5 Critical Considerations When Planning a Cannabis Business

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The challenges of finding and isolating potential active compounds from natural products are numerous. As more people invest in all phases of cannabis and hemp businesses, there are two questions I find that are almost universally asked:

 

Question 1: What is the best mode of concentrating the essential oils from cannabis or hemp?

Answer 1: Start with the end goal in mind. What are the formulations and ingredients necessary to make them?

 

Question 2: How can I maximize my investment?

Answer 2: Many times, you get addition by subtraction. Examine the entire workflow and not just the individual parts. Then, fill the holes in the bucket (don’t lose money).

 

Too many times planning teams start with a bias toward a particular cannabis process technology—whether it be extraction with butane, SFE with CO2, H2O, alcohols, etc.  That bias leads to a (too) early commitment to a favorite formulation, post-processing technique, and instrumentation that were used in previous stages of cannabis or hemp history. They then make products based on those subjective biases versus peer-reviewed science that can be learned and applied from the mature dietary and nutritional supplements, flavors and fragrances, and ethnobotany and pharmacognosy industries, as well as biopharmaceuticals, natural products, and small molecule markets.

 

Before stepping into the quagmire, I always recommend that cannabis business operators give careful consideration to these 5 areas in defining the process that is BEST for them:

 

  1. Define the business based on motives and not just money. Securing and maintaining the money to fund the motive-centric business is critical. Losing money by not recognizing where money is being lost throughout the process will make it extremely difficult to achieve a sustainable business.
  2. Choosing the technologies and techniques balance is difficult, as everyone has an opinion. Opinions need to be formulation-centric. The choices need to focus on increasing revenue, decreasing cost, and optimizing resources – all of these factors need consideration, not just a singular focus.
  3. Examine and re-examine the business model. Repeat and change as required. Formulate products for the market you are in and the components and compounds available. Spend the time to research peer-reviewed literature and the market studies of pricing and availability of the compounds expected to be used in the formulations. Know the regulations.
  4. Examine the entire process to gain a view of where money is lost due to time inefficiencies or degrading value of added compounds through poor standard operating procedures. Follow the rule of addition by subtraction.
  5. Examine the resources needed to reach the goals set for the business. Too many companies have underestimated the assets needed to succeed with cannabis applications. There are good reasons to be concerned about not having too many capital expenditures in the beginning. However, most companies do not budget for the internal testing instruments. You cannot manage what you refuse to or cannot measure.

Finally, I can’t emphasize enough about studying the peer-reviewed literature for a historical perspective on all facets of the business. With that knowledge, you will go a long way towards achieving your motive centric goals.

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Cannabis Extraction