Cost of new mandatory marijuana pesticide testing tough to absorb for Colorado’s growers

(This story has been corrected to note that under Colorado law, licensees that pass the validation process must submit one batch for testing once every 30 days.)

New mandatory marijuana pesticide testing in Colorado is putting a financial squeeze on local cultivators to the tune of thousands of dollars in increased costs.

The added expense is the latest financial blow to hit the state’s cultivators, which are already struggling with falling wholesale prices and a glut of product.

Colorado’s Marijuana Enforcement Division is requiring pesticide testing for marijuana flower and trim, but not concentrates. The new rules took effect Aug. 1.

Other states with recreational marijuana programs such as Oregon and California also require cultivators to submit their cannabis for pesticide testing.

In Colorado, the added cost amounts to $100-$120 to test each strain.

Tim Cullen, CEO of Denver-based Colorado Harvest Company, which grows and retails medical and recreational marijuana, said the process is costing him about $2,500 a week per grow to comply.

“It’s not like you can charge any more for the same product,” said Cullen, who operates two grows. “You’re just paying more (to produce the product).”

However, the new rules have been a boon for cannabis testing labs in the state, which are being flooded with new business – although some company owners and industry groups say the tests don’t do enough to protect consumers from unwanted chemicals in their marijuana, and even more needs to be done.

The state of Colorado’s mandatory pesticide testing requires medical and recreational cannabis be tested for:

  • Abamectin (Avermectin B1 &B2)
  • Azoxystrobin
  • Bifenazate
  • Etoxazole
  • Imazalil
  • Imidacloprid
  • Mlathion
  • Myclobutanil
  • Permethrin
  • Spinosad A&D
  • Spiromesifen
  • Spirotetramat
  • Tebuconazole

Another financial obstacle

Cullen is the middle of the validation process, which requires him to submit samples for testing six weeks in a row. If he passes the validation stage, his operation then must submit one batch for testing once every 30 days.

He grows about 25 strains per cultivation site, and each strain must be tested at a cost of $100 per strain per week. Because he operates two grows, that’s $5,000 a week for his business, or $30,000 for the year given the six weeks of mandatory testing, Cullen noted. The monthly testing would be an added expense.

“It’s one more cut among a thousand that’s making this business impossible to run,” Cullen observed.

Until the federal tax structure is changed to allow cannabis companies to deduct the same types of expenses taken by more mainstream industries, these extra financial burdens will be crippling, according to Cullen.

“You can’t have the state government imposing all these new tests every year that come out of the profit margin of the business without giving some relief on the federal tax side that takes all of the profit out,” he added.

The state also is expected to add more mandatory tests in the future, including testing for heavy metals.

That’s not to say Cullen is against mandatory pesticide testing.

“It’s an additional cost that does not generate more revenue for the company,” he said, “but it’s also absolutely necessary that cannabis be tested for pesticide use.”

Fewer strains on the horizon?

The added cost will likely lead Cullen to grow fewer strains to reduce expenses.

“We’re only growing the best, heaviest-producing strains in-house and then supplementing that with wholesale, which is probably a blessing to the wholesale market because there’s so much wholesale sitting out on the market,” Cullen said.

Many growers are reportedly at rock-bottom prices. Cullen’s purchasing wholesale flower for $600-$800 a pound on average and sometimes for less.

By comparison, wholesale prices for a pound of cannabis flower were $1,800-$2,200 a year ago in Colorado, according to Marijuana Business Daily‘s Cultivation Snapshot.

Cullen estimates the cost of production for indoor-grown cannabis, with as many efficiencies as one can put into place, at roughly $500-$550 a pound, with a skeleton crew and no hiccups. It means the margins are very thin for cannabis producers.

After a grower pays the lighting bill and landlord, he noted, “there’s just nothing left there.”

This added financial burden might eliminate some of the competition.

“Some people probably won’t make it through this,” Cullen said.

A boon for labs

One industry sector that is enjoying this additional requirement: state-licensed cannabis testing labs. There are five licensed labs in Colorado.

Since the state mandated pesticide testing for cannabis, Denver-based Nordic Analytical Laboratories owner Kimia Mahmoodi has been working longer hours, bought new equipment and hired more staffers.  

She’s tried to keep her promise to clients that they will get results back in two to three days.

To do that, she’s purchased another liquid chromatography mass spectrometry testing instrument that costs in the $300,000-$500,000 range.

