What’s the Right Price for “Safe Marijuana”? Let’s Roll The Nevada Cam…

For Nevada's cannabis program to really take off, more testing labs will be needed.
What are you willing to pay for “safe marijuana”?

Without a doubt, Nevada’s revised medical marijuana program has been slow to start. And after a gruelingly competitive application process and significant administrative delay, only one Nevada dispensary is set to open for business going into August, and that’s Silver State Relief out of Sparks. What will also likely further slow down Nevada’s already slow pace is its overall lack of quality assurance testing labs. Though Nevada was not short on applications for Medical Marijuana Establishments for cultivation, production, and dispensing facilities, the state significantly lacks in testing laboratories. According to the Las Vegas Sun, the state approved 55 dispensaries; 182 cultivation facilities; 117 production facilities; and only 17 licenses for independent laboratories. Thus far, it appears that only one testing lab, DigiPath Labs, is ready to operate.

It has been predicted that 540,000 pounds of marijuana will need to be grown to meet qualifying patient demand in the State of Nevada. So, what’s going on with the other labs in Nevada? And why aren’t there more of them?

To secure licensure from the state (and even from certain municipalities and counties), testing labs had to meet almost the same standards as MMEs in certain respects. In addition, Nevada cannabis testing facilities are subject to strict operational guidelines, maybe more than in any state in which our law firm operates. And labs will have to do a lot of the legwork when it comes to the logistics of even securing a sample for testing. Essentially in Nevada, a production facility will contact a testing lab when it has cannabis for testing and a testing facility tech will then visit the production facility, scrutinize a five-pound sample of the cannabis ready for testing, and will randomly select a 12-gram sample to transport back to the lab. The lab will then test the cannabis for several things as required under state regulations: moisture content, potency analysis, microbial screening, and pesticides among others.

Given recent scrutiny of the marijuana industry as a whole, quality assurance testing geared towards consumer safety is more important than ever. But that testing is becoming increasingly more sophisticated and the fields of testing are broadening all the time. This means that testing is starting to become expensive and that labs likely need as much (or more) capital and manpower to operate as any highly-regulated marijuana business. In addition to the state and local licensing fees and operational costs, its no wonder that Nevada doesn’t have more testing facilities — as opposed to Washington, Oregon, and Colorado, where at least licensing fees are not as robust for labs.

Certainly, accurate and reliable testing is going to be cost-intensive, and the cost of that testing will ultimately be passed off to marijuana businesses and to consumers. Indeed, DigiPath Labs, which is promising a 48-hour turn around on its tests, will be charging anywhere from $100 to $250 per test, with a batch costing $500 to $1,000. Consequently, the question becomes, is it better for a state to try to license a good number of qualified labs to ensure competitively-priced testing in the marketplace? Or is it wiser to, say, go the path of Minnesota which designated only two mega-labs to test its cannabis products, making lab expenses just a fixed, higher-end cost of doing business? Only time and the market will tell what businesses and consumers are willing to pay for “safe” marijuana products.

At this point, we here in Nevada are mostly just happy that things on the cannabis front are finally starting to roll…