Concentrates Makers Struggle With Low-Level Competitors

By Fred Dreier

Brandon Hamilton, owner of a Seattle-based cannabis concentrates company called WAM Oil, was concerned with the way his products were being marketed and then sold at area dispensaries.

So he enlisted secret shoppers to go to dispensaries and ask budtenders about the various oils on the shelf.

He was not happy with what his secret shoppers reported back. Dispensary employees did not know the difference between his product, which was produced in a closed-loop extractor at his laboratory, and lower-quality products that were likely made using rudimentary methods.

“The level of sophistication at the point of sale was really disappointing,” Hamilton said. “It’s hard to differentiate between how one was manufactured versus another.”

Hamilton and other concentrates manufacturers believe the low level of sophistication within the market is costing them big bucks.

Professional concentrates manufacturers can easily invest tens or hundreds of thousands of dollars into their equipment. Closed-loop CO2 extraction kits range from several thousand dollars to well over $100,000 for large custom-built machines.

Hamilton estimates he’s invested a quarter of a million dollars in his lab alone – while some of his competitors have spent just a fraction of that amount on rudimentary equipment.

Does Cheaper Sell Better?

It’s no secret that many concentrates on dispensary shelves are produced using cheap and somewhat primitive methods.

Anyone with a few hundred dollars-worth of cannabis, a PVC pipe, a few bottles of butane and a Youtube account can produce cannabis wax that, in many states, could sit on store shelves alongside products produced using more professional methods.

While these concentrates do not look drastically different, they usually cost around $5 to $10 less per gram at the point of sale than professionally produced ones. Sometimes the difference in wholesale price is much higher. And that price discrepancy often steers consumers to the cheaper ones.

“Some kid who is shooting butane in his garage, he can show up and say ‘hey, I have this really beautiful amber [wax]’ and now it’s on the shelf,” said Samuel Decker, CEO of the Oregon-based extract company Udoxi Scientific. “And it will be cheaper than our product.”

Within the market for concentrates, price point plays a major factor, because many of consumers who prefer these products are in their early- to mid-20s. So the cheaper waxes and oils tend to sell better than the expensive ones.

Another factor in the extract market is reputation. Similar to the connoisseur-class of cannabis consumers, concentrate manufacturers can create a name for themselves based on the perceived quality of their product.

Concentrates made by well-known artisan manufacturers can sell at substantially higher prices. But that reputation does not always mean the producer has invested thousands of dollars in a production facility or machinery.

“Most patients don’t know the difference between closed-loop or not,” said Aaron Justis, owner of Buds and Roses dispensary in Los Angeles. “They just want a reputable versus a non-reputable brand.”

A Need for Regulation

Hamilton said he remains competitive with cheaper brands by offering a wide range of products, from oils and waxes to cartridges that are used in vaporizer pens. He also invites legislators into his laboratory to show them how a professionally-operate concentrates company looks and feels, compared to backyard operations.

Decker said he tries to work with shops to self-regulate how the products are being sold.

“The shop buyers are the ones who are at the forefront of all of this, and they need to be the ones who are self-regulating,” he said. “If they’re not self-regulating, at this point there won’t be any regulations.”

Both Decker and Hamilton think that there needs to be some type of regulation to weed out the less-sophisticated producers.

Both men believe that their products contain fewer contaminants – both pesticides and residual solvents – than the cheaper product. And both believe that their products also contain more of the active agents, both CBD and THC, than the cheaper extracts.

Regulations could be coming with the onset of recreational laws.

In Colorado, for example, the Marijuana Enforcement Division recently released a new set of rules for processing and extraction. All concentrates manufacturers must use closed-loop systems and pass a four-week inspection process. They must also submit their final product to testing labs, which will test for the presence of solvents and other contaminants.

Until other states roll out similar restrictions, professional concentrates manufacturers will continue to have to find other ways to compete in the market.

Photo credit: Image of closed-loop hydrocarbon extraction machine produced by Udoxi Scientific. Photo by Samuel Decker of Udoxi Scientific

20 comments on “Concentrates Makers Struggle With Low-Level Competitors
  1. Sandra on

    ““The level of sophistication at the point of sale was really disappointing,” Hamilton said. “”

    This is not only true for concentrates, but topicals and probably other products too. In the case of topicals, generally the budtenders are not trained at all to talk about the product and rarely are the topical products displayed in a way that make sense, the way the rest of the world does cosmetic and spa retail display and marketing.

    Perhaps creating a plan-o-gram and counter top display that can set these concentrate products apart from their cheaply produced competitors is the answer.

    Reply
  2. Bill on

    Ok, so now you are in, you are making money and are going to use that money to influence regulations to weed out your competition rather than improve your marketing. SHAME ON YOU. Learn to play fair not like big business that has KEPT you out until recently. Et Tu?

    Reply
  3. Arlin Troutt on

    When all the money smoke clears remember the cannabis is an ancient herbal garden remedy and people have been making tinctures from cannabis 5,000 years before the DEA jacked the price up to $5,000 a pound. The Prohibition of Marijuana is a deadly crime against humanity and a vicious assault on our Constitution that will require accountability. When you put revenue about the public safety you become a criminal and that is what our government has done. In 1970 Nixon and the 91st Congress ignored the studies and recomendations to remove marijuana use and possession as a felony. Instead Congress deliberately classified and confused marijuana use and our kids with heroin addiction. This idiotic lie led millions of distrusting kids into drug addiction and destruction. The Prohibition of Marijuana was not just some stupid mistake a gang of fools made. People have died from these lies about the history, safety and medical use of marijuana and it is time for accountability not bullshit.

