How Many Testing Labs Are Too Many? Week in Review

West Virginia state lawmakers are moving toward a two-laboratory monopoly for testing products in the state’s medical cannabis program. But one testing executive indicated that just one lab may be sufficient.

Delegates voted 67-33 Feb. 24 to approve House Bill 4627, which would amend an article of the state’s Medical Cannabis Act to provide that “no more than two laboratories in this state may be certified pursuant to this section.”

Sponsored by Del. Brandon Steele, of Raleigh, the legislation now heads to the Senate.

The West Virginia Medical Cannabis Act was signed into law by Gov. Jim Justice in April 2017, but the program rollout hasn’t been breaking any records. The state’s Department of Health and Human Resources (DHHR) didn’t announce medical cannabis dispensary permits until January 2021. Patient registration opened the following month.

In March 2021, the state’s Office of Medical Cannabis (OMC) announced it awarded its first medical cannabis laboratory testing permit to Analabs Inc., of Crab Orchard, located in the southern part of the state.

But Analabs didn’t start receiving samples from the nascent industry until October 2021, the company’s vice president, Kelli Harrison, told Cannabis Business Times.

“It’s been a very, very slow rollout,” she said. “We actually only got our first samples this past October. It’s just been very slow. There’s only two growers actually operating. [The state has] done a terrible job rolling it out.”

While cannabis testing and analysis is new to West Virginia, Analabs launched in 1987 and serves clients with varying analytical needs in the state, from waste and drinking water plants to coal companies, engineering firms, natural gas companies and the like.

To help invigorate the cannabis segment of the testing market, Harrison said she’s advocated for state lawmakers to expand the list of diagnoses for qualifying patients, and for state officials to make it easier for patients to get their medical cards.

In July 2021, OMC hosted a public signup event for potential medical cannabis patients at the Kanawha-Charleston Health Department in Charleston, and then announced subsequent events in Morgantown, Beckley, Elkins, Parkersburg, Princeton, Weston and the state’s Eastern and Northern panhandles

“It was me that actually pushed them to do a couple of patient registration events to try to help people,” Harrison said. “You know, it’s all electronic, online, and a lot of older people just couldn’t do it or didn’t know where to start.”

While Analabs was the first testing facility to receive approval for the state’s medical cannabis industry, Harrison said the process didn’t involve intensive oversight from DHHR. With ISO-17025 accreditation, DHHR reviewed Analabs’ paperwork and granted the license, she said.

At the time of that licensure in March 2021, OMC officials had said that laboratory permits would not be limited in number and that the application process will remain open indefinitely.

Leading up to that licensure, OMC Director Jason Frame said one goal of his office was to provide the oversight to ensure that eligible West Virginia residents would have the ability to procure quality-tested medical cannabis.

But that quality-tested medical cannabis now could be in the hands of two licensees should H.B. 4627 be enacted.

Steep Hill, a multistate operator with footprints in lab testing, research and development, licensing, genetics and remote testing, is the other licensed testing lab in West Virginia’s medical cannabis program. In 2008, Steep Hill opened as the first commercial cannabis lab in the U.S. and now has operations extending from California to Massachusetts.

Under the Green Analytics license name, Steep Hill received its medical cannabis testing laboratory permit Feb. 2, 2022, according to DHHR Communications Director Allison Adler. 

“Significant investment has been made in West Virginia to facilitate safe medical cannabis products for registered patients through stringent lab testing at laboratories that applied and met licensing requirements,” Adler said in a statement to CBT. 

With those two testing licenses in place, H.B. 4627 is designed to ensure Analabs and Steep Hill remain the sole laboratory providers to the state’s medical cannabis market.

Some of the laboratory costs associated with serving the medical cannabis industry include additional equipment and staff, and certifications, Harrison said.

Those investments would become more difficult to realize a return on under an unlimited license structure for testing labs paired with a limited license structure for cultivators and retailers, she said.

“There’s not even enough analyses for one [lab under current market conditions],” Harrison said. “So, the bigger issue is to make sure the labs can be viable. They’ve limited the number of growers. They’ve limited the number of dispensaries. Everything in the whole program is so limited. You can’t have endless laboratories, but really there’s not even enough [business] for one.”