Louisiana Hemp Magazine: Are Hemp/Cannabis Extraction Companies Obsolete?

Are Hemp/Cannabis Extraction Companies Obsolete?

By Charles Kountz

2018 and 2019 saw an explosion of hemp and cannabis extraction companies all over the U.S. At the time, it was the most profitable step in the production of CBD and thousands of hungry entrepreneurs jumped in head first.

This byproduct of the “green rush” caused a saturation in the industry, devastating extraction businesses in 2020 and forcing many companies to close their doors. Compounding the problem are technology and market trends which are making extraction companies a thing of the past.

With the substantial decrease in price for extraction equipment and new technologies, CBD and cannabis companies are now choosing to vertically integrate. Being vertically integrated means you grow the hemp/cannabis, you extract it, you manufacture it and retail it, all by the same company and usually in the same building. This has proven to not only remove the high cost of subcontracting extraction services, but allowing the companies to maintain control of their entire production process.

What does this mean for extraction companies? To be honest, it’s not looking good. Many industry experts believe that besides a few massive extraction companies, most extraction services will go under within the next two years, being replaced by more efficient, cost effective vertically-integrated companies.

Let’s say you grow 50 acres of hemp and need it extracted. You then take this biomass to the extractor and they can keep 32 acres worth of extracted material for their payment. This is why business owners and farmers are alarmed. Hence the movement of investing in their own equipment or their decision against planting hemp for extraction purposes.

The latest equipment for extraction is cheap, efficient, and intuitive. Companies can now harvest their hemp/cannabis, extract it, distill it, and manufacture it virtually seamlessly with push-button technology.

With CBD distillate and isolate selling for $900 and $500, farmers are finding new areas of the hemp market to invest in. In the south there are not any major extraction companies that can compete with the titans in Colorado and Oregon. Farmers are now moving to the Boutique Flower market, growing in greenhouses with a focus on quality, not quantity. With Louisiana's hemp flower market taking off and with new laws being put in place, the smokable hemp market is about to blow up in Louisiana.

Another note worth mentioning is that the fees associated with subcontracted extraction services can be jaw-dropping unless you go to one of the five goliath companies which dominate the market. Most extraction companies can take up to 65% of your product as a fee.

MASSIVE EXTRACTION / DISTILLATION PLANT

COMPACT DISTILLATION UNIT

For more information on greenhouse and indoor growing or to purchase top shelf boutique hemp flower seeds, contact Louisiana-owned VIRGIN HEMP FARMS via email at Blaine@virginhempfarms.net or call 337-849-6481