How much should it cost to produce a kilo of hemp/crude/distillate/isolate?

CannaBusiness
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Good evening everyone,

I’m looking to learn a little more about the costs associated with farming and extraction.

I only work with the post processing side (distillation/remediation/isolation/water soluble) and we’re working to get into white labeling. While I believe have an idea of the current market for these items…

Henp: $0.75-$1.00/point @10% CBD = $7.50-$10.00/pound

Crude (winterized/decarbed): $500-800/Kg

Distillate: $1000-1500/Kg

T-Free Distillate: $2000-$2250/Kg

Isolate: $1000-1500/Kg

What I don’t fully understand are the costs associated with getting to these products.

For example I have no idea what the cost too produce a pound of hemp is ($/lb)

I have an understanding of what costs are associated with the extraction and distillation process

-Hemp
-Ethanol/CO2/Hydrocarbons
-Labor
-Rent
-Utilities
-Insurance
-etc.

But I lack a true understanding of the actual cost/kg.

Obviously this may have some wide variance depending on how you’re doing your extraction, what scale you operate at, how well you’re able to recover solvents and your extraction efficiency… but I would love to hear some thoughts on average costs for a small/medium/large scale extraction facility/farm.

My rough estimation is something like this,

50lbs of 10% Biomass @$1.00/point = $50

50lbs / 2.2lbs/Kg = ~23Kg Biomass

23Kg of Biomass @10% CBD = 2.3Kg CBD

Let’s say your extraction efficiency is 80%

2.3Kg x 0.80 = 1.84Kg Crude oil

Let’s say our distillation efficiency is 60%

1.84 x 0.60 = 1.1Kg of Distillate

So if my math is right (which I’m not saying it is) you’re looking at about 50$ in hemp… if you can extract say, 100/lbs / hour and you pay your 4 extraction techs 20$/hour (80$/hour @50lbs = ~2.3Kg of crude 100lbs/hour = 4.6Kg of crude per hour) Or about 20$ in labor per kilo of crude

Let’s say you have a 80% solvent recovery rate… you’re looking at around 100$ in solvent per kilo? (I don’t understand the economics of solvent for extraction very well)

@100/lbs per hour or 2.3kg of crude per hour that’s 24hrs x 2.3kg/hr = 55Kg/Day x 24 Days per month = 1320Kg/Month

Let’s say rent is 5000$/month and utilities is also 5000$/month

$5000+ $5000 = $10,000/month

$10,000 / 1320kg/month = $7.76/Kg on rent and utilities…

$50 + $20 + $100 + $7.76 = $177.76/Kg to produce a kilo of crude…

$177.76$/Kg / 0.60 (for distillation efficiency) = $296.27/kg of distillate

Going from distillate to isolate with a 70% efficiency $296.27 / 0.70 = $423.29/kg of isolate

This is simplified but am I close or am I missing something obvious?

If you have the guts I would also love to hear anecdotal costs from members of the forum, but if you don’t feel comfortable with that I understand.

My goal here is to get a better understanding of the CBD/Hemp market in order to provide pricing for my customers that will allow everyone to benefit.

I appreciate all of your insights into this matter!

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As you scale…most cost are fixed in either a fixed cost as In employee power or in a ratio - E.G. how much solvent you use - so In a nutshell that’s why profitability goes up.

However, after a certain point profitability is not dictated in actually inputs/outputs of market but rather who is effectively able to keep cost down.

For example, Palm oil cost about $50 a ton to refine after the end of the day…

Imagine you profits right now as we speak in our indusrty if we were that effecient, but we are not. LOL

How do you operate as CHEAP as possible?

Be a jew. @Mosaic_Co-Labs has seen the fro.

Chase dollars, keep pennies. :face_with_hand_over_mouth:

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You’re off by an order of magnitude on your biomass. 50lbs of 10% at $1pppp is $500.
Farmers have learned a lot and shoulder a lot of risk; they will price accordingly. Quality hemp won’t come cheap.

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The biggest variable in yield per acre that I see is soil quality. I grew clones 100 yards apart that did not look anything at all alike. Some were ratty little weeds in the unimproved soil, but giant Christmas trees in very good soil.

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Well said my brother @BrotanicalMatt

But a true Proforma with COGs fixed and variable relies on a comprehensive model that utilizes dozens of assumptions. These assumption calculators take a mixture of firsthand experience and modeling proficiency. You have not accounted for scrap rate, initial expenses, consumables, taxes, admin, packaging, licensing, insurance…blah blah blah…I have a professional from Roche as my Operations Officer. She prepares models that make MBAs dizzy. The last business masters degree holder I shared with said it would take him another semester to learn how she does things. Point being…without a comprehensive model you risk falling flat on your face right out the gate by overpromising deliverables

@CO_Chromatography you’ve got a great foundation for production COGs! This shit ain’t easy…I remember thinking my modeling was on point until I shopped it around to investors and learned the hard way. If you’d like I can put you in touch with my CO. She does consulting and is the most bang for the buck I’ve seen. She was head of compliance for worldwide operations at Roche but still offers very affordable solutions.

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Yes and experience is 100% key.

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Aha! Thank you.

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Bump. Is anyone willing to share the cost/kg for isolate nowadays? Worth an ask

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With or without unknown additives?

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Less than 250$ a kg :slight_smile:

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What about equipment cost?

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Depends how much it cost and how long it’s amortized out…

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less than it cost to make lol

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I guess my phrasing was not super clear. I was wondering what it costs to make a kilo, not what a kilo costs to buy.

Unless you’re just goofing with me and saying “the cost of making a kilo of isolate costs less than it costs to make”

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Right now it’s cheaper to buy the isolate then it is to make it

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Lol no I’m just saying @ current market prices isolate costs less to buy then to make

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unless you are a huge processor its going to be a lot less to buy than produce it yourself.

We were running around 50kg of isolate a day for a while and our cost was around 300 to make a kilo once biomass prices were slashed. Facility build out was a couple million.

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Do you mind saying how much of that $300 is just the biomass cost?

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I dont honestly remember anymore its been about a year since i did the numbers but biomass was pretty damn cheap, i cant count how many people were offering free biomass at the end of my hemp run.

Now its cheaper to buy winterized crude or even hot cbd distillate that would be a great feedstock for making isolate and you would only need a reactor and a way to dry the isolate.

adding in extraction is where it gets pricey these days.

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For the buildout, sure. Wish I could say that tolling biomass to W/D crude was pricey, we’re running on some razor thin margins at $2.85/lb with price breaks for larger commitments.

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