The cannabis oil well is far from running dry. Here’s what you need to know before you start drilling.
May 7, 2019 4 min read
Opinions expressed by Green Entrepreneur contributors are their own.
Cannabis oil is having a moment. Sales of THC-rich concentrates such as wax and shatter are projected to reach $8.5 billion by 2022. “The demand is very high,” says Corey Mangold, CEO of Orchid Essentials, a multistate cannabis brand. “Almost every extraction company I know of in the country is operating at full capacity. The oil market is still expanding.” In other words, there are plenty of opportunities for savvy entrepreneurs.
Before you rush into the oil business, three things to consider:
1. Look beyond CBD and THC.
The two most popular cannabinoids are CBD and THC, but there are dozens of lesser-known ones believed to be just as effective. With acronyms like CBG and CBC, these compounds are highly sought after by those in the know but still far from being mainstream. THCV, for example, is believed by some to be an appetite suppressant.
Related: Why Cannabis Oil Is Big Business (and How to Capitalize on It)
While there isn’t as much research on these cannabinoids as CBD and THC, Mangold predicts that will change in the coming years. “As more medical research comes out and more product development happens, you’re going to start seeing products like CBG, CBDL, and THCV, and then you’re going to have a growing market for extracting those compounds,” he says.
2. Explore wax, shatter and rosin.
The most popular form of cannabis oil concentrate is known as distillate, and it’s used to manufacture vape, edibles, and many other products. And because concentrates are the second-largest product category behind flowers — and vapes, in turn, are the majority of the concentrates category — most people tend to have a limited view of cannabis oils: They equate them with vapes.
But there are other forms of oil concentrates, and they’re ripe for exploration. Concentrates such as wax, shatter, and rosin are beginning to take off for use in dabbing, which is becoming increasingly popular. They all take somewhat different forms, and are all very potent. Wax, as the name suggests, resembles the consistency of candle wax. Shatter is thin and translucent like a pane of glass. Rosin is sticky. Each is made in somewhat different ways, and consumers will favor one over the other for different reasons. (Rosin, for example, tends to retain most of the flavor of the original bud because of the way it’s processed.) If you’re getting into the business, you can start experimenting with these different products — and seeing which new consumers they attract.
Related: This Is How to Finance Cannabis Oil Extraction Equipment and Keep All Your Equity
3. Know the challenges of extraction.
If you’re thinking about going into the extraction business, be prepared. The process of extracting oil from the cannabis flower is a costly endeavor. It also takes expertise and specialized equipment. There are two ways of going about it: with and without solvent.
Both methods require an up-front cash outlay of up to several million dollars. For this reason, Mangold recommends partnering with third-party cannabis oil manufacturers. “We worked with different farms, cultivators, and extractors,” he says. “That was the wise way to go, because we didn’t have to go out and raise money to build out an extraction facility.”
But if your mind is set on the extraction business, don’t be discouraged. Because the demand for these products is on target to triple in just three years, investors are taking notice, and there’s room to make your mark.
