Opportunities in the Hemp Industry
It doesn’t matter whether you are a farmer, extractor or investor, there are a wealth of opportunities throughout the hemp industry for anyone willing to put in the effort to capitalize on them. The CBD industry has exploded and shows no signs of slowing down, but there are a variety of profitable ventures you can find inside of the hemp industry that only continue to grow in their size and reach. This article will detail the many opportunities inside the hemp industry and how you can find your next business venture no matter what you are hoping to accomplish.
What Opportunities are Best for You?
At extraktLAB, we typically break down those in the hemp industry into a few categories: farmers, processors, chemists, investors and entrepreneurs. Let’s take a look at the individual opportunities for each of these categories to see where you might find yourself.
When you are a hemp farmer, there are several great opportunities that you can key in on. Depending on the method that you choose, hemp can be grown primarily for textiles, or for high CBD content that can be used for extraction. Both of these options have promise as the world of hemp grows in its scope.
It’s no secret that small farms have been struggling within the last decade or more. With cash crops like corn and soy trending towards large scale operations, small farmers are finding it more and more difficult to remain profitable. It’s no surprise that one of the best solutions today is the opportunity of hemp farming.
Since the passing of the 2018 Farm Bill, growing hemp has become increasingly popular as it opened the final door to allow growing for all purposes – including cannabinoids like CBD. As long as the crop has a threshold of THC below 0.3%, it can legally be grown and sold to a variety of interested buyers who may use it for extraction, or many other options. Because of this, the Hemp industry is projected to grow to $2.6 Billion by 2022.
The great thing about farming hemp is that there is a wealth of opportunities that hemp can be used for. Let’s take a look at the number of things hemp can be used for:
The Many Uses of Hemp
- Food: Products like hemp seed oil, hemp seeds and hemp hearts have proven to be a reliable source of nutrition that is readily available and plentiful. As the popularity of hemp continues to grow, products made from hemp will likely be found more often in the kitchen making it a growing business opportunity for hemp farmers around the country.
- Textiles: Hemp products like clothing have already been proven as a great alternative to cotton and other materials. The softness and durability of current hemp textile processing makes it one of the best solutions for clothing while avoiding environmental impact of other fabrics that are often overused. Hemp is also a great medium for making rope, twine, building materials and more.
- Biodiesel: While this product is still in development, there is promise that hemp derived biofuels could be a fantastic alternative to gasoline and other fuels. This kind of fuel could be the answer to a clean and green fuel option for cars and other engines that would otherwise use gasoline.
- CBD: The most recent, and likely most profitable reason for growing hemp is for CBD extraction. Extractors are always looking for high quality hemp biomass to meet the demand of the booming CBD market to make distillates, isolates and other cannabinoid based products. While this opportunity does have more stipulations than others, it is a lucrative business when all of the laws and regulations are followed.
Processing hemp often refers to the extraction of CBD from hemp. Extraction CBD can be highly profitable both in terms of selling wholesale extracts to other companies, or to a retail market creating your own high end CBD products like tinctures and vaporizers. ……
For a flat rate, a processor will take the biomass from a grower, extract and refine into the desired product and then return the finished product to the grower.
Spot Market Sales
This process involves the processor finding and purchasing biomass from a trusted supplier, extracting the desired product and selling it to the wholesale market. There are a number of products that can be created and sold in this market.
White label processing
Similar to spot market sales, white label processing allows for processors to buy biomass, and extract it for a final product. However, rather than sell it wholesale, the processors will fully package the product and allow another company to put their own label on the product.
This sees the process through from biomass to fully packaged products. These products like tinctures, edibles, vaporizer products, etc. can be sold directly to dispensaries and other retail outfits ready to sell these products.
Not only is a good chemist necessary for creating CBD products, it is also a great opportunity to dive into the growing market of new cannabinoids created from hemp. As extracts continue to become more popular, knowing the science behind making the highest quality products becomes critical. For this reason, extraction operations are always in need of well versed chemists in the industry.
