State inspections show an Arizona cannabis testing lab continues to flout the rules even after a recent $88,500 fine for previous repeated violations in THC potency and contaminant tests.
The fine levied against Kaycha Labs, a Florida-based chain with locations in nine states, and its subsequent violations offer more examples of a system long criticized as flawed. The criticism centers on how the system in Arizona, as well as other states, encourages cannabis dispensaries to pressure labs to provide favored test results for potency and potentially harmful contaminants like pesticides.
"Foxes guard the henhouse" in the testing industry, said Jon Udell, a cannabis lawyer and policy director for Arizona NORML, the National Organization for Reform
of Marijuana Laws.
"Arizona's labs are paid by the very dispensaries whose products they're supposed to police, and the lab that best inflates THC content and hides contaminants will be the lab that wins the next contract," Udell told The Arizona Republic. "A $90,000 fine is not a big enough punishment to disrupt that math."
The fine is one of the largest ever in Arizona for a testing firm, yet lower than some industry observers expected. The state originally assessed a $133,500 fine against Kaycha but lowered the amount in a consent agreement, a common occurrence in the state's regulation of labs.
Arizona voters legalized medical cannabis in 2010, then legalized recreational cannabis for people 21 and older in 2020. But the state didn’t require any formal testing until 2021. Since 2021, the industry has shrunk from 27 labs to seven.
Kaycha opened its Tempe lab in 2023 as part of its national expansion and quickly ran into problems with inspections by the Arizona Department of Health Services, which oversees the state's medical and recreational cannabis industry.
Violations led to a $37,750 assessed fine in January 2024 and another $4,000 fine, which was negotiated from an original $10,000 assessment in September 2024. The fines were for multiple failures, including not developing proper standards, not completing required forms and using inconsistent testing methods, online records show. Some of the 2024 violations had been flagged in 2023 inspections.
The health agency's 11-page letter in April 2024 contained findings that the firm had provided more inaccurate sample results for potency and contaminants, including some "double-repeat" violations. Problems came up in every aspect of its responsibilities, including tests for microbes, pesticides and potency, according to the state.
For instance, state rules advise laboratories not to retest cannabis for potency without a scientifically valid reason to do so, such as a "known failure" in the process. Kaycha retested potency samples at a client's request, according to a 2025 letter to Kaycha by the health agency.
One retested batch showed criteria being used that tended to inflate potency results, the letter said.
Inspectors went back into the lab in November 2025 and found higher-than-allowed levels of the pesticide Spinosad in some samples attributed to poor scientific methods.
In December, records show, the state issued a recall of several edible cannabis products sold in dispensaries, saying in a news release, "failed testing for the pesticide Spinosad was reported to the cannabis establishments as a passing test."
The company has paid half the $88,500 fine and has until October to pay the rest. In the meantime, inspections in April and June of this year showed violations that included repeats of the problems identified in 2025.
The largest part of the 2025 penalty was due to pesticide testing, in which the lab established a baseline method using cannabis samples that weren't diluted to reduce pesticide concentrations, then added dilution in actual tests, skewing the results.
The June 2026 inspection showed a similar dilution problem, but this time in THC potency tests.
The health agency's reports from 2026 don't mention any potential fine for the new issues.
Chris Martinez, the president and co-founder of Kaycha Labs, didn't return calls or emails for this article. He told The Republic last year the lengthy April 2025 inspection report was "just a standard audit."
"They found things and we fixed them and we move on," he said at the time.
Kaycha claims on its website it has labs in nine states and is "the largest Multi-State operator in the cannabis testing industry." The company has also garnered some negative attention for its operations. Kaycha Labs is one of eight testing companies being sued by a competitor in Massachusetts for allegedly manipulating test results to inflate potency results and undercut results on contaminants.
Reach the reporter at rstern@arizonarepublic.com or 480-276-3237. Follow him on X @raystern.
This article originally appeared on Arizona Republic: Cannabis testing lab kept breaking rules after major Arizona fine
