Cannabis Testing Services Market Size, Share & Trends Analysis Report By Service Type (Potency Testing, Terpene Profiling, Heavy Metal Testing, Pesticide Screening, Microscopy Testing), By End Use, By Region, And Segment Forecasts, 2023 - 2030

Report Overview

The global cannabis testing services market size was valued at USD 1.6 billion in 2022 and is anticipated to grow at a compound annual growth rate (CAGR) of 16.9% from 2023 to 2030. The leading factor attributing to market growth is the growing need for cannabis testing services due to a rise in contamination cases. The cannabis plant, in its cultivation phase, is exposed to various contaminants, which mainly include heavy metals from the soil, fungus, molds, and pesticides. These contaminants are unfit for human consumption and can harm consumers by causing severe fatalities and respiratory diseases. Many regulatory agencies have started establishing maximum quantity limits on residual solvents, insecticides, pesticides, heavy metals, microbes, and mycotoxins for testing plant samples. It further resulted in the establishment of many new laboratories, particularly in regions where cultivation is booming.

Moreover, the growing legalization of medical cannabis across various countries is also a critical factor influencing the growth of the market for cannabis testing services. For instance, in 2018 Farm Bill was introduced to legalize hemp cultivation in the U.S. Following the trend, many countries in Europe and Asia are set to legalize medical cannabis for the increasing patient population. The number is expected to increase exponentially over the forecast period. Owing to this increase in number, the need to set up effective testing services became a necessity for assuring the quality of cultivated cannabis.

Most countries have stringent rules and regulations on medical cannabis usage and cannabinoid content. These countries require various types of test results to assuring quality. The boost in the cannabis market spontaneously created a substantial demand for independent laboratories. However, each country has its unique testing laws. Furthermore, the testing needs and equipment required by each laboratory may differ. Moreover, countries with stricter norms may require added equipment with more enhanced features and high precision. Thus, it proves to be a significant hurdle for the growing testing services market.

Moreover, the high cost associated with the initial level inhibits market growth over the forecast period. The laboratory equipment needed for undergoing various contamination tests is expensive. It can be a major obstacle for small and mid-sized laboratories trying to enter the market for cannabis testing services. In addition, the market is very niche and is currently facing a dearth of trained laboratory professionals. People are not well equipped and lack the necessary expertise in cannabis examination.

Service Type Insights

Based on service type, the potency testing services segment dominated the market with a revenue share of 22.6% in 2022. Increasing usage of effective potency testing techniques such as Gas Chromatography (GC) and High-Performance Liquid Chromatography (HPLC) for testing samples and increasing demand for examining the potency of various cannabinoids, particularly CBD (Cannabidiol) and Tetrahydrocannabinol (THC) in cultivated cannabis are the key factors driving the market.

Moreover, this segment is anticipated to be the fastest growing, with a CAGR of 18.6% during the forecast period. Increasing quality checks for cannabinoids to ensure accurate labeling of products in medical and recreational markets and their increasing exports to countries where the market is highly regulated are the key factors expected to drive the market for cannabis testing services. Furthermore, the potency testing service keeps consumers well informed about the product's quality, further supporting this segment's growth in the cannabis testing services market over the forecast period.

End Use Insights

Based on end use, cannabis cultivators/growers dominated the market with a considerable revenue share in 2022. Cultivators are signing agreements with testing laboratories and research centers, as governments in many countries have imposed restrictions on the THC content in cannabis products. Moreover, these growers need to sell different varieties of plants based on their CBD and THC content to manufacturers and wholesalers at different prices. These are the dominant factors supporting the growth of the segment.

On the other hand, the cannabis drug manufacturers segment is estimated to register the fastest CAGR over the forecast period. The growing acceptance of marijuana as a medicine and the rise in the number of cannabis-based clinical trials by the big pharma giants such as Sanofi, Solvay Pharmaceuticals, and Pfizer are the key factors driving the segment growth. For instance, as of June 2018, Sanofi registered 38 clinical trials, Solvay Pharmaceuticals registered 7, and Pfizer registered four cannabis-based clinical trials.

