Friendly is as Friendly Does

Will 4/20/16 Yield the Biggest Retail Week Yet?
April 20, 2016
When Our Medicine Dies
June 19, 2016
Show all

Friendly is as Friendly Does

Consumer power is the only thing that seems capable of increasing the credibility of the Cannabis testing results reported by Washington’s State-certified Labs. QA Work Groups and competent oversight will help, but it’s what consumers choose to purchase and where they choose to shop that is the ultimate key to solving what I view as the biggest current risk facing this market.

Late last year, I posted a series of articles examining the Quality Assurance (safety) and Cannabinoid Profile (potency) testing allegedly conducted by the Labs certified to service Washington’s new State-Legal Cannabis market. That work scored the 14 then-operating labs on what I called a “Friendly-ness” scale. On that scale, labs that had a tendency to NOT fail product on QA tests and/or to report cannabinoid levels that seemed inflated were labelled as “Friendly”. They were “Friendly” in that their reported/alleged results were of a character that would likely be perceived in a positive, friendly light by their clients. There were 5 such Friendly labs identified.

In posting the Lab series, I was hoping to see progress in the labs achieving PRAGUE-ness in their operations (i.e, being Proficient, Reproducible, Accurate, Good, Unbiased, and Empirical in their sampling, testing and reporting). I argued that PRAGUE-ness was better than Truthiness. I hoped the market would listen.

In that context, I thought an update regarding the Labs would be in order. The WSLCB has a Quality Assurance Work Group looking at lab-related things and they are having their second meeting this afternoon. This is meant for them, but it is also intended as an update for the businesses and consumers of this industry.

Product lots that fail QA tests are not allowed to be sold as-is. That is a good thing, as those products are defined (through regulation) as unsafe for consumption. Selling unsafe products can hurt and, potentially, kill both those consuming for recreation and those consuming for health. Selling such products consistently and regularly at a high frequency WILL hurt and potentially kill consumers and patients.

Product lots that have high “potency” numbers, on the other hand, have a tendency to sell quickly and at higher price points than do those with lower numbers. At this early stage in Washington’s regulated Cannabis market, an ever-increasing number of those it serves are relatively naïve regarding it’s products. These consumers have tended to over-emphasize reported Cannabinoid levels in assessing the potency/quality of products within the regulated market. They are effectively “valuing” products largely based on the potency numbers printed on the mandated product labels.

Many alcoholics and most cost-sensitive shoppers of alcohol know that fortified malt liquor and wine are generally quite potent and are generally less expensive than many alternatives. These high-alcohol-inexpensive products provide a cost-effective path to a cheap drunk. These are good products both for alcoholics and for those segments of society seeking intoxication by alcohol yet having less discretionary money. It is unfortunate that alcohol causes so many health and public problems. Yet, it generates loads of tax revenue, so we have face-saving efforts to show a good-faith effort to mitigate those harms through a good thing created by the Legislature called Alcohol Impact Areas. For those following this issue … there is a meeting in Spokane of a Senate Committee to unreasonably leverage this good concept for self-serving anti-Washingtonian reasons scheduled FOR TOMORROW. It’s not everyday you can influence/educate a Senate Committee without traveling to Olympia. Seize the opportunity and show up and talk with the Senators (and press). It is, as an aside, disappointing that Senator Baum-whateverhisnameis wants to bastardize the good concept of AIAs to serve his anti-Cannabis worldview.

Similar to cost-sensitive alcoholics (and alcoholics-in-process), many of the consumers new to our regulated State-legal Cannabis market seem to prefer the allegedly 31% “THC” bud-from-heaven to the beautifully flavored and nuanced wonder produced by any of a number of our highly talented artisanal farmers but which hits only 26%. Eventually they will learn. Until then, the market appears to be pandering to (and profiting from) their ignorance.

Given this, one might think that the market would “like” and reward Friendly labs with more business. Friendly labs tend to not only ensure that one’s product will make it to market (and, perhaps, be safe), but also tend to report Cannabinoid numbers that will increase it’s price and velocity through the Retailer’s inventory (and make the consumer think they just bought “value”).

