Marijuana Business Factbook 2019

206 Marijuana Business Factbook 2019 Chapter 4 | Financial & Operational Data: Cannabis Product Manufacturers © Copyright 2020, Marijuana Business Daily , a division of Anne Holland Ventures Inc. You may NOT copy this Factbook, or make public the data and facts contained herein, in part or in whole. For more copies or editorial permissions, contact CustomerService@MJBizDaily.com or call (720) 213-5992, ext. 1. • With more brands, more products and more mainstream interest in the manufactured cannabis products space, investment in research and development has become a more critical component of success. Developing and implementing manufacturing methods to create products such as homogenous, shelf-stable beverages with rapid onset and offset times requires a high degree of technological prowess and comes at a steep cost. • Regardless of a manufacturer’s skill in branding itself and expanding into new products and markets, an unexpected change in a state’s regulations can have significant impacts on success. Regulatory changes happen in new and developing markets, such as California, as well as in more established markets, including Colorado and Washington state. Changes in rules and regulations regarding edibles production and testing procedures have created challenges for manufacturers in Arizona, California, Colorado, Oregon and Washington state. While these changes can cause significant disruption for some businesses, savvy manufacturers that are able to adapt can benefit from being one of the few producers remaining on the shelf after new regulations take place. BUSINESS MODEL BREAKDOWN For cannabis product manufacturers, revenue, startup costs and operating costs are tied to whether the company grows its own cannabis for extraction and manufacturing or it purchases the plants from a third party. The financial implications of operating both a cultivation facility and a manufacturing facility are different from those of operating a manufacturing facility on its own. For this reason, this chapter considers two different types of cannabis product manufacturers: • Cannabis Processors: Businesses that receive raw cannabis from a third party to use in their processing and manufacturing facilities. • Cannabis Producers/Processors: Businesses that grow the cannabis that is used in the processing and manufacturing operations.