She had one technician in her pesticide testing lab, but she’s hired three more.

“I know the cost is very high for the growers, and they’re not happy about that,” Mahmoodi said. “But it costs us a lot of money to do the testing as well.”

Her lab charges $120 per test for a 2-gram sample and offers a bulk discount of $100 per test for higher volumes.

Mahmoodi said so far she hasn’t had to reject that much cannabis for unacceptable pesticide levels.

“People are following the rules and regulations,” she said. “We don’t have that many failures.

“The consumers are happy that they see the product they’re using is pesticide-free.”

Consumer confidence

Finding out what’s in the cannabis being grown is a large concern for at least one industry group.

A campaign dubbed #Whatsinmyweed – made up of business owners and industry groups, among others – contends that the state’s list of 13 banned pesticides is far too limited to adequately determine if there are chemicals in cannabis

“This is a really, really small step that does not even begin to adequately create a meaningful consumer health and safety protection,” said Ben Gelt, board chair of the Cannabis Certification Council.

Kirk Scramstad, operations director for Organic Alternatives – a Fort Collins, Colorado, medical and adult-use retail business that also has a cultivation and manufacturing license – said the mandatory tests have increased his firm’s costs but don’t do enough to make an impact.

“Is this a step in the right direction? I think so,” he said. “But is this a big enough step? I don’t think so.”

Bart Schaneman can be reached at [email protected]

11 comments on “Cost of new mandatory marijuana pesticide testing tough to absorb for Colorado’s growers
  1. L Wayne on

    Any kind of chemical pesticides are toxic. Even if the government says a little bit is OK, it alllllll adds up over time in a person’s mind and body as well as the environment!! Organic is the way to go, whether it’s pot or food. It’s not rocket science and it’s not reinventing the wheel here. BUT the chemical companies along with the associated businesses with them and the government officials who have bought off on this, or been bought off by these companies, only care about money money money. The health of the American People are being sacrificed over money once again.

    Reply
    • Dr. Scott Perlman on

      Couldn’t agree more , but isn’t testing good for the consumer to know what there buying . I agree , Organic 100% is my life style , whether your eating the food or smoking the cannabis all needs to be organic!

      There seems to a skippy in the article heee other then the fees I see hurt the industry at some level , how are the politicians involved other then the possibility there hands being involved either in the cultivation or testing .
      Dr. Scott

      Reply
  2. Ken in Washington on

    This is going to be an ever growing issue in any state that regulates legal cannabis sales and to me looks like a really good reason in to becoming a 100% sterile, no-pesticides, no-fungicides, nothing added cannabis organic growing facility.

    Laboratory sterile, no pesticide or whatever inspections needed, required.

    This would be indoor facilities only for obvious reasons, and a lot of the growers I have seen in person or videos of their grow ops operate such dirty facilities they would have to change their ways big time, sell out or die out.

    The legal cannabis industry is still in it’s infancy and will have to continue to deal with things like this along with many more unknowns to come.

    Good luck to all that stick with it.

    Reply
  3. Johnathan Aluitious Hempseed Da lll on

    The last time I was in Denver I could taste the Neem tree extracts “Avermectin” in samples of weed.I inquired where you could get organic, natural weed, cultivated outdoors, pesticide free with the sun. The bud-tender drew a blank !

    Reply
  4. John on

    The title of this article should actually read, “Colorado Marijuana Industry finally forced to ensure Consumer Safety.”

    They cry about not making any money anymore, but what about the consumers?

    Reply
  5. Vince on

    This is an understandably tough situation for growers and consumers alike, and ultimately a growing pain associated with this new market. I sincerely hope for a future where it is clearly defined, affordable, and realistic that reputable growers can produce products that are easily verified as safe to consume by the average consumer. Until then, I wish all the best in the industry!

    Reply
  6. Kent Campbell on

    I recommend that you all review the Startengine.com MedX at .60 cents. They are so close to getting several large investors so they can go silent for 90 days before going public. The .60 cent price will go away once the 90 day quiet period will start. I currently am long 250,000 shares. The product is NatureCide. An existing product that until now had no real market. It is a pure organic, non toxic, natural effective pesticide that dissapears within 30 days after application. The state of Colorado has already approved it for use in Colo for Marijuana. Advise due diligence, and a quick decision if you are interested.

    Reply

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