High Spirits

#007 - Getting Real About THC Potency & Quality Control w/ Josh Wurzer

August 24, 2023 AnnaRae Grabstein, Ben Larson, Josh Wurzer Episode 7
High Spirits
#007 - Getting Real About THC Potency & Quality Control w/ Josh Wurzer
Show Notes Transcript Chapter Markers

Ever wondered how the potency of your cannabis is determined, and how that determination directly impacts the price you pay? Join us in this thought-provoking episode of High Spirits Live as we uncover the state of lab testing in the US cannabis industry with SC Labs founder Josh Wurzer. We'll dive into the complex nuances of consumer behavior and the urgent need for more transparency and information in the rapidly evolving cannabis market. 

Lab testing in cannabis isn't as simple as it seems. Learn about challenges of obtaining accurate potency results, how THC values influence wholesale pricing, and how different states are addressing these critical issues. We'll also delve into the rising cost of top-tier cannabis, driven by mounting taxes and regulations, and how innovative tech platforms could be stepping up to offer consumers nuanced data for a more comprehensive understanding of the products they are considering. 

And it gets even more interesting: Inflated potency results and fraud are real threats in this industry. In our in-depth conversation about these issues, we'll explore how labs validate their tests, the importance of regulations in maintaining honesty, and what steps are being taken by regulators to ensure safety standards. It's an enlightening discussion that promises to broaden your horizons on the complexities and challenges of the ever-evolving cannabis industry. So, don't miss out on this opportunity to gain a deeper understanding of the cannabis industry. Tune in now for an engaging and informative session that you won't want to miss!

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Remember to always stay curious, stay informed, and most importantly, keep your spirits high.



Speaker 2:

Welcome to High Spirits Live, where we're serving up unfiltered insights, revealing our insider's perspectives and illuminating transformative strategies for people who are trying to make sense of the cannabis industry. Let's go, alright. Anna Rae, how are you doing this morning?

Speaker 1:

Hey Ben, I'm doing great. I'm happy to be here. Glad we're getting into a good rhythm with Thursdays for recording days, it's been really good.

Speaker 2:

Yeah, yeah. Well, I'm glad the rhythm is here as well. It forces me to be a good boy, even though I was out late last night on a school night Not my typical MO, but I guess the last two weeks it has been.

Speaker 1:

Yeah, I think you've still got the background music on. You want to? Yeah, I do.

Speaker 2:

You're right, see, I'm just, I'm still. I'm still at the bar last night. I guess How's your week going?

Speaker 1:

My week has been really good. I had a birthday party for my son over the weekend and we took seven kids and their parents to the circus. It was a total rager. It was really cool I would recommend the circus to any grown-up that hasn't been in a while. It's good for the soul.

Speaker 2:

And on the cannabis front I'd say that Before we get to the other circus. What does a circus entail these days? Because the only thing that pops in my head is, well, first circus cookies and then Barnum and Bailey's and animals and I know that's not vogue right now. So, yeah, what's the circus like these days?

Speaker 1:

Well, good point on calling out the animals. There are no animals at the circus anymore because it's highly inhumane. So instead this was Circus Vargas that we went to. It's a traveling circus that they say is French Not really sure if the people were actually from France, but there was a lot of acrobatics. There was some really cool tricks with people riding dirt bikes and doing acrobatics while riding dirt bikes and riding the dirt bikes inside of metal cages that are shaped like a globe multiple dirt bikes inside of the metal cage.

Speaker 2:

Any carnage.

Speaker 1:

There was no carnage at all, but I will say, as a spectator, that that's what I was most worried about was, holy crap, what if somebody gets hurt and all of us have to see it? And then what do we do? So yeah, it was a good it happens.

Speaker 2:

I can only imagine.

Speaker 1:

It must happen, but it can't happen very often, Otherwise they wouldn't do these crazy tricks, right?

Speaker 2:

I don't know. Anyways, very cool. Well, I'm glad. I'm glad it went well and I'm glad the kids had a good time. But you were about to jump into our other favorite circus. What's happening in cannabis?

Speaker 1:

Well, it wasn't quite a circus, but I did. Last week, right after we recorded, I went to your party, your Vertosa five-year anniversary party, and that blast is a great who's who of the cannabis industry. I saw a bunch of folks that I've known for a long time there, and there was some great food, so thank you for having me.

Speaker 2:

No, thank you for coming. It was a great celebration. Wow, that was only a week ago. It so much happens in a week, but yeah, it was really great to have so many people come through, super grateful that any of our listeners were there. You know I think we talked about this in previous weeks it's just for me, every year I just get so excited to like celebrate another year of life in this industry and I know not everyone feels that way about the industry, and then they have their reasons, but you know, to see people like Andrew D'Angelo come through and is like wow, he's really been in this industry a lot longer than I have and yeah, it's just a testament to people's resilience and then the ability to keep pushing through.

Speaker 1:

Yeah Well, I will say that my favorite part about the party was a little bit selfish or self indulgent in some ways. You guys had a little math contest about your growth of THC that you have distributed around the US and it was a bit of a riddle, a bit of a complex math problem like something you might see on the SAT, with a number of data points, and then you are supposed to answer the math problem, put the answer into a jar and then, of the correct answers, there was going to be a raffle and I won the math problem and I was the only one out of it.

Speaker 2:

So you didn't even have to do a raffle, you just won it outright.

