Good work. Took me a while to figure out that picture, but I think I understand. I'm of two minds: I usually try to leave young seedlings alone to develop as many early leaves as possible for robustness, then pinch later when better established. I also could see pinching it just after that vertical growth to the right of the toothpick...maybe in a couple weeks or so.
However, I wonder why your lavender is so floppy. If you're fertilizing it, cut way back or stop entirely if that potting mix has fertilizer in it. Can you give it more light?
