The marijuana market is poised for some exponential changes. Legalization of recreational cannabis is on the horizon for Canada, and more states are going legal every year below the border. With nearly one million pounds of pot in Oregon alone, this booming industry needs effective and efficient tech to regulate all of this weed.
PotNetwork reported earlier this year on the lack of standardization in cannabis testing. In a world where marijuana is legal, the industry requires regulatory testing on mold, mycotoxins, potency, and pesticides. And the demand for legitimate cannabis testing labs is growing.
The cannabis testing market is projected to grow to $1,416.3 million by 2021. That is a big jump from the $822 million the industry pulled in in 2016. Contributing to this growth are the ancillary markets cannabis testing is generating: analytical tools and other testing equipment are one, technology and software are another.
The technology currently offered by cannabis testing labs includes (but is not limited to) terpene profiling, pesticide screenings, residual solvent testing, and potency testing. Potency testing made up the largest share of the cannabis testing industry and is the one test expected to see the most growth through 2021.
But how can the cannabis industry guarantee that each of its testing labs across the globe is adhering to the same safety regulations and potency guidelines necessary to promise this kind of growth?
The Emerald Test
Emerald Scientific is one of the only testing equipment distribution companies that cater to the cannabis industry. They created The Emerald Test exclusively for cannabis testing labs to set a standard of regulation. As defined on their website, the test is “an Inter-Laboratory Comparison and Proficiency Test program (ILC/PT)” for evaluating how accurate and dependable cannabis testing equipment is across different labs.
The Emerald Test examines all tiers regulated by state licensing programs and the United States Federal Department of Agriculture (FDA), including four different microbial panels and a heavy metals test. As far as potency testing goes, this test analyzes the concentration of THC and CBD in flower and oil, including hemp oil, as well as the active terpenes in hemp.
The Emerald Test ensures that cannabis testing labs are on the same page across all tiers, including potency and microbial content. The test is offered bi-annually, and labs can participate in the tiers of their choosing. Cannabis labs that earn Emerald Test badges are actively meeting the safety and potency criteria established by the panel at Emerald Scientific. Results are shared with the public, and each lab has the opportunity to see how they compare to others in the industry.
How Do Cannabis Labs Compare?
Digipath Inc. (OTC.DIGP) announced its Emerald Test badges at the beginning of the year. Their subsidiary, Digipath Labs, earned badges in The Emerald Potency Test in both 2016 and 2017, and the lab participated in the potency, terpene, and pesticide testing last fall.
Digipath Labs provides pharmaceutical-grade testing and analysis to the cannabis industry. The company looks at these badges as a way to verify their systems and protect their customers from unregulated and unsanitary cannabis. Digipath recently reported 17 percent annual year-over-year growth. Digipath COO Todd Denkin attributes the positive balance sheets to their upgraded services.
“During this time, we used the opportunity to service and upgrade instrumentation, develop and validate new state-mandated assays and to prepare for ISO 17025 accreditation as we continue to manage growth in this heavily regulated frontier,” Denkin clarified in a statement on Tuesday.
Standardization has the potential to pay off huge for cannabis testing companies and laboratories. California native Steep Hill Labs, the first commercial cannabis lab in the United States, is also using The Emerald Test to their advantage.
Steep Hill earned their potency badges from Emerald Scientific back in 2014. This helped to solidify their reputation as one of the purest cannabis testers in the market. Their website boasts that they can quantify twenty cannabinoids and over forty terpenes.
Steep Hill Labs is taking their stellar reputation and using their accredited equipment to develop genetic testing for cannabis. Their suite of genetic tools identifies different genetic markers in different strains of marijuana. This will help doctors prescribe the right strain to patients and give dispensaries the knowledge they need to pair pot smokers with the experience they want.
“We’re bringing a whole genomic services kind of division online,” Steep Hill’s chief science officer Dr. Reggie Guadino said in an interview with CNET Magazine. “Ancestry.com…type services are absolutely essential for the future of the cannabis industry to be able to breed those things that will be either more targeted to certain populations or medicinal."
Creating a potency standard can inspire cannabis companies to be innovative with their testing technology. Unfortunately, standardization does not mean a thing when marijuana is still federally classified as an illegal drug. Steep Hill Labs was required to close their testing facility in Anchorage last month after Wells Fargo called in their loan. Wells Fargo, like many American lending banks, will not knowingly bank with marijuana or marijuana-related businesses.
Steep Hill is not losing any sleep over the morass that is the United States legal system. The lab is using their Canadian presence to expand into Europe. Steep Hill Canada is bringing their testing and genetic services to Germany, Spain, France, Italy, Switzerland, and Britain, with plans to open a lab in Mexico as well.
With a projected year-over-year growth of over eleven percent, the market for cannabis testing is ripe with opportunity. Programs like The Emerald Test can ensure that potent and pesticide-free cannabis will be available to consumers across all markets, and it might even inspire more innovation in cannabis testing and technology in the months to come.