For the majority of the thousands of years the hemp and cannabis plant has been used, the flower of the plant was the primary source. While some products like hash and other crude extracts were sometimes used, the recent boom in highly refined, highly potent extracts have created a market opportunity for chemists who are keen in separations science. Knowing the science of extraction is critical for a number of steps in the extraction process:
Hemp Extraction Methods
Extraction is the science of removing the active compounds from a material using a solvent to strip them off and leave behind the excess plant material. This involves the polarity of the solvent used and the cannabinoids and other materials desired to properly extract them from the biomass. This is the crucial step to creating these high quality products.
Winterization is performed with supercritical CO2 extraction in order to remove the fats and waxes from the crude oil. This requires specialized methods of chilling and vacuum filtration that chemists have to get right in the CO2 extraction method.
The solvent removal process is part of the refinement process that chemists need to be present for. This careful process utilizes heat, vacuum pressure and thin film technology to carefully remove the extraction and/or winterization solvent from the extract in large quantities. By carefully dialing in the right temperature and pressure dependent on a number of variables, chemists can rapidly remove solvents making an extraction operation incredibly efficient.
Much of what applies to solvent removal is the same with distillation making it ideal territory for the adept chemist in the extraction industry. That said, the process becomes more refined as more minute solvent quantities need to be removed and the consistency of the oil increases
Isolation is a chemical process that entirely isolates the desired cannabinoid making a 99% pure product. This is performed carefully through isomerization and tedious chemical wash that must be done at the skilled hands of a trained chemist to ensure efficiency and consumer safety.
While CBD has exploded in popularity, the desire for new cannabinoids derived from hemp are quickly catching up to CBD. These compounds like Delta-8 THC are psychoactive, but are in a legal middle ground due to their derivation from hemp. The chemical synthesis process for these cannabinoids is detailed and it is crucially important to make sure that the process is done exactly to make sure the product is safe and effective for the end consumer.
Become an Investor
Investment in the hemp industry may be the most profitable option we discuss. It’s no secret that the hemp industry is only increasing in its popularity making it an ideal investment opportunity. In fact, predictions have been made that CBD and hemp could potentially pass cannabis reaching $22 billion dollars in 2022. With this in mind, let’s take a look at some of the best possibilities for investors in the hemp industry.
Investment in Farmers
Starting with the source, hemp farmers are essential for all forms of the hemp industry including textiles, food and cannabinoid products like CBD. After the 2018 Farm Bill had passed, the door that had been closed for decades opened again allowing American farmers to legally grow hemp. Once licensed, it was a great opportunity for farmers to cash in on the next profitable farming venture.
One of the reasons to invest in hemp farmers is that growing hemp is nearly universal for all opportunities in the industry. Whether growing for food, textiles or CBD and other cannabinoids, the farmer is able to capitalize on each of these opportunities. Though the cannabinoid content may be higher with hemp grown for CBD, a typical hemp farmer can focus their priorities on specific hemp strains for any form of hemp product on the market.
Because the small farm has faced increased difficulty throughout recent years, many farmers have dedicated their efforts to this lucrative plant. In fact, studies have shown that, while acreage has decreased slightly, the number of hemp farmers from 2019 to 2020 grew by 27%. Whether it’s for textiles, food or CBD, the farming of hemp is only a growing investment opportunity.
Investment in Textiles, Building Materials and Energy
One of the fastest growing investment opportunities of the hemp industry is in hemp textiles. While clothing, rope and other materials made from hemp have been used for a relatively long time, there are new methods of using hemp that could revolutionize a number of industries.
For example, a material often referred to as “hempcrete” has changed the way builders have looked at creating homes and other buildings as a new alternative to traditional building materials like concrete. Hempcrete uses the materials of the hemp plant called the “shiv.” While not ideal for food or CBD, the shiv of the plant is high in silica which binds well with lime to create a material that is lightweight, insulating, flame resistant and incredibly similar in its composition to concrete making it an ideal building material all around.
Another field of hemp use that is rapidly gaining popularity is in biodiesel fuel. This use of hemp is done through a process called cellulolysis. This process takes the harvested hemp plant which is shredded and chemically heated to produce cellulose. Then, the cellulose breaks down into sugars that ferment and turn into ethanol. Once this is done, the ethanol can be refined so that it is safe to use as a fuel for a variety of purposes.
