Marijuana testing laboratories sue equipment maker alleging fraud

More than two dozen marijuana testing laboratories are seeking a collective $1 billion in damages from a major medical-equipment manufacturer they claim sold them faulty gear under false promises.

The suit, refiled in Suffolk County Superior Court in Massachusetts on July 24, accuses Massachusetts-based PerkinElmer Health Sciences, now known as Revvity Health Sciences, of undertaking a “knowingly and intentionally deceptive marketing and sales campaign” to sell equipment it knew “could not – and w(as) not designed to” test cannabis, court documents show.

Keith Bensten, the attorney of record for Revvity, did not immediately respond to an email seeking comment from MJBizDaily on Monday.

In a June 18 response, made to an earlier version of the complaint first filed in January, the company rejected the fraud claims as “insufficient” and “inadequate.”

The lawsuit does not appear to have been mentioned during Revvity’s quarterly earnings call on Monday.

A hearing in the case is scheduled for Tuesday, according to the docket.

Marijuana testing labs claim $325 million in damages, seek $1 billion

The suit names PerkinElmer and Revvity executives and board members as well as employees, many of whom, the suit alleges, personally made false promises convincing the labs to purchase “cannabis testing laboratory instruments” starting in “2017-2018.”

The company promised that labs would be able to run tests much more easily and quickly using their equipment, the suit claims.

“In reality, the supposedly turnkey products were incapable of accurately and reliably performing as marketed,” according to the suit.

According to the suit, the company was aware as early as 2019 it was making claims the equipment could not meet via notices from state regulators as well as other labs experiencing problems, yet continued to sell to customers on the basis that its gear could meet state-mandated marijuana testing requirements.

The labs claim to have suffered total damages “of at least $325 million.”

The lawsuit claims violations of the RICO Act, fraud, negligence, and breach of warranty. It seeks $1 billion in total relief, according to filings.

Claims of faulty gear complicate marijuana testing laboratory picture

Some of the plaintiffs in the suit include labs recently penalized by state regulators for allegedly producing unreliable results, including inflated THC potency or clearing for sale cannabis contaminated with pesticides or mold.

The ongoing suit follows claims first made against PerkinElmer/Revvity as long ago as 2021, court records show.

And it threatens to further complicate the picture for marijuana testing laboratories, which regulators and operators throughout the country have identified as a major issue regarding consumer trust and safety.

According to the suit, the labs’ use of PerkinElmer “methods and instruments consistently resulted in failed testing.”

And that was despite California state regulators informing the company in 2019 that a lab using its gear “was unable to test for certain analytes,” the suit claims.

In at least one instance, a testing lab lost its state permit as a result of buying the faulty gear, according to the suit.

California-based plaintiff NCALC, which did business as The Higher Commitment (THC) Analytical, alleges it had its permit revoked by state regulators after it was found to have “failed to meet numerous testing requirements,” the suit claims.

These are requirements the PerkinElmer/Revvity sales pitch claimed the gear would meet, the suit claims.

Another plaintiff, Massachusetts-based Assured Testing, is currently suing the state Cannabis Control Commission in an effort to recover its license suspended earlier this month.

However, Assured does not claim in this suit that the PerkinElmer/Revvity gear was at issue with the loss of its permit.

Promised ‘cannabis testing suite’ with turnkey solutions

According to the suit, the company offered a ready-to-go “cannabis testing suite” that had state regulatory requirement-compliant and validated testing procedures.

Those “claims were a potential game changer for” labs “because, if true, they would allow the testing laboratories to save millions of dollars” in labor and other costs.

The lawsuit accuses the company of developing a “sales presentation” in which it claimed its QSight machine “could provide all testing previously provided by two instruments.”

The lawsuit also alleges that affected labs informed company executives and board members of the problems as early as February 2020, but “continued to market and sell the same defective systems using the same deceptive representations,” documents show.

Standard operating procedures claims

At issue is the claim that the gear also came with “turnkey,” or ready-to-go, standard operating procedures, or SOPs.

SOPs are instructions for performing experiments that ensure consistent, accuracy, and safety.

SOPs are often lab specific. And some states with legal cannabis markets such as New York, California, and Oregon require labs to submit to state regulators even more specific SOPs for key functions such as testing for total yeast and mold.

That made PerkinElmer representatives’ alleged claims that their lab gear was ready to start testing in those markets – without requiring labs to do the extra work to fine-tune SOPs – all the more alluring, according to the suit.

But the company’s claimed “(s)tate specific SOPs did not exist,” the suit claims, adding that the company “had only partially developed certain SOPs for California and Oregon.”

“The problem with all of (the company’s) so-called turnkey solutions, however, was that they were not turnkey,” the suit alleges.

Machines could run multiple required tests simultaneously

According to the suit, the company claimed labs could use their gear to run a single test that would detect all the pesticides required by California law instead of using two machines as was an industry standard.

In another alleged false promise, company officials claimed a gas chromatography mass spectrometer could run a test that would detect “both residual solvents and terpenes.”

The suit also accuses PerkinElmer/Revvity of marketing a “digestor,” which uses acid under pressure to prepare samples to detect heavy metals.

According to the suit, the digestor was so “unusable and dangerous” that “it was common for the vessels to explode and cause harsh acid to be displaced in the lab.”

Plaintiffs in two countries, 10 states

The plaintiffs in the suit include companies in 10 states and in Canada, some of which have gone out of business:

• Assured Testing Laboratories, based in Massachusetts.
• Plant Safe, of Arizona.
• Evio, based in Berkeley, California.
• Nature Safe, San Diego, California.
• Pride Analytics and Consulting, Cathedral City, California.
• NCALC, doing business as The Higher Commitment Analytical, in Nevada City, California.
• High Sierra Analytics, Fresno, California.
• 2 River Labs, California
• American Biotech Testing, Salinas, California.
• SC Labs, with locations in Tigard, Oregon and Santa Cruz, California.
• CB Labs, in San Rafael, California.
• CanMedLabs, Sunrise, Florida.
• Enve Analytics, Windham, Maine.
• Indicative Testing, Sanford, Maine.
• Aries Analytic, Ferndale, Michigan.
• Agricor Laboratoires, Plymouth, Michigan.
• Vassar Acquisitions Property Management, Vassar, Michigan.
• The Spott Laboratories, in Kalamazoo, Michigan.
• Scepter Lab, Santa Fe, New Mexico.
• Higher Testing, Roland, Oklahoma.
• Jasper Analytical, Tulsa, Oklahoma.
• Rose City Laboratories, Portland, Oregon.
• Pinnace Analytics, Medford, Oregon.
• Bluebonnet Labs, Dallas.
• First THC Company, Dallas.
• High North, Woodbridge, Ontario.
• Ontario Inc., of Vaughn, Ontario.
• Pura Analytical Labs, of Duncan, British Columbia.

Private equity angle

The suit also names the private equity fund New Mountain Capital as a defendant.

In 2023, New Mountain acquired PerkinElmer’s “ongoing sales and services operations” related to the cannabis-testing gear, according to the suit.

The suit also alleges that after the acquisition, the company “continued to harm” the suing labs “by refusing parts and service to” labs that brought suit.

Other labs that did not sue were warned that if they did, the company would similarly refuse to honor agreements to service their equipment, according to the suit.

The suit also accuses Juniper Analytics, a cannabis-testing outfit, of promoting the faulty gear in exchange for “cash payments and free instrumentation.”

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.