A court battle between regulators and Michigan’s largest cannabis testing facility has major implications for the state’s marijuana industry.
The case centers on Lansing-based Viridis Laboratories and a 2021 recallof thousands of cannabis products the company had verified for quality. That recall was partially struck down by a judge later that year.
WKAR’s Sophia Saliby spoke with reporter Beth LeBlanc who recently put out a story on this ongoing legal fightfor the Detroit News.
Interview Highlights
On the initial recall
There were several samples that Viridis had tested and passed as being able to be sold that actually later tested positive for aspergillus when they were retested. Aspergillus is a mold that definitely shouldn’t be on marijuana in elevated amounts. And so, that’s what led to this massive recall.
Of course, a judge later on definitely downsized the recall because he said the agency hadn’t done enough testing to show like all the product that was recalled was actually contaminated. And it’s been a court battle, basically, ever since that recall was issued.
On how Viridis responded to the recall
Viridis Labs feels like the state’s testing of its product was off and that they believe that some of the data was incorrect … they believed that the agency was in fact targeting them for some unknown reason and potentially looking to decrease their market share in the safety compliance testing world.
On how the results of this legal battle could impact the industry
From the state side, this is calling into question their recall that they did in November 2021, which some estimated cost of market more than $200 million in marijuana products that were recalled. So if that’s the case, if this was a faulty recall, if this wasn’t warranted, you have that dollar amount on the table.
And then if Viridis is wrong, if its potency tests are incorrect, if its aspergillus tests are incorrect, it could be fined for continuing to use those potency tests or those testing methods moving forward.
Both parties in this have a lot to lose, depending on the outcome of this case.
Interview Transcript
Sophia Saliby: A court battle between regulators and Michigan’s largest cannabis testing facility has major implications for the state’s marijuana industry.
The case centers on Lansing-based Viridis Laboratories and a 2021 recall of thousands of cannabis products the company had verified for quality.
Reporter Beth LeBlanc recently put out a story on this ongoing legal fight for the Detroit News, and she’s here with me now. Thank you for joining us.
Beth LeBlanc: Hey. Thank you for having me, Sophia.
Saliby: This case centers on Viridis Laboratories. What exactly does this company do and how big of a player is it in Michigan’s cannabis market?
LeBlanc: Yeah, so this company does testing for the regulated marijuana market. So essentially, before a product hits the shelves and different marijuana shops throughout the state, they test it to determine its potency, but also to make sure there aren’t any contaminants or foreign objects in that marijuana.
In years past, Viridis has had a pretty large market share, when the recall happened in 2021, it estimated that it tested about 60-70% of the product in Michigan that was sold. So, it’s a pretty big player in the market, and it’s definitely had an influence on the way things are tested in Michigan, especially at the start of this industry.
Saliby: What exactly were the details of this initial recall back in 2021?
Aspergillus is a mold that definitely shouldn’t be on marijuana in elevated amounts. And so, that’s what led to this massive recall.
LeBlanc: Yeah, so initially, the state reached out to Viridis in like August 2021, just to say that something was off with their potency, that they believed the potency results that Viridis was getting through these marijuana samples was too high.
But what actually led to the recall was they did an audit in Viridis Laboratories in October 2021 and found that there were several samples that Viridis had tested and passed as being able to be sold that actually later tested positive for aspergillus when they were retested. Aspergillus is a mold that definitely shouldn’t be on marijuana in elevated amounts. And so, that’s what led to this massive recall.
Of course, a judge later on definitely downsized the recall because he said the agency hadn’t done enough testing to show all the product that was recalled was actually contaminated. And it’s been a court battle, basically, ever since that recall was issued.
Saliby: And why are the state and Viridis Labs still at odds on this issue?
LeBlanc: Viridis Labs feels like the state’s testing of its product was off and that they believe that some of the data was incorrect. They believe that the analysis of the data was incorrect, that the state was looking at it in a way that would kind of conflate or inflate the concentration of aspergillus in the number of tests that this company had done.
