The global cannabis testing service market was valued at USD 1.15 billion in 2019 and is expected to grow at a CAGR of 14.9% during the forecast period. The prominent factors boosting the service market growth were an increase in adulteration in cannabis-based products, the establishment of cannabis testing labs in developed economies, and the positive narrative towards cannabis use through workshops, conferences, and symposiums. During cultivation, the herb is exposed to many contaminants present in the soil, water, and air such as heavy metals, chemicals, and pesticides.
Despite regulatory brakes, the growing list of marijuana manufacturers ignited the establishment of hemp testing labs. According to the claims of the Association of Commercial Cannabis Laboratories (ACCL), currently handling the management of 30 of the 40-50 cannabis testing service labs in the U.S.
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Moreover, favorable government policies across countries are expected to be a critical factor in the global market. For instance, in 2018, the U.S. government introduced the “Farm Bill” to legalize hemp cultivation in the country. Following this, many Asian countries relaxed regulations for cannabis use in the medical and pharmaceutical industry for its huge population suffering from pain related disorders. As a result, there is a necessity for setting up quality testing labs.
Positive legal scenarios across the globe, supported with government policies and public-private investments spurred the need for cannabis testing services in the market. In 2018, Farm Bill was introduced in the U.S. to legalize hemp cultivation. The same trend was followed in the European and Asian countries for medical purposes. The number is expected to grow in number over the study period. In line with this, there is a need for setting up such testing labs to assure the quality of cannabis.
The majority of countries have strong legislation for the use of medical cannabis. Each country has unique testing laws. This is having spurred the strong demand for dedicated independent laboratories. To maintain the quality standards and adulteration the testing labs have to obey local laws, respective to the country they are operating. They have to follow the strict guidelines issued by the concerned regulatory authorities. This has boosted the establishment of quality standard cannabis testing labs, across the globe.
The market is primarily segmented on the basis of service, end-use, and region.
By End Use
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Based upon the service type, the global market is categorized into potency testing service, terpene profiling service, heavy metal testing service, pesticide screening service, microscopy testing service, residual solvent screening service, and others. In 2019, the potency testing segment accounted for the largest share in the global market. The rising use of potency test techniques such as high-performance liquid chromatography, gas chromatography, cannabinoids, and the Tetrahydrocannabinol (THC) in both cultivated and recreational cannabis.
Furthermore, the same segment is also projected to exhibit the highest growth over the study period. Owing to the favorable government regulations, there is a rise in cannabis export for recreational and medical purposes, which resulted in increased quality checks for the cannabinoids for proper labeling and to ensure quality. Developed economies are more focused on containing adulteration.
Based on the end-use, the global cannabis testing service market is bifurcated as drug manufacturers, cultivators/growers, and research institutes & labs. In 2019, the cannabis cultivators/growers dominated the market with a high revenue share. The key factors responsible for the market segment’s growth-imposed restrictions on THC content above the designated levels, and the collaboration and exclusive agreements of the cultivators with the labs.
Cannabis drug manufacturers exhibited the highest growth rate over the study period. The acceptance of cannabis for medical and recreational purposes by government across the globe, supported by real world evidence in the form of clinical trials by the big pharma companies favored the segment’s growth. For instance, as of 2019, Sanofi registered 38 and Pfizer registered four cannabis-related clinical trials.
The global cannabis testing service industry is bifurcated into North America, Europe, Asia Pacific, Latin America, and Middle East & Africa (MEA). North American region is the largest revenue contributor followed by Europe and the Asia Pacific region. In 2019, the North American region accounted for over 80.0% of the global market. Europe is projected to exhibit the highest growth over the study period. Key factors expected to drive the concerned market are the positive legal framework, the presence of labs, and the increasing use of cannabis in research and development. The region is also seeing an increase in market competition.
The region’s market growth is due to the presence of cannabis cultivators, and the presence of labs as per the guidelines issued by the government. Moreover, both in Canada and the U.S. most of the cannabis producers have acquired the majority of labs in the region to bring them in-house, to have more intellectual power, and stay competitive. The market in the region is undergoing a transformation, not only seen in labs, but also among producers and distributors. Industry consolidation is expected to continue as the market evolves.
The prominent players operating in the cannabis testing service market are Shimadzu Corporation, Agilent Technologies, PerkinElmer, Inc., Millipore Sigma, AB Sciex LLC (a Danaher Company), Restek Corporation, Thermo Fisher Scientific, Inc., Waters Corporation, Fritsch Milling, Accelerated Technology Laboratories, CannaSys, Inc., PharmLabs, LLC, Guardian Data Systems, Inc., Lab Lynx, Inc., Steep Hill Halent Laboratories, DigiPath, Inc., SC Laboratories, CannaSafe Analytics, and CW Analytical Laboratories.