who had product of this type on their shelves.
The testing lab, Viridis, supposedly did not use proper testing protocol when checking cannabis samples for microbial contaminants, including aspergillus and salmonella. The recall covered a quarter-year’s worth of tested cannabis flower, and included all batches tested at both the Viridis lab sites. It’s important to note the cannabis wasn’t found to be bad, only that it hadn’t been given a proper test for microbials. With that understanding, the MRA crafted novel regulations allowing the return or re-batching of cannabis in order to perform the retesting. Any recalled cannabis must pass two different microbial tests before it can be returned to store shelves.
Sounds easy? Hardly! A batch size in Michigan for testing is 50 lbs. There are 16 ounces in a pound, which equals 800 ounces. Many customers purchase cannabis in a one-eighth ounce quantity, prepackaged. That’s 6,400 eighths packages from a single batch of cannabis! Viridis has claimed in the past that they test a huge percentage of the state’s cannabis, meaning a huge percentage of all the cannabis in the state is affected- and the recall is for the last three months, which is all the freshest cannabis on the shelves.
Understand that some of the cannabis on the shelf of your adult-use cannabis retailer is owned by the store itself, and some is owned by the processor or grower and is being sold on commission. The companies who own the recalled cannabis are paying the price for the alleged Viridis mistake. Start-up companies operating on a budget in a very competitive marketplace. Cultivators who trusted them with their first-run of commercial product, and now have three months of work they can not profit from. This recall could include the entire harvest from outdoor grow operations, and that is a loss which can not be recouped until harvest of next year.
Industry expectations do exist, international standards are available for lab procedures, there really is no excuse for not doing it right. But focus less on Viridis and more on the fact that this exposes a vulnerability in all commercial cannabis systems: the ‘too big to fail’ status of single corporate entities in the cannabis space. If one company like Viridis, which is rumored to have tested 60% of the state’s cannabis in that period of time, can dominate a market so dramatically, their downfall would lead to a downturn in Michigan’s cannabis marketplace. That is unacceptable.
There are ways in which we limit corporate entry into certain markets; we approve mergers, the government denies the joining of companies where a monopoly would occur, there are regs against price-fixing, and municipalities limit the number and type of companies they allow in their communities. Establishing volume limits or limitations on the number of licenses issued to a single corporate entity is a reasonable way to ensure mega companies don’t take everyone else down when they fail.
Many small businesses instead of a single big business is the key to Michigan’s economic success, as small business is the engine of jobs creation. If any one small business fails due to mismanagement, legal action or bankruptcy, the system just continues on unaffected. Many of Michigan’s entrepreneurial families would find a home in the cannabis industry, instead of Canadian investors living large on the success of a business they bankrolled from afar. The Viridis disaster should be a lesson for lawmakers and regulators to learn about the potential for disaster when unchecked greed is allowed into the system.