Medical marijuana shops and growers are trying to have the state amend regulations in a way that could drastically lower the costs of lab safety testing. Regulations will need a sample to be tested from each 5-pound batch of cannabis prior to any of it being sold. Independent state-certified laboratories run the samples for pesticides, toxins, and microbes, among other contaminants.
In a recent letter to a top state official, the Nevada Dispensary Association stated the 5-pound rule hikes up the cost of marijuana drastically. However, the numbers point out otherwise. Given the prices charged for marijuana and the small amounts sold to each patient, lab testing makes up about 3 percent — or less — of what patients will spend. Prices for lab tests vary, but they normally range between $700 and $1,000 per batch.
“The NDA feels that these fees are prohibitively high and ultimately increase the costs of medical marijuana to the patient, to such an extent that many patients may not be able to afford their doctor-recommended medication for the treatment of a serious condition,” Riana Durrett, executive director of the dispensary group, wrote in a letter to state health official Laura Freed.
Marijuana shops in Clark County are selling a gram of cannabis for $16 to $20 and a quarter-ounce for about $100. That means a marijuana-shop can sell 5 pounds for more than $32,000. If a grower spent $1,000 to have a 5-pound batch approved, the lab tests would tack on only $3 to the cost of a quarter ounce — or less than 50 cents to the cost of a gram.
Durrett’s letter called the 5-pound rule arbitrary and argued the state should instead require testing only on each “propagation batch.” A batch would be defined as “seeds or clones of a unique strain that are propagated during a single day.”
Under that structure, a batch could theoretically be any size, even hundreds of pounds or more.
The state has not yet provided a solution about changing the marijuana testing standard. She said the marijuana shops want a standard that is based on science and hope to start a conversation with scientists and state officials.
Durrett said the state prompted her to talk about potential changes with James Dean Leavitt, president of the Nevada Cannabis Laboratory Association. Leavitt stated that the cost of lab testing is “insignificant” in contrast to the overall costs of cultivating marijuana.
Leavitt stated he would be open to upping the size of a batch if the scientific proof showed it was warranted. However, he said it’s too soon to know and the state should make no alterations until labs have been doing tests long enough to obtain a lot of data. David Goldwater, one of the owners of the Las Vegas-area dispensary Inyo Fine Cannabis, said growers are also pushing to change the 5-pound rule.
“The cultivators are telling us, ‘Hey, this is costing us a fortune and it doesn’t make any sense,’, ” Goldwater said.He added: “Every little bit of regulatory requirement adds cost ultimately to the patient.”
Durrett’s letter said that, while marijuana shops agree testing standards keep patients safe, there’s no proof the 5-pound rule is the safest one. Leavitt said marijuana cultivators’ push to save spending on lab tests which could ironically increase their financial risk. If a sample fails testing, the 5-pound batch from which it came must be terminated.
A company that is doing this is DigiPath Inc. (DIGP). The company works with digital pathology that runs its operation within the marijuana testing industry after the opening of its Las Vegas laboratory this past June Matt Karnes from GreenWave advisors says that marijuana testing is the most attractive subset of the business, which can have many profitable gains if the operation is run efficiently. The company is in a good place to take advantage of a $850 million market opportunity by 2020, with plans to grow within Nevada and into other states that have legalized cannabis.