Speaker 1:

Yes, I won it outright and I felt so proud of myself and at the same time, as soon as I completed the math problem, I felt this competitive spirit bubble up inside of me and I just wanted to know if I was right. So it was super satisfying and the best part about it was the prize was a money tree, and money trees are incredible indoor plants that you are not supposed to buy for yourself. So I felt really grateful that I was able to win a money tree, and I'm hoping that it is a harbinger of lots of good luck that's coming my way.

Speaker 2:

Well, if the size of said money tree is any indication, I think you're on the right path. This thing was like the biggest money tree I've ever seen, about five feet tall.

Speaker 1:

Exactly. Yeah, awesome, so thank you so much for that. I know Well so what's going on with? You this week. How's it going?

Speaker 2:

You know. So kind of like dovetailing on that, I guess, is I'm really glad I made the decision to get in the cannabis industry because I was teleported back to my life in Silicon Valley last night and I'm not going to name any names, but I went to this event and it was the intersection of Dow, which is like decentralized autonomous organizations, which, as a former venture capitalist and an entrepreneur myself, like I just totally reject the concept of decentralized ownership of the company. That said, it was also like intersection of kind of like woo-woo plant medicine and like just this ultimate, like echo chamber, of like consciousness and all this kind of stuff. Which I am a conscious leader, I see, or I feel that I am, and I prescribed to that as as a benefit that I can bring the company. But there is this like disconnect of like people, like building conscious companies and not understanding why investors didn't want to give them money on that premise and no one in the room was willing to like really like stand up and tell people like, because that in of itself is not the value prop. Like. The value prop is whatever your company does and consciousness or being a conscious leader is how you believe you're going to create the most effective company in doing so. Then I was just reminded of like these little bubbles that get created in Silicon Valley and how it becomes this really kind of like just I don't know. It attracts certain types of people, but it definitely repels anyone that's not in the bubble. So it's like I don't know. I'm just happy to be in the cannabis industry, where I do feel it's a lot more open to, to whomever. Like the whole, like ethos of cannabis since I've joined has been like oh, you're smart and you're interested in cannabis, like come on in, like tell us your knowledge, like let's, let's help each other out, and I just love that about this industry.

Speaker 1:

So yeah, although we are a bubble too, we're just a really cool or we're a bubble worth joining. Join our cannabis industry bubble. It's good over here on a good day.

Speaker 2:

It's hard to get also, but we have a good time it is a bubble, but it's not like a bubble where, if you're not 100 milligram like you know consumer, you're not in the cool kids club. Like you know, I've been in the industry for eight years now. I still only consume like five or 10 milligrams at a time, but I feel just as cool as you and array.

Speaker 1:

Well, thank you.

Speaker 2:

I don't know your doses, but you know.

Speaker 1:

You know my doses fluctuates. I'm down for the hardcore hero dose and I'm down to skip to the hero dose. Also, I'm I'm a spectrum and a girl Well cool, I'm connected to your Silicon Valley roots. I think it's important for all of us cannabis to be constantly networking with folks in other industries, similar industries, and just helping constantly put a face to who we are and what's going on in our space. I think it just helps helps move our businesses forward, policy forward, all that good stuff, absolutely, yeah. Well, so you know I'm I'm really excited about today's topic for a number of reasons. Back in 2009, which was when I first entered the cannabis industry professionally, I did so as a 27 year old, first time CEO and I was a part of starting C pill lab. We were the very first cannabis lab to ever do potency testing, and I did so with absolutely no knowledge of chemistry or science, but but really with a hypothesis and a mission to create professional, legitimate opportunities and cannabis and to learn more about canvas. And one of the people that I met in that journey was one of the first chemists that we hired at steeple, who went on to start his own lab with some partners, and that person is Josh Worzer, who is now the president of, or the president, co founder, chief compliance officer at, sc labs, and SC labs has become one of the leaders in the cannabis lab testing space, and we have been hearing a ton of different news about all of the HC policy inflation that's going on in the industry and the consumer demand for high potency cannabis, so we thought we should talk about it, and who better to talk about it with us today than Josh Worzer? So I want to welcome Josh to the show today.

Speaker 2:

Hi hey Josh.

Speaker 3:

Good, good Very good.

Speaker 2:

Well, chief compliance officer, sc labs and array like this is going to be a banger of a show like this is right up your alley. And I know I have a ton of questions about potency because we work across many different markets and it's just. You know what we've been talking about with labs and testing results. You know, for many years in California. I mean, it's just like it's a different timeline and every different market you go into and it's a different set of rules, like depending on where you're at. So we're going to dive into all of that today. But you know, to Anna Ray's point, josh, I couldn't imagine a better person to bring on than than yourself. I know SC labs has has been expanding along with the cannabis industry over the years and would love to just kind of start there and get an understanding of you know what is the purview of SC labs today and and yeah, a little bit of a of your journey since breaking off from from steep hill and an array.

