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…

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

  1. There is no doubt the Nevada test requirements will be strict, and it will be both save – and expensive. However, I question the estimated 540,000 lbs marijuana demand in NV. Colorado, a state with more than double the population, has 50% more tourists than Nevada, and is adult use legal, sold 148,000 lbs in 2014. There are still fewer than 10,000 registered patients in Nevada, and a several month waiting period for patients getting cards today. Further, there are several labs in NV – aside from Digipath – that are ready to open. We aren’t waiting for labs, the labs have been waiting for the state to decide what pesticides to test for. It looks like they finally came out with a ruling, and there is sufficient test capacity in the near term at least.

  2. I agree that the demand number appears to be out of whack. Here in Oregon with over a million more people than Nevada, annual cannabis production has been estimated (and of course until a fully regulated rec market is in place to complement the medical market, these numbers are just that, estimates) at somewhere in the neighborhood of 400,000 lbs, but annual consumption in 2015 has been forecast to only hit about 113,000 lbs. This has caused our legislators and regulators to promote the idea that we have a 75% diversion rate to the black market, making sensible regulatory policy hard to steer.

  3. I’m completely confused on what you mean by “safe” cannabis. In CO, all licensed whole sale growers are required to submit product for testing prior to being allow to sell to any clubs. Also the clubs purchasing are required to run a secondary test via a certified lab to confirm with the state of CO that they are purchasing what they say they are purchasing, and the grower is selling what they say they are growing. You also must purchase your clones from a club store via the state. Every plant has a “Skew” tag that must be either scanned, or entered into the states registry monthly and status of the plant. IE: alive, budding, dead, discarded, non producing. You cannot grow from seed. So this is being controlled from start to finish. As far as being able to develop your own strains, that is not legal at this time in CO. If you are determined to develop your own strain, under strict guidelines you must work with an accredited lab, and the state must be aware of your process via the growers reporting, as well as the lab reporting on your grow. So there is a constant checks and balances going on. Are we in NV just not smart enough to handle this? It certainly would create jobs. And not just for those who have come here from Northern CA to build for Tesla. Rather than giving the jobs to locals.

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