Global cannabis testing market size is primarily driven by favorable regulatory approvals across North America permitting the production and sale of cannabis-based offerings, from food and medicinal products to oils and lotions.
Cannabis lab tests are important for ensuring that the crop as well as end products are free of contamination, are of the highest quality and are compliant with local and international standards.
Besides helping to warrant consumer safety and quality control, providers of cannabis testing can also provide quality assurance services to help manufacturers evaluate and enhance their portfolio, while being compliant to any upcoming regulations.
An increasing number of people are being educated about the benefits of CBD-derived medicines, which in combination with a surge in healthcare spending, will significantly bolster the consumption of cannabis products in developed countries of America and Europe.
Market forecast and competitive landscape
A 2019 market study published by Global Market Insights, Inc. estimates that cannabis testing market will surpass US$2 billion in annual revenues by 2025, fueled by increased deployment of cannabis with treatments for numerous medical conditions. Rising geriatric population in the U.S. could be one the major influencers, as people look towards cannabis for an alternative to opioid in pain management.
Some of the key competitors offering a slew of cannabis tests and related services include:
- Anandia Labs
- CannaSafe Analytics
- Pure Analytics
- SC Labs
Various educational and medical research institutions are also involved in extensive testing of cannabis and associated substances, as well as its applications, such as University of Mississippi and University of Alberta. Companies may seek deals with hemp growers or food and beverage producers to help develop high-quality products, through effective cannabis testing equipment and novel processes like cannabis genetic tests.
Most of the testing service providers have to confront arduous scrutiny from government officials, particularly in regions where cannabis has not yet gained broad commercial approval. Any compromise in quality can lead to heavy fines or even the loss of testing license, as proven by the shutting down of Iron Labs by Michigan Regulatory Agency in August 2019. Apparently, the lab had failed to report edibles which tested above the potency limit for THC.
Reviewing the market potential in North America
The U.S. Department of Agriculture has informed that the production of hemp has expanded to more than 128,300 acres across the country, with farmers benefitting from the passing of the 2018 Farm Bill. The bill has specifically excluded industrial hemp and its extracts from the Controlled Substances Act, which could have termed the crop under marijuana.
Cannabis testing labs in California are leveraging the massive interest in CBD products from consumers, pharmaceutical companies and beverage producers. The state holds a notable share of cannabis farms and its three licensing agencies have already issued more than 10,000 commercial licenses for cannabis businesses, indicating a vast requirement for quality control services in the region.
Techniques such as cannabis chromatography are becoming popular for potency testing, screening pesticides and terpene profiling. CW Analytical Labs is one such company offering chromatography for potency testing of cannabinoid, including for products sold in California.
Regulators are exercising stricter policies to curb the availability of likely harmful cannabis and marijuana products to consumers, right from cultivation to manufacturing, which would entail the need to test for heavy metals, pesticides and other ingredients.
In this regard, Massachusetts Cannabis Control Commission, owing to possible misinformation provided, has fined a substantial amount to marijuana cultivator M3 Ventures for utilizing banned pesticides at its growing facility.
The massive revenue potential for North America cannabis testing industry is derived from consistent investments by equity firms, industrial giants and private investors into the cannabis sector. For instance, Oakland-based ArcView Group has allegedly helped its members invest more than US$260 million in over 200 enterprises across the industry, including research companies, CDB infused drink makers and even in a cannabis delivery app.
Powered by the rising cases of cannabis being legalized in many states in the U.S. for medical as well as recreational purposes, the U.S. cannabis testing market size will depict a CAGR of 5% over 2019-2025. Not to mention, the U.S. is remnant of a score of awareness programs that are being conducted to educate people about the beneficial uses of marijuana in the medical industry, which will further augment the regional cannabis testing market outlook.
Significance of product testing has also been realized in Canada, which has recently legalized cannabis. Nearly 76% Canadians who consumed cannabis-based products in the first half of 2019 affirmed safety and quality as the main consideration before buying them. With the presence of numerous leading producers like Aurora Cannabis and Cronos Group in the country, cannabis testing market share is unquestionably poised to witness substantial growth in Canada over the coming years.
Developments supporting proliferation of cannabis testing market trends
Cannabis growers and retailers have conventionally found it difficult to win licenses even in states where the substance has been legalized for medicinal use as well as other applications. The inevitable proliferation of hemp-based products has however encouraged local authorities to permit businesses associated with the industry to operate, with certain restrictions and exclusions.
Located in Santa Ynez Valley in California, Buellton City prohibits all cannabis-related commercial activities, but has recently decided it would allow cannabis lab tests within its city limits. The move basically represents a changing albeit favorable environment for cannabis testing industry, where a city banning cultivation of the substance and retail sales of its products, will support testing activities to explore job opportunities.
Digital technologies, not surprisingly, are expected to have a major impact on the global cannabis industry, encompassing farm operations, supply chains, product testing and development. As analytical testing for cannabis gains momentum, investment in technology adoption and business collaborations are the obvious next steps to expand testing capabilities and efficiency.
Citing an example to underscore these developments, Anandia Laboratories and medical cannabis verification company TruTrace Technologies will be collaborating on analytical and genetic testing for the substance. The blockchain platform of TruTrace is reportedly aimed at ensuring product quality and genetics across the supply chain. Both the firms are committed towards evolving cannabis genetic tests and accelerated the testing process to comply with health regulations in Canada.