Every time a new state jumps on the legalized cannabis bandwagon, starry-eyed entrepreneurs hoping to make a million start making plans to open their own businesses. Some want to be growers while others are looking to be retailers. But the most attractive, and arguably the most complicated business, is processing.
A cannabis processor takes raw plant material and converts it into the various compounds that become the ingredients for finished retail products. For example, a processor might extract CBD from industrial hemp and then turn it into an oil or tincture.
Cannabis processing is lucrative due to the sheer number of retail products entrepreneurs can make. In addition to tinctures and oils, processors can manufacture vaping liquids, topical lotions, edibles, and more. But doing so is not as easy as it sounds. It takes a lot to succeed as a cannabis processor.
- Substantial Startup Funds
The first thing any would-be processor learns is that getting started is not cheap. In most states, the first thing a processor needs is a license. Licenses can run thousands of dollars per year. But above and beyond that, most states require that processor applicants prove they have sufficient financial resources before a license will even be granted.
This means that an aspiring processor must have enough money to get going and become operational within a short amount of time. States are generally reluctant to issue licenses to entrepreneurs who cannot prove they will be operational in 4 to 6 months. They do not want license holders taking years to get their businesses off the ground.
- Cannabis Processing Equipment
With license in hand, entrepreneurs also need a full range of cannabis processing equipment. Houston’s CedarStoneIndustry says that one of the biggest investments in this regard is extraction equipment. Processors must have equipment that can extract cannabinoids, terpenes, and other compounds efficiently and safely. Such equipment does not come cheaply.
Cannabis extraction can be achieved in several different ways. Processes can utilize steam, some sort of solvent, or other means to gain access to cannabinoids and terpenes. Some extraction methods are simpler and less expensive than others, but they all require expensive equipment.
- Processing Space
You cannot run a cannabis processing business without maintaining space for equipment and production. How much space a new processor needs depends on their goals. An entrepreneur looking to focus mainly on extraction may not have plans to produce retail products themself. They need less production space than the company they sell their extracts to.
The largest processing operations operate huge manufacturing centers boasting tens of thousands of square feet of space. They operate multiple extraction lines along with separate lines for every retail product manufactured. Some of these processing operations are pretty impressive.
- Knowledge and Experience
The hardest thing to come by for any licensed cannabis processor is knowledge and experience. Processing industrial hemp and marijuana is not an easy task. There is a lot of science behind it. There is also plenty of intuition and gut instinct. The entrepreneur truly needs a knowledgeable and experienced staff to handle all the specialized work. Once again, that staff does not come cheaply.
All of this seems to indicate that the two most important things you need to succeed as a cannabis processor are money and people. A sufficient amount of investment funding gets a processing operation off the ground. The right people build the operation into a successful venture. In between are equipment, production facilities, and everything else that makes a business run. Needless to say, succeeding as a cannabis processor is no small accomplishment.
