Cannabis Oils Are the New Gold

The 2 most common methods of extraction in the cannabis industry are butane and Co2, with Co2 extraction reigning as the leader due to the lower hazard risk during production and the non-toxic nature of the method used to extract the oil.

Co2 extraction is a commonly used method to produce many products in todays market place. From coffee, tea, perfumes, and omega 3 oils, this extraction method is much safer and is non-toxic and safe for ingestion. With the wide acceptance of Co2 extraction being used in the food industry, it is no surprise that this method would be adopted into the cannabis industry to manufacture oils for the medicinal side of the industry.

Cannabis oils are the future when it comes to both the medical and recreational side of the cannabis industry. They are portable, discreet, easy to use, and can be incorporated into a variety of different forms and delivery methods. Oils can be manufactured and used in the production of edibles, topicals, vaporizable oils, and even introduced into inhalers for medical uses that offer a controlled dosage.

Currently in Canada, licensed producers are limited to producing CBD dominant oils that feature very low THC content. With these production regulations, the oil is designed for the medicinal sector versus the recreational sector. There is speculation of regulations being altered once the recreational market opens in 2018 but until further notice, the production of these oils is for topical use or oral ingestion only.

The Co2 extraction method has the ability to be tuned and refined because it is a segmented process which creates the ability to isolate properties within cannabis and create specific oils to treat certain ailments. Whether it is isolating THC-A to help treat diabetes or isolating a CBD component for treating anxiety and seizures, the method of Co2 extraction will open new doors for the medical industry.

Before the oils are available to the consumer, there is quite of bit of refinement that cannabis must go through. Some licensed producers are even spending upwards of $1M for the equipment to produce it. Even with these exorbitant amounts involved, there is still an enormous space to capitalize on the production of oil.

After completing some additional research regarding the equipment costs for Co2 extraction, each unit can vary between $39,000-$300,000. Some of the equipment is very efficient and offers the ability to recover 95% of the CO2 used in each extraction. The reusable nature of the CO2 helps to create a cost-efficient extraction process that is environmentally friendly, non- flammable, and non-toxic.

Cannabis oil is quite costly at roughly $100-$120 for 1mL, but due to its higher potency (often 80-90%), consumers will require significantly less of it. The main reason for such a high price point is due to its rarity in the industry and equipment costs and time involved to extract the product.

Oil is produced on average at a 5:1 ratio to create 1mL of the golden substance. With LP’s being able to produce a gram for $2-$3, it is apparent that the margins are there to create a very rich oil out of $10-$15 of cannabis and retail it for $100-$120. As more and more of Canadian LP’s introduce Co2 extraction into their production facilities, it is likely that it will drive the retail cost of oils down for consumers.

Ultimately the goal with oil production is for medical reasons and CBD products are currently the primary objective in the oil market. Co2 extraction will continue to create opportunities to isolate properties of cannabis will hopefully reveal a spectrum of treatment options for patients in the future.

With a price tag that is over twice the value of gold, cannabis oils will most likely dominate the industry over the next few years for several reasons. This liquid gold is likely to continue to unveil different methods of integration into modern medicine. Additionally, with a high demand in the recreational market and new products being released for vaping these oils, it will be a very lucrative market for the Canadian cannabis markets. If higher potency oils are permitted within the recreational market, you could obtain a product that is 90%+ THC. This would open a variety of options for a discreet, convenient, and pure form of cannabis.

Return On Investment For Oil Manufacturers