By Steven Fuhr
The history of cannabis extracts like hashish predate 100 A.D. However, more modern extraction methods like BHO, which uses a butane solvent, RSO, which uses alcohol, and the “supercritical” produced with CO2 are relatively new inventions. Steam distillers (tinctures) have been in use for about the last hundred years, and are still used today on plants such as lavender or mint, as is CO2. Butane extractions were first done in the mid-1950s, but the trend really took off around 2005 due to its low cost, an easy process and the oil’s high demand. What used to be called honey oil years ago is now referred to as shatter or wax, and is often smoked as “dabs.”
What I-502 processors need to realize is many medical marijuana dispensaries currently report 30-50 percent of revenue comes from some form of concentrate or edible. To make edibles, you first need to extract the oil, which is really nothing more than concentrating trichomes. And these products will be an even bigger factor in the new legalized adult markets. Many think dabbing oil is just for the younger crowd, but adults will want it in vape pens and edibles just as much, if not more. If your plan was to just process flowers, you’re looking at less than half the retail market, and you’re missing out on as much as two-thirds of the potential profit.
There is one huge misconception about oil machines that needs to be dispelled right up front. The first words out of most people’s mouths are that these “hash oil” machines blow up, since it has been hyped in the media. You can bet your fire marshal has read these horror stories too. However, the reality is very few machines have exploded, and only certain types of extraction solvents are volatile. Butane is the most explosive, which is why the Washington State Liquor Control Board requires a “closed-loop” system for it — one than recovers the solvents safely. Although CO2 is not volatile, those systems are generally closed-loop, as well, due to their high pressures. Regardless, every explosion I’ve read about occurred with an “open” system or when purged residual gas from the oil product was handled improperly. The risk is worth it to many though.
Remember the old Rumpelstiltskin fable, where they turn straw into gold? Keep that story in mind when you think about the fact you can only sell “Grade A” cannabis in the legal adult market, and up to half of the plant’s mass will be Grade B or less. Producers will be forced to “oil” entire crops that mold, mildew or get serious infestation, which happened to many outdoor crops last year in the northwest. Ironically, up until a few years ago, straw actually had more value in the marketplace than cannabis trim, until people discovered the profit potential of extractions. Now trim is hard to find and getting more expensive by the day.
The reason is simple. With a typical yield of 10 percent oil by weight, a pound of average trim yields about 45 grams of oil. High quality bud can yield more than 20 percent oil, since yield is a factor of plant tissue potency. Oil that is 50 percent or more pure THC wholesales for $20-$30 a gram and retails for $50-$70 a gram, but those are medical dispensary prices. In the I-502 market, the price will likely be double that. Not to mention most processors will cut the pure product in half, or even into quarters, making one gram of crude oil incredibly profitable. Considering 99.8 percent pure gold bullion closed last week at around $65 a gram, cannabis extract oil is literally worth more than pure gold, all made from a trim product that not long ago was worth less than straw.
As with any tale by the Grimm Brothers, there’s always a catch, or two, or three, and a lesson to be learned. This story is no different. The catches here lie within a range of certification challenges, astronomical startup costs, and incredibly high levels of complexity, with one notable exception. There’s also one all-important factor to consider first: the certification of the extraction machine itself.
Whether you are buying lights, controllers, HVAC equipment or oil extraction machines, there is one question you need to ask right up front: is it UL certified? After all, the very first question Labor & Industries inspectors or fire marshals will ask is whether or not the product has been tested and approved by Underwriters Laboratories. If it isn’t certified, they make you pull it out right then and there. And it’s not enough for every bell and whistle on it to have a UL stamp; the whole unit has to be UL tested as a unit. The catch here is UL will not certify anything for cannabis.
There is one and only one single exception to UL certification: If its plan has been certified by an engineer (for example, it has a “stamped” plan). Our research into extractors over the last year has found most major oil extraction machines on the market right now do not have this. Some have UL certified parts, but that is not enough. Most are working on Profession Engineering (PE) stamps feverishly though, and some are very close. Unfortunately, some people found out the hard way that a Liquor Control Board investigator may well approve a shiny new closed-loop oil machine, but the fire marshal may not. The key here is to get a plan approved by your local fire marshal before you buy one of these expensive machines, which also makes your Liquor Control Board approval easier.
Which brings us to the catch in the story of costs. For starters, if you have a volatile solvent, you’ll need to create what’s called an “H-Class” room to put the extractor in, which means vented, fire suppressed and explosion proof. A very expensive proposition to say the least.
Last fall I visited a large CO2 extractor in Seattle and he pointed out people often fail to realize this $140,000 machine goes in a $100,000 room. You also need a team of qualified people to run it, or you can turn your gold into worthless sludge. They can also take quite a bit of time to process fairly small amounts. CO2 extractors have one major advantage over all other systems in that you can run product with mold, mildew, or pests and it will come out clean with much greater ease.
Large BHO extractors tend to cost $25,00-$40,000, and people do seem to like the flavor of BHO more than CO2, but even the bigger BHO extractors process less than a pound of plant tissue at a time, and the residue can be harmful if not purged properly. Not to mention it’s just a dab more explosive than CO2, which means they will usually be much harder to get approved by the fire marshal. One other consideration is that butane extractors are much easier to run. If you go with CO2, you’ll need to retain a chemist to make your “recipes” because it really is that complicated, and it turns out a half-decent chemist costs as much as a really good lawyer.
There is one extraction method that is often overlooked, mostly because the concentrates it produced in the past were not noted for having very high potency, but that has changed with new technology. The solvent is not volatile and non-toxic. No blast room, closed-loop recovery system, or special storage is required, and it’s both inexpensive and easy to use. It’s called water.
It makes a product often called bubble hash, but industrial-grade hash processing is not about using your grandmother’s “Bubble bags” or heaven forbid, her washing machine.
The fully engineered hash oil machine we’ve chosen holds 27 gallons of solvent, processes three pounds a run, and makes “5 Star” concentrate that runs 55-65 percent THC – better than the average 50 percent potencies of BHO or CO2 concentrates. It’s even dabable. Best of all, water extraction retains most of the terpenes (flavors) which many harsher solvents strip away. Cold water (ice) extractions activate less of the THC, making a great smoking product, and hot water (steam) methods fully activate the THC, which make them ideal for infusing into edibles. Some people are even integrating alcohol into this water-extraction process with great results. Not to mention water is organic, and the residue is safe, assuming you don’t let your product mold when drying it, of course. The fire marshal even likes it too – the solvent I mean.
No matter what path you choose on extractions, one only has to look at daily changes in Washington or Colorado to realize this part of our business is a moving mark. The last news release I read said 68 applications to process oil were submitted to the Washington State Liquor Control Board and only two had been approved at that point. Holding off on using a volatile extraction method might be a wise strategy for the time being, but selling trim for someone else to process is awfully expensive when you add that extra 25 percent excise tax, and throwing all those trichomes away on your trim and Grade B bud is no better a prospect.
With an ounce of hash oil worth more than an ounce of gold, and so few processors extracting this high-demand product, the lesson I hope we all take from this story is for those few processors daring enough to do extracts, the sweet smell of success will be no fairy tale.
Steven Fuhr is the managing member of aGroPack LLC. He can be contacted with questions and comments at agropackwa@gmail.com.