Marijuana Business Magazine February 2020

Marijuana Business Magazine | February 2020 96 E xtraction companies looking to stay competitive in a sector growing more crowded by the minute need to consider how to keep costs as low as possible. An extraction company executive looking for ways to save should think about: • Automation to lower labor costs. • Asking for bulk discounts from vendors. • Streamlining packaging. • Equipment quality. • Facility design. “The biggest problem we see in costs is in downtime and bottlenecks in the extraction process,” said AC Braddock, CEO of Seattle-based extraction company Eden Labs. Automation Versus Labor Labor costs are one of the largest expenses for an extraction company. Finding ways to automate processes can significantly cut down on the need for labor. Patrick Mitchell, director of sales for Phoenix-based vaporizer manufacturing company Jupiter Research, recommends automating the hardware process. “There are ways to work with automation and get more strategic in your operation,” he added. For example, Jupiter Research collaborates with a company that offers a pre-rack filling solution that loads racks of cartridges straight into a filling machine, fills them in batches, then puts the racks into another machine for the cartridges to be capped. A larger company producing 15,000-20,000 cartridges a month or more could save tens of thousands of dollars in that time period on labor costs, according to Mitchell. “This is the biggest scalable solu- tion we’ve seen to date,” he added. Vendor Discounts As extraction companies scale up, they can use size of orders to leverage better deals with vendors, including packaging companies, solvent providers and marijuana flower producers. How to Keep Extraction Costs Low Companies can use facility design, bulk discounts, automation and streamlined packaging to save money Best Practices In Extraction | Bart Schaneman In the highly competitive extraction sector, keeping production costs as low as possible is one way for companies to ensure long-term success. Extraction companies thinking about how to cut costs should consider the following: • Automation can help reduce labor costs, which can be expensive. • Vendors might be willing to negotiate discounts for bulk purchases, especially with their larger customers. • Selling all your products in the same type of container is one way to streamline packaging costs. • Choosing high-quality equipment from the onset can help save money later, when it’s time to scale up. • Designing a facility for maximum efficiency and throughput will save companies from paying for unused space. Designing an extraction facility with efficiency in mind can save money in the long run. Photo by Matthew Staver Best Practices in Extraction will appear in each issue of Marijuana Business Magazine through 2020.