So, it is clear that this opportunity could be part of a revolution for clean and green fuel alternatives, but infrastructure is necessary for this to really take off. While this may seem like a substantial feat, we can already see evidence for fuel and energy alternatives with things like solar, electric and wind power. With the right effort and opportunities, there is little doubt that biofuels will surpass the currently used energy sources making it an ideal investment opportunity on the forefront of innovation.
With hemp being so versatile, it is clear that investing in the hemp industry is a great opportunity. Much like investment in companies like Tesla who have revolutionized the electric car industry, there are likely to be hemp based companies who can revolutionize power, textiles, food, building materials, etc. and it would be in an investors best interest to be on the forefront of those opportunities as they become more prevalent.
Investment in CBD Of course, the biggest boom in the hemp industry has been the fascination with cannabidiol (CBD). According to projections, the CBD market in North America is expected to grow to $61.2 billion dollars by 2027 with CBD oil being the highest profiting product in the industry. With an increasing number of individuals finding CBD products to be a great asset to their own lives, it is no wonder that the CBD industry itself is only increasing in its scope.
Though there are naysayers against CBD, there is ample evidence coupled with countless personal testimonies that it is a useful product in medicine and home remedy fields. Perhaps the most significant example of this is the creation of Epidiolex. This is an FDA approved drug created from CBD that has proven to significantly aid in severe illnesses such as Lennox-Gaustaut syndrome (LGS), Dravet syndrome, tuberous sclerosis complex (TSC) and a number of seizure disorders.
Why does this matter as an investor? It provides strong evidence to support CBD as an increasingly useful product in the medical field indicating that an investment in the CBD industry is an investment in a growing industry both in credibility and opportunity. In fact, GW Pharmaceuticals, the makers of Epidiolex, are often considered one of the top CBD stocks worth investing in.
Because of CBD’s widespread legality, the number of those purchasing CBD products is increasing. By 2020, the sales of CBD products reached roughly 5 billion dollars with a projected increase through 2025. By investing in CBD retailers, extractors, pharmaceutical companies, and other CBD related businesses, you would be getting into a profitable investment opportunity early on when all evidence points to an increase in the market over the next few years.
Being an Entrepreneur
Creating a business in the CBD industry is something that many are taking the chance on, but if done correctly, it can be one of the most profitable opportunities in the industry. Let’s break down the three most important steps to starting a successful CBD business in a booming industry:
Understand the Laws Surrounding the Industry
This is perhaps the most important consideration before investing time and money into building a new business in this industry. Thanks to the 2018 Farm Bill, hemp and CBD are now federally legal, but it is not without its exemptions. In Idaho, South Dakota and Nebraska for example, CBD is fully illegal and Iowa, Alabama, Georgia, Texas and a handful of other states have certain restrictions on CBD despite it being legal.
Knowing these regulations is critical whether you are planning to create a business, but currently live in a state where CBD is illegal, or a state that has various restrictions on manufacturing or sale of CBD products. And example of something to avoid for possible legal repercussions is making a claim on the packaging of your product. If your product says, “our CBD can help treat your anxiety,” you are making a legally unfactual claim because CBD is not approved by the FDA to treat any ailments. Ignoring these legal restrictions can put you on the fast track to being fined, or even shut down effectively ending your startup before it really gets off the ground. So, make sure to take this step incredibly seriously when planning your startup in the industry.
Research Your Market
This should go without saying, but understanding where you will fit in the extraction industry. You are not the only one looking at the extraction industry and realizing its potential. An ample amount of research is necessary to identify the risks, find gaps in the industry and find a way to fill them when you create your business.
There are hundreds, if not thousands of CBD products on the market including tinctures, gummies, vaporizers, lip balms, etc, but where is there an opportunity for a different product? A great example of this is in water soluble CBD or “Nano-CBD.” CBD is not water soluble on its own, meaning that CBD drinks were nearly useless prior to this technology.
Someone saw this gap and created nano CBD, a process that shrinks down that CBD particles to a nanoscopic size so that it can pass through the blood brain barrier when ingested and reach the bloodstream faster. There are clearly a number of innovations that can be done in the extraction industry, and you can be part of them. Study the market, identify the greatest opportunity, and build your business in a way that makes you unique and valuable to the market.
