Comprehensive Cannabis Lab Testing A Highly Profitable, Low Risk Segment Of Burgeoning National Industry
With recreational marijuana legalization ballot initiatives set for 2016 in Arizona, California and Nevada, the $2.7 billion plus U.S. cannabis sector appears to really be heating up. Leading resource for cannabusiness entrepreneurs and a major go-to source for real-time data on the sector, ArcView Market Research, recently projected a 300 percent uptick nationwide to some $10.8 billion over the next four years for the industry, which already spiked 74 percent between 2013 and 2014. This projection by ArcView seems quite reasonable given the rate at which other states are hungrily moving to access the substantial tax revenues currently enjoyed by Colorado, as well as Washington, which did roughly $250 million in sales over the last year, netting a 72 percent higher excise tax take ($62 million) than initially projected.
One of the most attractive plays in this burgeoning sector is the de-risked lab testing segment, where companies like DigiPath Inc. (OTCQB: DIGP) represent a solution to the ongoing problem of cannabis products not only routinely misrepresenting the levels of THC content they contain, but also containing unsafe levels of carcinogenic pesticides and solvents, as well as heavy metals, insects, microbes, mold-generated mycotoxins and other contaminants. This segment is not forced to contend with the myriad cultivation, product quality and consumer marketing issues faced by companies on the medicinal and recreational consumption end of the business, which is populated by growers, equipment providers and formulators such as Abattis Bioceuticals (OTC: ATTBF), as well as MIP (marijuana-infused product) developers focused on edibles, such as Nutritional High International (OTC: SPLIF).
The Skills To Pay The Bills
There are currently only a handful of publicly traded entrants into this vitally important segment of the cannabis market, such as CannLabs (OTC: CANL) and Pazoo (OTC: PZOO), which provide the crucial testing and verification services cannabis product producers and dispensaries need to satisfy state-mandated requirements. A report out in June this year from GreenWave Advisors indicates that only those lab businesses with the most comprehensive testing capabilities, as well as the logistical acuity to expand geographically, will offer investors the best opportunity.
This key factor is what makes a company like DigiPath so interesting, given its deep bench of engineering talent and established presence with an operational lab in Las Vegas, Nevada.
Nevada: Out In Front, First-In-Class
With one of only two labs currently operating in southern Nevada and the completion of its first commercial tests having already demonstrated the efficacy of the company’s raw technical capacity and expertise, DigiPath, via its DigiPath Labs™ division, is poised to become one of the leading providers of certified cannabis material testing services in the state. Utilizing robust, extremely sensitive hardware from one of the most trusted names in the diagnostics instrumentation game today, Agilent Technologies (NYSE: A), DigiPath’s initial Nevada location boasts a very quick turnaround time for the local industry and is able to return a fully vetted sample result in only 48 hours.
By providing a comprehensive vetting process that checks everything from potency and moisture content, to contaminant and other foreign matter inspection, DigiPath Labs provides an impeccable one-stop-shop testing solution, within a scalable architecture that can be easily built out to additional states. And this company possesses the know-how to execute on a nationwide growth strategy as well. DigiPath Chief Science Officer, Dr. Cindy Orser, PhD, helms the flagship DigiPath Labs location in Nevada and will be the tip of the spear when it comes to rolling out further standardized botanical nutraceutical testing facilities, harnessing her more than two decades of experience spanning both academia and private industry. Extensive time spent managing every aspect of essential projects and liaising between several companies, including her own Big Sky Biosystems company, and federal regulatory agencies like the FDA, CDC and the ARC (U.S. Treasury’s Administrative Resource Center), has prepared Dr. Orser to deliver exceptional results for DigiPath in this endeavor.
Lab Testing Segment An Industry Sweet Spot, Nevada Is A Gold Mine
That same report from GreenWave, which blew ArcView’s projection out of the water by predicting $21 billion by 2020 for the U.S. cannabis market, also has some extremely rigorous analysis of the future of the lab testing space. GreenWave’s analysis shows that lab testing and data analytics, an important secondary component of the segment, are on track to approach revenues of some $866 million a year in the U.S. alone by 2020 if full legalization occurs. The report also argues that longer-term, data analytics, consisting of procedurally built up and highly granular profile data on the psychoactive cannabinoids, as well as the terpenoids (which act as an anti-inflammatory, anti-tumor, antispasmodic, appetite promotion and insomnia fighting agent) present in various strains, may ultimately emerge as the more lucrative element of such laboratory testing. The significance of this information for everything from cannabis-based medicines development to rapidly profiling strains, and enabling better decisions by consumers, cannot be overstated.
With numerous sector operators currently rushing to open dispensaries in Nevada, and a unique reciprocity provision on the books that allows any one of the 42 million visitors per year drawn in by Las Vegas and the state’s other attractions to shop freely at dispensaries in the state if they hold a valid medical marijuana card, Nevada could be one of the biggest winners as the sector continues to boom. In fact, NerdWallet estimated last year that Nevada’s resident population alone could produce a market worth as much as $100 million a year if legalization passes, and that this figure could double under the influence of strong tailwinds from medical cannabis tourism.
More Than Meets The Eye
DigiPath isn’t just about cutting-edge digital pathology solutions and cannabis lab testing firm. The company has established an unbiased cannabis media operation known as TNMNews (The National Marijuana News), dedicated to providing coverage of the economic and political, as well as cultural and medicinal dimensions of the industry, both via terrestrial radio stations and online through its website TNMNews.com. In concert with this bold media initiative, DigiPath has also taken its commitment to solving industry problems like the lack of established protocols governing cultivation and testing best practices one step further, as they design an industry-leading training curriculum..
As the regulatory restrictions on cannabis continue to melt away under strong consumer sentiment regarding marijuana legalization – illustrated by Gallup polling data that consistently shows over half of respondents in the U.S. now favor legalization, as well as a recent poll by Pittsburgh research firm CivicScience that showed 61 percent of respondents somewhat or strongly support legalizing and taxing marijuana – the demand for reliable lab testing will only continue to accelerate. DigiPath has put together the technical requisites needed in order to capture significant market share amid the progression of this trend and, as state regulators come to understand the utility and importance of such comprehensive testing, the strict quality assurances provided thereby will become of increasing value as a selling point for legislative change.
Take a closer look at the company by visiting www.digipath.com
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