Figure 1: A schematic representation of 7 key factors you must keep in mind when setting up a cannabis extraction facility (Figure courtesy of CloudLIMS).
by Martha Hernández, Scientist, CloudLIMS.com
Setting up a cannabis extraction lab can be an exhilarating experience, especially if you’re passionate about the cannabis industry, because extraction is where all the goodness of cannabis is revealed. The global cannabis extract market was valued at $2.74 billion in 2021 and, with a projected CAGR of 20.6%, it is expected to hit close to $3.5 billion by 2030.1
Cannabis extract provides consumers the rare opportunity to enjoy high concentrations of cannabinoids and hence hard-hitting potent effects. Even though most consumers still prefer cannabis flowers, extracts are increasingly gaining popularity, especially among the younger demographics. With the anticipated exponential growth rate of the cannabis extraction market size, the profitability of this industry seems guaranteed and an extraction lab is one way to go.
Setting up a cannabis extraction lab is both labor and finance intensive.2 However, once appropriate measures have been put in place, rewards will be reaped for a long while. In other words, once the capital investment has been made and regulatory conditions met, the recurring costs and requirements are negligible.
Other than the significant startup costs, setting up an extraction lab can be further complicated by the intricate regulatory framework governing the cannabis industry. Several states have legalized cannabis even though it remains illegal at the federal level. Due to federal prohibition, the industry is knee-deep in rules and regulations that spell out what can and cannot be done by any business in the industry. All in all, these factors must not only be considered but must also be prioritized when you are setting up an extraction lab.
This article outlines seven important considerations that should be made when one is setting up an extraction lab for cannabis (Figure 1).
1. The Location
Like most other businesses, you need to care about finding the perfect location for your extraction lab. This begins with finding a state where cannabis is legal in the first place. While hemp is legal in all states, cannabis (containing more than 0.3% THC on a dry weight basis) is not. Ensuring that your facility is located in a legal state is the first step. Next, you will need to find the specific location rules and regulations that are applicable in your state; you will be surprised to find that they are quite a number. For starters, even in legal states, city, county, and town authorities as well as the Liquor and Cannabis Board (LCB) have the right to decline cannabis license applications at certain locations. These are referred to as zoning laws. You will need to find out the specific zoning laws in your state as an initial step toward identifying the ideal location for your extraction lab.
Most states, in the spirit of maintaining public safety, limit the proximity of extraction facilities to daycares, playgrounds, elementary schools, public parks and libraries, and residential areas. The acceptable distance is at least 1,000 feet away. Some states also limit how close one extraction facility can be to the next one by limiting the number of licenses that are granted to businesses in a specific area. You will need to get acquainted with such specifics before you settle on your ideal location.
Don't forget to make general location considerations such as proximity to raw materials and labor, availability of suitable infrastructure, and the demand for your services in the location.
2. Meeting Regulatory Requirements
When setting up an extraction lab, you must know the regulatory implications that come with the decision and how best to comply. Three things must be prioritized: the current Good Manufacturing Practices (cGMP), Fire Protection Codes, and the Occupational Safety and Health Administration (OSHA).
Current Good Manufacturing Practices
cGMP is a quality assurance measure that ensures that manufactured goods meet a minimum acceptable threshold for quality and intended use.3 It is made up of five key components:
- Raw materials
- People
- Processes
- Premises
- Procedures
There are about 10 principles that govern the application of cGMP. They include the creation and implementation of Standard Operating Procedures (SOPs), the creation of working systems, the maintenance of equipment and facilities, and staff training.