Calculate Your extraction Business Operating Cost
Starting a extraction Business? Check out our Calculators and to analyse costs, estimated revenue, yield, initial investments and important metrics for your extraction business.
Find your Niche
What are you looking to do in this widely diverse industry? There are a number of opportunities that you can dive into for your startup including extraction, machinery and equipment, toll processing, retail products, etc. Let’s take a look at a few of these options to get an idea of what might be best for you:
- Toll processing: Processing and providing high quality distillate, isolate and other hemp and cannabis extracts to other businesses in the industry is another lucrative opportunity inside of the business of extraction. Investing the time and effort in the proper processing equipment and dialing in an ideal extraction process provides you the opportunity to become a reputable processor and partner for multiple businesses inside of the extraction industry.
- White Label: Perhaps the easiest opportunity for startups, white label production is a valuable industry that allows the ability to create consumer products while maintaining a business to business partnership opportunity. Branding a business on a product that has already been made takes away the complexity, stress, and financial strain that would be needed for a consumer business to create their own line of product making it a simple, profitable opportunity for startups all around.
- Retail Product Formulation: If business to business is not what you are looking for, product formulations will let you step into the business that creates products directly for the consumer. The consumption of hemp and cannabis products has shifted dramatically with the use of extraction increasing over several years. Consumers are now looking for more potent, discreet, simple products that come from the extraction industry like vaporizers, tinctures, edibles and other concentrates. Though a competitive field, investing in creating your own brand of products is an available option for investors – and a viable one at that. This market is only increasing and becoming more profitable making it a wise investment opportunity overall.
- Machinery & Equipment: As mentioned above, extraction has become a standard in the hemp and cannabis industry and for good reason. Of course, a business needs the correct equipment to make these highly sought after products. This opens the door for you to create high quality equipment for new and existing extraction operations. For example, companies like extraktLAB build full turnkey solutions for those businesses looking to dive into the extraction industry to create their own products. Building pre-process, extraction, solvent removal, distillation, chromatography and formulation equipment is highly profitable as they are highly sophisticated and sought after pieces of equipment for any extraction operation both in the hemp and cannabis industry.
Ask our industrial hemp experts to determine what type of hemp processing and hemp extraction equipment is best suited for your business.
Although this industry is incredibly competitive, there are ample opportunities that you can find if you take the time and effort to really understand the market. Whether you are farming hemp, creating a business from the ground up, or looking for a reliable investment opportunity, the hemp industry has availability for everyone willing to take the chance.
extraktLAB is an example of success in the extraction industry built from the ground up to make some of the best extraction equipment on the market and dedication to helping businesses succeed in the industry. If you are looking for guidance on starting your own business, or starting with the best equipment you can buy, contact us to get started and make the next steps to creating the best opportunities for yourself in this lucrative industry.
Frequently Asked Questions
What makes new cannabinoids a good product?
The short answer is that customers want a psychoactive cannabinoid, but don’t want to break the law. Cannabinoids like delta 8 THC offer a mildly psychoactive product that users can take without breaking federal regulations and risking prosecution.
Is isolate THC Free?
The term THC Free is not regularly used anymore by reputable companies because there are chances that there are trace quantities of THC in an isolate. A better term that is used now is THC ND or THC Non-detect because the quantity of THC is unlikely to be detectable by testing.
Which distillate product sells best on the market?
The truth is that distillate products depend on user preference. While vaporizer products may be perfect for one user, another may prefer the ease of use of gummies. Then, wholesale distillate will be best for B to B sales. It’s best to have a wide range of products to capitalize on the market.
Does solvent type matter when selling crude oil to other businesses?
For the most part, the extraction method will not make a difference in the crude you generate. The primary difference is with supercritical CO2 extraction where crude oil should be winterized. A business may desire a winterized crude oil, or may perform winterization themselves.
Can terpenes be collected without decarboxylation?
Yes, terpenes can be collected during the extraction process. However, they can be lost or degraded due to the temperatures used to perform the extraction. Decarboxylation uses a lower temperature which makes it the best time to collect terpenes without degradation.’