Speaker 3:

All right, great, yeah, so we founded the lab in 2010 after I left steep hill, and so we've been in operation ever since then. You know, similar to a lot of companies that were sort of pre legalization in California, where we, you know, we for the majority of our early years we didn't have any regulations, so we were just, you know, voluntary testing lab and in California. And then when Oregon legalized, we started a lab in Oregon and then shortly after that, california's regulations took place and so then we had mandatory testing in California, which kind of changed the game for us. And then, you know, for first 10 years or 10 and a half years or so, we was just the two labs, and then just recently we've we've sent it quite a bit. So now we have lab laboratories in in in Phoenix, we have a laboratory in in Michigan, right, and then we have two laboratories in Colorado as well. One is specialized in just him, and then there's is a cannabis laboratory. We also have a laboratory in so Cal, but we're, we, we, we we've sort of consolidated that laboratory and its operations back up into into our northern California lab, so we're not testing cannabis out of that lab right now. So, yeah, so you know kind of similar, similar to Anna Ray, have kind of been here for a while and kind of seen it all go down and you know, and being in the laboratory, I think one of the exciting parts for me about about this job has been, you know, everyone sort of wants to come through and talk shop and you sort of get to, you know, pick sort of all of the things, of all the people doing cool innovative stuff in the industry. So, if nothing else, I've had a really cool vantage point to see this industry develop over the last 12 or 13 years and and kind of watch not just the evolution of the industry but the evolution of cannabis products and how they're formulated and seeing them kind of come from, you know, basically around in early days or another with an array, you know the infused product makers were basically big brain and on is they cook in their, in their kitchen, just like you know you would back from your college. We need to see where that's come in, to see the complexity and in the sophistication of some of the products that are out there right now. It's exciting.

Speaker 1:

It's so true that the lab space is a great network building spot to work in the industry because you really do get to meet so many different entrepreneurs and different faces of their journey and they're doing product development and you get to be right there with them so cool. I am super impressed to hear about all the states that SC is in now. Can you give us a little bit more understanding to about the size company? How many people work SC? How many different cannabis businesses do you serve? Things like that?

Speaker 3:

Yeah, so shoot. I should have pulled the numbers before we started, but we have. We have over 120 employees these days and and the amount of companies we serve shooting just just in California, I know you know, in any given kind of month it's probably hundreds, and you know network wide, you know high hundreds. So so we're, we're, we're, we're one of the largest labs in most of the most of the markets we're in. So you know, we have a good amount of kind of breadth of view as far as you know kind of what we've done and who we work with. So, yeah, and we're, you know we're one of the largest labs in most of the most of the marks we're in. So we do good amount of testing.

Speaker 1:

I have 100,000 samples. That is so incredible. Congratulations.

Speaker 3:

Yeah, and that's not an exact number, but we have to be. We have to be at least, you know, nearing that, if we're not past it already. I know, I know in California alone we had, you know, we've tested over 300,000 samples. I think at this point, Wow.

Speaker 2:

So in the news a lot lately and this is always been in news. But it's just like potency accuracy and I think one of the things that really caught my eye was just that Missouri's like implementing these new rules for double checking. The others work, the lab testing of products, and this is to combat kind of an endemic issue of largely like potency elevation, especially when it comes to flour and vapes. And I mean, we've been dealing with this in California for years now and I guess, before we kind of dive into the why, what and all this kind of stuff, but like, what's the current state of it? Is it still an issue? Are people still lab shopping, you know, in California, in most states? Like, what's the kind of general status of potency accuracy?

Speaker 3:

Yeah, I'd say you know, in several of the markets we're in it's as big as an issue. It's an issue in every market. You know this is sort of the crux of the problem. You have a, you know you have basically is one metric that you know laboratories measure that has a large to a large degree affects the wholesale price that you're going to get for the cannabis product. And this is this mostly has to do with cannabis flowers and concentrates where, where you know, the THC value is a large determinant in how much that cannabis is valued at. So there's a huge incentive to try and get as high a number as you can on that test. And you have these private companies doing this testing and we're overseen by regulators but also have an enormous pressure to return results that are, you know, are high for that one value as well. As you know, we do a lot of compliance testing out. We would test in every state. We do a whole panel of safety tests. So you know, obviously operators don't want to fail any of those, either because it costs them money or in some states they actually have to destroy the crop. But you know the THC, the THC value, is the one where we seem to see the kind of most attention and you know, and so there's certainly a huge incentive to get high results, and so that kind of manifests itself in two ways. There's certainly been instances, and it happens, where laboratories are less than honest and give the customer what they want. But then there's also sort of this other type of scenario where it's sort of a, you know, confirmation bias I guess, for lack of a better term which doesn't necessarily describe but if you're looking for high results, you're going to kind of stack everything in that direction, and so there's going to be a reward for those laboratories that return the high results. So you know, and then you also compound. It's compounded by the fact that in a lot of these markets the cannabis industry is really struggling and a lot of these producers are not doing well and in need to sort of, you know, kind of pull every lever they can, even if it's not necessarily, you know the one, you know the most honest of ways to go about it. So you'll have, you know, laboratories that are returning, you know, higher than average potency results on, or THC specifically, results on their tests, and they're going to, you know, they're going to sort of attract the business over time where you know producers are going to naturally go to that laboratory to try and get as high results as they can. And then, like I said, there's also been instances where people were labs have, just you know, been fraudulent and been giving people false numbers. And you know different states again, you know you talk about Missouri different states have different ways to address this regulatory wise, and certainly some are doing it better than others. And that's, you know, that's a big piece to this puzzle is making sure that you keep the laboratories honest so they can keep the rest of the industry honest and they keep the consumer safe. We don't see it as much of an issue in infused products because typically those producers and manufacturers are looking for accurate numbers, more so than you know what's the absolute highest concentration I can get on THC. So that's with limits and caps and they want to have accurate dosing. But with flowers and concentrates and the inhalables, people just want to see high THC results.

