A $500 million class action lawsuit was filed last week in Calgary targeting the potency of several Canadian cannabis companies’ products, claiming testing shows the THC content is “drastically different” than advertised. For example, a potency analysis of a cannabis oil product from one of the major producers contained 46% of the THC advertised. A second sample from the same lot was tested and contained 79% of the advertised THC content.

Class Action LawsuitCannabis was overdue for class litigation. Since 2015, the authorities have issued warning letters to dozens of cannabis manufacturers whose products have tested below the labeled quantities.  In 2018, GemmaCert published a white paper warning the industry of such lawsuits. The dietary supplement industry is rife with lawsuits and recalls, both in the form of class action suits from consumers and suits from the FDA. The white paper argued that as the cannabis industry evolves, it could be subject to this scrutiny or, worse, legal discrimination by anti-cannabis groups. Regulation brings litigation.

Class litigation is driven by opportunistic attorneys and prompted by recalls or cautionary regulatory notices. Once a problem is identified, attorneys assess the sales volume of the product in question and the extent to which its harmed consumers. If the case is profitable – and supported by consumer complaints – it is likely to proceed.

The companies listed in the Calgary lawsuit played into the hands of attorneys. The variable potency of cannabis is well-documented. Potency varies between crops and between individual buds from the same plant. Additionally, potency decreases as plant material ages. Some extract products may even experience an eight-month half-life, meaning 50% of the potency is lost every eight months.

There is no silver bullet solution to overcome the threat of class action lawsuits. Cannabis companies must acknowledge that cannabis quality assurance is a challenge. They must adopt comprehensive standard operating procedures to address this challenge, including quick, inexpensive in-house testing. Analysis devices such as those offered by GemmaCert make possible what laboratories cannot: a better assessment of potency variance with more frequent sample analysis.

Because THC and CBD content varies widely from flower-to-flower, selecting a representative sample is difficult. Testing multiple samples – even with a testing unit slightly less accurate than conventional laboratory equipment – provides a far better understanding of the potency of a crop. A representative assessment of potency with multiple tests is more relevant to quality control than a highly accurate test from a single specimen.

Class action lawsuits are here to stay. Unfortunately, there are plenty of cannabis companies in denial or too arrogant to admit they have a quality assurance problem. They will go down and make lawyers rich along the way. The smarter ones will think risk mitigation by also investing in in-house testing. As a result, they will not only be better protected but consumer confidence in their products will rise, as well as brand loyalty, paving the way for sustainable profitability.