From cultivator to consumer: What’s driving THC inflation?

THC inflation has become so pervasive that even public companies like Organigram (Nasdaq: OGI) are starting to make noise about it.

“THC inflation is alive and well out in the market,” Organigram CEO Beena Goldenberg said in the company’s most recent earnings call. “… We are seeing continued higher THC, and we are still seeing random testing showing that there are several players out there continuing to identify their THC flower as higher potency than it really is.”

High THC doesn’t mean more high

While customers have come to believe that higher THC measures mean a better high, a 2020 report from the University of Colorado Boulder found that’s not the case.

“Cannabinoid receptors may become saturated with THC at higher levels, beyond which there is a diminishing effect of additional THC,” the report noted.

But consumers don’t appear to have gotten the memo. They continue to demand higher and higher THC levels in the products. Dispensaries, in turn, focus on stocking products with higher THC levels.

Cultivators have also become ensnared in the inflation race, as they can’t sell their products – despite the quality – if it isn’t above a certain number.

“I mean last year I was at the store, and I saw 55% total THC on flower,” Josh Swider, CEO and co-founder of Infinite Chemical Analysis Labs, said. “It’s physically impossible to get this, but then there’s no checks and balances.”

Labs are ground zero

Labs have become the key part of this massive deception.

“California in 2020, I started getting these requests, ‘Hey Josh, 20% minimum,’” Swider said. “What does that mean? All my flower has to be 20% total THC, or I have to go because the stores are starting to only buy 20% or better.”

Swider wouldn’t guarantee anything. But it repeated in 2021.

“I started getting these calls. ‘Hey Josh, 25%. I need 25%, or they won’t buy my product.’”

Then in 2023, the bar for dispensaries in California moved to 28%, then 30%, Swider said. Holding a hard line hurt his business.

He said he held a hard line, and it hurt his business. Labs began to compete with each other to deliver the desired THC numbers.

It isn’t even done on a quiet level, Swider said. Labs are actively promoting their ability to inflate THC numbers.

On the one hand, he understands the pressure to inflate THC levels at the labs; these are typically small businesses who have invested everything they own. They can’t afford to go out of business, and the temptation to tip the scale is too tempting.

Who ya gonna call?

Swider said California regulators appear to have little interest in curbing the problem, even though other states, such as Michigan and New York, have taken a more active approach.

However, when people show up to your lab with $100,000 cash in a bag and ask for you to pass their product, it’s hard for many to say no, he said.

It should be easy to catch at least some of the labs embellishing results. If all the products testing high come from one particular lab, that’s probably a good indication, Swider said.

But THC inflation can happen in several different ways. Some labs manage to test cannabis with more moisture, which can result in a higher THC level, while others just test one high THC batch and then pass the grade to all the other strains a customer has brought in.

THC caps

One answer may be THC caps on products – or at least new rules for retesting when results come in so high.

“We’ve heard anecdotally some boards are pushing back on over 30% flower and asking for secondary testing,” Goldenberg said. In addition, many of the companies are “facing more pressure as Health Canada and the OCS have announced random THC testing protocols.”

Swider thinks that states that want to get things right will make the effort to resolve the issue. If they don’t, he said, it will put a lot of honest cultivators and labs out of business.

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