CANNABIS TESTING SERVICES MARKET ANALYSIS

Cannabis Testing Services Market Size and Trends

Global cannabis testing services market is estimated to be valued at USD 2.38 Bn in 2024 and is expected to reach USD 5.87 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 13.8% from 2024 to 2031.

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The cannabis testing services market is expected to witness significant growth during the forecast period. With the growing cultivation and use of both medical and recreational cannabis, the need for the testing of various product attributes is increasing. Factors such as varying laws pertaining to the use and sale of cannabis products in different regions, rising focus on ensuring product safety and quality, and the introduction of new testing technologies will support the demand for cannabis testing services. Several countries and states are establishing standardized testing and certification programs which is also expected to boost the market growth. However, challenges such as lack of regulatory standards and inconsistencies in state and national regulations may hamper the market growth during the forecast period.

Rising Cannabis-based Drugs Approvals

Rising cannabis-based drugs approvals are projected to drive the market growth during the forecast period. For instance, in August 2020, GW Pharmaceuticals plc., the world leader company in science and development, along with its U.S.-based subsidiary, Greenwich Biosciences, Inc., declared that the U.S. Food and Drug Administration (FDA) had approved EPIDIOLEX (cannabidiol) oral solution to treat seizures associated with tuberous sclerosis complex (TSC) in patients one year of age and older.

Market Concentration and Competitive Landscape

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The rising focus of major market players on new product launches is expected to drive the global cannabis testing services market growth over the forecast period. For instance, in March 2021, in Germany, Stade Arzneimittel, a pharmaceutical company, announced the introduction of its medicinal cannabis portfolio under the CannabiStada brand which includes medical cannabis. The organization had released both flowers and entire extracts of cannabis, particularly for chronic pain patients who have failed to respond to conventional medicines such as opioids. Stada Arz is one of the first companies in Germany to launch medicinal cannabis with the launch of cannabistada.

Key Takeaways of Analyst:

The cannabis testing services market is poised to grow significantly over the next decade as the legal cannabis industry continues to expand into new markets and jurisdictions across North America. More countries and states are legalizing medical and recreational cannabis use, driving greater demand for testing from both cultivators and consumers. As legal supply chains get established, mandatory safety and potency testing will be required, creating ongoing demand.

The market is currently dominated by Western states where legalization first took effect, such as California, Colorado, Washington, and Oregon due to their earlier start. However, markets on the East Coast and Midwestern states are expected to experience faster growth as more areas legalize and set up regulated systems requiring testing. International markets also present promising opportunities as more nations pursue medical cannabis programs.

Major factors fueling the market growth include the increasing sophistication of consumers who demand consistency and safety assurances. This will propel the testing of microbes, pesticides, heavy metals as well as cannabinoid and terpenoid profiles to verify label claims. Strict regulatory frameworks also mandate recurrent testing during cultivation and production to ensure consumer safety.

Market Challenge – Lack of Standardized Testing Procedures

Lack of standardized testing procedures is a major factor which is hindering the global cannabis testing services market growth during the forecast period. The rising demand for safe cannabis products has resulted the need of cannabis quality control testing facilities. However, several products fail to meet the standard criteria. According to California’s Bureau of Cannabis Control (BCC), in September 2020, approximately 32.9 percent of foods, tinctures, and lotion samples, as well as 20.4 percent of inhalable oils and waxes samples failed laboratory examination. Furthermore, there are certification problems for makers of infused goods because there are different rules and regulations stating the standardization method of the equipment. As a result, depending on the laboratory where a sample is examined, it might give a variety of outcomes which is projected to hamper the market growth.

Market Opportunity – Increasing Cancer Prevention Initiatives

The cannabis testing services market is poised for significant growth and transformation as more states legalize medical and recreational marijuana use. Currently, cannabis testing is largely done manually which can be an inefficient, time-consuming and inconsistent process. However, the implementation of automation and digitization technologies provides a major opportunity to standardize, streamline and scale testing operations. Automated solutions such as liquid handling robots, next generation sequencing machines and software for lab information management could help labs process more samples faster and with improved accuracy. This would help labs alleviate the heavy workload associated with increased production and consumption volumes. The continued digitalization of testing data and integration with seed-to-sale tracking systems creates opportunities for leveraging analytics and artificial intelligence. This can power applications like predictive quality management and remote monitoring. Such innovations are likely to have major impacts on compliance, public health outcomes as well as cultivator and product success. As the legal cannabis market matures, automation and digitization will be crucial for the long-term scalability and sustainability of quality control regimes.

