Some MS cannabis growers may not be able to turn a profit with new weed-testing regulations

State Health Officer offers further grace period for growers to catch up with new regulations

Dozens of medical cannabis cultivators and other business owners voiced concerns Thursday at the State Capitol over the potential negative impact of new yeast and mold testing requirements for flower.

During an advisory meeting with state health officials and legislators, small-size cultivators said they are being squeezed both by new testing regulations and methods, which is causing more failed sanitation tests, and by the fact that if they fail, there is currently no way to have the product retested if the batch is “cleansed”.

They said this could threaten some small cultivators’ livelihoods. According to figures from several sources, the new testing standard alone will likely cost smaller growers thousands either through retesting and pretests, cleansing or purchasing new equipment.

It is already a distressed industry, with 393 licensed Mississippi cannabis businesses, including dispensaries, cultivators and processors, serving 43,000 medically approved customers across the state, a tough ratio for these businesses.

“Some of the farmers are living from crop to crop… I think we’re pushing this a little too fast. I don’t have an issue with (the testing standard). I’m all for it, but I have an issue with we don’t have an accurate testing guideline to reach that number,” Phen Schlett, owner of Big River Cannabis, said, referring to how cultivators haven’t been given guidelines on how to reduce the number of yeast and mold cells in crops.

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According to figures provided by the Mississippi Medical Marijuana Association, cultivators and lab owners, it costs growers $500 to test one batch of flower at a testing facility. If it fails, the flower must be turned into oils or other distillates. That process cuts the crop’s value in half, Mississippi Medical Marijuana Association Executive Director Henry Crisler said. Growers can also appeal test results to the state for a possible retest.

During the meeting, several business owners expressed concern that the new standard will cause them to fail their tests, tanking profitability. Dekalb-based Alchemy Analytics, a testing lab, has already seen several failed tests, CEO Hatem Mourad told the Clarion Ledger.

Perry Lewis, COO of Steep Hills, the only other operating lab in the state, said of the 24 batches of flower the lab has tested without any prior cleansing, seven passed and 17 failed. Five other batches were sent in pre-treated with radiation, and they all passed.

“It’s definitely a high percentage, and the other lab is quoting about the same or worse than we are,” Lewis said.

In January, the Mississippi Medical Cannabis Program implemented a new regulation requiring a limit to the amount of mold and yeast cells found within flower. To ensure businesses had enough time to adjust, there was a six-month grace period. More than 20 other states with cannabis programs already have this requirement.

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However, in December and January, nearly 75% of the industry’s product was recalled due to testing failures at Rapid Analytics. Lewis said it was difficult for Steep Hills and cultivators to catch up to the regulation as they were trying to retest products and recoup losses. Lewis said that situation continued until late June, when retesting stopped. The new regulations took effect July 29.

“It felt like a lot of people forgot where we were at the beginning of this year,” Lewis said, noting that Steep Hills took on a large portion of the industry’s testing when Rapid Analytics closed. “June was the first time we felt like we were in a position, when we were in a good turnaround point to prepare for the new regulation.”

State Health Officer Daniel Edney simply said that wasn’t an excuse, and that several mid to large-sized cultivators already cleanse their product.

“We lost six months of grace period, and I’m just challenged to know why there was no discussion about this in the last six months,” Edney said. “We could have taken care of all this over the grace period…I’m happy to extend it for a limited amount of time with a game plan. We want everybody to be able to comply in a reasonable way and not impact negatively their business.”

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Edney also said the program plans to release guidelines in a few weeks on having failed product cleaned so it can be resent for compliance testing.

“We’ve even looked at what do we need to do at the state level to provide remediation access for the smaller cultivators,” Edney said. “We want to make this work where this is not the Department of Health trying to run people out of business.”

However, Crisler said he is unaware of any remediation businesses in Mississippi, and the cost for cultivators to acquire the equipment to conduct that cleaning is expensive. Some of that equipment can costs more than $200,000, one cannabis cultivator said during the meeting.

If growers were to pay a third party to conduct the testing, it would also cost nearly $200, and they would still have to spend the about $500 to retest for compliance, Crisler said. Labs can also conduct a research and development test of a small sample before a cultivator sends in a batch. Lewis said Steep Hills currently charges $110 for just a yeast and mold research and development test.

Edney said that while he understands the new testing standard is affecting smaller growers, they are necessary to keep the public safe, and that he is willing to work with cultivators to become compliant with the tests. He did not say when a new grace period would start or how long it would be.

 Grant McLaughlin covers state government for the Clarion Ledger. He can be reached at gmclaughlin@gannett.com or 972-571-2335.