In an extraction lab, cGMP standards must be maintained to ensure that all extracts produced meet internationally acceptable safety standards. This also serves as an assurance of the strength and quality of the extracts.4
NFPA Local Fire Codes
The National Fire Protection Association (NFPA) is a non-profit organization that exists to support and ensure that fire safety is maintained in public spaces. To this end, the organization recommends the following fire safety precautions:
- Fire extinguishers
- Fire signs
- Fire alarms
- Fire detectors
- Smoke detectors
- Unobstructed fire exits
- Sprinkler heads and pipes
The NFPA has created over 3,000 codes to ensure that loss of life and injury to a person or property is minimized in the event of a fire outbreak. Here are a few important fire codes that extraction labs must be familiar with:
1. NFPA 1: This is the fire code handbook that provides general fire safety guidelines.
2. NFPA 45: This code explains how flammable materials (such as those in extraction labs) should be handled and stored.
3. NFPA 58: This fire code is specific for the handling of Liquefied Petroleum Gas (LPG).
4. NFPA 70: This fire code, also called the National Electrical Code (NEC), specifies how electrical installations should be done.
Occupational Safety and Health Administration (OSHA)
OSHA was created as a result of the Occupational Safety and Health Act of 1970. It ensures that workplaces are safe for employees and working conditions are conducive and acceptable according to OSHA standards.5 OSHA falls under the US Department of Labor and protects the interest of employees in the private sector as well as some public institutions. This entails providing employees with a safe working environment, protective gear, training on health hazards, and providing compensation in case of workplace injuries.
A cloud-based laboratory software for CBD/THC laboratories, known as a Laboratory Information Management System (LIMS), can help centrally manage all documents related to regulatory guidelines and enable staff to securely access the latest version of documents at all times (Figure 2).
3. Staff Management
Staff members at the extraction lab are an invaluable asset and hence a priority consideration. Staff management begins with hiring qualified and competent staff for the job and ensuring that they have the required tools to perform their tasks. Staff members also need to be trained regularly on best practices to ensure that their skills are updated. They also need regular motivation, both monetary and non-monetary, to ensure that their performance is at its level best.
4. Waste Management
Extraction labs handle a lot of waste from the cannabis plant and extraction material. Cannabis waste, including plant trimmings and trashed products, cannot be treated like any other waste because of the scheduled status of cannabis at the federal level.6 As an extraction lab, it is important to get familiar with all the laws regarding cannabis disposal. In some states, you will be required to engage a third-party service provider to destroy cannabis waste. Most states permit the on-site destruction of cannabis waste through methods such as burning, shredding, and burying. However, the waste must be first rendered to a state that is "unusable and unrecognizable." Most extraction chemicals are hazardous and must be segregated and handled accordingly. When choosing a waste disposal method for your extraction facility, it's important to consider the cost implications.
5. Worker Safety
Extraction lab employees are constantly exposed to risks and hazards that jeopardize their health. This includes cannabis raw materials, extraction machines, chemicals that they handle, and the working environment. Worker safety involves identifying occupational health hazards and finding appropriate solutions to mitigate them.7 In addition, workers need to be trained on potential hazards at the extraction facility and how to prevent workplace accidents and injuries.
6. Supply Chain Management
Cannabis extraction is a mid-stream process that involves several elements and processes. An efficient supply chain will minimize the wastage of time and other resources and boost the productivity of the lab. A cloud-based laboratory software for CBD/THC laboratories plays a major role in optimizing a lab’s supply chain.
7. Equipment Selection and Management
Though this comes last on our list, it is in no way of the least importance. The type of extraction equipment you select for your extraction facility will have far-reaching implications many years later.8 Some equipment may have a cheap price tag but may offer inferior service. The equipment you select will also determine the nature and quality of the extract that you produce. You will need to undertake thorough market research and even involve a professional to help you select the best extraction equipment that will give you the optimal output in the long run. Any equipment that you select must be listed by Underwriters Laboratories or it should at least be certified by the National Recognized Testing Laboratory (NRTL).
Figure 2: A laboratory software for CBD/THC laboratories to securely manage SOPs & documents and assure their availability to staff (Figure courtesy CloudLIMS).
Conclusion
Cannabis extraction is an industry that is fast-growing and potentially lucrative. Before diving in, it's important to ensure that seven critical things are in place. This includes the location of the extraction lab, regulatory framework, staff and waste management, worker safety, supply chain management, and equipment selection and management.9 A laboratory software for CBD/THC laboratories automates in-house testing workflows, efficiently manages the supply chain and lab equipment, and helps follow regulatory guidelines with ease.10 With this in place, your lab will be at a vantage point to reap maximum rewards from the billion-dollar nascent industry.