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Test type segment is sub-segmented potency testing, terpene profiling, cannabinoid profiling, pesticide screening, residual solvent testing, microbiological screening, and others. The cannabinoid profiling segment is estimated to hold 32.6% of the market share in 2024 owing to the rising regulatory requirement for measuring cannabinoid concentration in cannabis products. Cannabinoids, such as cannabidiol (CBD) and delta-9-tetrahydrocannabinol (THC), are the primary compounds responsible for the therapeutic and psychotropic properties of cannabis. However, variations in their concentration and ratios can have implications on product safety, dosage, and clinical efficacy. Moreover, federal and state regulators have established strict guidelines and standards regarding the permissible limits of different cannabinoids in medical and recreational cannabis products. This is intended to ensure patients receive consistent and quality-tested medication. As the cannabis industry continues to expand with new product varieties such as edibles, extracts, and tinctures entering the market, there is an increasing need for sophisticated cannabinoid profiling tests that can accurately quantify both major and minor cannabinoids. This drives significant demand for cannabinoid profiling services among cultivators, product manufacturers, and dispensaries who rely on these test results for regulatory compliance and improving product quality. Several testing labs are also offering advanced cannabinoid profiling packages that test multiple cannabis batches to help businesses maintain cannabinoid concentration consistency over different growth and production cycles. The growing regulatory stringency regarding cannabis safety and compliance with set limits of THC, CBD, and other cannabinoids is a key factor contributing to the high demand for cannabinoid profiling services.

Insights, By End Use: Increasing Need for Independent Third-party Testing

End use segment is sub-segmented testing laboratories, research institutes, and others. The testing laboratories segment is estimated to hold 43.4% of the market share in 2024. As the cannabis industry involves several stakeholders including cultivators, product manufacturers, dispensaries and consumers, independent third-party testing plays a crucial role to ensure safety and quality across the supply chain. Regulators in states with legal cannabis programs typically mandate requirement of samples from production batches to be sent to licensed testing laboratories for various analysis before the products can be introduced to the market. This is because testing laboratories are better equipped with advanced analytical instruments, highly skilled workforce, and follow rigorous quality certifications unlike in-house testing facilities of cultivators or manufacturers.

Regional Insights

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North America remains the dominant region in the global cannabis testing services market and is estimated to hold 44.3% of the market share in 2024. This is due to the early legalization of medical cannabis in several states in North America starting from the late 1990s and increasing commercial cultivation activities. States like Colorado, Washington, and California have developed a mature cannabis industry over the years with stringent regulations requiring licensed producers to mandatorily test their products. This has translated into a higher demand for testing services in the region compared to others. Moreover, the presence of several certified testing labs and the development of testing guidelines by agencies like AOAC International has further strengthened the market position of the region.

Europe has emerged as the fastest growing regional market for cannabis testing services. Countries like Germany, Italy, Denmark, and the Netherlands have legalized medical cannabis in the recent past, whereas countries like Spain and Portugal have decriminalized personal use and possession of cannabis. This growing acceptance and the development of a regulated medical cannabis industry has boosted the need for testing activities. The region is also witnessing increasing cross-border trade of medical cannabis between nations which necessitates quality assurance through testing. Moreover, the cultivation licenses issued by countries like Germany to domestic as well as foreign producers have attracted multi-national cannabis companies to establish European operations. This has accelerated the regional market growth of cannabis testing services. The region is also witnessing increased research collaborations between testing labs and universities to develop innovative solutions.

Market Report Scope

Cannabis Testing Services Industry News

• On March 19, 2024, Triverity Analytical, a cannabis testing facility, in South Dakota, U.S., announced that it had planned to open a new cannabis testing facility in South Dakota, U.S.
• In May 2023, Smithers, a leading provider of testing, consulting, information, and compliance services, announced the acquisition of Green Scientific Labs’ operations in Arizona. This acquisition represents Smithers’ entry into the Arizona cannabis testing market.
• In May 2023, UCLA Health received six grants totaling US$ 9.5 million from the California Department of Cannabis Control (DCC), which will support research on a broad range of topics, from the potency and effects of cannabis products to the financial health of California’s cannabis market
• In January 2020, New Tropic, a cannabis manufacturer, launched its highly-anticipated "Type 7" manufacturing and co-packaging facility in California, U.S. The facility has one of the highest production capacities in the U.S. It will produce cannabis products including bulk crude and distillate, flower and pre-rolls, and all forms of cannabis concentrates, with edibles and beverages.

*Definition: The dried leaves, flowers, stems, and seeds of the cannabis sativa or cannabis indica plant are referred as cannabis. Tetrahydrocannabinol (THC) as well as other mind-altering chemicals which are psychoactive substances such as cannabidiol are found in the plants such as cannabis sativa and cannabis indica. Cannabis is considered amongst the most widely used addictive substance after cigarettes and alcohol. However, cannabis has legal application in medications such as cannabinoids oils. Cannabis testing is the examination of a sample of cannabis to identify cannabinoids (CBD), tetrahydrocannabinol (THC), and terpene levels, as well as impurities and pollutants such as pesticide residue, residual solvents, disease, and pests. Different states in various regions can establish its own rules and regulations for what must be tested and printed on cannabis product labeling.

Market Segmentation

•  Test Type Insights (Revenue, USD Bn, 2019 - 2031)
  • Potency Testing
  • Terpene Profiling
  • Cannabinoid Profiling
    • CBD Testing
    • THC Testing
  • Pesticide Screening
  • Residual Solvent Testing
  • Microbiological Screening
  • Others
•  End Use Insights (Revenue, USD Bn, 2019 - 2031)
  • Testing Laboratories
  • Research Institutes
  • Others
• Regional Insights (Revenue, USD Bn, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East
    • GCC Countries
    • Israel
    • Rest of Middle East
  • Africa
    • South Africa
    • North Africa
    • Central Africa
• Key Players Insights
  • 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
  • Cascadia Labs
  • Smithers
  • Triverity Analytical