Why Cannabis Processing Is Such a Costly Business


Headlines proclaiming the benefits of medical cannabis are written to get attention. That they do. But they do not tell even half the story. Cannabis is a plant that offers benefits and applications way beyond the medical. To utilize the plant, it has to be processed. And depending on how it is you do it, processing can be very expensive.

Turning cannabis into medicines and health products requires extracting the plant’s cannabinoids, terpenes, and oils. It sounds simple in principle, and it actually is. But getting it right requires the right equipment and a solid process. Therein lies the reason cannabis processing is so costly. You need expensive equipment. You have to pay people who know how to implement your processes properly.

Extraction and Distillation

Turning cannabis plant material into medicines and health products starts with extraction. For the purposes of this post, we will refer primarily to CBD extraction. Just note that CBD is only one of more than a hundred cannabinoids found in the cannabis plant. THC is another.

CedarStoneIndustry is a Houston company that manufactures extraction equipment, among other things. They explain that cannabis processors generally turn to one of three methods to accomplish extraction:

  • Steam Distillation – Steam distillation involves introducing plant material to steam and high heat. Cannabinoids and terpenes are drawn away by the steam and distilled.
  • Solvent Extraction – Solvent extraction involves mixing plant material with a natural or synthetic solvent. The solvent breaks down the plant material so that cannabinoids and terpenes can be captured.
  • CO2 Extraction – CO2 extraction is similar to solvent extraction except that supercritical carbon dioxide is used instead.

Regardless of the chosen extraction method, processors have to distill the liquid components of extraction. CBD distillation works the same way as alcohol distillation. The liquid resulting from extraction is subjected to a combination of heating and cooling in order to achieve condensation. As the heated material condenses, its components separate at different rates, allowing them to be recovered.

Investing in Equipment

CedarStoneIndustry says that steam distillation is the cheapest way to extract and distill CBD oil. However, it is also the most inefficient. Processors go with steam distillation for one of two reasons: they do not have the money to invest in more expensive equipment or the size of their operations does not justify one of the other two extraction methods.

Solvent extraction represents a more costly investment. But by far, CO2 extraction is the most expensive of all the options. It requires highly specialized equipment capable of maintaining consistent temperature and pressure.

Knowledge Costs, Too

Equipment is not the only expense cannabis processors incur. In order to generate enough product to make business worthwhile, they have to hire staff. And for processing and distillation, staff have to come into it already possessing a certain amount of knowledge and skill. That costs money.

As with any other industry, employers have to pay more to hire people who know how to use CO2 extraction equipment. The equipment is highly specialized, so pulling someone in off the street randomly rarely occurs. Processors have to go looking for the right hires. They have to pay those people competitively, which adds to the cost of doing business.

The costly nature of processing cannabis may explain why smaller operations are gradually giving way to their corporate counterparts. Processing is costly. It requires a significant investment in equipment and personnel. Above and beyond that are processing licenses issued by state governments. They can be fairly expensive as well. The long and short of it is that starting a processing operation is not cheap.

Comments are closed.