Investment value finders Investment value finders
This story originally appeared on Cannabis & Tech Today.
From the point of view of cannabis extraction, scaling production isn’t always a simple equation.
Scaling extraction means putting together puzzle pieces, often within rigid constructs of local regulations, astronomical equipment costs, and overwhelming data management.
Even when a new extraction machine is financially feasible, local laws may restrict the handling of dangerous materials.
Worse, the backend data management piece can easily inundate a producer who’s used to working within a network of Excel sheets.
Profitable growth in the cannabis concentrate sector means hitting the sweet spot in a Venn diagram, comprising efficient output, compliance management, and robust production-tracking protocols.
Turn-Key Solutions Facilitate Easy Scaling in Cultivation
When planning for growth, cultivators have options.
It’s relatively simple to expand into new greenhouses, grow rooms, and manufacturing facilities—so long as space allows.
Local regulations and licensing considerations always exist, but growth for the cultivator is a much more straightforward affair than it is for the extractor.
Furthermore, an increasing number of modular solutions in cultivation make growth as simple as ordering a new prefabricated unit.
Cannabox, Starrco, and Portaking are only a handful of these new turn-key solutions that facilitate rapid and relatively straightforward cultivation expansion.
Unlike in cultivation, where modular units abound, there are thus far few prefabricated options for increasing output in cannabis extraction.
When they do exist, other limiting factors complicate matters.
In extraction, scaling up production requires either significant capital expenditure or ramping up current machine capacity.
Limitations on Current Cannabis Extraction Technologies
Cannabis extraction today comes in a variety of forms, including CO2, ethanol, rosin press, ice water, dry sift, and hydrocarbon.
Hydrocarbon machines are typically the best option for small to medium-scale producers because they are an affordable upfront investment with award-winning output.
Although comparatively affordable, hydrocarbon extraction runs up against issues because of its extremely flammable nature and the significant costs associated with regulator compliance.
More machines mean more flammable solvents, which are limited in quantity under local regulation.
CO2 extraction machines seem safer to run and as Type 6 instead of Type 7, are less likely to come up against local regulations, but they can easily cost hundreds of thousands (even millions) of dollars, with relatively low throughput.
The cost of investment puts this strategy far beyond the reach of most extractors today.
The limits on hydrocarbon in cannabis extraction and the sheer cost of some new extraction machines are why most companies find themselves adding more shifts to do more runs.
But this can be expensive.
A better first step is to dial in the production line by analyzing run data to cut costs, reduce run times, and increase yields.
Planning for Growth Through Smart Supply Chain Management
Sustained growth is only possible through comprehensive production tracking, ongoing compliance, and data-driven insights into costs, efficiencies, and more.
Whether a producer is increasing the number of runs on their current machines or shelling out significant investment into new machines, profitability comes down to the details.
The first step toward better data management is moving away from Excel spreadsheets (or worse, whiteboards) into a fully integrated supply chain management system.
Backbone, a highly customizable tracking, compliance, and reporting platform, is one such software solution.
It allows producers to expand in size and capture additional processes and procedures that come online during periods of growth.
Erika Tingey, Head of Product at Backbone, stated, “Backbone specifically targets manufacturing, and the whole supply chain, aimed at tracking and managing the whole process, from seed to distribution.”
Backbone integrates directly into the production floor, feeding automatic hardware readings from scales, thermocouples, flow meters, and pressure transducers straight into the platform for detailed analytics and reporting.
Furthermore, the platform is highly customizable, including managing workflows, embedding SOPs within a process, and implementing procedural prompts during production.
Most importantly, through an easy-to-use dashboard, Backbone makes it simple to parse all this data.
Compared to the frustration of juggling numbers on a spreadsheet, this is a system that Tingey says allows manufacturers to quickly “see how to improve productivity, and track profitability.”
Smart Scaling From Data-Driven Decisions Post Cannabis Extraction
Compared with cultivation, there are significantly more hurdles to scaling a cannabis extraction business.
The costs of equipment, low-throughput capacity, and local regulations can all hamper efforts to ramp up production.
Extractors have to turn to the numbers to scale their production efficiently and effectively.
Whether an extractor is planning for more runs or more machines, only data-driven growth is sustainable.
Scaling up means starting with automated production tracking and comprehensive supply chain management.
Detailed data like this allows companies to make smart decisions about equipment investments, process tweaks, runs required for production goals, and how to ultimately drive down COGs.