References
- Grandview Research. Cannabis Extract Market Size, Share & Trends Analysis Report By Product Type (Oil, Tinctures), By Extract Type (Full Spectrum Extracts, Cannabis Isolates), By Sources (Hemp. Marijuana), By End Use, By Region, And Segment Forecasts, 2022 - 2030. https://www.grandviewresearch.com/industry-analysis/cannabis-extract-marke.Retrieved on October 8, 2022.
- Precision Extraction Solutions. Extraction Lab Startup | Cost & Return on Investment. https://precisionextraction.com/2017/03/starting-an-extraction-business-cost-and-roi/. Retrieved on October 8, 2022.
- World Health Organization. Good Manufacturing Practices. https://www.who.int/teams/health-product-policy-and-standards/standards-and-specifications/gmp. Retrieved on October 8, 2022.
- CloudLIMS.com. Why Your Cannabis Testing Facility Should be GMP Certified. https://cloudlims.com/blog/cannabis-lims-for-gmp-certification-for-testing-labs.html. Retrieved on October 14, 2022.
- United States Department of Labor. Occupational Safety and Health Administration. https://www.osha.gov/. Retrieved on October 8, 2022.
- The Great State of Alaska. Division of Environmental Health. Solid Waste Program. Cannabis Waste. https://dec.alaska.gov/eh/solid-waste/how-do-i-dispose-of/cannabis-waste/. Retrieved on October 8, 2022.
- Creative Safety Supply. What are occupational health hazards? https://www.creativesafetysupply.com/qa/workplace-safety/what-are-occupational-health-hazards. Retrieved on October 8, 2022.
- Cannabis Science and Technology. Extraction Facility Design: Important Factors to Consider Before Selecting Extraction Equipment. https://www.cannabissciencetech.com/view/extraction-facility-design-important-factors-consider-selecting-extraction-equipment. Retrieved on October 8, 2022.
- CloudLIMS.com. Infographic: Factors to Consider When Setting up a Cannabis Extraction Lab. https://cloudlims.com/blog/infographic-factors-to-consider-when-setting-up-a-cannabis-extraction-lab.html. Retrieved on October 14, 2022.
- CloudLIMS.com. Why Should Cannabis Extractors Perform In-House Testing? https://cloudlims.com/blog/why-should-cannabis-extractors-perform-in-house-testing.html. Retrieved on October 14, 2022.
About the Author: Martha is a chemist with expertise in diverse areas of analytical chemistry. She has worked as an analyst at a licensed 3rd party analytical laboratory where she focused on developing and validating analytical methods for bioequivalence studies. Later, she served as a quality control expert in the analytical domain and as a monitor in clinical trials. Her interest in the clinical industry led her to be a part of two of the biggest hospitals in Mexico where she gained expertise in hematology, microbiology, and blood banking. Later, she became a member of a team of forensic chemical experts and started working from day one as a specialist in narcotics and drugs. This enabled her to gain rich experience in GC-MS, FTIR, HPLC-MS/MS, ICP-MS, and other analytical techniques for the separation, detection, and quantification of different molecules such as cannabinoids.
She has participated in multiple oral trials defending her legal opinions and worked as an expert consultant. She worked on the synthesis of small molecules for testing them on multi-drug resistant bacteria and mycobacteria, further developing her analytical skills in column chromatography, thin-layer chromatography, microbiology, and compound elucidation by NMR and HRMS. She carried out a research stay at the University of Barcelona with the organic synthesis team. She has also worked on natural products in France and presented her work at conferences in the USA and France. She received awards and accolades for her exceptional work. She has participated in several conferences as a moderator as well.
Martha holds a bachelor’s degree in Clinical Chemistry from the Faculty of Medicine UANL and a master’s degree in Pharmacy from the Faculty of Chemical Sciences UANL, Mexico.