How to spot a broker

[Mont7071]

Ok, feel free to point out flaws in my math/yield, because I think there is going to be a reckoning, and these brokers are going to take it on the chin, but here goes…

Since it seems that any random guy off the street (AKA me) can currently buy 12% dried biomass easily at $2.35/pt, that’s $28.20 a pound.

1 pound of hemp, I (and presumably most others who do a bit of hunting) can get that CO2 extracted for under $9/lb, at moderate scale.

1 lb extracted biomass yields about 68 grams crude, right? Efficient guys can probably do better, but I see filter/winterization services for $0.25 quoted all over on websites at rack rate. So, winterization on that 68 grams cost a max of $17 on our example original Lb.

After filtering and winterizing, you have at least 42 grams of CBD oil left that can be sold as ~65% CBD crude all day long, or processed further to distillate/isolate/whatever.

I’m ignoring some separate minimal decarb and freight/transport costs for now, but adding all these up, your total input costs on that initial lb of hemp biomass to get to these final 42 grams is $49.20. That equates to production costs of $1,171 per kilo. You can buy kilos of that spec of oil all day long on Kush/Hemp Exchange\etc public marketplaces for $1700 per kilo, any quantity you want, no broker needed.

Sooo, either;
A) My math is bad (but I’m pretty sure its not, and i’m using conservative #s).
B) the bottom of the market is going to drop terribly as all this new supply comes online this season, scale efficiencies come into play, and prices crash 30+% in the next 3 months.
C) These multiple tiers of brokers are going to vanish cuz there is no money left for their non-value added “service” (Yeay!!)
D) All of the Above

What think you? Am I missing something here? I’d hate to be a broker in a few months, the majority are going to get squeezed out IMHO, and quickly.

[Siosis]

Hook me up with that biomass son I’ll pay you a fat finders fee.

[Mont7071]

Come mid-October, there are going to be even more WA and OR farmers that will take around that rate, I’m pretty sure. It’s on the lower-end, but I know of at least 3 that accept that as fair, and I didn’t hunt too hard. The days of 3.50-4.00 a point around here are over. I wouldn’t be surprised to see sub-2.00 in December if there is the glut of new supply a lot of people are expecting.

[Siosis]

Well obviously harvest this year is gonna drop. You said now.

This harvest 2.50 will be high end.

[greenbuggy]

@Mont7071

1 lb extracted biomass yields about 68 grams crude, right? Efficient guys can probably do better, but I see filter/winterization services for $0.25 quoted all over on websites at rack rate. So, winterization on that 68 grams cost a max of $17 on our example original Lb.

After filtering and winterizing, you have at least 42 grams of CBD oil left that can be sold as ~65% CBD crude all day long, or processed further to distillate/isolate/whatever.

My experience with cold ethanol extraction (so skipping post extraction winterization step and associated losses) and after decarb/degassing, crude that will have a COA of 65-75% TAC, 37-38 g per lb is about average on 10% homogenized material, scaling to 12% should be about 45 g per lb

IMO CO2 doesn’t scale as well as ethanol does, we don’t charge extra for winterization/filtration/decarb and from what I’ve seen you lose more yield if you have to winterize separately from extraction, if you are bringing us honest 12% material at $20/lb extraction fee that says you need 22.2 lbs (1000 g/kg divided by 45 g/lb) bought at $28.20/lb to make a kg of crude, so $444.44 in extraction cost + $626.04 in biomass = $1070.48 production cost per kg of crude.

I don’t think your math is that far off, and FWIW we discount for any sizable amount brought to us to have extracted.

That said, don’t know your local market, I’m in CO winterized hemp crude can be had here pretty easily for $13-1400/kg depending on how many kgs you are buying at a time. I hope C is right and I suspect we’re already seeing B happening since a kg of crude was just under $3k back in January and prices continue to drop. Where the price of crude will level off I cannot say.

[Siosis]

If you can find me 2.50 ppp or under I’ll give you a fat commission. I need 8,000 pounds a month each month till end of October when harvest comes in

[Demontrich]

Pipe dreamers!

Pass dat pipe pleaze

[Future]

My big farm in S. Oregon fully expects prices of CBD isolate to be sub $3 this year, that’s why we grew mostly CBG

My Romanian farm is profitable at $1 end price in the US. Thats after shipping to Switzerland then Canada, then sent south to the US…

[Mont7071]

Wow, that would be quite the fall-off on the isolate side, maybe even a bigger % drop from me and greenbuggy’s similar numbers to get to crude above, but it wouldnt surprise me with those starting crude production costs and an efficient crude>distillate>isolate process.

I’ve never done a processing deal to get all the way through to the isolate stage from biomass, we buy a small amount of isolate on the open market; that was $6500/kilo a year ago, the last kilos we bought were 7 weeks ago, at only $4600, so that sub-$3 amount you quoted sounds like a continuation of the same price-fall for this season, maybe even accelerating.

Can you give an example of the math going from the above ~$1100/lb crude oil, processed over to isolate?I’ve heard retail quotes of $0.75-1.25 per gram from distillate>isolate, but dont know what the real processing cost/ yield loss is at each add’l step after crude, and if that’s a good deal or bad to process it further like that in a falling market.

[Krative]

I’ll get 70-75% yield in distillate from 60-65% winterized/decarbed crude. That distillate is ~85%, and will usually yield about 65-75% (especially dependant on concentration of other cannabinoids in solution).
So if we are starting from crude oil at $1100/L, it comes to about $1956-2418/kg isolate

[greenbuggy]

@Mont7071

Can you give an example of the math going from the above ~$1100/lb crude oil, processed over to isolate?I’ve heard retail quotes of $0.75-1.25 per gram from distillate>isolate, but dont know what the real processing cost/ yield loss is at each add’l step after crude, and if that’s a good deal or bad to process it further like that in a falling market.

Obviously this is dependent on your local market, prices and lead times vary greatly.

That said, I’m just an extractor and for time being we aren’t vertically integrated enough to produce distillate/isolate on the scale we can extract at. So most of our clients use a separate lab to further refine the crude we produce. Seems like going rate is about $1 per finished gram to take it all the way to isolate and anywhere from $.60-.75 per finished gram to take from crude to distillate. Efficiencies from crude to isolate seem to be all over the place dependent on input material, low end 30-33% for crappy (old/moldy/seedy/low %) input material, closer to 50% for better quality input material

[AgTonik]

[SISU]

These disputes extend to the highest levels of the industry.

[Apothecary36]

“I need 100 liters a week of distillate” 2018 broker
" I need 40,000 lbs of hemp flower" 2020 broker