As cannabis legalization spreads, marijuana testing becomes big business

Mar 14, 2019

The market for cannabis testing tools and technology is anticipated to hit its stride in 2025. The market, which was worth a little over $1 billion in 2017, will be worth $2.4 billion within the next five years. According to the latest research from The Insight Partners, that works out to a CAGR of 11.9 percent.

A little under twelve percent in five years might not make an investor’s head spin, but it proves that steady growth is possible despite the legal restrictions tethering North American cannabis. Insight’s 100-page report details exactly how the cannabis testing market will toughen out the political landscape, especially in the United States.

The United States has the most to gain from cannabis testing

Insight’s report names North America as the largest market for cannabis testing. And as thirty states have already legalized cannabis for medical use, the U.S. represents the largest share in this market. Those states are home to sixty percent of the continent’s total population, which is seen as the key driving force behind the testing market.

At the writing of this article, there are over 8,000 active licenses for different cannabis businesses in the US alone. No other country has that level of competition, and it represents the huge financial potential that awaits American cannabis. The demand for resources, conferences, and workshops is unlike that of any other nation. The team at Insight notes that the demand for knowledge and the subsequent implementation of more laboratory information management systems will turn the U.S. into a leader in the testing market.

The segment that will see the biggest boost in cannabis testing will be products. This includes the instruments used to test the potency, terpene profiles, and pesticide levels of both hemp and cannabis. Testing products represent over 73 percent of the testing market, and potency testing alone is predicted to dominate over a third of the market by 2025.

What roadblocks is America facing when it comes to cannabis testing?

Potency testing is necessary to regulate the dosing and consumption of medical cannabis, but tests for heavy metals, solvents, and other residuals are becoming increasingly more important as more people start to use cannabis. The problem facing Americans is that none of these tests are federally required, and the risk to American tokers is a real one.

Industrial hemp may have been legalized in the latest farm bill, but cannabis is still considered a Schedule I drug by the federal government. When it comes to cannabis testing, both industrial hemp and marijuana undergo many different tests. But cannabis is not legally held to the same safety standards the FDA uses for other consumables, and many growers are legally prohibited from using pesticides at all.

In a recent research study completed by Purdue University, Jenna Beckerman, a professor of botany and plant pathology, and her team outlined the legal hurdles that many farmers and cannabis businesses will be facing as Congress continues to stall on legalization. The issue lies in the fact that the country will be playing catch-up with its cannabis testing and safety regulations.

[On hemp and CBD, the FDA and USDA are still playing catch-up]

“You’d really rather have everything in place before you have people growing cannabis or hemp, but that hasn’t happened,” said Leah Handler, a graduate assistant who worked on the study. “It will take considerable effort to take the steps necessary to ensure that cannabis can be grown safely and that growers will have the tools necessary to protect their crop investments.”

The legal limitations may be constricting the true growth of the cannabis testing market, but the desperate effort that is driving the need for high-quality cannabis testing products will be the boost behind that steady eleven percent growth in the market. According to the team at Insight, the legal pressure may actually drive the development of “novel opportunities” in cannabis testing that could further legitimize the cannabis industry as a whole.

Pot stocks step in to legitimize cannabis testing in the United States.

Last month, The Insight Partners released their top ten lists of companies and laboratories in cannabis testing. Las Vegas-based cannabis testing lab Digipath Inc. (OTCQB:DIGP) was named as one of the top market players in North America, and in good form the pot stock subsequently filed a provisional patent for their latest terpene testing technology.

[Arcadian Biosciences stock jumps 50 percent after announcing new cannabis business unit]

Terpene profiles are used to distinguish different cannabis cultivars from one another, but the marijuana plant naturally uses terpenes to protect itself against pests, mold, and other microbials. According to the team at Digipath, these terpenes can be used as a natural mold repellent that could save cannabis growers thousands of dollars.

“We noticed that certain cultivars fail for mold much more often than others, and it can be tied to their terpene chemoprofile,” Cindy Orser, Digipath’s Chief Science Officer, explained in Monday’s press release. “We sought to take advantage of the production of terpenes by cannabis plants as naturally-derived microbial control agents.”

When it comes to mold testing, there is a one percent failure rate in Nevada. But other legalized states like California are seeing up to twenty percent of their flowers fail mold tests. The new testing method developed by Digipath would use the plant’s natural defense system as a healthier and safer alternative to traditional or even synthetic fungicides and help protect the plant and the people using it.

Digipath’s latest testing method could definitely be under Insight’s umbrella of “novel opportunities” in cannabis testing. States across the country are updating their pesticide and fungicide approval lists, but the cannabis industry is growing faster than they expected. Finding a safe and natural alternative is one unique step toward a safer and more regulated industry, and it will be exciting to see what the testing market continues to come up with over the next five years.

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