Back on July 15th, the Oregonian published a well-written piece by Noelle Crombie about the possible shortage of cannabis testing facilities. As a law firm that represents a lot of cannabis growers, we have been keeping a close eye on this situation for quite some time. In fact, We have suggested that if you want a nice view on the local industry, a lab just might be the best place to start.
This is partly because the next lab applicant will be only number 9, as compared to 774 recreational producers applicants to date. The administrative rules correlating to lab testing became final 2 months ago, and Oregon Liquor Control Commission has been very stern that no product will pass through to retail unless that product has been tested and shows to be clean .
This means that labs will serve captive customers and that money generated by the lab may be strongly correlated to operational efficiencies, rather than market opportunity. It also goes without saying that with very few labs, the industry could become bottlenecked. We can think of a few main reasons why people are not applying for the OLCC lab license.
Second, unlike cultivating cannabis, almost no one has any field time or proven expertise in running a pot testing lab. Third, the path to becoming an OLCC licensed lab is a long. Fourth, due to the need for unique lab equipment and experienced staff, start-up costs may be higher than in other industry business lines.
As to the process for obtaining a lab license, applicants must first become verified by the Oregon Environmental Laboratory Accreditation Program, which qualifies state labs for a variety of testing programs, such as the Clean Air Act and Clean Water Act.
In reference to the ORELAP cannabis accreditation website, the “Accreditation process takes several months” and for this reason, ORELAP “Strongly recommends that laboratories apply as soon as possible.” Once accredited, a lab must also clear the OLCC application process, which itself takes time.
While the start-up costs and accreditation processes for labs are not to be taken lightly, this business line appears underexploited at present.
While administrative licensing and start-up costs may seem like high obstacles to jump, the reality is that we have helped many, many clients move through an evolving thicket of state and local guidelines and regulations for cannabis related activities; and we have aided many others in raising millions of dollars to fund their marijuana start-ups.
So here’s hoping that the supply-demand curve corrects itself with labs.
MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
