The spreading legalization of cannabis by US states is opening up a torrent of market opportunities for many parties, from growers and vendors to testing labs and testing instrument providers. Recreational cannabis became legal in California at the start of 2018, and a transitory period allowing cannabis providers to meet all statutory and regulatory requirements ended June 30. A summary of these requirements is found in a California Bureau of Cannabis Control's (BCC) fact sheet. The list of now-enforced regulations that must be met by all cannabis goods sold in the state affects packaging and labeling, potency limits for edible cannabis products, the ingredients listed on and appearance of cannabis packages, and lab testing requirements. IBO spoke with California cannabis testing lab Steep Hill, as well as Agilent Technologies and Shimadzu Scientific Instruments, two instrument companies that provide cannabis testing equipment to labs, about the cannabis testing market in general in light of California and other states' recent legalization and new regulations.
Steep Hill, Steep DemandSteep Hill has been providing testing for medicinal cannabis for more than 10 years, according to director of marketing Kelly Kaufman, even before testing was mandated. The testing company has labs in Alaska, Arkansas, Hawaii, Maryland, New Mexico, Pennsylvania, Washington and Washington DC, and is also contracted for labs in Canada, France, Germany, Italy, Israel, Jamaica, Mexico, Spain, Switzerland and the UK. Congruent with its size and history, the company has implemented an advanced approach to cannabis testing, including standardization of testing methods and procedures. “With 10 years established credibility, we've seen just about everything there is to test and have established SOPs to do so, which allows us to interface and influence regulatory bodies (like the DOH [Department of Health]) in specific and/or emerging jurisdictions," explained Ms. Kaufman. "We've refined best practices and SOPs, including ISO 17025 certification, continued PT [proficiency testing] and accreditation above local jurisdiction regulations.”
“We’ve implemented new plans to add additional instrumentation to our lab to better meet and support new demands on our business model.”Discussing California's new testing requirements, Ms. Kaufman stated, “California’s BCC Emergency Regulations technically went into effect January 1, 2018, and we did see a steady increase in sample volume.” But the effect on Steep Hill's business only continues to increase. “Leading up to the July 1, 2018 shift to enforceability is where we’ve truly seen the scope of the impact of cannabis legalization and regulation on our business, and consequently, on our plans for expanding our instrumentation." The company is currently looking to open new lab space in the state to meet the increasing testing volume. This increase has also influenced the decision to purchase new lab instrumentation. “We’ve realized that what was adequate instrumentation in a pre-legalized market quickly will be unsustainable in the new landscape, where we’ve seen (conservatively) a 130% uptick in our sample intake,” continued Ms. Kaufman. “In order to keep our turnaround times reliable and efficient for the amount of testing coming through our pipeline, we’ve implemented new plans to add additional instrumentation to our lab to better meet and support new demands on our business model.”
Opportunities for Instrument CompaniesWith the higher testing volume described by Steep Hill, instrument providers that outfit labs are also expected to experience higher demand. Both Agilent and Shimadzu began to see an increase in customer inquiries before the July 1 regulations went into effect. “Agilent began to see a significant increase in demand and sales for cannabis testing in late summer/early fall of 2017,” said Anthony Macherone, PhD, senior scientist at Agilent and visiting scientist at John Hopkins University School of Medicine. The demand spans a range of testing techniques that the company offers. “The platforms included headspace GC/MS for terpenes and residual solvents, LC-MS/MS for residual pesticides and mycotoxins, GC-MS/MS for residual pesticides, ICP-MS for metals testing, HPLC for potency and real-time PCR for microbial screening.” And the growth has not shown any signs of slowing down. “Demand and sales into this market space have continued on a sharp upward trajectory ever since,” added Dr. Macherone. Shimadzu's experience has been similar. “We saw increasing demand for cannabis testing instrumentation during the six-month transition period before the July 1, 2018 deadline requiring products to pass additional checks for cannabinoid potency levels and terpene profiles, as well as contaminates such as pesticides, heavy metals, residual solvents and mycotoxins/aflatoxins,” explained Bob Clifford, PhD, general manager of Marketing at Shimadzu. “This is likely the result of laboratories preparing their facilities in advance in order to maintain production and efficiency.”
