Nevada Cannabis Compliance Board (CCB) members unanimously voted during their regular meeting Sept. 27 to deny two motions by Cannex Nevada LLC (now doing business as LettuceTest LCC) to dismiss disciplinary action against the company.
In a 44-page complaint CCB filed in January 2021, state regulators claimed that Cannex failed to fix “systemic issues cited over multiple years of inspections, several of them repeat offenses.”
Specifically, regulators detailed 22 violations found during a December 2019 investigation and the continued review of laboratory records. Among those violations, Cannex was allegedly engaging in practices designed to inflate THC potency for select clients—a “repeat violation” from December 2017, when Cannex had its license suspended. Cannex last renewed its state license in July 2020 as both a medical cannabis and adult-use cannabis testing facility in Nevada.
On behalf of LettuceTest/Cannex, attorney Kimberly Maxson-Rushton, a partner at Cooper Levenson, argued during a CCB special meeting Sept. 15 that every one of the testing facility’s alleged violations in question occurred in 2019, when the Marijuana Enforcement Division (MED) was the state’s regulatory body for the industry (before the CCB’s formation).
Maxson-Rushton said the testing facility demonstrated compliance and met a statutory standard via a corrective action plan with MED officials, and therefore the CCB members should dismiss their current complaints—made in 2021—because they mirror what was already corrected.
“Even if (Cannex) didn’t agree [with the 2019 audit and investigation], they have the obligation to demonstrate compliance to the satisfaction of the agency that holds their license,” Maxson-Rushton said. “And that’s what they did. And so, again, it begs that question: When all of that was done in 2020, before [the CCB was] even in place, why file a complaint in 2021?”
But CCB members rejected that motion—that Cannex has already amended its alleged 2019 violations—during their subsequent meeting on Sept. 27.
“There are some serious allegations in that matter,” CCB member Dennis Neilander said during the meeting. “And I don’t believe the party filing the motion has carried the burden to dismiss because in reviewing the record, there’s been a finding by the hearing officer. And so, in light of those facts, I would support denying the motions—both of them.”
According to the 44-page complaint, Cannex was not maintaining impartiality in its 2019 testing procedures, as required by state law.
“Rather than protecting consumers through accurate and honest testing, Cannex implemented processes that were designed to protect monetary assets of their clients without regard for consumer safety,” according to the complaint.
The CCB complaint listed five of Cannex’s major cultivation clients with whom the laboratory allegedly engaged in improper testing practices that were implemented “for the purpose of protecting their clients’ businesses, and therefore their own.”
Those five companies are: THC Nevada (FloraVega), Silver Sage Wellness, ACC Industries, Nevada Group Wellness (Prime Cannabis) and Integral Associates (Essence). Four of those companies are listed with active licenses on CCB’s website, while there were no search results for ACC Industries.
In addition to engaging in practices designed to inflate THC potencies, the CCB complaint alleged that Cannex was performing:
“Heavy metals testing data demonstrated that the lab routinely retested samples from Silver Sage Wellness Cultivation that failed for cadmium,” according to the complaint.
Considered a cancer-causing agent, breathing high levels of cadmium damages people’s lungs and can cause death, according to the Centers for Disease Control and Prevention.
“During the period of review, all of Silver Sage Wellness’ cadmium fails were retested at least twice more, with some up to four or five times more,” according to the complaint. “As a consequence of this practice, Cannex reported multiple samples which failed for cadmium as passing from September 2019-November 2019. This is evidenced by the 22 samples [listed in the complaint], all of which initially failed for cadmium.”
The CCB complaint also detailed microbial failures through unapproved retesting.
The actual microbial fail rate for THC Nevada as tested by Cannex was approximately 31% during the period reviewed by state inspectors (September to November 2019), according to the complaint. Cannex allegedly retested all the failed samples and reported passing results when possible.
“This resulted in a reported microbial fail rate of only 13% for that time period,” according to the complaint. “Of those fails, 13 samples initially failed for Aspergillus. Cannex subsequently retested and reported passing results for all 13 of the failed Aspergillus samples.”
A meeting date to consider the proposed disciplinary action is to be determined.
