The Global Cannabis Testing Market size is projected to reach USD 1,806 million by 2025, at a CAGR of 13.4% during the forecast period. The growth in this market is mainly driven by factors such as the legalization of medical cannabis and the growing number of cannabis testing laboratories (specifically in the US), the growing adoption of LIMS in cannabis testing laboratories, and increasing awareness about the latest trends and available technologies in the cannabis testing market. Additionally, emerging markets in LATAM and the MEA region, and increasing merger & acquisition among various cannabis testing equipment manufacturers, laboratories and small market players will provide significant growth opportunities for the market players in the near future. On the other hand, a lack of uniformity in rules and regulations, high costs, and inadequate personnel are major factors expected to hamper the market growth.
Key Players:
Agilent Technologies, Inc. (US), Shimadzu Corporation (Japan), MERCK KGAA (Germany), Thermo Fisher Scientific (US), DigiPath, Inc. (US), Steep Hill Inc. (US), SC Laboratories, Inc. (US), and PharmLabs LLC (US).
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Cannabis Testing Market Dynamics
Drivers: Legalization of medical cannabis coupled with the growing number of cannabis testing laboratories
Medical cannabis has proven effective in various medical applications, such as reducing nausea caused due to chemotherapy, stimulating appetite in AIDS patients, controlling muscular spasms in multiple sclerosis patients, and reducing intraocular pressure in patients with glaucoma. Owing to their health benefits, governments in various countries are legalizing the use of medical cannabis Australia (2016), Canada (2015), North Korea, Spain, Portugal (2001), the UK (2006), Germany (2017), Italy, the Netherlands, Israel, and Brazil have all legalized the use of medical cannabis in recent years. Moreover, in the US, 25 states have legalized medical cannabis, while four Colorado, Washington, Oregon, and Alaska have legalized cannabis for medical and recreational use. As medical cannabis is being legalized in several countries/states globally, the demand for the analytical testing of cannabis for ensuring its safety before human consumption has increased in recent years. According to industry experts, the number of cannabis testing labs is expected to grow at a significant CAGR in the coming years, primarily due to the growing legalization and increased adoption of cannabis testing. Such trends indicate the expected growth in demand for analytical instrumentation, software, and services for cannabis testing in the coming years.
Restraints: Lack of uniform rules and regulations
The increased use of cannabis for medical purposes has led to the legalization of cannabis in various countries worldwide. However, a lack of uniform testing standards or stringent rules and regulations has emerged as a prominent consideration. Operating a testing laboratory in the cannabis testing industry devoid of universal standards can be challenging, as licensing and regulatory requirements vary from state to state and can change abruptly with updates in state policies. The 2018 Farm Bill legalized the cultivation and production of hemp in the US. However, hemp cannot contain more than 0.3% THC, as per section 10113 of the Farm Bill. Any cannabis plant that contains more than 0.3% THC would be considered non-hemp cannabis or marijuana under federal law. Additionally, various testing standards must be adhered to while establishing a lab; lab accreditation is also required, with specifications varying from state to state. Such stringent regulations are likely to hamper the market growth.
Opportunities: Emerging markets in LATAM and the MEA
Emerging economies across LATAM (Latin America) and the MEA (the Middle East and Africa) are expected to witness high growth in the cannabis testing market. This can primarily be attributed to the strong government support for the legalization of medical marijuana in these countries compared to other regions. This is attracting various investors, prominent players, and government bodies to invest in developing standards for cannabis testing laboratories or enhance their operations and activity. For instance, MediPharm Labs Corp (Canada, US) entered into a supply agreement to supply premium, GMP-certified formulated cannabis oil to XLR8 BRAZIL, a Rio de Janeiro-based value-added distributor serving Brazil, Latin America’s largest medical cannabis market
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Challenges: High start-up costs for cannabis testing laboratories
High start-up costs for cannabis testing laboratories constitute one of the biggest challenges in this industry. These laboratories have to make significant investments in procuring and maintaining high-priced, advanced analytical equipment. Equipment standardization and upgrades, software requirements, accreditations and certifications (such as ISO certification protocols), and the requirement of skilled professionals further add to the cost of operations.