Speaker 2:

Yeah it's funny you mentioned infused products. That's my world and we, because we're like an intermediate ingredient. Sometimes a new lab will be confused about what our incentives are. And indeed, to your point, it is accuracy, like if we submit something that needs to be 100 milligrams per gram, like that's exactly what we want, right, and we don't want it to be 130 milligrams per gram because that would make no sense, that would throw off batching and then the final product is going to be off by that 30%, right, and so it's like the ripple effect of that in some cases has been really challenging for our business. But yeah, go ahead, annarie, yeah.

Speaker 1:

Yeah, so when buyers at dispensaries are choosing products to carry, I think it's really common that brands here that for flower products, they don't want to buy anything that has less than 20% THC in it. And I just want to say that for the record, as a long time cannabis consumer advocate like watcher of the space. This is a bummer. So if there is a pathway forward for us to open the to products that don't have such high concentration of THC, we're going to get to, as consumers, access to a much broader diversity of unique flavors and terpenes and all kinds of stuff. So my hope is that what we're talking about today and this movement towards creating more accuracy in potency testing drives us to actually have access to more diversity of products on the flower side. But just to and that's just some context for listeners. I think that it definitely is important context in so much as if buyers at dispensaries are saying they don't want to buy things for less than 20% potency. That is why brands are going to Josh and SE labs or other labs and putting pressure on them to give them the very highest level of potency, to give them the very highest results on flower. But, as you've mentioned, ben, there's this spectrum. Manufactured products want consistency, flower and concentrates want the highest potency possible. And I'm wondering, josh, when you're dealing with that as a business and you have these two different stakeholders of customers you've got your manufacturers and you've got your flower brands or cultivators how do you figure out a testing program that serves them both and attracts them both, so that you can keep them all happy?

Speaker 3:

Yeah well, I mean in, not all flower manufacturers are looking for that crazy 45% THC flower that doesn't exist in nature, and so we're going to do what we're going to do. We've been around forever. We're a large company, we're not going to play that game. So you're going to come to us if you want accuracy, if you want consistency. And our message to our customers, the producers and growers out there and distributors and kind of everyone in the vertical, is the kind of short term benefit of trying to get an extra $500 a pound wholesale is not worth a sort of long term potential damage to your brand if you have a recall or if there's some sort of recourse when people find out that your labels aren't correct. And so we still get a lot of customers in the flower and concentrate side of things who are looking for accuracy and aren't trying to get those artificially high numbers. And usually those are the producers that can produce high quality THC cannabis without having to have numbers to choose. And then again, certainly the infused product makers are also a big niche for us because we pride ourselves on our accuracy and consistency and quality control, and so we tend to attract those customers. But I also wanted to just touch base on what you said, anari, and I have a theory a bit about it too, and I think this accelerated a bit during COVID, because I get it as a consumer myself when I walk into a dispensary. Well, first of all, right, you know, during COVID I couldn't even walk in the dispensary, so I couldn't open up the jar and give it a smell, because that's what I'm looking for in cannabis. It's the old analogy that everyone uses that you don't buy wine based on its alcohol content. But it's true, you know you buy wine for its flavor and in aroma and in all of those subtle subtleties of it, and you know, you assume you'll drink enough to get drunk. It's not a problem. And for me, cannabis is the same way, and I'm sure anyone really, when they think about it, you're looking for that flavor, you're looking for that aroma, and if you have to take another hit or just hold the hit in a little bit longer, you exhale like 98% of the THC. I forget what it is, it's been a while since I've seen the study but you exhale 97% of the THC you inhale anyway. So if you hold it in a little bit longer and allow that THC to get in your bloodstream. You get just as high off of one hit of a 14% flower plant that you held in versus a 30% flower that you exhale right away. But that 14% might have really interesting flavors, aromas, but no one's growing those strains anymore because there's no value to them on the wholesale market. A lot of them we're talking about this previously, anare like you know, you get the bubble cushes, the purple oracles, a lot of the purples, a lot of these strains, la confidential that you don't see on the market anymore because they just don't test very high. But they were staple strains back when we started doing this testing because they were great strains and no one realized that they're only 14%, because they still got you plenty high and they tasted great. So I think the consumer needs to have more data when they walk into a dispensary to make a choice outside of just that THC percentage. Because if you only give them the THC percentage at the dispensary, at the retail level, then they're only going to focus on that when making their buying decisions. So we've made a real push to our customers and more so we try to make as much of an effort as we can to educate the consumer to look for terpene test results in order to go in and give it a smell. But terpenes are really the true kind of quantitative quality indicators for cannabis. Is which terpenes because cannabis can produce different terpene profiles where this one strain might have 60% of the terpene content is mercy, which is that kind of earthy sedative terpene that makes you a little bit sleepy and it gives a lot of the indicators their flavor and certainly their effect. Or it could have no mercy in it and be predominantly, say, terpinoline, which is actually sort of a stimulant and it gives kind of jacks and train wrecks and those types of strains their flavor and there's a bunch of other different potential terpene profiles. And then how much of those terpenes are there is going to be sort of how well that cannabis plant was dried and cured and stored most importantly stored and if there's still a high terpene content, you know you're going to have a really strong and flavor when you consume that cannabis. And so if you're going to be looking for any type of analytical results to make your decision, it should be terpene results. But unfortunately those aren't always available and then even when the manufacturer does that test, most of the dispensaries don't do a great job displaying that information or training their bud tenders and how to relate that information to the consumer. So I think at the end of the day, it all relies on consumer education and all of our jobs to do that, because if the consumer changes their patterns, the rest of the industry will follow along, and so to us it's a matter of just getting the consumer picking on the right things, and we're seeing that a little bit, not to go on too much of a rant here, but in Oregon, actually, now we're getting a lot of pressure to return high terpene results. You've got people switching labs.

