The state-to-state patchwork of cannabis industry regulations typically makes any multi-state cannabis operation exceedingly complicated, and the same can be said for important auxiliary services such as lab testing.
We recently connected with Josh Wurzer, the co-founder and COOof SC Labs — a cannabis and hemp testing lab operating in California, Colorado, Michigan, and Oregon — to discuss expanding markets, lab protocols, and tips for finding a reputable lab testing partner.
This Q&A also covers the founding of SC Labs, the company’s future as it transitions to new leadership, and more!
Scroll down to read the full interview.
Ganjapreneur: What inspired you and co-founders Jeff Gray and Alec Dixon to found SC Labs?
Josh Wurzer: I was the lab director at Steep Hill lab, which was the first commercial cannabis testing lab in the world. At the time, Steep Hill was run by cannabis activists without any laboratory background. I really liked the idea behind Steep Hill but thought there was an opportunity to build a cannabis lab that looked more like the commercial laboratories I was familiar with, while staying firmly rooted in the cannabis movement. In 2010, I was introduced to my future partners Alec Dixon, Jeff Gray, and Ian Rice and pitched the idea to them. They were all also working in the cannabis industry in various capacities and they immediately saw the value in lab testing. Alec was working in hydroponics and Jeff was a cultivation consultant. Over the course of a couple beers we agreed we would found the lab.
Did the business plan always include scaling the cannabis lab into a nationwide operation?
We never wanted to be in every market and we still don’t. Early on there were only a couple viable markets that could support lab testing. As we became more and more successful and started to become the dominant lab in California, we naturally began looking to expand. Labs only work in mature markets and we were always careful not to chase every opportunity or shiny object so we didn’t get too far ahead of ourselves.
How does the company decide the next state or territory it will expand into?
Today there are several viable testing markets. We generally look for emerging markets in states with large populations. One of our differentiators is in offering a consistent service, across markets, to clients who are also in multiple markets. As such, we look for states with a healthy number of multi-state operators.
In a market filled with lab shopping for the desired results, why can consumers and businesses trust SC Labs?
We have only been testing under state regulations for a small portion of the time the lab has been in existence. Early on, it was a tough sell walking into a dispensary asking for money and cannabis products with the promise of returning a PDF with some numbers on it. All we had was our integrity in the scientific rigor that went into producing those numbers. At the time, the people who were interested in voluntary testing were not looking to cheat either. So, building a trusted brand was central to the conversation. As such, we worked really hard to make sure we were never perceived as inflating results or any other unscrupulous behavior. The whole lab shopping and THC-inflation phenomenon came about with the advent of regulations requiring everyone to test.
Today, we still see our integrity and reputation as our most valuable asset and we guard it above all else. The scientists and support staff that work for SC Labs all take great pride in what we do. We do great work and we are always striving to improve the accuracy and quality of our test methods.
I believe some of the labs and cannabis producers who are chasing inflated THC results or trying to sneak contaminated cannabis goods into the supply chain are really short sighted. Most of the lab operators and our cannabis customers who are looking to build companies and brands that will stand the test of time understand that accuracy and integrity are more important than a quick buck.
How often does lab protocol require equipment to be cleaned, maintained, and calibrated?
It is different for every piece of equipment. Some equipment needs daily maintenance or calibration and some can go much longer without either. However, all of our analytical test methods require us to run multiple quality control samples with every test batch. This allows us to continuously monitor the calibration and performance of our equipment. Each of these quality control samples has acceptance criteria. If an instrument returns results outside of that criteria, it triggers an investigation into the cause and the batch has to be retested until we have passing quality control samples.
Does each lab have the same operations, standards, and offerings despite varying state regulations?
In some states, all the labs run all of the required tests and in other states, where it is allowed, some labs may specialize in a particular test or tests and subcontract the rest of the testing out to another lab. Our labs also offer specialized hemp tests that are compliant in all 50 states as well as several tests that aren’t required anywhere but may help our customers grow better cannabis, or make better cannabis products. Several of these tests aren’t really offered anywhere else. So in that regard, we are different. However, most of the cannabis labs have similar equipment and perform the same tests similarly.
