Tolling has become a critical part of modern cannabis operations, allowing brands to outsource extraction and manufacturing while focusing on sales and product development. But when raw biomass is transported from cultivation sites to third-party processors, it enters a high-risk phase. A single failed compliance test can stall production, trigger costly delays, and jeopardize inventory planned months in advance.
What “Failure” Means
State-mandated testing typically covers potency, moisture content, pesticides, heavy metals, mycotoxins, microbiological contaminants, and, depending on jurisdiction, water activity or filth. Regulations vary, but the consequences are consistent: if biomass fails, it cannot move forward until remediated, retested, or destroyed.
In California, for example, distributors must either destroy failed products or work with a licensed manufacturer on an approved remediation method before retesting. Oregon requires labs to report failing results to regulators within 24 hours and restricts remediation for certain contaminants such as banned pesticides. These rules create a strict, time-sensitive framework that tolling partners must navigate.
Immediate Impact: Quarantine and Documentation
Once a batch fails testing, the tolling facility must immediately quarantine it—separated, labeled, and locked down from other inventory. A certificate of analysis (COA) documenting the failure becomes the key decision-making tool. At this point, risk allocation depends on the tolling agreement.
Some contracts maintain cultivator or brand ownership throughout transport, meaning the financial burden of a failure stays with them. Others shift partial responsibility to processors if contamination can be tied to improper handling, storage, or process deviations.
Remediation, Retesting, or Destruction
Whether biomass can be salvaged depends on the failure category and state rules.
- Remediation: Many jurisdictions allow remediation for microbial contamination, excess moisture, or certain processing-related issues. Methods may include re-drying, decontamination, or converting biomass into extract. Once remediated, the batch must pass a full compliance retest.
- No-remediation contaminants: Some failures—especially involving banned pesticides or certain mycotoxins—require mandatory destruction. Oregon and other states explicitly prohibit remediation in these cases, forcing operators to absorb the full loss of material and labor.
For brands relying heavily on tolling, one failed batch can wipe out a harvest’s worth of supply, strain retail commitments, and disrupt product release calendars.
Risk Amplified by Fragmented Regulations
Because cannabis remains federally illegal, each state sets its own testing, remediation, and destruction rules. An issue that is remediable in one market may be an automatic loss in another. This lack of uniformity adds uncertainty around insurance claims, remediation timelines, chain-of-custody disputes, and financial responsibility between partners.
How Tolling Partners Can Reduce Exposure
Strong risk mitigation begins long before biomass arrives at the processor. Effective strategies include:
- Pre-harvest screening: Internal testing that mirrors state compliance panels helps catch problems early.
- Clear contract language: Agreements should define when ownership transfers, who pays for remediation or destruction, who chooses the testing lab, and how many retests are allowed.
- Robust chain-of-custody procedures: Proper packaging, secure transport, and environmental controls (temperature, humidity) minimize contamination during transit.
- Data-driven quality tracking: Monitoring patterns in failed batches can reveal recurring contamination sources—specific cultivators, storage methods, or carriers—and inform long-term operational improvements.
The Bottom Line
Testing failures during tolling transport are costly but manageable. With strong contracts, proactive testing, and an aligned logistics strategy, brands can convert testing failures into operational insights rather than catastrophic losses.