Marijuana’s Next Billion-Dollar Market: Lab Testing

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Fifty billion here, $10 billion there—estimates of the size and the growth of demand for cannabis, cannabis research and other marijuana-related ancillary products and services differ only in guessing at just how huge weed is going to be, everywhere, for everybody. (Amazing; this is just what investors want to hear!)

Now comes sweet music for the ears of anyone involved with a marijuana-testing lab: cannabis testing is poised to become a $1.4 billion market by itself, according to a new estimate.

Cannabis lab testing for potency, purity and detailed information such as terpene counts was worth $866 million in 2016. With rising demand for medical marijuana throughout the world, and legalized recreational cannabis available throughout more and more of North America, testing labs will be worth $1.4 billion by 2021—a year-over-year growth rate of more than 10 percent. Which is to say: pretty huge.

The estimate includes the cost of equipment and computer software used to test cannabis—expensive liquid and gas-chromatography machines—as well as the cost of hiring skilled and trained humans to run them and interpret the results. This is one area where growth may be inhibited; according to research analysts, there is a “dearth of skilled professionals” working in marijuana lab testing.

This is all according to an estimate from Markets and Markets, an India-based “global research firm” founded in 2001 that is also a veritable report factory. This estimate on the cannabis testing market is but one of 60,000 market reports the organization claims to publish in a calendar year. (Reading the full report will cost you several thousand dollars; this is all per the perfunctory introduction.)

It’s safe to say that there will be increasing demand for accurate and reliable marijuana testing and the subsequent clean cannabis, following a string of contamination scandals.

Two of Health Canada’s officially licensed marijuana companies were recently found to be using a banned pesticide in product delivered to patients—some of whom say they are now more sick than they were before as a result—and in California, an immuno-compromised cancer patient died after acquiring a fungal contamination that may have originated in smoked marijuana.

One area where lab testing is absolutely set to expand significantly is California—the largest single producer and consumer of cannabis in America—where none of the marijuana is subject to state quality-control standards and may be sold as-is until Jan. 1, 2018.

According to Berkeley, Calif.-based Steep Hill Labs, one of the labs mentioned in Markets and Markets’ report as a key player, much of the marijuana sold in dispensaries in California would fail safety standards in other states.

Of particular concern are the CO2 cartridges used in vape pens. More popular than ever as a discrete, clean and easy way to consume cannabis, cartridges use oil distilled from raw cannabis—and any contamination in the starting product is concentrated in the resulting oil.

Some vape cartridges may also include chemicals including polyethylene glycol, which is classified as a carcinogen. Does yours have this nasty stuff? You probably don’t know! Though you’d like to—and hopefully you will, well before the industry that’s telling you becomes worth seven figures.

1 comment
  1. So, as far as I follow. For example, the MCR Labs (Framington) had in their Crunchbase profile like 10 employees at the moment of this publication, and now (check the Crunchbase), they employ 10 times that in the business of cannabis analytical testing. Does it mean they ride the cannabis lab testing horse effectively?
    Its hard to say, since this article does not say anything about the size of the US cannabis lab testing market, just some general assumptions. Surprisingly, I checked Statista, there is no much information about the size of the US market for cannabis products testing.

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