Lawsuit accuses cannabis labs of turning a blind eye to batch fails

A class action complaint filed in California accuses cannabis company Shield Management of lab shopping to hide that 23 of its products failed tests.

Lab shopping is when cannabis companies look for a lab that will turn a blind eye to pesticide contaminants so that failed products can continue to be sold, despite the safety risks.

There are approximately 50 Department of Cannabis Control (DCC) licensed labs in California, and competition is fierce to maintain market share as the state’s legal market declines. The complaint states that competition used to be healthy and revolved around quality, turnaround time, and customer service; now it’s a free-for-all, in which brands and laboratories agree, jointly, to ignore “safety fails” to hide the presence of dangerous chemicals that otherwise would prevent the sale of these tainted goods.

The case states that honest and compliant labs are at a disadvantage, because fraudulent labs can get more customers by removing the worry that products will fail, which would make them ineligible for sale and not be available to sell. At the same time, honest labs get punished for abiding by the regulations.

If a cannabis product fails the test for certain pesticides, the owner of the failed product can request remediation or reprocessing, but the original product can’t be retested. Labs can test the product after the owners have attempted to resolve the problem.

Shield Management

This case specifically calls out Shield Management and alleges it sold tainted products. The products from the West Coast Cure and Phire brands were independently tested by the plaintiff, Kayla Esmond, and found to contain the contaminants.

The case specifically claims that Shield fraudulently sold the products labeled as not containing pesticides or metals, which Esmond’s tests found to be false. It also alleges that Shield doctored the Certificates of Analysis that claimed the products had passed the tests.

The case also states that consumers overpaid for the products. They couldn’t have commanded market prices for them if they knew the products didn’t pass these lab tests.

Shield is accused of deliberately manipulating the results and that it wasn’t a result of error or negligence.

The case also noted that the issue of lab testing is not isolated: “This systemic fraud is not an isolated phenomenon but rather is becoming a pervasive issue across the marketplace, affecting numerous stakeholders, including consumers, legitimate businesses, and the integrity of the industry as a whole.”