Regional Insights

North America dominated the market with a revenue share of 84.6% in 2022 and is anticipated to grow at a significant CAGR over the forecast period. An increase in the number of testing laboratories in the region owing to rigorous guidelines set by the government for marijuana cultivators and the presence of a large number of cultivators in the region are the key factors supporting the market growth in this region.

On the other hand, Asia Pacific is anticipated to register the fastest CAGR of 25.9% over the forecast period. Several countries in the region have already legalized medical cannabis, and more are expected to follow in the coming years. This is likely to show an increase in the demand for cannabis testing services, as governments and businesses need to ensure that the medical cannabis they provide is safe and effective. In addition, the number of cannabis testing laboratories in the region is growing rapidly. This is due to the increasing demand for cannabis testing services and the growing availability of funding and expertise.

Key Companies & Market Share Insights

These companies are focused on increasing their geographical presence and acquiring major certifications to add value to their services. For instance, in April 2023, with the acquisition of C4 Laboratories, a renowned cannabis testing facility in Arizona, SC Labs was able to double its testing capacity across five states: California, Colorado, Michigan, Oregon, and Arizona. Leading Arizona laboratory C4 Laboratories delivers cutting-edge testing capabilities, consumer safety based on science, and operational excellence. Customers of SC Labs seeking quality and a wider global reach will benefit from the acquisition.

In February 2022, sister businesses Botanacor Laboratories and Agricor Laboratories, both headquartered in Denver, Colorado, and SC Laboratories, headquartered in Santa Cruz, California, teamed up to give cannabis & hemp brands access to the most wide-ranging, cutting-edge testing options available in North America. A national testing network was built on the collaboration of three of the most reputable and long-standing cannabis and hemp testing organizations in the U.S. Both the hemp and cannabis businesses are likely to benefit from the combination, which will give them access to a wider variety of testing resources, improve data distribution, advance science, increase testing capacity, and improve operations to speed up turnaround times.

In March 2020, the company Green Leaf Lab’s unit in Oregon became the first testing company to be accredited with ISO/IEC 17025:2017. Moreover, in December 2019, Eurofins Scientific entered into a partnership with Medicinal Genomics Corp. (MGC) - a U.S.-based bioanalytical testing company - for introducing a next-generation Single Nucleotide Polymorphism (SNP) chip. It will be useful for advanced cannabis genotyping, breeding, and pathogen testing. Such initiatives by the key participants are fueling market competition. Some of the prominent players in the global cannabis testing services market include:

• Saskatchewan Research Council (SRC)

• SC Labs

• Steep Hill, Inc.

• SGS Canada Inc.

• CW ANALYTICAL

• PharmLabs

• GreenLeaf Lab

• Eurofins Scientific

Cannabis Testing Services Market Report Scope

Global Cannabis Testing Services Market Report Segmentation

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2030. For the purpose of this study, Grand View Research has segmented the global cannabis testing services market report on the basis of service type, end use, and region:

• Service Type Outlook (Revenue in USD Million, 2018 - 2030)

  • Potency Testing

  • Terpene Profiling

  • Heavy Metal Testing

  • Pesticide Screening

  • Microscopy Testing

  • Residual Solvent Screening

  • Others

• End Use Outlook (Revenue in USD Million, 2018 - 2030)

  • Cannabis Drug Manufacturers

  • Cannabis Cultivators/Growers

  • Others (Research Institutes & Labs)

• Regional Outlook (Revenue in USD Million, 2018 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • UK

    • Germany

    • France

    • Italy

    • Spain

    • Sweden

    • Norway

    • Denmark

  • Asia Pacific

    • China

    • Japan

    • India

    • Australia

    • Thailand

    • South Korea

  • Latin America

    • Brazil

    • Mexico

    • Argentina

  • Middle East and Africa

    • Saudi Arabia

    • South Africa

    • UAE

    • Kuwait