“Demand and sales into this market space have continued on a sharp upward trajectory ever since late summer/early fall of 2017.”Although California's cannabis testing regulations are now in effect, standards organizations are still catching up. As for testing methods, the BCC regulations state that a lab is required to develop, implement and validate test methods for sample analysis, and to work in accordance with guidelines put forward by the US FDA’s 2016 Bacterial Analytical Manual, the 2016 20th edition of the AOAC’s Official Methods of Analysis for Contaminant Testing, and the USP and National Formulary’s 2016 Methods of Analysis for Contaminant Testing. However, published guidelines are not yet cannabis specific. “AOAC has reached a consensus for standard method performance requirements for four different cannabis testing methods, but has yet to publish any approved methods,” explained Dr. Macherone and Mary McBride, director, Global Market Regulations and Standards Strategy, Segment Marketing and Market Development at Agilent. “USP established an expert review panel for cannabis in 2017, but to date have not completed development of any active standard test methods for cannabis or any cannabis-associated compounds. ASTM also established a new Technical Committee (D-37) in early 2017.” Shimadzu has worked with labs that incorporate various testing guidelines. “Generally speaking, Shimadzu has worked with laboratories that follow both USP or AOAC guidelines; it seems to be dependent on their familiarity level with the respective organizations,” detailed Dr. Clifford. “Labs with roots in the pharmaceutical industry may generally follow USP guidelines, whereas those with roots in the food industry may follow AOAC guidelines for their validation practices.”
Testing Requirements and MethodsOutlining the the testing requirements detailed in the California BCC’s Text of Regulations, Dr. Clifford, who works with Steep Hill, and Ms. Kaufman stated: “A licensed laboratory shall obtain ISO/SEC 17025 accreditation for the testing of the following: (1) Cannabinoids; (2) Heavy metals; (3) Microbial impurities; (4) Mycotoxins; (5) Residual pesticides; (6) Residual solvents and processing chemicals; and (7) if tested, terpenoids.” They continued, “The platforms utilized in the testing can vary depending on the cost of instrumentation, speed of analysis, sample preparation, experience of the user, multiple tests on single instrument, multiple tests in a single run, etc.”
“Many cannabis QC testing labs are moving to turnkey analyzers, which are easier to operate and require less than one day to complete installation and training.”Because of this flexibility, labs have the capability to choose instruments based on which factors are most important to them, such as cost, speed and user-friendliness. “Cannabinoid analysis can be analyzed on a HPLC with a UV detector, which doesn't require a high-level chemist,” explained Dr. Clifford and Ms. Kaufman. “Some prefer to analyze on an HPLC with a photo diode array (PDA) detector looking for other impurities. If speed is an issue, the analyst may switch from an HPLC to a more expensive UHPLC with a higher operating cost." Multiple factors determine lab's purchase. "Analysts could choose a very expensive LC-MS/MS because then the lab only has room for a limited number of instruments, and other tests, such as pesticides and mycotoxins, may be analyzed on the same instruments. Thus, there is more than one way to achieve a goal.” Generally, trends point toward customers prioritizing ease of use, according to Dr. Clifford and Ms. Kaufman. “Many cannabis QC testing labs are moving to turnkey analyzers, which are easier to operate and require less than one day to complete installation and training,” they said. “These analyzers, which include all reagents, columns and standards, as well as simplified software, help increase quality by standardizing operation. They also decrease cost by obviating method development and performing rapid, fit-for-purpose analyses.” According to them, Steep Hill was one of the first multi-lab cannabis testing companies to enter the cannabis testing market using this approach. For each category of regulated compounds, there are multiple methods for testing for them in cannabis, as Dr. Clifford and Ms. Kaufman explained. For example, they noted, heavy metals like lead, mercury, cadmium and arsenic can by analyzed using either AA, ICP or ICP-MS, with the latter method being the most popular due to its combined speed and sensitivity. Mycotoxins and aflatoxins analysis can be achieved through HPLC or LC-MS(/MS). LC-MS/MS is usually used for pesticides analysis. But GC-MS/MS may be needed for certain compounds as the testing requirements continue to evolve in different states and around the globe. For example, either headspace GC or GC/MS can be used to analyze residual solvents. “GC only provides retention time as the indicator of the type of solvent, whereas GC/MS may utilize a library search as well to identify the compound,” stated Mr. Clifford and Ms. Kaufman. “Similarly, [this] is true for terpenoid testing, but the analyst may switch from headspace sampling to solid phase microextraction (SPME) for measuring lower levels.” The growing cannabis industry is showing no signs of slowing down, which is providing a wealth of opportunities for cannabis testing labs and, therefore, instrument providers working with such labs. New regulations such as California's requirements further define the role of testing for labs like Steep Hill, which not only drives demand for testing services, but also shapes the reputation of the cannabis industry in general. “Above and beyond regulatory testing services, Steep Hill is committed to providing our clients the best possible final product we can through services tailored to the entire life cycle of cannabis production,” said Ms. Kaufman. “We hold our vision tightly to our business strategy.”