This November, voters in nine US states will weigh in on ballot initiatives to legalize cannabis—whether for medical use only, or for all adults 21-and-over. California, the nation’s most populous state—and the world’s sixth largest economy—is being watched especially closely. If passed by voters, California’s Adult Use of Marijuana Act, a “tax and regulate” measure for recreational use of cannabis, could present some social challenges—but also build up a relatively new legal industry in the state's economy. The legal sale of cannabis in any of the nine states will generate spin-off economic effects.
Cannabis has been consumed in large amounts for decades in the United States, but increased regulatory scrutiny will mandate that all cannabis products legally sold in the United States must be tested for potency and purity by a state-licensed cannabis analytic laboratory before reaching consumers. This means a massive increased need for these labs—and a growing market for lab instrument manufacturers and lab suppliers.
A 2016 report by Arcview Market Research, which tracks the industry, predicts the annual sales figure for legal cannabis will grow from $5.7 billion (in 2015) to over $22 billion by 2020. Similarly, a 2015 report by GreenWave Advisors, LLC forecasts total annual legal cannabis sales in the range of $21–25 billion by 2020, with total annual revenues for cannabis testing labs being about $850 million.
Cannabis testing lab owners and managers are feeling that their industry is finally getting the legitimacy and respectability it deserves. Josh Wurzer is co-founder and Laboratory Director for SC Labs in southern California, a leader in the field of cannabis testing. Interviewed for this article, Mr. Wurzer commented on how much the cannabis testing industry has changed since he first became involved. He describes the early days of testing medicinal cannabis as a bit like the ‘Wild West’, with everyone scrambling to buy used lab equipment because financing was tight—almost impossible to get. He states the quality of testing then was wildly variable and cannabis-testing methods in each lab were developed in secret. Although lab operating procedures and testing methods remain closely guarded secrets, Mr. Wurzer says standardization of results (if not yet methods) is being achieved among the leading labs in California. Although the cannabis testing labs are competitors, SC Labs participates with them in ring testing. Mr. Wurzer said ring testing is a common procedure used in other industries where participating labs each send out samples to their competitors to verify that they are getting similar results. He noted this is one more sign of the growing maturity of the cannabis testing industry—“it helps protect customers and also helps the cannabis testing industry as a whole thrive.”
The most basic of cannabis lab testing assesses how much of the psychoactive compound THC a sample contains (expressed as a percentage of overall weight). However, many labs, whether required by their state or not, also test for contaminants, such as molds, mildews, harmful bacteria, and residual fertilizer or pesticides applied to plants by the growers. Many labs now also test for terpenes, as part of product quality control analysis. Terpenes are a large group of volatile unsaturated hydrocarbons found in the essential oils of plants, which give the different varieties of cannabis (OG Kush, Lemon Haze) their distinctive aromas and flavors. Once ingested, some terpenes interact with each other and with cannabinoids to produce specific effects; some terpenes energize the consumer, whereas other terpenes induce a calm, relaxed state. Understanding these effects is especially important for medical-use cannabis.
Cannabis testing labs and industry analysts expect that legalization will not only increase the volume of cannabis tested but also number of tests for each submitted sample. The stringency for a ‘pass’ in these tests will also increase. Todd Denkin, CEO of DigiPath Labs in Nevada, recently told the Las Vegas Review Journal that his company had invested $1.4 million in its new testing facility. This investment included a $250,000 LC/MS instrument to measure pesticide residues. Testing for pesticides is becoming more common and important. In the last year, Denver's Department of Environmental Health and Colorado's Marijuana Enforcement Division recalled over 50 different cannabis products due to unacceptably high residual pesticide levels detected during testing. Mr. Wurzer mentioned that 40-45% of the cannabis that SC Labs tests fails the pesticide screen.
Most of the equipment used to test cannabis is commonly found in labs that test food, pharmaceuticals, or personal care products. Wurzer outlined a list of ‘must-haves’ for a top-flight cannabis lab. His list includes LC/MS (high performance liquid chromatographs coupled with mass spectrometers) for cannabinoids and pesticides, GC/MS (gas chromatographs coupled with mass spectrometers) for terpenes and residual solvents, ICP/MS (inductively coupled plasma mass spectrometers) for heavy metals, and PCR, real-time PCR, and DNA sequencers for genetic testing (for the presence of pathogenic bacteria and molds).
Lab instrument manufacturers have noticed that the cannabis testing industry is growing—and gaining respectability. Cannabis testing labs are also increasingly able to afford (or get financing) to buy new, high-end lab instruments. At the recent Cannabis Science Conference held in Portland, OR on October 5–6, approximately 650 scientists, lab managers, and exhibitors from around the world met to discuss the cannabis industry and its future. Shimadzu Scientific Instruments was a major sponsor of the conference and appears to have made early, bold steps in reaching out to the cannabis testing industry. According to Scott Kuzdzal, PhD, General Manager of Marketing at Shimadzu, his company aims to supply hardware, software, service, and technical support that allows cannabis testing labs to be up and running quickly, with lower capital and operating costs.
When asked what he thought was a future trend in cannabis testing, Kuzdzal replied: “Shimadzu sees easy-to-use analyzers that do not require advanced degrees nor expertise in chromatography/mass spectrometry to operate. At the Cannabis Science Conference in Portland, we previewed our new Cannabis Analyzer for Potency. This turn-key analyzer provides an integrated LC, all consumables (including HPLC column and reagents), software and methods necessary to get a lab up and running in under one day.”
Asked for his view of the future, Mr. Wurzer pointed out that the growth in the cannabis market means stakes are higher. Government regulatory agencies, cannabis producers, and consumers want to know that lab results are reliable and trustworthy. He said lab instrumentation has to have the sensitivity, reproducibility, and documentation capabilities for a lab’s test results to be legally defensible. “Moving forward, I think we'll see the testing industry evolve to not just perform the basic quality control and safety testing required by regulation. It [testing] supports cannabis growers and product manufacturers, so they can actually improve their processes and the quality of their products.”
How will increased regulations and stringency requirements affect testing labs? According to Wurzer, “Labs will either have to buy the proper equipment or close. This is a good thing. Customers should expect competency from their cannabis testing labs.”