Can you share any red (or green!) flags for industry operators who are currently looking for a reputable testing lab?
I would definitely be leery of labs who are willing to guarantee any results on a test. It sounds obvious, but it is impossible for laboratories to promise that you will get a certain result and if they do, test at your own risk. Additionally, lab customers should always vet their lab thoroughly and, if they have the resources, request the opportunity to audit a potential lab’s quality control system. A reputable laboratory should welcome this request and make themselves readily available for an on site visit as well as be willing to open up their operating procedures, quality and training records, etc. for review. If a laboratory welcomes this activity it is a good sign that they are proud of the work they do and don’t mind having it inspected. If a lab dodges these requests or is less than forthcoming, I would take my business elsewhere. You pay for transparent data collection, if a laboratory isn’t willing to show you everything that goes into generating that data, how can you have trust? Additionally, if a laboratory makes a mistake, and we all do, they should have a transparent process for investigating the root cause of the error and be willing to share that information with you as well.
What is the company’s quality assurance process to ensure each lab upholds the SC Labs standards?
That has been a big part of the lift in bringing labs into the fold that had been previously operating. We have a well established set of processes that have been refined over the past 12 years and we want customers to have the same experience, as much as is possible, when they test across the network. We also strive to be the leader in accuracy, turnaround times and efficiency. As such, we do come in and establish our SC Labs systems as quickly as possible. However, we have also been able to incorporate some best practices from each of the labs we’ve acquired. So, it has been a two way street in that regard and the process has made us much stronger overall in our technical operations.
Why and how did the company restructure the leadership team?
The original SC Labs leadership team is still involved in the day-to-day business. However, we have been able to add some experts to our executive team to really help us accelerate growth and that includes our new CEO, Jeff Journey. For the past 12 years, Jeff Gray served as our CEO and he looked forward to passing the reigns to Jeff Journey, in order to take the business to the next level. Jeff Gray’s new title is Chief Innovation Officer and he’s focused innovating our services portfolio as well as expanding our laboratory network. I have retained my role, overseeing the technical laboratory operations as well as regulatory and quality operations across the network. My title has changed from President to Chief Operations Officer. We’ve also been able to bring in additional executive support for Sales, Marketing, IT, and Finance which has helped us do things we just didn’t have the bandwidth or skill sets to accomplish until now. Additionally, our Chairman of the Board, Jeff Vail is an amazing executive and has had a huge impact on this growth stage for our company. Because he served as our interim CEO, he understands our business but also brings a fresh outside perspective.
What were the key traits and/or experience that SC Labs was looking for in the CEO hiring process?
Strong leadership experience with a track record of integrity and experience with a growth organization. It was also important to find someone who had experience leading science-based organizations.
What new perspective, wisdom, and/or skills does Jeff Journey bring to the team? How does the Board see Journey adding to the SC Labs brand?
We spent a lot of time searching for the perfect CEO for SC Labs. Obviously, as founders, we were emotionally invested in who was going to lead the company we spent the last 12 years building. I think we really found the best person for the job in Jeff Journey. He has a life sciences background and understands what it takes to get to where we want to go. He is intelligent and engaged and really proving to be a quick study in regards to the cannabis testing industry.
How do you hope to see SC Labs grow in the coming year, and how will this growth serve the cannabis industry?
The plan is to continue building what has already become the largest cannabis laboratory network in the country. We will continue to expand into the larger markets so we can offer customers the same experience in all of the places they operate as much as possible. I think our longevity and reputation for accuracy and integrity will help drive the lab industry in the markets in which we participate. Hopefully we can push the new labs to ‘up their game’ and they can do the same for us. In the end, the more high quality, high accuracy labs that are operating will benefit the end consumer, who want accurately labeled and safe products.
Thanks, Josh, for answering our questions today! Our audience can visit SCLabs.com to get in touch and/or learn more.