A significant yet hidden cost of plant oil extraction using volatile chemical solvents, such as butane hash oil (BHO) in the hemp and marijuana industries, is the heating or cooling of the air used to evacuate the volatile solvents from blast-proof rooms required by fire codes to ensure employee and building safety.
If these blast-proof rooms are not designed properly, the HVAC costs alone can larger than the labor expense in colder climates.
Conditioning this wasted air can cost extractors up an extra $25,000-50,000 per year depending on regional temperatures and energy prices without the proper design and technology.
HAL Extraction Technologies’ booths patented technology and patent-pending designs save this cost, and pay for the cost of the booth within a year or two.
Plant oil extraction rooms made by HAL Extraction Technologies combine patented AMAV (Active Monitoring + Adaptive Ventilation) technology with a patent-pending design called DVAC (Distributed Vapor Airflow Capture) Adaptive Ventilation and a patent-pending Focused Flow design engineered to minimize the wasted air by 83%.
The HVAC costs are driven by the energy required to raise or lower the temperature of the air used to evacuate the solvents from the blast rooms. To lower costs, HAL’s technology and design reduces the amount of air needed to ensure employee safety and meet the fire codes.
The HVAC costs are higher in climates with more extreme temperatures in winter or summer and higher energy costs. Depending on the local climate and cost of electricity, this results in a savings of $74-$106 in the Northeast US, about $53 per shift in Arizona, C$17-C$50 in Canada.
[Contact HAL Extraction for a detailed costs by US State and Canadian Province]
Patented AMAV (Active Monitoring + Adaptive Ventilation) saves 33% on HVAC Costs
HAL Extraction Technologies’ patented AMAV technology alters the airflow to vent the rooms only when volatile solvents are present. For a typical 180 square foot booth, fire codes require ventilating 8,000 cubic feet per minute of conditioned air for most of a shift, given that butane can explode in concentrations as low as 2-8% of the air.
By sensing the air for volatile compounds and altering the speed of the ventilation to peak levels only when necessary, HAL Extraction’s patented technology reduces the amount of air needlessly conditioned air by 33%.
Depending on the climate and the cost of electricity, this patented technology reduces the HVAC cost by roughly $40 per 8 hour shift in the Northeastern US, and up to $65 in the winter. Even in warmer climates like Arizona, the savings in the winter is still $22 per shift.
Over two shifts per day and 250 weekdays per year, HAL’s patented AMAV technology alone saves up to $20,000 per year of wasted utility expense in the Northeast.
Patent-Pending DVAC (Distributed Vapor Airflow Capture) saves Another 75% on HVAC costs
HAL Extraction’s modular booths go a step further with a patent-pending engineered design that focuses the variable airflow only where it is needed to evacuate the volatile compounds.
Through this focused airflow, the DVAC plenum design reduces the air evacuated by another 75%, saving another $50-64 per shift in In New England and $32 per shift in warmer climates like Arizona.
Combining AMAV and DVAC Reduces HVAC Costs by 83%
With no technology or design, fire codes basically require the operator to run the ventilation continuously during extraction – or 6 hours of an 8 hour shift assuming 1 hour each of set up and clean up.
HAL’s patented technology combined with its engineered design results in a booth that costs $20 per shift in New England and $7-10 per shift in warmer climates, compared to $45 to $125 per shift with the simple solution mandated by fire codes.
This saves $100 per shift in the Northeast, which adds up to $50,000 per year, and $53 per shift in Arizona (which adds up to over $26,000 per year).
HVAC Can be Largest Controllable Cost
Looking at the cost of extraction, the key ongoing operating costs are:
- Raw Plant Material
- Labor
- Solvents (Butane and Propane)
- The HVAC expenses
The raw material is the largest cost, but it is determined by local supply-demand and vertical-integration decisions, rather than any ongoing operating decisions.
The controllable costs for an extractor are the Labor, Solvents, and HVAC expenses.
Assuming a wage of $14-22 per hour, the labor is $112-176 per 8 hour shift.
Assuming 40 pounds of raw plant material is processed over 8 hours, the cost of the Butane/Propane is about $47.
This leaves the HVAC expenses, which can be $100-120 per shift in New England to meet code, but which are only $18-20 for the HAL 180 using the AMAV and DVAC technology.
Meaningful Impact to Margins
Regardless of the current end price of the extracts, a company’s cost of extraction is one of the few things that can be managed. Most of the cost of goods sold for extract is the raw material itself, which will fluctuate similarly for all extractors in a market, and COGS related to the equipment and efficiency will differentiate those with higher and lower cost production.
Long term capital and industrial process decisions must be made based on long term pricing assumptions, and though limited supply after legalization in a state leads to initially high wholesale and retail prices, increasing supply rapidly pressures the wholesale price downward – as the history of mature markets like Colorado and Oregon have shown.
As per LeafLink and Marijuana Business Daily [article here https://mjbizdaily.com/wholesale-marijuana-hemp-oil-prices-fall-nationwide/], the average wholesale price of marijuana extract oil in Colorado, Oregon, Washington, and California is $8.54 per gram in November 2020.
For Colorado, the savings is $65 per shift, or 8 cents per gram – which is equal to 1.0% points of margin, simply by not wasting the heated air.
Should the Northeast see similar pricing as the industry builds out, the savings of 8 cents per gram would be even higher at 1.5% points of margin.
Explore HAL Extraction’s product lines here, speak with the HAL team today for a custome quote.
Call HAL Extraction at 720.504.4726 or email info@extractionbooth.com.