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Why Are Cannabis Labs Important and What Makes Them a Great Investment?

Ryan Allway

June 22nd, 2015

News, Top News

[stockchart symbol=DIGPD]

The expansion of the legalized marijuana industry at the state level has created a diverse array of ancillary businesses, each of them with their own competitive landscape and growth potential. This week, GreenWave Advisors, LLC, an independent investment research and advisory firm serving the burgeoning cannabis industry, published a report titled “Marijuana Lab Testing: An in depth analysis of investing in one of the industry’s most attractive plays,” which projects marijuana lab testing revenues could reach $850 million a year by 2020.

Unlike many other marijuana-related businesses, including 22nd Century Group, which focuses on vaporizer products, Cara Therapeutics Inc., which focuses on research, or MyDx Inc., which focuses on chemical sensors, cannabis testing labs address an immediate need from dispensaries and growers looking to meet state-mandated regulations before they can sell to the public. As a result, the market has been rapidly expanding across many states with few public companies well positioned to take advantage.

The report covers each state’s requirements for testing, which vary considerably from state to state, and highlights for investment considerations the leading indicators for what is considered to be a top growth sector within the marijuana industry.

“As individual states debate the efficacy of current legislative statutes or contemplate initial legalization referendums, lab testing requirements of cannabis products has become an increasing subject of concern and attention. Although the current governing statutes regarding legalized marijuana uses vary in great degrees from state to state, one common theme that has emerged is the increased awareness on the part of legislators and health officials, as well as cultivators and laboratories, of the critical importance of product testing and quality assurance.”

Required cannabis testing is relatively new. In fact, Colorado had no protocols in place at the start; the program was only began a year ago after a series of overdoses on edibles made the news. Similarly, Washington State did not begin compulsory testing for potency, contaminants, moisture and microbiology until 2013 when recreational cannabis became legal, even though medicinal use had been in effect since 1998.

While many of the cannabis testing labs are privately owned, DigiPath Inc. [stockquote symbol=DIGPD] , a publicly traded company based out of Nevada, is a potential opportunity for investors to participate in this portion of the industry. The company is one of only two labs operating in the Las Vegas area, and recently inked a one-year agreement with Euphoria Wellness to test for unsafe levels of contaminants such as heavy metals, microbes, mycotoxins, pesticides, and solvents, which can exacerbate patient health issues.

Comprehensive cannabis potency testing is critical for patient care. Cannabis is believed to contain over 400 medicinal compounds, most notably cannabinoids and terpenoids, each of which affects the body differently. One compound, THC, is known to induce cancerous cell death. Another compound, CBD, keeps certain cancers from spreading. Different compounds can reduce tissue inflammation, treat epilepsy, and fight methicillin-resistant Staphylococcus aureus (MRSA) infections.

It is no wonder that so many states are now requiring that lab testing be a step in the seed to sale process. Of the 23 states that permit medical marijuana, eight currently require testing and five additional states are considering testing legislation, which is likely to expand over the coming years as more states pass marijuana laws and state legislators continue to better define what is considered safe.

In a recent article from Smithsonian.com, Andy LaFarte of Charas Scientific, who operates one of only eight labs in Colorado, said “It’s pretty startling just how dirty a lot of this stuff is,” and “There’s a stereotype, a hippy kind of mentality, that leads people to assume that growers are using natural cultivation methods and growing organically…That’s not necessarily the case at all.” Surprisingly, Colorado doesn’t even require testing for contaminants, just for potency. Washington, on the other hand, tests for microbial agents like E. coli, salmonella and yeast mold, and officials there rejected about 13 percent of the marijuana products offered for sale in 2014.

A company like DigiPath Inc. (OTCQB:DIGPD) is well suited to take advantage of this growing industry with their existing lab, trusted scientific team, and experienced management professionals.

To learn more about DigiPath Inc. please visit their website at http://www.digipath.com.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

Disclaimer: Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.

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About CFN Media Group

CFN Enterprises Inc. (OTCQB: CNFN) owns and operates CFN Media Group, the premier agency and financial media network reaching executives, entrepreneurs and consumers worldwide. Through its proprietary content creation, video library, and distribution via www.CannabisFN.com, CFN has built an extensive database of cannabis interest, assisting many of the world’s largest cannabis firms and CBD brands to build awareness and thrive. For more information, please visit www.cfnenterprisesinc.com.

Disclaimer: Matters discussed on this website contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time-to-time have a position in the securities mentioned herein and will increase or decrease such positions without notice. The Information contains forward-looking statements, i.e. statements or discussions that constitute predictions, expectations, beliefs, plans, estimates, or projections as indicated by such words as "expects", "will", "anticipates", and "estimates"; therefore, you should proceed with extreme caution in relying upon such statements and conduct a full investigation of the Information and the Profiled Issuer as well as any such forward-looking statements. Any forward looking statements we make in the Information are limited to the time period in which they are made, and we do not undertake to update forward looking statements that may change at any time; The Information is presented only as a brief "snapshot" of the Profiled Issuer and should only be used, at most, and if at all, as a starting point for you to conduct a thorough investigation of the Profiled Issuer and its securities and to consult your financial, legal or other adviser(s) and avail yourself of the filings and information that may be accessed at www.sec.gov, www.pinksheets.com, www.otcmarkets.com or other electronic sources, including: (a) reviewing SEC periodic reports (Forms 10-Q and 10-K), reports of material events (Form 8-K), insider reports (Forms 3, 4, 5 and Schedule 13D); (b) reviewing Information and Disclosure Statements and unaudited financial reports filed with the Pink Sheets or www.otcmarkets.com; (c) obtaining and reviewing publicly available information contained in commonlyknown search engines such as Google; and (d) consulting investment guides at www.sec.gov and www.finra.com. You should always be cognizant that the Profiled Issuers may not be current in their reporting obligations with the SEC and OTCMarkets and/or have negative signs at www.otcmarkets.com (See section below titled "Risks Related to the Profiled Issuers, which provides additional information pertaining thereto). For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity-based compensation in the companies it writes about, or a combination of the two. For full disclosure, please visit: https://www.cannabisfn.com/legal-disclaimer/. A short time after we acquire the securities of the foregoing company, we may publish the (favorable) information about the issuer referenced above advising others, including you, to purchase; and while doing so, we may sell the securities we acquired. In addition, a third-party shareholder compensating us may sell his or her shares of the issuer while we are publishing favorable information about the issuer. Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.

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