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Cannabis sweeps the nation
As the Cannabis revolution swings across America, states going legal are raking in huge tax revenue, and citizens are finally getting access to medical and recreational benefits of Cannabis production. The momentum is slowing moving towards oil (concentrates) which provide easier access to deliver the benefits via vape pens, edibles, and concentrates for medical purposes (CBD’s). With the political aspects aside, this review will list the aspects of producing Cannabis oil for profit.
Supply versus demand
The mystique of the Cannabis industry has lots of people jumping into the mix, without knowledge of running a business, or the nuances of running a business to make money. A few are becoming millionaires, but most are breaking even, or losing money. Just look at the number of licenses issued in Colorado, and how supply has effected pricing. Business Insider reports that the price of wholesale marijuana has dropped by half in about a year.
Plan a startup strategy
What differentiates those making money, and those losing money ?
Those who make money set out with a plan, a budget, funding, and a team to deliver that plan. If you set out with detailed goals and a strategy, you’re already ahead of most of the groups in the industry. Failure to plan, is a plan for failure.
You need to have a startup plan, growth, and exit plan. If you plan and play your cards right, you’ll end up with a successful business.
Information is paramount to profit
In the planning stages, it’s critical to become informed. Read, research, inquire, and educate yourself about what you are getting into.
Read: Study online information.
Research: Online studies, scientific research papers, pricing models and consumer demand.
Inquire: Existing successful operations, and those that are not, and why they are not.
Educate: Sometimes the key to success is a very fine line, stack the deck in your favor.
Determine your business path to success
Select the part of the industry, that interests you the most, and makes the most money.
While this may be easier said than done, select a industry segment that you will enjoy working in, and develop it.
If you are vertically integrated, and have lots of funding, you can run an entire operation from cultivation to retail sales. The savvy types will focus on one targeted segment and make money with that segment, then grow by acquisition.
Start with oil extraction
Who makes the most money in the oil industry ? When compared to the hydrocarbon oil industry, it is the refiners.
In the Cannabis industry, the most value-added is extracting and refining the botanical oil.
Why is Cannabis oil extraction potentially the most profitable and least vulnerable to industry pitfalls ?
While supply and demand will ultimately determine overall industry income, as a Cannabis oil refinery lab (including post processing), you have the flexibility to determine downstream products. With a extraction system, you can make live resin, vape pens, concentrates, shatter, etc. And like other industries, you can tailor the output according to the market demand. Cultivators and retails do not have such flexibility. The ability to morph according to customer demand is an important factor to profitability.
What is the best method of cultivation of Cannabis to make a methodical profit ?
The best profit model would be a indoor grow, with staggered starting and harvest cycles, on a weekly basis. This will not only utilize your energy, personnel, and extraction lab more efficiently, but also allows you to tailor downstream product offerings to consumer demand, while providing a fresh product at all times. While outdoor grows are great, they are only once a year. The stress at harvest season is tremendous, and all that supply drives prices down, at that time of year.
FogPonics is the best kept secret in the Cannabis industry
Developed by a LA entrepreneur, the vertical grow tower system provides a weekly harvest, optimizing energy, personnel, and production specifically targeting oil production. On a five week grow out cycle, FogPonics is designed for oil production with fast growth varieties like Cinderella.
Oil extraction and post production
As oil is extracted from botanicals, the end product is a substance commonly referred to as crude oil. While this material can be used for dabs, it is more likely to go into post processing for refining downstream into concentrates or other products. It is typical for a extraction system to have a complimentary post processing lab, to refine and separate the oil for consumer products.
Strategy for success
Determining your actual business model will depend on your goals and the market in your area, but we recommend the following:
1. Start a extraction facility with post-processing lab.
2. If supply is an issue, vertically integrate with a FogPonics vertical grow facility.
3. Tailor your output products to demand.
4. Start or acquire your own vape pen brand, or develop products with your concentrates.