Strategic Spending for your Cannabis Lab

Whether you’re new to the cannabis extraction industry or a seasoned veteran, I suspect you’re as guilty as I am for the same undeniable urge. The champagne wishes and caviar dreams of our youth rolled into a fixation as adult business owners and operators that we cannot deny — we all love ogling shiny expensive things, and extraction equipment is no different.

The sights were aplenty at MjBizCon this year. Plenty of new stainless steel extraction equipment and glassware for all of us to drool over — or better yet, drop deposits on. But one thing that separates the amateurs from the pros is the ability and wisdom to be strategic with spending. It’s one of the biggest indicators of long term success and viability. I discussed the true costs of starting a cannabis extraction lab in my last blog, which focused mainly on all costs associated with getting an extraction operation running other than equipment. Let’s take a look at the equipment side now.

The first thing we need to look at when purchasing extraction equipment is the end goal. Many times, this is easy to pinpoint. Whether it be the elimination of a bottleneck, an increase of production or control, or reduction of labor, we should all be striving to continually increase quality, improve margins, and reduce time. The “how” is the hard part. What do you prioritize?

Unfortunately, there is no golden goose egg. Operators and owners often have different motivations for new equipment purchases, which can create a riff in financial and operational concerns. Owners may only see “bigger and more,” while operators may see other critical limitations that need to be solved prior to scaling production. Make sure the operations team is involved in any new purchase, as they will know exactly where to direct spending.

On a side note, spending money on talented personnel is probably where you’ll see the highest rate of return for any production facility at this stage in the cannabis industry. There are so many opinions on processing and equipment – and every manufacturer is trying to sell you a dream. Thus, having people on your team that understand production, scale, and the equipment needed to get there is invaluable. I’ve seen production issues get solved with a new team member who works twice as hard, makes cannabis manufacturing processes more efficient, or plans a better production schedule, no new purchases necessary.

Giving in to the urge to buy something just because it’s new could result in a fancy new shiny thing taking up space under a tarp in the corner of the cannabis lab. Technology is changing rapidly, but not always for the better. Unfortunately, some new versions of equipment are actually worse than their predecessors – technology in the cannabis industry is still very nascent. As these large equipment suppliers look to become more profitable, they will decrease quality while increasing marketing – which brings me to my next point: used extraction equipment.

It’s easy to discount used equipment because, let’s be honest, some of it has been treated poorly and used and abused. Often times things like glassware, distillation setups, and extractors will be heavily contaminated with pesticides. Heaters and Chillers get ignored and often have never been maintained. But the reality is that warranties on new cannabis extraction and laboratory equipment tend to expire quickly and any lab that’s planning on operating for any significant amount of time will have to learn how to maintain, repair, clean, and sterilize equipment. Because of the sheer number of labs that have gone out of business, the secondary market for lightly used cannabis extraction equipment is abundant and deals are plenty. Often times groups who come from outside the cannabis industry get talked into buying things they don’t need from salespeople who don’t genuinely have the customer’s needs in mind. This leaves a huge opportunity for extraction labs on a budget to upgrade without spending MSRP.

In conclusion, I truly believe spending money on talented and knowledgeable cannabis extraction operators will have a waterfall affect on the rest of the business. They can produce more with less, hopefully know how to repair and maintain equipment, and will know a deal when they see one. The riff between ownership and operations people is one of the most likely reasons I see processing facilities fail. Take care of your people first. They will take care of your business.

Are you ready to discuss how to take your cannabis extraction business to the next level, how to train your operators, or how to navigate a large equipment purchase? Union Cannabis Group is comprised of a team of industry experts ready to help with all aspects of the business. Reach out today to continue the conversation!

Derek Thiel

Derek Thiel is Chief Operating Officer of Union Cannabis Group. He specializes in post-processing refinement technologies, industry research and development, training of advanced extraction processes, and streamlining operational procedures to maximize efficiency.