Speaker 2:

I was just going to ask that it's like because you're making me yearn back to the deli style that we used to enjoy here in California and that all went away. And it's like that was especially as a low-dose consumer. That was like my favorite thing about going into a dispensary was just the aromas and getting to see and smell the weed. And now it's all shrink-wrapped and behind plastic and it's unfortunate. And I am interested because in the infused product space what we're seeing is like I mean, 90% of the product that is sell are still just like THC and a beverage or a gummy or something like that people are starting to ask for like live rosin and and and like full spectrum and, and it seemingly like Maybe there's an opportunity for a more sophisticated consumer. And I'm curious like are we seeing that in flower and it sounds like that's kind of where you're going, in Oregon At least is people are looking for for terpene profiles, but is that terpene profiles that are still paired with like a 30% THC?

Speaker 3:

Yeah, I'm sure it is, and in Oregon is a unique. Of all the markets where we're sort of the the testing has become, you know, kind of Coopted by by you know a few labs and in some brands that are, you know, seeking kind of these like ridiculously high THC results to put on their label. Oregon is the worst and has been traditionally the the. You know, if you walk into dispensary in Oregon you'll you regularly see 45%, 50% THC flowers.

Speaker 2:

I mean that's Is there even flour in there? At that point is it just like crystals.

Speaker 1:

It's just hash. At that point it just growing hash on a plant.

Speaker 3:

Yeah, so. So, like what? About six months or a year ago it started where you know our salespeople up there saying it's hard to compete against it's labs. You know we have certain customers that you know, flower customers that are that are, you know, saying that they can get a higher terpene result at this other lab and you know, pardon me was like, well, that's just Oregon. But also pardon me was like at least they're, at least they're looking for the right metric when they're to fake you know. So we're making progress, I guess in some sort of weird way. But, um, yeah, and I think it takes time and there's so much of this industry is just so new. What new to the consumers, new to the, to the people working in the industry and in. You know, we're still figuring it out. So I think you know, over time, that the consumer will get the hint. I mean, you know I you got to look at like alcohol in in this regard and in sort of, certainly, craft beer or craft wine are our Great examples and you know I have to imagine over time, the consumer of cannabis Um, starts to go in that same direction where they say, alright, I want to know the, the THC percentage, because I want to know how careful I should be. But, um, or you know how many of these I should plan out, plan on consuming, but I don't need the highest that I can find, I just want something that that tastes really good and is well grown, well cured and in maybe a little bit unique and and and hopefully we get there. And part of it too, I think is is sort of the high cost at the retail level, that of cannabis still, I mean obviously the, the, you know Taxes and in these regulated markets are so much that goes into that, that cost. But for a top shelf, top shelf eighth of cannabis, you know I can still pay 50, 55, 60 dollars when you know which is what I was paying, you know, kind of when it was black market and so um, so I think you know that makes it sort of expensive to, to, to consume those, those high-end, high-end cannabis flowers, and you know maybe people are looking for, you know, to get the maximum bang for their buck.

Speaker 1:

But I want to jump in here on on. I think you're bringing to light some really important points about how consumer behavior drives the products that the cultivators and the manufacturers make, and then the trickle down and connection to the lab testing and and my mind Goes my systems thinking mind goes to well, our consumers getting their information and what is the information that we're showing to them? And and as the as the retail environment has been driven more towards e-commerce platforms and the order ahead Style menus, where people are going on to a dispensary website or onto weed maps and Purchasing their items and then going to pick them up at a dispensary or getting delivery, or even inside the dispensary environment. Looking at menus that are on tablets, what I have seen is is is a lack of Information that the consumer gets. Often, if I go on to one of those e-commerce menus and I click on a flower or on a pre-roll or a vape or something to learn more about the product, the only thing I get is the strain name and the THC percentage. And so I think that, while we're saying the consumers have a lot of power here, it also behooves the industry to figure out ways to start inserting more information to drive consumers to be able to make unique and different choices. So if you are a Technology platform out there that's designing menus, or or even just a retailer that is, just made me think of the Ganges, like the, you know.

Speaker 2:

It's like they could do like tasting videos and like post the video to these e-commerce sites so that at least there's like an expert on there like explaining the flavors and the experience, and this is a great idea. I'm gonna call Max. Like he needs to get his people on this.

Speaker 1:

It's like I was. I was buying some, some shelves off of a off of you know A online furniture store the other day and and when you go in there, you can click on, let it the tech specs and I mean I've probably got 30 different data points that included the weight, the length, the width, all of these different things of these shelves that I was gonna Buy. And I was doing this and I was thinking, wow, I have more information about the shelves that I'm trying to purchase when I'm looking at a shelf online website, then I am what I'm trying to buy cannabis on a dispensaries online menu, and so I think that we really just need to start bringing to the surface Ways for consumers to choose new things that aren't just about what the logo looks like on the package and the THC On that. On that effort, josh, I know that SC labs partnered with the Emerald Cup a couple years ago and you guys rolled out some you really unique categories of Cannabis that you were at least attempting to introduce into more mainstream Language so that people could start thinking outside of the box of Indica sativa, which is another thing that sometimes you see Indica sativa hybrid and then THC percentage. You guys had did a bunch of other categories but hopefully drive consumer understanding of the product. Do you want to talk about that for a minute?