    Reply
  4. WAM Oil on

    @Bill, WAM Oil doesn’t believe in legislation to weed out the competition. In fact, we were asked directly by BOTEC and WSLCB if BHO and others should be outlawed. Our response was a resounding, “NO!” as we believe there are many great BHO (and others) concentrates. We believe in legislative regulation from a patient, consumer, and zoning/building safety, not to remove competition. WAM Oil welcomes HEALTHY and SAFE competition on all levels.

    Reply
  5. James on

    No one talks about the toxic nature of BHO, not only for the end user but the release of solvents and the flammability. Many of the oil processors are back alley and reminiscent of home made meth labs. The closed loop CO2 machines are expensive but the end product is far superior not to mention the environmental effects. Too bad the dispensaries don’t self regulate the concentrate market. Since they don’t, the government will.

    Reply
  6. Chet on

    I don’t seem to have this problem with ice water. At the same time producing a safer, better tasting, and still very effective product.

    Reply
  7. Derek L. on

    We at Herbal Synergy LLC actually pioneered the residual solvent analysis trend you’re now seeing, and have acquired a wealth of information on concentrates and solvents. Educate your bud tenders and eliminate the frustration of your patients knowing more than the bud tender attempting to serve them.

    Reply
  8. Tudo on

    I would not switch for any price from the gold oil from Tetra Labs and frankly I would like to buy stock in the company if it were possible to do because of the integrity of the product and company behind it. I only wish they still had the red color oil!

    Reply
  9. SeanDon on

    If these high cost “lab” products really had so much more to offer it would have no trouble competing. The guys “blowing in their garage” pioneered this, not so you can monopolize it from them with regulations and deep pockets. While there is bunk product out there, people know what they are getting.A simple lab test would solve any concerns here and is a sure way for consumers to differentiate top shelf clean oil from something produced poorly. However they want to stop these small scale makers entirely when in all reality their oil is almost, if not just, as good Keep the MJ market a FREE MARKET!

    Reply
  10. bongstar420 on

    Interesting. My philosophy is quality is quality. If his stuff is great, I won’t need to be told. I will simply know it when I see and taste it.

    Reply
  11. Kushest on

    Bill and SeanDon are right on.
    Trying to monopolize on the industry is a selfish move.
    This gives some of us an opportunity in cannabis that we might not otherwise have. Being a supporter for many years, I feel like I’m entitled to a little something as well.
    Then these big businesses want to come in with their money and push us out of our own world.
    There is enough marijuana and money out there for everyone.
    If you feel you have such a superior product then stop trying to sell a mercedes at a Honda dealer.
    Market to the people that have money for your amazing product.
    Not everyone can afford $100 a gram and these people need access to cheaper medication if possible.
    What you are trying to do is Rob people of that right and forcefully jack up prices for your own profit. You’re kind is not welcome here.
    That way of thinking was never what it was supposed to be about.
    As a matter of fact I’m going to start a list of people that should not be supported. Welcome to the black list.
    I’m in the entertainment business myself and have quite a large following and that number grows considerably every day.
    Also supported by major influences in the industry such as B Real from cypress hill.
    I think it’s time to spread awareness and let people know how these big businesses characters are trying to control them and take away their right to affordable medication.
    Let this be a wake up call. All you are is a money hungry bully.

    Reply
  12. John Wheelock on

    Please regulations are the whole reason for trying to legalize marijuana regulations are bullshit just because you are not making enough on it does not give you the right to start trying to reverse laws and change ideas marijuana should be legal idiot and concentrates can be made at home so screw you and your profit.the only people opening dispensaries are the rich who all look down their nose at legalization now all trying to make the block I say screw you all I hope you are dispensaries fail and it becomes legal everywhere and you all lose your millions

    Reply
  13. Jay on

    Please! This article is baseless. I was I recently resigned as a purchaser for a collective in Wa.
    WAM oil isn’t productive anymore because of its inferior quality product, plain and simple. Our shop discountinued WAM because we couldn’t get rid of it at liquidation prices. Message from your patients: Rather than doing lame interviews and waving how much money you have wasted around, you should get back in your expensive lab and fix your expensive mid to low grade product. Message to Fred, pick a better company with a reputable history before you write an article with these claims, WAM’s business went in the toilet because their processes didn’t evolve with the industry. If you ever Vaped a WAM CO2 cart and then Vaped anybody else’s cart you would have known better.

    Reply
  14. logicality on

    Whats with these money hungry suckerfish? So some guy in his garage is able to produce the same quality product that you produce in your fancy lab full of overpriced equipment. Good for him. Shame on you. You don’t head off your competition by running around whining to law makers that you spent way more money than your garage based competition and pushing to have laws set in place so that they can’t make a living too! Someone manufacturing in their garage can take their product down to a lab for testing just as easily as you can. If it tests clean then its all good. And F your fancy smancy stuck up product!

    Reply
  15. chris on

    I disagree with a lot in this article. Just a couple of years ago I wouldn’t have but there are difinitely some inaccuracies. For one, there are no reasons for a closed loop system to put out a higher quality product. In fact it is not true. Especially for co2, closed loop is not the best even though it is the norm. All it means is that basically the solvent is being recycled and that can create other compounds which are considered impurities but they are often not regarded as a pesticide, solvent or other

    Reply
  16. Jim on

    Why would CO2 machines be forced to recycle? They don’t generate any CO2, they just use CO2 that was produced by some other process. BTW, even the recycling machines have to vent some or all of their CO2 at some point so there is no such thing as a truly closed system. Hydrocarbon solvents ok, but CO2? Doesn’t make any sense.

    Reply

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