Last November, the city of Costa Mesa, California took a leadership position in the legal cannabis sector when it put “Measure X” to a vote with its residents. The people voted in favor of the new legislation, giving the coastal city at least a year’s jump on all others in Orange County by legalizing laboratory testing and manufacturing of medical cannabis. Voters, however, didn’t want to see cannabis sold in the city, voting down two measures to create licensed medical marijuana dispensaries.
This means that medical marijuana can only be sold from one business to another within the city limits, a scenario that is expected to keep the new cannabis business at the scientific level and behind closed doors. That’s a perfect scenario for Oregon-based life sciences company Signal Bay and its cannabis laboratory services unit EVIO Labs. EVIO operates state-of-the-art testing facilities and offers accredited testing methodologies that verify the safety and potency of the nation’s cannabis supply.
Signal Bay is preparing for expansion outside it home state, including initiating the acquisition of Massachusetts-based cannabis testing lab Viridis Analytics MA late in June. On Tuesday, the company disclosed that they are entering the large California market, executing a long-term lease to open a testing facility in Costa Mesa.
“Now that our footprint is established in Oregon, we’re starting the coast-to-coast expansion portion of our business model, with California and Massachusetts of the highest priority, Signal Bay CEO William Waldrop told us in a phone conversation on new lab plans. “The California market is expected to easily be the largest legal cannabis market in the world and we intend to be the go-to laboratory in the state.”
Waldrop explained that his team felt Costa Mesa was an ideal location to establish a central hub lab catering to Southern California through the nearby highways serving as arteries to what they call “spoke” labs in San Diego, Los Angeles, San Bernardino and Inland Empire, amongst others.
“We had a game plan should Measure X pass as we expected and began implementing the strategy immediately,” explained Waldrop. “While being proactive, we think Costa Mesa is still going to be reserved, which could mean only a limited number of market participants, an ideal environment for us to grow. At this moment, we’ll be the first and only fully licensed cannabis testing laboratory servicing the region.”
Although medical marijuana has been legal in California for about two decades and generated about $2.8 billion in retail sales in 2016, it is expected to experience a boom starting in January when recreational marijuana becomes legal. Market experts at New Frontier predict the California cannabis market will reach $6.46 billion by 2020. EVIO Labs will now have a flagship facility at the epicenter of that activity.
The surge in demand will bring about massive amounts of government revenue, as well as a unique set of challenges to regulate the industry. Accredited laboratories are expected to be operating at full capacity when the state implements mandated testing to ensure product integrity and safety for consumers.
Waldrop said that he anticipates the turnaround time to get the new lab going in the area of five months, which dovetails nicely with the legalization of recreational marijuana in California.
“States are seeing the revenue that places like Colorado are bringing in via legalizing marijuana for both recreational or medicinal purposes. Most don’t want to pass it up, but they absolutely are not going to sacrifice safety, which I’m convinced will create a shortfall in labs and a tremendous opportunity for our company,” commented Waldrop. “First, we were in Oregon, next California and Massachusetts. Over time, through acquisition and organic growth, we plan to have hub and spoke locations in every major market and to be the household name in cannabis testing.”
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