Starting a QC Cannabis or Hemp Laboratory: Testing Requirements, Initial Expenses, and ROI

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Abstract / Synopsis:

This article demonstrates how quickly a cannabis or hemp testing laboratory can see return on investment (ROI), despite a high initial investment in instruments and major consumables necessary to conduct key analytical testing. It provides information on the required instrumentation, approximate cost of the instrumentation, revenue per analysis, samples analyzed per week based on an 8-h day, break-even time after instrument purchase, and monthly expenses for major consumables.

As the cannabis and hemp industry expands worldwide, the need for quality control (QC) becomes even more essential to ensure continued growth. Just as foods and drugs are monitored to ensure accurate labeling and that they are free of contaminants, the same concept holds true with cannabis and hemp.

This testing requires a suite of analytical instruments. This article provides information on the required instrumentation, approximate cost of the instrumentation, revenue per analysis, samples analyzed per week based on an 8-h day, break-even time after instrument purchase, and monthly expenses for major consumables. The cost per analysis will vary based on location and should be verified. Information presented here is based on research in the US market.

This research does not provide details on building costs, rent, taxes, utilities, benches, ventilation systems, personnel, and so forth because there are too many variables. In addition, the expenses listed only include the more expensive items and not things like vials, caps, and certain other consumables. Also, it has been estimated that other laboratory supplies such as pipettes, gloves, vortexes, spatulas, cleaning wipes, dispenser for solvents, flammable solvent cabinet, and so on will require another $30,000.

Cannabinoid Profile Analysis

Cannabinoids are generally measured by techniques such as high-performance liquid chromatography (HPLC), ultrahigh-pressure liquid chromatography (UHPLC), liquid chromatography–mass spectrometry (LC–MS), and liquid chromatography–tandem mass spectrometry (LC–MS/MS).

UHPLC analysis times can be twice as fast as those using conventional HPLC, making it a more efficient technique, although it’s not as rugged as HPLC. Table I provides data when conducting a 10-min analysis of 11 cannabinoids using HPLC. Increasing the number of cannabinoids to 15 will add 5 min to the analysis time. (See upper right for Table I, click to enlarge.)

For an 11-cannabinoid analysis, the revenue is typically in the $50–75 range, but Table I will use the lower $50 value because it is more prevalent according to research. With a run time of 10 min resulting in 48 samples per day, the revenue would be $12,000 per week, meaning the instrument will be paid off in less than one month. Table II provides a monthly cost of the more expensive consumables. (See upper right for Table II, click to enlarge.)

Terpene Profile Analysis

Consumers are very interested in terpene profiles because of the different aromas and possible medicinal benefits. The combination of terpenes and cannabinoids contribute to the “entourage effect” because of the synergy between these two classes of compounds.

Table III presents data for an analysis time of 12 min. This time could increase based on the number of terpenes being analyzed. It has been reported that there are more than 5000 terpenes in nature and 200 in cannabis, although most profiles analyzed contain fewer than 20. Revenue is typically in the range of $120 per sample. At 200 samples per week, the revenue will be $24,000 per week. The break-even point for the instrument is typically less than one month. The most prominent consumable is helium at $500/month. Adding vials and caps will bring the total monthly cost of consumables to approximately $1100. As mentioned earlier, because the sample is very clean, the column would only need to be replaced yearly. (See upper right for Table III, click to enlarge.)

Heavy Metal Contaminant Analysis

Food labels often contain nutrient information, such as sodium, potassium, calcium, and magnesium, which can be analyzed by inductively coupled plasma-mass spectrometry (ICP-MS). ICP-MS is also used to analyze toxic heavy metals, including the “big four” of arsenic (As), cadmium (Cd), lead (Pb), and mercury (Hg)—an analysis required by most states. In addition, various states require the analysis of other elements such as silver (Ag), barium (Ba), chromium (Cr), copper (Cu), iron (Fe), manganese (Mn), nickel (Ni), antimony (Sb), selenium (Se), and zinc (Zn). With ICP-MS, the analysis time is the same whether analyzing one or multiple elements because the technology can perform simultaneous analyses.

Expected revenue per sample is $75 for the “big four.” Analysis time listed in Table IV is 5 min, but there are accessories that decrease that time to approximately 2 min. The longer time was chosen because metals analysis is the fastest analysis in a cannabis or hemp laboratory and thus does not act as a bottleneck to obtaining a full certificate of analysis of all compound classes. Up to 480 samples can be analyzed per week for a revenue of $36,000. Return on investment (ROI) for an ICP-MS is less than one month. (See upper right for Table IV, click to enlarge.)

Table V shows some of the more expensive consumable items, such as argon, a torch, and the cone assembly. The average cost of analysis is approximately $1/sample for all consumables. (See upper right for Table V, click to enlarge.)

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