Mandatory Pesticide Testing Costly For Struggling Growers In Colorado
By Roger Moleskin photo/istock/Rex_Wholster
We’ve covered the many expenses those across the entire cannabis industry must incur in order to stay viable. From operating in a cash only industry, property taxes, and fees and licensing, virtually every single cannabis business is operating at a loss for the time being. Unfortunately, their financial troubles are not over, as the state of Colorado has implemented new marijuana pesticide testing rules that will add thousands of dollars to already inflated costs for all growers. Colorado’s Marijuana Enforcement Division is requiring pesticide testing for marijuana flower and trim, but not concentrates. The new rules took effect Aug. 1.
The testing for recreational and marijuana cannabis covers more than a dozen pesticides. Although it’s a necessary step in the interest of public health and transparency that we should be thankful for - after all everyone wants a safe product - the added costs may prove to be a tipping point for those businesses already on the brink.
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).”
Every Colorado grower must first submit samples for testing six consecutive weeks. Then, if the validation test is passed, they test each strain they produce at the cost of $100 a week. In Cullen’s case, he operates 2 grow sites with about 25 strains each, making his weekly cost $5,000 and over the course of a year, $30,000.
“It’s one more cut among a thousand that’s making this business impossible to run,” Cullen observed.
This is a complicated issue. While it’s true that safety standards are an absolute must, the problem for the businesses is that the extra tests come directly out of the profit margin. Many growers are already selling at rock-bottom prices and cannot afford to drop any more, so the only viable choice for them is to scale back on production by growing less.
Additionally, the grow facilities have been operating without the new regulations for quite a while now, so it’s possible that the product they submit for testing would not pass, resulting in the entire batch being destroyed. Some growers will undoubtedly lose an entire grow in order to properly clean their facilities and keep up to par with the new standards.
While the regulations are necessary and will increase consumer confidence, cultivators will continue to feel the pressure and may have to invest in entire new maintenance systems because of them. This may well be the end for some smaller businesses, but market analysts say that is a good thing for the industry overall because it will mean less competition and a state-approved and tested product.
However, in the short term, the new rules add to costs and show little benefit. Kirk Scramstad, operations director for Organic Alternative, 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.”