Coherent Market Insights

Cannabis Testing Services Market to Surpass US$ 5.87 Bn by 2031

Cannabis Testing Services Market to Surpass US$ 5.87 Bn by 2031 - Coherent Market Insights

Publish In: May 23, 2024

Cannabis testing services market is estimated to be valued at USD 2.38 Bn in 2024, and is expected to exhibit a CAGR of 13.8% over the forecast period (2024-2031). The global cannabis testing services market is witnessing high growth due to the rising demand for safety and potency testing of cannabis and cannabis-derived products. Furthermore, the increasing legalization of medical and recreational cannabis across countries is driving more consumers to the legal cannabis market, thereby propelling the need for quality certification and testing.

Market Dynamics:

Rising demand and increasing legalization of cannabis are the two major drivers propelling the growth of the global cannabis testing services market. As the legal cannabis market continues to grow significantly across regions, the demand for purity, safety, and potency testing is also increasing. Various countries and states that have legalized medical and recreational cannabis have made third-party safety and quality testing mandatory. This is creating lucrative opportunities for cannabis testing service providers. Furthermore, changing consumer preferences towards premium and qualitatively tested products is also boosting the market growth. However, the presence of lesser number of certified laboratories and high costs associated with cannabis testing limits the overall market expansion.

Increasing Regulation and Standardization Needs are also Driving Cannabis Testing Adoption

Not only does legalization open vast new testing demands, but regulators are also implementing stricter rules around cannabis quality control and safety compliance. For example, many jurisdictions now require mandatory pesticide testing, and some even cap the allowable levels of certain residuals in finished products. They also require tests to prove THC and CBD potency matches label claims. This rising tide of regulation demonstrates the governments’ responsibilities to properly oversee the new legal industries and protect public health. Cannabis businesses must comply with the various testing requirements to legally sell their goods. The additional regulatory hoops are raising the baseline needs for testing and certification accordingly. As regulations tighten further over time, testing will become an even more important process in the cannabis supply chain, driving greater market success for testing labs.

Legalization of Cannabis for Medicinal and Recreational Use is Driving Growth in the Cannabis Testing Services Market

As more states in the U.S. and countries around the world legalize cannabis for both medicinal and recreational adult use, the demand for cannabis testing services is growing exponentially. Previously, when only medical cannabis was legal in some jurisdictions, the volumes being produced and sold were much smaller compared to today with the addition of legal adult-use markets. With the larger consumer base and higher production volumes that legalization enables, cannabis producers require extensive quality control and safety testing of their products to ensure they meet legal compliance standards and customer expectations. This represents a huge new market opportunity for cannabis testing laboratories to analyze product potency, check for mold, pesticides and other contaminants, and issue certificates of analysis for distribution. As long as legalization continues its trend of expanding to additional states and countries, it will remain one of the primary drivers fueling growth in the cannabis testing market.

Cost of Testing Services Could Restrain Market Adoption Rates

One challenge restraining the wider adoption of cannabis testing services is the costs associated with the various analyses. While important for ensuring product safety and legal compliance, testing fees can add up significantly for cannabis companies - especially smaller producers with tighter budgets. A basic panel screening for common contaminants like pesticides, heavy metals, and microbes might cost a few hundred dollars per sample. However, more robust secondary testing for residuals quantification or additional tests for terpenes/cannabinoids, etc. could easily exceed US$ 1,000 per analysis. The high price tags may convince some producers to cut corners on testing or only partially test their inventory to save money in the short-term. This represents a risk as it could compromise customer wellness or run afoul of regulations. Nonetheless, cost remains a barrier for full market penetration of cannabis testing services.

Limited Laboratory Capacity Restrains Market Growth

A related restraint is the relatively limited capacity of licensed cannabis testing labs compared to the fast growth in production volumes seen across the legal cannabis industry. Even as new testing facilities come online, it can be challenging to rapidly scale analytical instrumentation, method development testing validations, certifications, and qualified staff recruitment to keep up with the burgeoning demand. Frequently, testing labs experience multi-week sample backlogs that frustrate producers trying to move inventory in a timely manner. The mismatch between supply and demand acts as another factor temporarily restricting wider implementation of cannabis testing programs by businesses. Unless additional labs come online at an even faster pace in conjunction with market developments, capacity limitations may persist as a restraint for a few more years.

Accreditation Regulation Provides Opportunities for ISO Certified Testing Labs

One opportunity emerging in the cannabis testing market relates to evolving lab accreditation requirements. Regulators are pushing for cannabis testing facilities to voluntarily seek internationally-recognized accreditations like ISO 17025 to demonstrate accurate, reliable results. Some U.S. states are even transitioning to only accepting test results from ISO-certified labs. This presents an opportunity for existing ISO labs or those pursuing the accreditation to leverage their status for a competitive advantage. As regulatory trends favor more stringent third-party oversight of testing quality systems, ISO certification becomes an important differentiator and value proposition for certain labs targeting government and multi-state operator clients that prioritize accredited partners.


Key Development

  • In July 2023, Health Canada, the government department of Canada responsible for national health policy, announced the launch of the cannabis testing initiative. The initiative will support Health Canada’s data collection efforts with respect to the composition of cannabis products available in the Canadian market, strengthening its ability to inform the public about health and safety risks associated with cannabis consumption. Cannabis products will be analyzed for THC and CBD levels, specific analytes of interest and chemical or microbiological contaminants, but will not reference brand or license holder names.
  • In April 2023, Oculogica, a medical technology company, announced that it had launched the roadside cannabis test that records and analyses eye-pupil characteristics. The OcuPro headset records and analyses pupil characteristics to determine whether someone is impaired from recent cannabis use. The device will be piloted across several police departments in Missouri, U.S.
  • In February 2021, NSTDA Characterization and Testing Center (NCTC) announced the launch of Cannabis Analytical Testing Laboratory and signed an agreement with Play La Ploen Herbal Center Community Enterprise located in Buriram province to perform cannabis testing for the enterprise to ensure its products meet international standards.

Key Players: Encore Labs, Steep Hill, Inc., SGS Société Générale de Surveillance SA., PharmLabs LLC, Saskatchewan Research Council (SRC), Green Leaf Labs, Eurofins Scientific, SC Laboratories Inc., Praxis Laboratory, Digipath Inc., Fairbanks Analytical Testing LLC, Aurum Laboratories, LLC, Pure Analytics LLC, and Cascadia Labs

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