Speaker 3:

Yeah, yeah, and I'm glad you brought up and you know I'm glad you brought up the ganjies too, because I think I think bud tender training is important. But but for us, what we did with the animal cup is we, we, we looked at our data set and in when we judge, in the animal cup and and you know what we found is that you know how do you judge, how do you judge sort of a dessert versus, say, like a train wreck? You know like they're completely different flavors or completely different smells, or versus, say, a fuel, and In you know it ends up sort of being a personal preference, the. The judges are going to sort of gravitate towards that flavor profile that they prefer and then sort of Judge within that category. So it seemed to make sense to to divide up the, the entrance, by those kind of broad flavor categories and and and just like you would. Again, you know if you're judging wines, you wouldn't judge. You know kind of all wines together and judge the whites and the reds and the, the sparklings, and just say who's the best wine. You know you're gonna divide it up and you might pick a best and show out of all of those, but it is really difficult to judge these sort of diverse, diverse plants or diverse strains and in flavor profiles, sort of all on the same level. So the Emerald Cup was behind it, tim was behind it and and, and you know we, we got on board, we, we went through our data set and you know, out of those hundreds of thousands of samples we had I think we use like 70,000 different terpene test results and sorted them. And first, you know there's there's kind of of all the possible you know kind of terpenes out there and flavors, cannabis produces, there's there's sort of a handful of archetype Terpene profiles and you you have sort of these heavily Mercy and dominant profiles and that's a lot of your desserts and in sort of all, basically everything that that gets classified in most dispensaries as as a, as an indica. And then you have this category where you have Mercy lemony, which is the, the, the terpene that that's found in in, you know, citrus and has that kind of lemony scent that gives pine salts, it's odor. And then beta karyafling, which is kind of this earthy, it's kind of the main terpene and closed cigarettes, if you've ever smelled that, it's kind of earthy and spicy and in in you see, like those three terpene sort of in it, in Somewhat even concentrations. You know there'll be one higher than the other and in sort of the interplay between those and you get, you get a lot of your other you, you know your other categories, your your also some of your desserts. You get your fuels out of that You're. You know, your your your gelato's, things like that. Then you have your trip and in between those two Categories that's like probably 60 to 70 percent of what's on the market right now, especially since the desserts are so popular these days, and then the fuels are always going to be popular. And then you have your trapezoid dominant strains. That's your jack rares, your train wrecks. And trapezoid is also. It's a pie, it's very common in pine trees and so it's somewhat of a pine piney smell, but not to be confused with piney. That's another terpene that can be dominant, that's so. So trapezoid is is right around 10, 15 percent of Of the, the, the strains in the market, and then much rarer, you'll see a couple percent of Strains in the market will be dominant in piney and and that's your kind of classic pine tree smell. And then, and then maybe less than 1% of strains out there are dominant osmene, and then, but within that, you've got, like you know, these secondary terpenes in aromatic compounds, um, thios, asters, things like that, that that kind of fill out that flavor profile. And so what we were able to do, both through our analytics as well as sort of the expert noses of you know, the, the animal cup judges who've been doing this for years Mark at napro, mark loose at napro, napro, who's kind of one of the, I think, leading researchers and Terpene breeding in cannabis these days. Um, he was one of the judges and he, he definitely contributed a lot to this. And so, you know, kind of collaboratively, we, we all came up with this, this, the system where we Group the cannabis into kind of really the, the flavor profiles that that people are already Classifying them at, just organoleptically, so on. You know the desserts, they all come together. So how do we use our analytics to be able to identify dessert through testing, and then sort all of these, all of these entrance, you know it, animal cup, some years takes in 7 800 different flower entries, and so how do you sort, sort those all into their their individual kind of categories through the testing and then, within those categories they were judged and so, um, you know, and then we. The idea is is to hopefully Carry that forward you know, other places in in sort of come coalesce as an industry around Some of these categories, and doesn't have to be exactly with what we came up with, but I think we've made a good start and so we're trying to.

Speaker 1:

I thought. I thought, wow, could we move away from Indica and Sativa and start to use these categories? It hasn't seemed to catch on as I had hoped, because I do think it was very innovative, but it also is maybe too complicated for consumers to understand. And that's what we're really rubbing up against. Is that THC is so understandable and all these things are just a lot harder for people to wrap their head around.

Speaker 3:

Yeah, and that's why we try to kind of map them to the different categories that people see, you know, people know the fuels, people know what we, or at least can kind of guess what we mean by the desserts. It's the sweet kind of birthday cake, you know, skittles, those kind of strains where they're the sweet and flavorful, and so it'll take time. You know, this doesn't happen overnight. We're looking at a pretty big partnership with one of the big online platforms when we can promote it and and I'll just give a plug to you know, and like I said, most of our retail outlets, dispensaries, aren't doing a great job yet. They need, they need educated bud tenders. That's where that ganjie program comes and I was actually one of the original ganjies and I think it's, I think it's, you know it's a great idea is just bud tenders need, need to, you know, kind of understand the stuff first so they can relate to people. But also the dispensaries need to do a better job getting that information to their consumers. And if there's one dispensary I've seen that that just nails it, it's, it's no, no, no kind of, you know, no, no stake in the company. But I'll plug them anyways. Mercy wellness up in, up in Santa Rosa Is does a great job. They, they, you walk in there and all of their flowers are categorized by dominant terpene or by in terpene category, I think now. And so, rather than see Indica sativa hybrid, you're gonna see here's all our pinings, here's all of our mercies and in in that, you know that is really powerful and I think you know their consumers. If you, if you ask them, they probably get it. You know, get it right away. And and that way, you know, a consumer can walk in and if no, if they like something and it's not available anymore but they knew it was a tropinoline dominant strain, they can go to the tropinoline section and they're gonna like whatever's in there because it's gonna be very similar.

