Costs of mandatory cannabis testing in California

Abstract

Every batch of cannabis sold legally in California must be tested for more than 100 contaminants. These contaminants include 66 pesticides, for 21 of which the state's tolerance is zero. For many other substances, tolerance levels are much lower than those allowed for food products in California. This article reviews the state's testing regulations in context, including maximum allowable tolerance levels — and uses primary data collected from California's major cannabis testing laboratories and several cannabis testing equipment manufacturers, as well as a variety of expert opinions, to estimate the cost per pound of testing under the state's framework. We also estimate the cost of collecting samples, which depends on the distance between cannabis distributors and laboratories. We find that, if a batch fails mandatory tests, the value of cannabis that must be destroyed accounts for a large share of total testing costs — more than the cost of the tests that laboratories perform. Findings from this article will help readers understand the effects of California's testing regime on the price of legal cannabis in the state — and understand how testing may add value to products that have passed a series of tests that aim to validate their safety.