Since the state of Washington legalized cannabis in 2012, and Colorado shortly after, we’ve been living in the “Green Rush”. This economic event is defined by the exponential number of businesses taking part in the cannabis and hemp industry.
To support the new regulations, states needed to ensure the cannabis and hemp flowers, extracts, and edibles were safe for consumption and use. Each state defined their own regulations around cannabis testing standards, providing a framework for cannabis testing labs to follow. Since then, cannabis testing labs have become a staple in the regulated markets.
Since the onset of the Green Rush, the cannabis and hemp industry has continued to expand. More states have passed laws legalizing recreational marijuana. The list is constantly growing, which makes keeping an up-to-date list difficult. Here is a Map Showing the Regulated Cannabis Programs by State, kept by the National Conference of State Legislatures.
Major changes occurred in 2018 with the passage of the Agricultural Improvement Act of 2018 (also known as the 2018 Farm Bill). The bill authorized the production of hemp and removed hemp and hemp seeds from the Drug Enforcement Administration’s (DEA) schedule of Controlled Substances.
Hemp grown under the plan is subject to sampling and compliance testing for THC concentration, which has paved the way for more hemp testing laboratories across the nation. Click here to read the Laboratory Testing Guidelines US Domestic Hemp Production Program.
This year (2023), the Farm Bill is set to be renewed. As of the date of this article’s publication, the details of the bill haven’t been finished or shared. But there is speculation that the legislation could bolster the hemp industry by closing legal loopholes and derivative cannabis products.
Growing Demand for Cannabis Testing Labs
The expansion of the cannabis and hemp market across the United States has created the demand for more testing labs. As each new state passes legislation legalizing recreational use of marijuana, testing standards are developed that cannabis manufacturers must adhere to.
Testing labs have the important job measuring and reporting on specific factors related to cannabis products, including potency, heavy metals, mycotoxins, residual solvents, pesticides, and more, with the primary job of ensuring the product is safe for consumers.
In states where the cannabis market has matured, like Oregon, Colorado, and California, regulations have evolved over time. Regulations are becoming stricter around areas like pesticides, mycotoxins, heavy metals, and other safety concerns. Even existing labs must pay attention to whether their instrumentation is up to the task and whether their methods are current, to ensure compliance.
As with most emerging markets, there are big rewards to be had, as well as risks. One of the biggest risks for cannabis testing labs that are starting up is managing cash flow.
Labs that have been unable to maintain a positive cash flow have had to shut their doors. Being able to streamline the runway from business plan to revenue realization means making smart decisions on how capital is spent.
Financing Lab Equipment Preserves Cash Flow
Walk through a cannabis testing lab, and you will see lab benches with sophisticated analytical instrumentation. Cannabis testing labs require high-precision lab equipment and trained chemists on staff to operate and manage the instruments.
If a business owner were to purchase the entire workflow of lab equipment needed upfront – all brand new – the total price tag would be substantial. And when balancing these capital expenditures with the other start-up costs, the dollars really begin to add up.
When starting up a cannabis testing lab, it is critical to have enough cash on-hand for rent, permits, insurance, salaries, and other monthly expenses. And like many new ventures, unforeseen expenses can arise that require having some capital set aside.
Leasing and financing offer a path to acquiring analytical instrumentation for a new lab without spending a large amount of upfront capital. If your new lab business is venture-backed, leasing or financing lab equipment can help you avoid the need to seek additional funding.
Analytical Instrumentation for Cannabis Testing Labs
Walk through any reputable cannabis testing lab, and you will see lab benches with sophisticated analytical instrumentation. Analyzing the chemical composition of complex samples requires state-of-the-art technology and trained chemists on staff.
Here are the types of instruments often used in a cannabis testing lab
- High-Performance Liquid Chromatography (HPLC) – This technique is used to separate, identify, and quantify each component in a sample.
- Liquid Chromatography Mass Spectrometry (LC/MS) – In this technique, the liquid chromatography system separates mixtures with multiple components, then uses mass spectrometry to identify each separated component.
- Gas Chromatography (GC) – This technique separates and analyzes compounds
- Gas Chromatography with Headspace (GC/MS) – This technique offers a sample preparation method for determining volatile compounds in solid and liquid samples.
- Inductively Coupled Plasma Mass Spectrometry (ICP-MS) – This technique ionizes the sample, then can detect metals and non-motels at very low concentrations.
- Quantitative Polymerase Chain Reaction (qPCR) – This technique of molecular biology used for both diagnostic and based research
Financing and Leasing Programs for Cannabis Testing Labs
There are many financing and leasing programs available for cannabis testing lab start-ups. Here are four of the popular ones:
$1 Buyout Capital Lease
With a capital lease, you can acquire lab equipment while preserving your capital funds. At the end of the lease term, you own the equipment for a nominal buyout fee – usually $1.
0% Interest Over 12-Months
With a zero-interest financing program, you can get the instrumentation you need without the high upfront costs. Divide the cost into 12 monthly payments without interest.
With a sale leaseback, you can turn recently purchased lab equipment into capital. We’ll buy the asset from you and lease it back to you in monthly payments. The instrument stays in your lab throughout the process.
Used Equipment Financing
Used and refurbished instruments offer excellent economic benefits to start-up laboratories. Financing a used instrument can be useful when looking for ways to maximize capital and control spending.
Launch Your Cannabis Testing Lab with Bold View Financing
Avoid the common pitfalls of starting a new cannabis testing lab by preserving your capital and managing your cash flow. Flexible financing and leasing programs are a terrific way to get your lab up and running with the equipment you need without depleting your cash reserves.
Why Cannabis Testing Labs Finance with Bold View Capital:
- No credit history? Starting up a cannabis testing lab? No problem. We specialize in creating affordable financing programs that can be tailored to meet the business needs of early-stage and emerging markets.
- Being self-funded enables us to create flexible and competitive financing programs. In contrast to working through a broker, you won’t run the risk of funding sources disappearing.
- We have partnerships with the best in the business, particularly with analytical instrumentation vendors. We use these relationships to deliver a worry-free procurement process that is simple and manageable.
- We have the history, reputation, and relationships you can count on. We’ve enabled scientific companies through our flexible financing and proven partnerships for over 30 years.