A key element to legalized cannabis commerce is the responsibility that a licensed manufacturer or cultivator has to produce and deliver safe products to their end-user patients and customers. The state’s have a duty to ensure this is being done and in the cannabis industry the organizations charged with carrying out these duties are licensed, independent Testing Labs as defined in Chapter 6 of the BCC regulations (See Fact Sheet).
In a nutshell, a Cannabis Testing Lab in California, is responsible for:
- Dispatching staff to gather samples from batches at a Distribution Licensee’s premises while under surveillance and according to strict SOPs.
- Log, securely transport and store all samples before, during and after testing.
- Hire and train a staff to perform comprehensive tests upon cannabis and cannabis products using equipment that can easily cost over $1M, including evaluations of packaging and labels.
- File Certificate of Analysis with the state and deliver these results to the Distributors.
- Oversee remediation options for failed batches, if allowed.
Perhaps this is a business you are very familiar with from an analogous industry, or you are scientifically or medically trained and inclined to believe this is the right lane for your skills and experience, or you see the market for testing the mega billions of projected cannabis revenue and want your slice of the pie.
Either way, this post discusses the licensing process at a higher level (see our eBook for greater detail) and then dive right into what you will have to do once you get that license to make your clients and investors happy.
There is great opportunity in Cannabis Testing Labs and the State of California has enacted the strictest regulations and standards of any state thus far (big surprise!) so if you can run a lab here, you can do it anywhere and will be prepared to expand once so many other states’ demand a high level of patient/consumer protection.
Getting your License
The first step for anyone seeking a state license, is acquiring local permission from a city or county in relation to its unincorporated lands. Unlike the most politically charged license type, Retail, getting the local permission to operate a Cannabis Testing Lab in California is relatively smooth, but not fast or easy. Many cities and counties don’t have caps on cannabis Testing labs and a few that have a complete prohibition on all cannabis business types allow for Testing with light zoning restrictions.
There are more steps involved than opening a traditional business but depending on the local jurisdiction, this can be achieved in a few months and handled by city management without public hearings and votes.
With your local permission in hand, you now have to illustrate to the BCC in Sacramento that you are qualified and prepared to test cannabis products by answering a series of questionnaires that demonstrate how your SOPs and workflow will ensure compliance. Additionally, they will check into the owner’s background, the premises including security, and make sure your organization is independent from other cannabis operators in the state.
Getting Ready to Operate
With the ink still wet on your License, you will invest in many high-tech pieces of equipment and the corresponding software to put it to the test within an integrated workflow filled with checks and balances and operational complexity. It should be noted that this equipment is standard issue in many fields but using it for cannabis requires some fine tuning and interpretation.
This early in the evolution of legal cannabis, each lab will draw from its own experiences and ongoing work to develop its own SOPs to deliver consistent, reliable and efficiently gathered results for their clients, the state, and the end-user patients and consumers.
The diagram below displays the many steps that we at BeGreenLegal perform with our clients to get them ready for operation and to be able to fulfill their commitments to the many stakeholders.
As you can tell, the first steps are required for your license application and they form the foundation for your day-to-day operations. Starting with a Facility Design and Operations Plan, you need to visualize how your lab will operate while at the same time ensuring compliance with all the state regs, as you will need to describe in the SOP-based Questionnaires.
But we quickly move from this conceptual stage to the implementation phase as your project is built out and equipped with the appropriate devices, software and workflow. Your team will need to be trained on each test in a detailed step-by-step manner to ensure quality and profitable results.
Open for Business
Once you’re ready to test, you need to find the right clients for your business. You have a “hunting license” to go after any Distributor in the state but you want to match your capability to their needs to make sure you are good fit for each other. Issues like geography as you need to sample from their facility, price sensitivity, lead time expectations and product types will be very important to analyze before pursuing your prospective clients.
Testing of flower is a relatively straightforward matter, but the cannabis products that are coming to market in a flurry often offer a more complex testing technique, which may or may not have been discovered as fast as the products. Those labs that develop expertise by product type should not only be able to garner a large part of that market for testing, but they may also be able to provide consultative services to their clients to produce better results. The more intelligence your organization has and develops, the more market power you will have.
BeGreenLegal estimates that well over 100 licensed labs, each capable of much more rigorous testing than previously provided in California or required in any other state, will be required to fill the needs of the market when it reaches its full capacity. There is ample opportunity if you have the discipline to execute at all levels and stages of your lab’s development, including expansion to other states as their standards mature.
However, if you are not prepared to operate appropriately, or are stuck with legacy equipment, workflow and staffers, you will most likely be roadkill in the race to the evolved cannabis economy. Please reach out to us to discuss your options for starting or overhauling your operation.