Speaker 2:

So that's that's an awesome step. And like consumer education because it forces the conversation, because if they aren't educated on what a terpene is, or or how to categorize, like, then they'll ask and then you know. I Just love that. It's like this, like passive forcing of a, of a, of a education, very cool, using the wine concept that you've been using of.

Speaker 1:

When I go to the grocery store and I'm looking at wines, they're usually organized by all those infind dolls are in one column and then all the cabs are next to it and the merlot, and so if you were doing that with terpenes, it could be simpler. So, yeah, I love that idea. Retailers steal that.

Speaker 3:

And it encourages the consumer to kind of branch out. So like when I go into the dispensary, even me, I, you know, I only recognize maybe a third or a half of the strain names and and so I'm just gonna stick with what I know, because I, you know I don't want to, or mostly because I know I will like it, and if I, you know, I would, I know, from a strange name, strain name I don't understand, but if, if I know, I like this class same thing with wines you walk in. I know I like Cabernet, so now I'm gonna go through that whole Cabernet section and try, try new ones all the time because I knew it, it's relatively safe, I'm not gonna hate it.

Speaker 2:

It's funny because I my mind immediately went to like oh, that creates challenges for for merchandising because, like you know, brands look like really good when they have all their products in one place. But to to to the point is like a wine wine faces. This as well Is like if you're, if you're looking at a J Laura in one section, like you'll go to another and there'll be another J Laura in another section. Really interesting. I know we're running tight on time, but there's one topic that I kind of wanted to jump into and make sure that we covered before, before we checked out here, and and this is around like, what are states doing Proactively to kind of get testing more in line or more Accurate, I guess? And then, what are the some of the different methods that that we're seeing in the market?

Speaker 3:

Yeah, and so I mean they're. They're like I said earlier and there's kind of two categories of why this is happening. There's some labs that are, you know, are straight-up cheating and in fraudulent and the regulators have to go after them and be strict. You know, I was just reading a you know about a lab out of Arizona the other day that had, you know, kind of multiple infractions for just that. The regulators went in and did their yearly audit and found, you know, and found kind of inflation or in falsifying of results and stuff like that. And you know that kind of stuff needs to get shut down. Regulators need to act swiftly In those situations. And just just to keep it fair, if you're gonna, if you're gonna have you know, sort of private companies and it's the model we use in food testing or environmental testing if you're gonna have private companies doing this compliance testing, there needs to be, you know, strict oversight by regulators to ensure that keep them honest, because you're you're sort of putting them in in quasi Compliance role and so so the regulators need to have strong oversight. So when there is funny business, they need to step in and and but. But Outside of that too, you just sort of have, you know, laboratories. There's a lot of people who got into the lab testing, who maybe didn't even have a background in any type of other testing. They, they wanted to get in the cannabis industry, saw it, saw testing as an opportunity, start a lab in, you know. And so there's a lot of people and when we started testing, especially back at steep hill and array that, you know, there was no guidebook. You know, if I want to do an environmental testing, I can go. Pull ALAC, official methods of analysis and there's, you know, ten different ways I can do any type of test I need to do that are vetted, already, you know, already signed off on, already validated, and and it's sort of like, just follow the cookbook. If I want to, you know, sort of iterate on that and make it faster, better, cheaper, I can do that. And then I can benchmark my test back to the ones that are out there. Cannabis didn't have any of those and still doesn't have very many of them. So so you have a lot of sort of different methods that were all developed custom by the laboratory that's performing them, and and so, and, and that's fine. There's there's like a whole science on how you, how you validate your test, how you ensure it's accurate, how you continue to measure its accuracy and how you continue to monitor its accuracy. But but you know, these labs are all gonna get rewarded for the high thing and if there the results are high, there's less incentive to go and back and redo the test. But if the results are low, you're gonna do that. So you kind of get this sort of stacking of, instead of a scattering, on both sides of the accurate number, because any measurement You're gonna have like a little bit of a plus, a little bit of a minus. You know people tend to stack all the pluses. So that's just to say that, like you know, there's, there's no exact number for any of these. When you're taking a measurement in an analytical lab, whether it's environmental testing or whether it's cannabis testing, there's gonna be a little bit of uncertainty. There's gonna be a plus or minus to every measurement, and so that's fine. But what we see is some of the you know, a lot of times this is happening just because the labs aren't necessarily, you know, doing a great job in every aspect and in in in, you know, kind of need a little bit of a little bit of oversight in that regard. So what we're seeing from regulators is first, you know, most of these states where it were, cannabis is legal, the Department of Health or whoever is tasked with with overseeing the laboratories, different in every state. We'll have we'll have some sort of audit process, we'll have some sort of monitoring process, and and then most of the labs are gonna also be independently certified party accrediting body to to ISO standard or or, in some places, the TNI standard, which are basically these international standards for how a Testing laboratory of this nature should operate. So we get accredited, we get, we have people come in audit, go through our tests, look at samples, make sure. We've done all of these steps we need to to ensure the accuracy and to share the sure, the traceability of our measurements, and and so that's the first step. But then in a lot of states, just specifically to combat, for the most part, the the potency testing issue, as well as to ensure that the compliance and the safety testing are Are, you know, are being done properly and that you know labs aren't passing things that are contaminated with pesticides or other contaminants. What they'll do is they'll pull a suspect sample. So if a regulatory body has some reason to suspect, suspect, that there was a sample, that's either you know, mislabeled for THC or had some sort of contaminant in it that wasn't reported. They can go pull that sample off the shelf and in States are kind of doing one of two things when they're doing this at all they're either setting up their own internal state lab to take that sample, test it and then see if the results match up with whatever the results From the original lab were, and then they can go back to the original lab and Resolve it and see and inquire why pull the data from that sample that the lab tested and See if it was done correctly, or what other states are doing, which, which is what I like as a laboratory operator In Missouri, is one of them. Michigan does this is is there. They actually send that sample to all of the other labs and say now, all of you test this and send us your results, and so that way they can take you know 10 data points from that see, plot them on, see where they all sort of cluster and make sure that you know that that that result, that original result that they pulled off the shelf, matches sort of the cluster results that they get from from the other labs and if there's some outliers, well that those don't throw off the result, because you know most of the labs, if you, if you pull 10 labs, maybe one or two of them will be a little bit off, but but the majority of them should be right where they need to be. The problem with having just the state lab, which seems to you know, make sense on the face of it, because it's like, well you know, they'll be the experts, they'll be the arbiter and there's no incentive to To kind of go one way or the other. But the problem with that is is now you're only comparing that sample against one lab, and who's to say that the state lab is correct and that the lab that did the original testing is incorrect if there's some sort of discrepancy and so so how do you resolve that? So you know that both of these models have been tried in other testing industries and that same problem has risen up in food testing or environmental testing, where states or or, or, you know, federal government tries to, tries to, you know, kind of compare results against a single reference lab. You know so. So those are the two approaches, and and and there's more. But in general we just need an engaged, engaged kind of regulatory body in each of these states to to to really kind of Look into any of these instances of mislabeling and if there's some sort of disincentive and in people know someone's looking, there's much less likelihood that that both the laboratories who want to be in it long term and who don't want, you know fines and audit findings and potential getting shut down, as well as the brands who don't want to be Called on it or have even worse, have to face recalls and in ruin the reputation of the brand. You know you'll see that incentive to kind of get incorrect answers and in mislabel products, I think, greatly reduced.

