The bottom line is this: Don’t make a capital investment before doing plenty of research, due diligence
By Nick Tennant
With extract-derived products accounting for as much as 50% of retail sales in the cannabis marketplace, a professional extraction industry has been born — and business is booming.
More and more growers are jumping on the extract bandwagon, out of necessity and increased profitability. The demand for extracts has also engendered a burgeoning cottage industry of extract equipment suppliers.
Until just a few years ago, the most efficient way to create cannabis extract was with a case of butane lighter fluid and a glass tube. Don’t try this at home. Stories abound of home explosions caused by this dangerous, hobbyist method. Those days are done.
For those would-be extraction professionals who enjoy keeping their fingers attached to their bodies, and avoid unnecessary property damage and trips to the hospital burn unit … read on.
For your average marijuana entrepreneur, the terms, technology and machinery involved in the cannabis extraction process can be dizzying.
Extraction, simply put, is the stripping of cannabinoids and terpenes from the less desirable plant matter. This creates an extract that can then be refined into oil, shatter and wax and infused into seemingly limitless products. This is done by a variety of methods which involve solvents. Ethanol, hexane, supercritical CO2, butane and propane are most commonly used.
This article will focus on butane and propane methods, commonly referred to as “light hydrocarbons,” and later lightly delves into the debate between light hydrocarbon and supercritical CO2.
Light hydrocarbon solvent extraction is by and large the most popular method of cannabis extraction. Some processors prefer this method for a number of reasons, including lower cost of the extraction equipment, speed of extraction and ease of production.
Light hydrocarbon solvent is inherently non-polar (chemistry jargon meaning the electrons play well with each other), which effortlessly dissolves cannabinoids into soluble form, without dissolving other undesirable compounds like chlorophyll (as ethanol or a more polar solvent would). Light hydrocarbons also pose a low health hazard, and the solvents are easily purged from the end product, resulting in a safe consumable good when properly processed. The result is a top-quality extract, created in minimal amount of time.
As they say, time is money.
One must always keep in mind that light hydrocarbon solvents are inherently combustible, so safety is paramount to any extraction operation.
An extraction lab must be set up in a controlled environment, constructed to UL Class 1, Division 2 standards. Meaning, according to Underwriters Laboratories, there is moderate to severe risk of flammable gases creating explosions. This classification is now quickly becoming the standard when using light hydrocarbons as a solvent in cannabis extraction.
Generally, one should have a separate room for running a light hydrocarbon extractor, with spark-proof ventilation, electrical and fireproofing that conforms with National Fire Protection Association code, as well as the aforementioned UL listing classification. Actually, it really isn’t that complex; most newbies find it to be more common sense than anything else. The bottom line is that light hydrocarbon extraction can be completely safe in a controlled environment.
However, the equipment you use and the extraction equipment company you work with are very important considerations because the stakes are high, both in terms of safety and business.
Every extraction equipment company should have at least one product in its lineup that is certified for use according to the guidelines of each state’s regulating agency. In Washington, extraction equipment certification requires an engineer peer review (or EPR for short). An EPR is a certification from a licensed engineer who meticulously reviews the equipment in question for safety, functionality and to ensure it meets applicable national safety codes (such as NFPA and ASME). Other states like Colorado and Nevada also require similar EPR reports, with the city of Denver having the most meticulous compliance requirements in the nation. If the company you’re considering doing business with can’t produce an EPR in a flash, then consider other options.
Research your options
Customer service is another very important consideration. When investing as much money to buy a fancy sports car, you should expect a certain level of service, particularly in terms of technical support. As with even the finest engineered vehicle, things can go wrong or you may need a quick walk-through of a feature. You need a competent professional, with decent response time, to get your extraction business back on the road. Again, time is money.
So before dropping all that cash, ask around. Talk to customers of different extraction equipment companies, ask for referrals, and check out social media. Is their equipment in stock? What are lead times for replacement parts? How is the technical support? Is response time reasonable? These are a few of the questions you should ask prior to making your investment.
Lastly, and this is a big one, would be the level of consulting your extraction equipment supplier can provide. A great company will have engineers to help you with room design and compliance, and a competent service and support team, and experts to help you get it all going. Dollars to donuts, hiring an expert to help you set up and run your lab will be one of the best investments you can make.
When doing your due diligence, you are bound to encounter one particularly and hotly debated question: Should I go with light hydrocarbon or supercritical CO2 for my lab?
Many new extraction companies get “sold” one way or another by thirsty salesmen and manufacturers eager to get your business. Don’t believe anyone who bashes either light hydrocarbon or CO2 extraction. The simple truth is both methods have their pros and cons, and they both have a growing demand for the end product they produce. But there are important considerations to take into account when deciding which way to go, including price, processing times and the needs of your customers.
A light hydrocarbon extraction “system” (meaning with all the pumps and other appendages to make your system complete) typically may be purchased for $20,000 to $40,000. A comparable CO2 system, in terms of volume of material it can run, will cost at least $100,000. Hence, the upfront cost of starting a light hydrocarbon lab is significantly less.
However, since light hydrocarbon is combustible and CO2 is not, one must factor the additional cost of building a light hydrocarbon lab to applicable fire and safety codes, which may cost an additional $15,000 or more. A CO2 lab is also generally easier to pass inspection because it lacks the “kaboom” factor.
When choosing between light hydrocarbon and CO2 equipment, processing time is a very serious consideration. A light hydrocarbon system generally processes material faster than a supercritical CO2 system.
Hence, quick, large-volume production is challenging with a CO2 system. However, a CO2 system may be scaled to do very large volumes (albeit with a large price tag), because they are not restricted by limits on flammable solvents. It is not uncommon for international extract companies to have single material vessels as large as 500 liters. The U.S. industry hasn’t yet reached that threshold.
Finally, some people just love supercritical CO2 extract and others just love light hydrocarbon (commonly referred to as butane hash oil or BHO) extract. What your customer is in the market for should be considered. With that being said, there is a huge market for both, and the demand exceeds supply.
Many of the businesses I work with employ both methods of extraction, and dominate different sectors of the market, with different brands, for each method. Your path may ultimately take you to both destinations.
Again, do your due diligence. Learn a lot before you make the leap. It is a big decision, and you deserve a healthy return on your investment.
Nick Tennant is the lead engineer of Precision Extraction Solutions, a Detroit-based extraction equipment company. More information about the company may be found at precisionextraction.com.