It is with a heavy heart that I present the following chart which demonstrates that this is, indeed, the case:

FriendlyLabShareTrend

This chart summarizes the monthly share-of-potency testing for flower enjoyed by the 5 “Friendly” labs relative to the 5 “not categorized as Friendly” Laboratories for whom I had sufficient data to evaluate their operations as enjoying the appearance of PRAGUEness (hereinafter referred to as PRAGUEy Laboratories). I’ve not included data for the handful of new labs that have entered the market over the past 8 months or the four that I did not originally categorize on the Friendly — PRAGUEy Scale (as they do not materially change the result and as the point is to compare “Friendlies” vs “Praguelies”).

I will make only two specific comments on this chart, as I believe it’s overall message relating to the business utility of pandering to the desires of a market are clear.
1) While Friendly labs and PRAGUEy Laboratories started out with even share, FRIENDLY was rapidly preferred by this market
2) Following a systematic growth in the dominance over the testing market enjoyed by Friendly labs, a 2-month downturn in their share (relative to PRAGUEy Laboratories) is apparent during the period immediately following my HI-Blog series on the state of the lab-testing market.

The first comment is, of course, a bummer. It’s good for the Friendly labs, but it sucks for the market. It sucks for the consumer, it sucks for the farmers and it sucks for the retailers. It also sucks for the viability of the labs that are, to the best of my knowledge, behaving in a manner worthy of the PRAGUE label.

The second comment may just be a coincidence, but it makes me feel good that my work may have had a small positive impact on the market already (I intend to look into why this is occurring and, specifically, who shifted business from Friendly labs to PRAGUEy Laboratories. I believe I will prefer the product of those farms in my future purchase decisions. I may even call them out in a future posting).

In any case, these are just my opinions. It is true that I have looked at the lab testing data more than most human beings likely have. I am, however, human and flawed. I also now know that I may well have consumed some FRIENDLY-tested product over the past 22 months. If so, I worry that that may have impacted my cognitive abilities in ways the product label did not suggest would happen.

I gather at least one of the Friendly labs has been looking closely at the data, as well. They almost seem to have taken inspiration in my postings about them and their industry. I hope they put that work to good use, and don’t use it in a veiled attempt to place a camouflage of respectability, decency, and leadership on top of their Friendly-ass selves.

It is also my sincere hope that the WSLCB has been trying to do (or, at least, will TRY to do) a quantitative assessment of the lab results that they have available (their data go well beyond what most of us have seen). That would be a good thing. It would tend to help encourage and enhance public health and safety. It would be, one might think, their duty.

To their credit, the LCB has done at least two things right on this issue.

Midway through last year, they began requiring that all labs start using THCmax (fully decarboxylated THC) when reporting “Total Cannabinoids”. That removed unnecessary (and systematic) variability from Cannabinoid reporting. It also removed a very useful market-development tool from the arsenals of certain Friendly labs.

The second thing — and it is a big thing worthy of applause, if not a standing ovation and addition to Christmas card lists — is that the LCB has created a Quality Assurance Work Group that is looking at both the lab “oversight” issue and what, if anything, to do differently with respect to pesticide definitions, regulations, and oversight.

The LCB has included all kinds of folks on this work group, including extensive industry representation whose membership includes folks nominated by the industry organizations that have the backs of various portions of the industry and lots of LCB, Health, Ecology types (and someone from Agriculture, thankfully). Of perhaps particular note, they included 4 labs/Laboratories on the work group.

It’s a very good thing that they have done (perhaps Director Garza was on vacation?). I just wish they had not included two of the Friendly labs on the work group (I guess the Director was working, after all). They are balanced, however, by the presence of two PRAGUEy Laboratories on that same work group (to be a fly on the wall to hear the interactions between these two groups would almost be worth the drive to Olympia).

Of particular concern is that the lab with the highest FRIENDLINESS score that is still in operation sits on the Group. It’s a bit like having two foxes (one of whom sure looks rabid) being invited to help guard your henhouse. Fortunately, there are two Laboratories I believe to be worthy of our trust sitting there to balance the pack (as are lots of public servants charged with making the world a better place and whose hearts likely align with that mission). I am hopeful that they and the LCB they serve will make a world that does not further reinforce Friendliness in reported lab results.