The impact of these factors is intensified because many banks deny funding or any other form of assistance to these laboratories due to ambiguity in the cannabis testing industry; lines of credit are also not available for laboratory owners/operators. Moreover, several municipalities are preparing a schedule to apply taxes on cannabis testing laboratories. As a result, running profitable operations after making significant investments is a major challenge, specifically for small/start-up cannabis testing laboratories.
By type, the services segment accounted for the largest share of the Cannabis Testing market in 2019.
Based on type, the cannabis testing market is categorized into products, services, and software. The services segment dominated the market in 2019. This segment is also poised to grow at a highest CAGR during the forecast period. The high growth of this market is owing to the growing legalization of medical marijuana (especially in the US). In addition, funding initiatives for cannabis testing laboratories and the growing number of cannabis testing laboratories are contributing to the growth of the cannabis testing services market. However, variations in cannabis testing methods and the lack of testing regulations are likely to limit the growth of the market to a certain extent.
Products accounted for the largest share of the cannabis testing market in 2020
The cannabis testing market is segmented into products and software. The product segment accounted for the largest share of the market and is expected to register the highest growth during the forecast period. The high growth of this segment can be attributed to the growing requirements for potency labeling and pesticide screening, which drive the demand for analytical instruments, introduce technologically advanced products, and increase the recurring demand for consumables. Cannabis testing products are further segmented into analytical instruments & consumables. Cannabis analytical instruments accounted for the largest share of the cannabis testing market in 2019. However, the market for consumables is expected to grow at the highest growth rate during the forecast period owing to recurring requirements and repetitive usage.
By services, the potency testing segment accounted for the largest share of the Cannabis Testing market in 2019.
Based on services, the cannabis testing market is categorized into potency testing, terpene profiling, pesticide screening, residual solvent analysis, heavy metal testing, microbial analysis, and other services. The potency testing services segment accounted for the largest share of the market and this segment is expected to grow at a highest CAGR during the forecast period. The high growth of this market is owing to the growing legalization of medical marijuana (especially in the US) and increased use of CBD for disease treatment. In addition, funding initiatives for cannabis testing laboratories and the growing number of cannabis testing laboratories are contributing to the growth of the cannabis testing services market.
North America accounted for the largest share of the Cannabis Testing market in 2019.
In 2019, North America accounted for the largest share of the cannabis testing market, followed by Europe. This market is also projected to register the highest CAGR during the forecast period. The large share of the North American regional segment can be attributed to legalization of cannabis (especially in the US) and the growing availability of products, software, and services for the cannabis testing industry, rapid growth in the number of cannabis testing laboratories, growing awareness regarding medical cannabis, rising funding for the cannabis industry, and the presence of prominent players in this region. The APAC market is expected to register the second-highest CAGR during the forecast period. Factors such as the growing biopharmaceutical industry, increasing life science research, rising investments by pharmaceutical and biotechnology companies, and the growing number of cannabis testing laboratories in the region, coupled with the legalization of cannabis for medical use, are expected to drive market growth in this region.
Recent Developments:
- In 2020, DigiPath acquired VSSL Enterprises Ltd., a provider of agritech consulting solutions for cannabis genetics, tissue culture, cultivation, analytical testing, and predictive tools. The acquisition will expand DigiPaths global ability to provide customers with technical services in germplasm development, tissue culture, and cultivation.
- In 2020, Agilent Technologies Inc., launched Cannabis and Hemp Potency Kit.
Report Objectives
- To define, describe, segment, and forecast the cannabis testing market on the basis of product & software, services, end user, and region
- To provide detailed information about the factors influencing market growth, such as drivers, restraints, opportunities, and challenges
- To strategically analyze micromarkets1 with respect to individual growth trends, prospects, and contributions to the overall cannabis testing market
- To analyze market opportunities for stakeholders and provide details of the competitive landscape for key players
- To forecast the size of the market segments concerning five main regions, namely, North America, Europe, the Asia Pacific (APAC), Latin America (LATAM), and the Middle East & Africa (MEA)
- To strategically profile the key players in the global cannabis testing market and comprehensively analyze their core competencies2 and market rankings
- To track and analyze competitive developments, such as product launches, acquisitions, collaborations, expansions, and partnerships in the cannabis testing market
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