The legal cannabis industry has exploded in recent years. Thanks to state laws legalizing cannabis consumption and the passage of the 2018 Farm Bill, there is plenty of business to go around. Processors are a part of the supply chain that occupy that middle ground between growers and retailers. Sometimes processors are also product manufacturers, other times they are not.
Making money as a cannabis processor is all about figuring out exactly what you want from a process and how you intend to do it. Before you get to that point, you need an education in all things cannabis. There is a lot more to the cannabis plant than just marijuana.
Most of the cannabis from which CBD and THC are derived is one of the following three varieties:
- Marijuana – Hemp with more than 0.3% THC by volume
- Industrial Hemp – Hemp with a high concentration of CBD but less than 0.3 percent THC
- Natural Hemp – Naturally-bred hemp with low volumes of both CBD and THC.
Both natural and industrial hemp are fully legal throughout the United States. There are no federal laws prohibiting its growth, processing, and sale. On the other hand, marijuana is still illegal under federal law. There are thirty-seven states with medical or recreational cannabis programs in place.
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Deciding What to Extract
As a cannabis processor, you would have to decide what you want to extract. If you were interested only in CBD extraction, you would then have to decide how to get to the precious oil. Houston-based CedarStoneIndustry says that distillation, solvent, and CO2 extraction are the most commonly utilized methods.
All three methods have their pros and cons. And by the way, all three can also be utilized for marijuana (THC) extraction. If you are looking at extracting oil from natural hemp seeds, all three of the previously mentioned processes might be overkill. Cold pressing is a more economical option.
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Cannabinoids and Terpenes
Next up, you would want to decide on any cannabinoids and terpenes above CBD and THC. Note that cannabis plants contain more than one hundred cannabinoids and dozens of terpenes, along with fats, flavonoids, and other substances. Why does this matter? Because as a processor, you are looking to produce the compounds your customers want.
You may have customers interested exclusively in CBD. They may not care about other cannabinoids and terpenes. Likewise, you might have customers whose only interest is THC. But as a processor, you might be interested in developing different cannabinoid and terpene profiles to use as the basis for developing your own branded products.
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Getting Up and Running
The decisions about extraction process and what to extract are simple compared to the chore of getting your business up and running. If you are looking at medical or recreational use cannabis, you’re looking at a potentially expensive state license. You probably won’t need a special license to produce CBD or hemp seed oil.
You will also need space. Extraction equipment can require a considerable footprint depending on how big you want your operation to be. You will also need space for packaging, testing, and office work. All of this will cost you up front. Plan on making a sizable investment before you ever produce your first drop of oil.
In a nutshell, making money as a cannabis processor requires a combination of knowledge, equipment, and space. That says nothing of the employees you will have to hire. It is doable – a lot of companies are making big money on cannabis – but it’s not as simple as buying raw plant material and rolling it into a joint.
