Barriers for cannabis labs limit new ventures required under California legalization
Cannabis legalization has promoted growth for many related businesses — banking and packaging, for example.
But strict rules about quality control for legal cannabis mean laboratories that test potency and a range of other questions that can only be addressed through the test tube have also grown.
And many of those businesses are in the North Bay.
“It’s worth reiterating that the cannabis industry is held to a much higher standard than about every product that’s on the market today other than baby food,” said Daniel Witt, the president of Sonoma Lab Works in Santa Rosa.
Witt’s lab follows requirements set out by the California Bureau of Cannabis Control. Samples are tested for pesticides, heavy metals, residual solvents, things like mold through a microbial screen, as well as the terpene profile of each sample, which gives plant varieties a district flavor.
Witt’s lab tests products from standard cannabis flowers to infused beverages and chocolates, with each product posing its own challenges.
An online pricing sheet lists about 20 different tests Sonoma Lab Works offers, ranging from $90 for a potency test to $185 for a pesticide test, with more expensive tests and packages available.
Witt said when legal cannabis was first getting off the ground after coming into effect in 2018, there was a dearth of cannabis labs. He estimated that six to eight months ago about 50 labs popped up across the state at the urging of the cannabis bureau.
Currently there are just shy of 30 laboratories with active licenses, according to the Bureau of Cannabis Control’s website.
That is a small number compared to the hundreds of cultivation licenses listed on the website of the California Department of Food and Agriculture, which issues them.
Witt said that is partly because there are several barriers to entry when it comes to starting and successfully operating a cannabis testing laboratory.
“If you’re going to do this industry right, no matter what vertical you’re in, there’s a tremendous amount of capital involved,” Witt said. He noted each piece of machinery in his lab costs a minimum of $100,000 and said in order to offer clients flexibility and timely testing they have multiple copies of each device.
Sonoma Lab Works has an annual license that Witt said is to be routinely renewed each year as long as his company remains in compliance with cannabis bureau requirements. Getting that license is not simple, however.
“(The bureau) has many requirements up front, everything from getting information on the licensee and any other owners to the physical space the lab is in.” Witt said. He said labs like his are also expected to get ISO, or International Organization for Standardization, certification to ensure scientific standards are up to par.
“Between that and the capital requirements, those are sufficient burdens because those take a lot of time to go through review,” he said.
Another barrier to entry for new labs is that established labs like Witt’s are developing relationships with recurring clients.
“People are settling into labs they are accustomed to and with whom they have a good rapport,” Witt said.
Part of good science in any discipline is comparing results against those of others in your field, a service offered by Emerald Scientific, an equipment supplier and proficiency testing service headquartered in San Luis Obispo.