Florida's green rush is creating business opportunities for more than just cannabis dispensaries.
Just ask ACS Laboratory, a medical marijuana and hemp testing lab headquartered in Boca Raton. The company, which tests cannabis products for potency as well as contaminants like pesticides and heavy metals, has doubled its revenue every year since 2018 as patient numbers increase and medical cannabis dispensaries grow their footprints across the state.
Marijuana easily absorbs pesticides, solvents and other toxins that are sometimes present during the cultivation process, which could be hazardous for people who smoke it or consume it in another way. In Florida, medical cannabis companies are required to send their products to third-party labs to ensure their marijuana and CBD products are free from contaminants and safe for human consumption before distribution.
"There are still so many facets of the cannabis industry that people don't know about, like the compliance aspect," said Roger Brown, president of ACS Laboratory. "If I wanted to consume marijuana, I'd rather buy it from a commercial dispensary that I knew had a requirement to meet certain regulatory standards, versus a black market dealer [who doesn't]."
The company's lab in Tampa tests products for 13 of the 22 medical cannabis companies that have licenses to operate in Florida, Brown said. He estimates that ACS Laboratory tests about 60% of the marijuana sold legally in Florida.
As of Dec. 31, there were 656,370 Floridians with active medical marijuana licenses, more than double the 299,044 reported in January 2020. The number of statewide dispensary locations also skyrocketed, going from 213 to 396 during the same period.
Sales of medical cannabis surged in the early days of the Covid-19 pandemic and have remained steady since, according to data from Florida's Office of Medical Marijuana Use.
Brown said ACS stands out because it goes above and beyond the regulatory requirements. In addition to testing cannabis for THC and other cannabinoids, like CBD, the lab also looks for contaminants like mold, heavy metals, residual solvents and 102 different pesticides.
"We test a batch [of cannabis] and then produce a report for the company. If there are no contaminants present at levels that are accessible, they pass and [the company] is allowed to sell the cannabis in a dispensary," Brown explained.
If the batch fails, the business can have their cannabis retested by ACS or another lab.
Testing marijuana for cannabinoids (the naturally occurring compounds found in the cannabis plant) can also help patients choose the strains that treat their health conditions, Brown said. ACS Laboratory can test for 22 cannabinoids, all of which could have different potential benefits – like pain or nausea relief – for users.
"Patients might benefit from a certain cannabinoid depending on their condition or body chemistry, so it's important to identify which cannabinoids are in certain strains [of cannabis] to help patients figure out what's actually going to help them," he said. "Kind of like the way you might take Tylenol or Advil depending on what works for you."
The company's lab testing facility in Tampa recently underwent a 20,000-square-foot expansion to keep up with rising demand as Florida's medical cannabis industry gains more ground. ACS plans to open new labs in nine different states in 2022, including some recreational markets. Brown declined to specify which locations the company is targeting, but said the firm will focus on the East Coast.
That could help ACS insulate itself from a wave of cannabis industry consolidations – of dispensaries and ancillary businesses – that Brown expects to see in 2022.
"Mom and pop [cannabis] businesses can only grow to a certain level, so I think we'll see more consolidations moving forward," he said.
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