State regulators ordered the recall of marijuana products from 29 cannabis companies after a Sacramento laboratory was caught falsifying test results for pesticides, a scandal that could have serious financial consequences for already struggling retail outlets.

The California Bureau of Cannabis Control sent out recall notices this week to all businesses that had contracts starting in July with Sacramento-based Sequoia Analytical Lab to test their products.

The laboratory closed down and surrendered its business license after state inspectors discovered on Nov. 27 that the director, identified as Marc Foster, had for four months been faking test results for 22 of the 66 pesticides he was required under California law to analyze.

“The lab director... was secretly falsifying the results” between July 1 and Nov. 27, said a letter sent by the facility to its clients, assuring them that Foster had been fired. “Management and ownership were horrified to learn about this severe breach of a very important safety regulation.”

It means nearly 850 batches — tens of thousands of pounds of flower, edibles and marijuana products — will have to be returned and either destroyed or retested.

“This is that doomsday scenario that everybody has been anticipating,” said Tony Daniel, the chief revenue officer with Steep Hill Labs in Berkeley. “Everybody up and down that chain is going to want their money back, and not everyone’s got 25 to 50 grand to cover a recall.”

The notice sent by the Bureau of Cannabis Control asked the 29 companies to request the return of all cannabis products that were tested at Sequoia.

“Any cannabis goods from these batches, returned by consumers to the retailer, must be destroyed,” said the letter. It said all remaining inventory should be destroyed or re-tested pending approval by the bureau.

The recall and closure could cause major complications in the cannabis industry, where the 43 licensed cannabis testing labs in California have to add new testing guidelines for heavy metals next year.

California’s pesticide limits, which generally follow state and federal laws governing crops, are already among the stiffest in the country. The labs are required to test for pesticides down to parts per billion, a measurement that most growers say is tantamount to a ban.

Industry officials have expressed doubts in the past that the laboratories in California were capable of testing cannabis to the precision required by regulators. In fact, faulty instruments incorrectly measured the pesticides, Sequoia officials said, and that is why the lab director, unbeknownst to them, falsified the data.

The recall doesn’t mean that the cannabis was contaminated, officials said, just that the pesticide testing was inadequate.

Peter Fimrite is a San Francisco Chronicle staff writer. Email: pfimrite@sfchronicle.com

Twitter: @pfimrite