Vencel Pugg's laboratory is located in the Flotsam forests. This is where the alchemist takes Geralt to verify the incense formula that the witcher gives him.
Geralt can reach the laboratory in one of two ways: either by being led by Pugg while blindfolded, or by convincing Pugg to indicate the location on the witcher's map.
There are also two mutually exclusive ways to leave the laboratory. Geralt can either take the boat back to Flotsam, or he can leave by the cave entrance, in which case the boat option disappears.