And then later on, in court filings, Viridis laid out kind of a more complex claim that they said, not only was the testing off, not only was the testing done by competitors and not only was the testing analysis off, but they believed that the agency was in fact targeting them for some unknown reason and potentially looking to decrease their market share in the safety compliance testing world.
Saliby: So, what is the status of this case now in the legal system? And what could it mean for either party, the state and the laboratory?
LeBlanc: Yeah, so this has been a very complicated legal case. It’s been in four different courtrooms basically. In three of them, the state courts and the federal courts, it’s been dismissed, basically, on technicalities around procedural issues.
But it just concluded testimony in the administrative hearing world. So, these are kind of courts within the state agencies that determine whether a state agency complaint is valid or not and give recommendations for how the state agency should move forward. So, they just concluded testimony in that. They’re waiting on a decision from the judge which could be several months from now.
From the state side, I mean, this is calling into question their recall that they did in November 2021, which some estimated cost of market more than $200 million in marijuana products that were recalled.
And I guess the implications of this are pretty big, from the state side, I mean. This is calling into question their recall that they did in November 2021, which some estimated cost of market more than $200 million in marijuana products that were recalled. So if that’s the case, if this was a faulty recall, if this wasn’t warranted, you have that dollar amount on the table.
And then if Viridis is wrong, if its potency tests are incorrect, if its aspergillus tests are incorrect, it could be fined for continuing to use those potency tests or those testing methods moving forward. So, both parties in this have a lot to lose, depending on the outcome of this case.
Saliby: It seems like the state might also be moving towards opening its own testing facility. How would that impact the industry if that happens?
LeBlanc: The Viridis case is a good example and one that I think the state is pointing to as to why it should have its own laboratory. So, the state is looking at opening a reference laboratory. It actually has the funding for it. It just needs permission from the legislature because the way the marijuana laws currently function, the state can’t possess its own marijuana or test it or what have you. So, this would be a reference laboratory. So, it would be kind of to develop the testing methodologies that they want licensees to be using and then also to retest or to validate or audit the tests that these laboratories are doing.
The state is hoping to kind of take that all off the table, questions about the methodology, questions about the audits that could take place in the future by kind of centralizing that in a state-run lab.
For example, Viridis, when this recall occurred, the state had to run all the retesting through other people in the market. So, licensees who were licensed for testing, which would make sense, but at the same time, they’re also competitors with Viridis. So, it calls into question what kind of motivations they may have in that testing or the results that they arrive at.
The state is hoping to kind of take that all off the table, questions about the methodology, questions about the audits that could take place in the future by kind of centralizing that in a state-run lab. And so they’re working towards that, they have the money to do so, they are just lacking legislative support so far for authorization to do this testing on their own.
Saliby: And how does this all affect the safety of recreational marijuana for the average Michigander just going into a dispensary?
LeBlanc: The case with Viridis, it raises a lot of questions about what sort of controls the state has, and what sort of authority it has to dictate the methodology that is being used by the licensees. And if a licensee has a methodology that they think might be better, that might be validated and authorized by an outside independent accrediting body, but it conflicts with state regulatory rules, like where’s the push and pull there? What happens?
Here you have a serious disagreement between the state and the licensee about the best methodology to use and whether that methodology was followed. And so, that definitely has an impact on the product at the end of the day.
And for somebody walking into a marijuana shop, I mean, they want to know that the product that they’re getting has been tested based on the best and most recent science that is agreed upon by the regulated industry.
So I think here you have a serious disagreement between the state and the licensee about the best methodology to use and whether that methodology was followed. And so, that definitely has an impact on the product at the end of the day.
Saliby: Beth LeBlanc is a reporter for The Detroit News. Thank you for joining me.
LeBlanc: Thank you for having me.
This conversation has been edited for clarity and conciseness.
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