Cannabis regulator urges quick passage of bill to let agency handle testing material as reference lab comes online

Brian Hannah, executive director of the Cannabis Regulatory Agency, told the House Appropriations subcommittee the agency’s state-funded cannabis reference laboratory is built, staffed and ready to operate and is intended to set testing standards and audit private labs for fraud. "It is built. It is ready to go. We have full staff for this reference laboratory," he said.

Derek Soba, the agency’s policy and legislative lead, said the agency cannot yet legally possess or transport marijuana in the quantities needed for the lab under current statute and urged lawmakers to pass House Bill 4501 and Senate Bill 704 to explicitly authorize that activity. "There's nothing in the statute right now that explicitly would allow the agency to possess marijuana, certainly in the quantities that we're going to need," Soba said, noting the bills have moved through committee with bipartisan support.

The agency described the lab’s public-health and quality-control roles: conducting research, auditing private testing labs to detect manipulated results, and assisting state police when nonregulated products may contain fentanyl. "We're trying to use this laboratory to do audits of the laboratories that are doing the license work in this environment," Hannah said, arguing the lab will help legitimate businesses and protect consumers.

Agency staff outlined funding and program details: an initial startup of about $2.8 million and an estimated $1.5 million annually to operate, financed from restricted license-fee revenue rather than general funds. The subcommittee heard the lab came from license-fee revenue and stakeholder support, and that the Cannabis Regulatory Agency does not ask for additional staffing in FY27.

Members pressed the agency on enforcement tools and outcomes. The agency said it relies on warnings, fines (statutory guidance previously allowed up to $10,000 per violation), license revocations and denial at renewal. It also acknowledged limits after a court decision that made suspending licenses difficult and described a backlog in adjudication for some formal complaints. "We can't suspend a license at all right now with the current language we have," Hannah said.

On equity and industry support, the agency summarized a social equity grant program funded with $1 million appropriations in FY24–26 that expanded from 62 grantees to 114 and distributed approximately $8,772 per grantee in FY26. The agency said the program is audited and grantee reporting is available on the agency website, but it does not currently track a formal ‘failure rate’ of grantees (how many recipients later went out of business). "We certainly have a list of all the businesses that have received grants. We could compare that with a list of businesses that are still active, but that's not a statistic that we track," Soba said.

The agency also warned of federal changes affecting hemp: a recent federal revision sets a hard limit of 0.4 milligrams per container that could reclassify many hemp products as marijuana in interstate commerce beginning this November absent further federal amendment. Soba said that change likely will curb out-of-state shipments and payment/transport partners, but it may have a different effect on in-state regulation and urged state policymakers not to "write this issue off just because the feds made some changes."

The subcommittee requested additional data on the social equity grants and disciplinary actions; the agency said it can provide lists and reports already published on its website. The hearing record shows legislators and agency staff agreeing to continue collaboration on legislation and county-level education grants intended to limit youth exposure to intoxicating hemp products.

The subcommittee took no vote on the bills during this session; committee members said they would continue to follow the legislation and monitor the CRA’s supplemental materials.