Don’t think we’ve had one of these threads in a while…
Northern Colorado if it matters any, capacity around 1000-1200 lbs/day depending on input material
We’ve been advertising $4.50 per input pound, cold extracted to W/D crude filtered to 1 micron, with discounts for larger pound amount commitments. Thinking about revising that down to $4.25/lb to stay competitive this fall.
Had a potential client price shopping the other day, told me that he’d had another extractor offering W/D crude for $3.40 per input pound, and had another one the other week who didn’t think our costs were in excess of $2/lb to cold extract using ethanol.
In the interests of being professional I didn’t immediately call them a cheap motherf&^#er but I think napkin analysis like that doesn’t take into account any machine upgrades, capital expenditures or maintenance over time. I also recognize an enormous variance in compliance costs and the rent/mortgage on the building you’re using. My interest in sustainability isn’t in making a slim margin this month so I can be insolvent when one of my machines needs to be repaired.
I also recognize that bulk CBD crude market prices are often in the sub-$200 range and that doesn’t leave a lot left over for either farmers or brokers given the costs they have into raising and drying or purchasing extractable biomass. But at the same time, I’m seeing more demand for isolate to isomerize and CBG crude and distillate prices still appear to be double or more CBD prices, though at what volume they’re actually moving I’m uncertain.
We’ve also seen a few extraction labs go under because of or in the wake of COVID and bankruptcy/insolvency or lawsuits seem to be on the verge of taking out a few more…I would think this would decrease the supply of extraction capacity, which ought to oppose prices continuing to drop for extraction services
Curious to see what other extractors are seeing currently and on the horizon.
@moveweight we’ve run some material for clients from WA, UT and OR but haven’t really targeted specific areas. I think our sales channels could be improved but I think its tough as pretty much all of our business is B2B and I don’t think SEO or social media marketing is going to do the trick as the big weight clients seem to mostly come by local networking. I also think that trucking any significant amount is likely to eat into margins that seem to get slimmer every few months
I know of at least one company in CO currently doing tolling to W/D crude at $3.50 per input lb. Their capacity is 25k lbs/day.
Another model I’ve seen a couple labs run lately is $1/lb input and then a product split. The initial deposit is returned in product then the remaining is split 50/50. Seems like it could be really useful to attract business from farmers who generally are low on cash after harvest, and at least cover some production costs for processors.
Lot of processors doing some side hustle in the smokable flower market to help pay the bills.
Figure out your true cost. Establish a margin that allows for growth and set your pricing. Normal business practices need to be instituted in this industry. If you can run at a buck a pound and a 50% margin is sufficient then charge $1.50.
How many farmers finished last year with nothing but a bill? I’d be very hesitant to pay anything for processing given the number of companies that sent out bills that were higher than the value of the product, or even worse, charged for stripping and drying but never extracted. Too many scummy suburbanites running things.
Shouldn’t all of this be part of a farmers business plan? Farming is a business after all, just like extraction is. I have a hard time feeling bad for the farmers that went all in on hemp in 2019 - risk/reward!
Etho’s Manufacturing quoted me $3.50 per lb plus they keep 30%. We sent 10k lbs by rail from TN last year to them, they did a good job but we need a 50/50 split or better this year, preferably in the south east. We are still total THC in TN until Nov.1. Mother nature willing we will have high content biomass CBD/CBG. Given the Dea’s IFR is it more logical to have our biomass processed in a legal state?
@Cloner Seems weird to have a price like a toll and still be doing a split on the output. If the prevailing rate in CO is going to be $3.50/lb I think thats probably where we’re going to set our price to try and stay competitive. We have never expected a split of the output material on a toll. Our toll price used to be higher (didn’t everyone’s?) but with a recent move and better local grid power than we had at our previous facility we’re also spending a bit less to provide the same quality of services.
That said, I doubt you’re going to find a better than 50% split on CBD crude, I put together a spreadsheet to estimate what $/lb my lab would earn doing splits, for a 50/50 split, 10% material, 3.8 grams per percent pound yield, $150/kg sale price on crude you’re at or near $2.85/lb toll equivalent, and that arrangement only gets worse if the lab sits on the material for any significant duration before selling.
CBG crude & distillate still seem to be getting better prices than that but with all the additional CBG in the ground this year I’m expecting we’ll see a drop in CBG commodities as well, how much of a drop I can’t say
@munkdooligan I know of multiple farmers that have been burned by people and companies who didn’t live up to the promises (and sometimes contracts) that they made to provide services in a timely manner.
If you haven’t done business with a person or business before it’s not always easy to ascertain whether they’re capable of doing what they say or blowing smoke to make a sale. I’m with Eisenhower on this one: “In preparing for battle I have always found that plans are useless, but planning is indispensable”
I thought it was weird as well, last year we just paid a tolling fee (yep much higher last year than this year). I should note that the tolling/split from Ethos is for distillate and we certainly trust they can do what they say based on last years runs. I would be thrilled to find a 50/50 split and realize that’s probably the best we can do.
I totally get it, everyone has to make a profit, this game is such a roller coaster. Our costs are also reduced from last year. We offered a few good growers free Clones in exchange for a % of biomass. I don’t see how charging $3-5 per clone is sustainable for any farmer. In comparison we grow ornamental “clones” in 72 cell trays at $.50 a cell and still turn a good profit. Cannabis roots and finishes way faster than most ornamental’s and aside from the IPM, Cannabis liner production is much easier than most plants we root. I would much rather work with a group of experienced farmers and offer free clones than watch people spend a small fortune for plants and fail miserably. Sorry got a little off topic but I have a big problem with growers ripping off naive farms.
I am also skeptical of the CBG craze and don’t see the end use consumer gobbling it all up quickly. We are still educating the consumer in the south east about CBD. If I even mention CBG some folks become baffled and almost overwhelmed. However some will make good CBG $ off of the hype. We sold more CBG Clones than CBD, even after telling everyone interested they should be conservative with the CBG production. Some of the push for CBG production was compliance, which I understand, but I was baffled by some farms decisions to plant all CBG with no off take agreement in site. I saw CBG Kilos sell for tens of thousands of dollars last year, prices seem to have already fallen dramatically. On to the next minor…? SMH
I called a large lab in Northern Colorado and they’re booked to at least January, they charge $12.50/lb for winterized crude. This was for 6,000lb and I think the price drops at higher quantity. Surprising that they’re still getting that much
Right? It doesn’t really match market prices. I also was told by another company $0.75/output gram winterized crude! That’s like $750/kg for crude after growing and harvesting. Don’t see how they would have any customers, or if they even do.
They are likely putting it into products, and creating their own line. tis the only profitable path forward at the moment. Plenty of margin on products even with the high cost of extraction.
