Abattis Bioceuticals Corp. (ATTBF)

[guay]

Tensions in Testing Procedures
from
Sampling Cannabis for Analytical Purposes
Michelle Sexton, Steep Hill Lab Jeremy Ziskind, BOTEC Analysis
BOTEC Analysis Corp. I-502 Project #430-1e Nov. 15, 2013

Many of the sampling policies described in this paper have significant implications on the price of testing. (To be clear, by price of testing we mean the costs levied on the producer, processor, and testing laboratory, as a result of specific policies regarding sampling methodology.) Since these regulations pertain only to the I-502 market, and not to the medical or black markets, minimizing the cost burden of testing and sampling-related policies is important to strengthening I-502’s ability to complete with these markets on price. Moreover, and for the same reason, even the most relaxed and least imposing testing and sampling policies discussed in this document will represent a cost increase over the current levels of testing expenditure as enjoyed even recently by the medical and gray markets. (However, these quality assurance regulations may also produce value, if consumers are willing to pay higher prices for cannabis with these assurances of potency and purity.)

The definition of a lot may have to evolve over time as the economy of scale evolves with the market. If it is projected that only large producers will be able to remain in the marketplace, then lot sizes will become much larger than what the existing framework may allow.

The suggested amount for a lot of plant material is not more than five pounds, based upon the approximate flower yield from an indoor grow facility using tables, or a 25 foot greenhouse row with mature plants spaced six feet apart (average yield estimated at 500 grams of flower per plant; Potter et al. 2012). The size of the greenhouse or area in which a particular variety is grown should determine what makes up the lot. A lot can be part of a larger unit that is a complete harvest. For instance, a harvest may include one lot or ten lots.

The decision on a maximum lot size entails a specific trade-off between cost and representativeness of the sample. As allowed lot sizes increase, producers and processors may separate products into a lesser number of individual lots, and testing laboratories may run fewer tests. Depending on required lot sizes, and based on the estimates of lot sizes in this document, a producer who produces a ton of plant material a year might have to pay as much as $65,000 a year for the required testing (excluding the possibility of bulk discounts). This would represent approximately 4% of gross income. (See Table 5).

Another option to reduce the cost burden of these policies would be to allow growers to access semi-quantitative methods for potency results, and provide this along with pesticide testing data as part of the grower’s certificate of analysis. Then, producer-processors would absorb some of the costs for quantitative potency and microbiology testing of product that will be distributed for retail sale. For instance, HPTLC or infrared (IR) can be used to estimate potency and help growers conduct their own experiments with growing methodologies and harvest times. A semi-quantitative result can qualify for a certificate of analysis for the producer/processor. At the next stage of packaging and finishing the product, the quantitative analysis could occur (HPLC, GC).

Finally, we might expect some decrease in the cost of testing as the volume of demand for testing increases. For instance, a common blood test for total cholesterol has a retail price of five dollars in California, yet preparing a blood sample is more time-consuming and expensive than preparing a cannabis sample. One important factor that distinguished the cholesterol test from the cannabis test is the volume of sales activity to the vendor. As demand for testing increases, testing companies will be able to make more efficient use of capital and overhead, and thus costs for testing may sink across the board.

Financial Feasibility for Raw Plant Material
Twenty grams per kilogram from the producer equates to a net loss of an estimated 60 dollars in sales for the grower, or about 1% of the total lot price. With large-scale growing facilities, a 2% sample represents a cost of about $100, and at this time with the grower performing all of the required tests, another $200. $300 per kilo of plant material over a year, if producing a ton would cost the grower about $125,000 a year. If the lot size is increased to 5kg, costs would be reduced, but it will be necessary for laboratories to decrease the cost of running the test by improving high-throughput procedures. Estimates are provided in Table 5.

Table 5: Comparing the cost of testing cannabis flowers with respect to size of the grow facility. ..."


Source: https://lcb.wa.gov/publications/Marijuana/BOTEC%20reports/1e-Sampling-Lots-Final.pdf
November 15, 2013 FINAL Page 21 and Page 22 of 26
from
Sampling Cannabis for Analytical Purposes
Michelle Sexton, Steep Hill Lab Jeremy Ziskind, BOTEC Analysis
BOTEC Analysis Corp. I-502 Project #430-1e Nov. 15, 2013