Sacramento-based Sequoia Analytical Labs surrendered its business license after a state inspection discovered that the company’s lab director allegedly falsified cannabis product testing results for almost four months. Hundreds of marijuana products may now have to be recalled and retested.

The loss of a lab could pose a significant problem for the California cannabis industry heading into January, when more testing requirements will go into effect for toxins such as heavy metals.

Testing bottlenecks are already expected by many industry insiders, and one fewer lab could exacerbate that problem.

According to a Sequoia message posted on social media and emailed to clients, the problem came to light during an inspection by the Bureau of Cannabis Control (BCC) on Nov. 27.

According to Sequoia’s message, “It was further discovered that the Lab Director knew about this and was secretly falsifying the results in order to issue (certificates of analysis) from July 1 to Nov. 27.”

The company was “horrified to learn about this severe breach of a very important safety regulation,” the message continued. “We have voluntarily surrendered our license … while we make the required corrections.”

The lab director has been fired and a replacement has already been hired, according to the message, and the company hopes its license will be reinstated by Jan. 1.

The BCC “should be contacting distributors so that affected products may be retested,” Sequoia also wrote.

The company is offering to retest products free of charge for any clients affected by the fraudulent results.

Steven Dutra, Sequoia’s general manager, told Marijuana Business Daily on Monday that the Bureau of Cannabis Control “is not demanding that product be pulled in and destroyed.

“The BCC wants product recalled and retested. Hopefully, they can just have a pesticide retest. We’re trying to determine that, because that’s a lot less expensive than a full panel retest,” Dutra said.

According to Dutra, 700-800 certificates of analysis appear to have been falsified by the former lab director, and those products will now have to be recalled, if possible.

“We’re probably looking, since July 1, at something in the neighborhood of 700-800 … batches of (MJ products) that didn’t have full and correct pesticide testing,” Dutra said.

He added that the lab has already notified the roughly 30-40 distributors it worked with at the time about the recalls.

However, since the results in question date back to the summer, many of those products have already been sold, Dutra said, meaning that only a fraction are even available to be recalled.

“Of those 700-800 batches, I’d be surprised if there were even 200 that had products on the shelf (still today),” Dutra said.

Still, this would by far be the biggest product recall to date in California’s regulated cannabis market.

There are currently 43 licensed cannabis testing labs in California, according to the BCC website.

A BCC spokesman declined to comment for this story.

John Schroyer can be reached at [email protected]