Currently, if you go out to the shelves of our retail stores, you are about 8 times more likely to be seeing products tested by Friendly labs than products tested by labs that are doing their job as the Good Lord and the regulators and legislators intended them to.

This really sucks. It is potentially damaging to this market, and it is potentially damaging to the health of those participating as consumers in this market. It is completely understandable, as well, given how the WSLCB and RJ-Lee have allowed Friendly lab behavior to persist and thrive over the past two years.

I say this because I shared my results (and links to HI-Blog) with both of these entities …. and I heard nothing back from either body (other than an acknowledgement of receipt from RJ Lee and subsequent acknowledgements from the LCB that they “are aware of Dr. MacRae’s work”).  Such is life.  It makes me a little less happy about the taxes I pay to the State, but such is life.

If you wonder whether our regulators were ignorant about what was going on prior to the HI-Blog series, the answer to that is no.  Last Spring, the Cannabis Transparency Project presented some of our preliminary work on the labs to the LCB. We showed them the “cliff” chart of moisture results and they oohed and aahed and stated quite clearly that they were aware that there was an issue with the labs, but that they had not been able to visualize it quite so clearly up until that time.  I reminded the LCB about the issue (and my blog) when I posted the first lab issue last November.

It is quite possible that, RJ-Lee was ignorant about what was going on, as checking how the labs was doing was not something they were being paid to do and, hence, not likely within their attention span. Reading the e-mail I sent to them about the labs also seemed to fall out of their attention span. I hope they continue to improve upon the stellar job on behalf of the industry that they have been doing thusfar. The LCB seems to like under-performing contractors. They must be easier to manage..

In spite of how deeply disappointed I am in the job that our regulators have been doing in managing this market and in protecting public health and safety while helping the State to reap the rewards of a new channel of taxation, credit should be given when it is deserved. The Quality Assurance Work Group and the standardization of reporting for THCmax are both credit-worthy.

Good on the LCB.

I hope that the Work Group gets it right, or at least moves us closer toward that which is right.
What we have now is not right.

************************************************************************************
As a teaser on a future article I am considering, I’ve begun an assessment of the early lab results that seems to show a relation between some apparently early indications of Friendliness and subsequent market share. As foreshadowing, this is increasingly appearing to be an unfair abuse of the lack of official oversight to unfairly engineer market dominance through reporting Friendly results. Initial results sure look like this might be true. One wonders if the Attorney General of this great State could shift some time from helping the obstructionists and, perhaps, take an interest in the possibility that some laws may have been broken by so-called labs attempting to unfairly gain share in a brand-spanking new market with the ill-gotten riches that have a tendency to follow.

I fully expect to hear a slew of truthy factoids that the dominant Friendlies, in addition to being Friendly, also supply great customer service, at low price points, with small gram requirements of samples, and pickup and delivery services, and great online systems, and rapid test turnaround times, and pretty looking reports full of Friendly numbers and low-cut revealing uniforms on their staff. I don’t particularly care, to be truthful, as the Friendliness they have displayed through their reported results is their “tell”. That is enough for me. In at least one case, I am quite convinced that Friendliness of reporting was at the core of the lab’s marketing plan. It is an interesting lab. It both nauseates me and intrigues me. I look forward to seeing what pops up on them in future (official?) assessments of the labs.

In the meanwhile, my response as a concerned consumer and analyst is that I’m adding a segment to my master business files that categorizes wholesalers on the degree of Friendliness of the test results they buy and Retailers on the degree to which the stench of Friendliness covers their shelves. Then I’ll know where to shop and what (not) to buy. Should make for some interesting analytic capabilities … and for some interesting CASP publications down the road, as well

That is consumer power.

2 Comments

  1. Shawn DeNae says:

    I wholly support the testing be placed in the hands of the WSDA and funded by the sin taxes consumers pay. The LCB secret shopper program could then do some random purchases covering all brands and types of products over the span of 6mo or a year. Then the 5lb lot becomes obsolete (hopefully) and the costs are taken out of the already stretched pockets of the farmers.

  2. […] that some state labs appear more friendly to growers in their potency and purity tests than others. A recent follow-up report by MacRae found that labs friendliest to the industry dominate in market […]

Leave a Reply

Your email address will not be published. Required fields are marked *