Speaker 1:

It sounds like you're hopeful, which I'm really happy to hear Of, that these things will work themselves out in time and that, and that regulators and the industry in the labs are making incremental improvements, which is about as much as we can ask for in cannabis. So we have come to our last call, and this is our ending of the show, where we give you, josh, an Opportunity to make a last impression. Whatever you want, a plug for your business, a call to action, your choice. So, josh, what is your last call?

Speaker 3:

Yeah, well, I'll plug my business, sc labs if you need testing and get it here. But you know, outside of that, you know I think we've spent a lot of time talking about it, but I wouldn't. My call to action be just to the consumer, is is is you know if you're, you know If you're looking at just THC, when you make your buying choices, try not to try to reward the, the brands that you know Are growing quality cannabis, that's, that's flavorful, you know, buy your cannabis at the, at the dispensary. So certainly there's a, you know there's, there's all the other, you kind of hemp, hemp drive cannabis or, like you know, infused products and you know Otherwise coming into the market. And I think you know support, support your local cannabis industry is tough in most of the markets and and in you know, if you continue to support them, you continue to have quality cannabis operators and a diversity of cannabis operators in the industry and Times are tough right now. So the smoke a lot of weed and in don't buy it. On THC, but and then one last thing too is this is specific to California right now. I know that AB 420 is passing and I know it's really important to a lot of the cannabis operators to To also be able to sell some of these hemp products or use hemp ingredients, um, in the actual cannabis industry where it makes sense, and have integration of the two industries and sort of bring these two industries together, and that's that's, you know, kind of near and dear to a lot of people's hearts right now. And I think you know for people to support that initiative and you know, and allow sort of you know the cannabis industry to to, you know, coexist alongside the hemp industry is important, because it's getting kind of weird right now.

Speaker 2:

So this is my call. Wow, that's gonna be a whole another episode. Thank you for seeing that. I'm gonna go Google. Yeah, it's a. That's really interesting because we we work on both sides of the supply chain, but we'll say that for another episode. Thank you so much, I feel like we could go for another hour Super enlightening. Thank you so much for taking the time today and array always, always great to see and catch up with you. Of course, thank you for for leading the charge on this content. I know I mean this is where where the cannabis journey started for you. So, yeah, really cool, awesome. Thank you to the audience for for for watching, engaging, listening. You know, this is, this is why we're having these conversations. It's important for us all to kind of be able to share this knowledge and you know, I just want to encourage people to Keep the conversation going. You know, make sure that we're Asking the questions will provide the answers will keep ringing on the guests. If there's anyone that you want to hear, that you want to see, make a recommendation, we'll get them on. If you enjoyed this episode, please like, subscribe, share with all your colleagues, friends, family. Otherwise, remember, stay curious, stay informed and, of course, keep your spirits high Until next time. That's the show. Thanks everyone.

Speaker 1:

Bye everyone.

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