(This is the eighth installment in an ongoing series offering tips and advice for marijuana and hemp extraction companies. The seventh installment is available here.)
Organic marijuana and hemp products can fetch two and three times more than conventional cannabis, but the path to market is trickier than simply growing the plant without common pesticides.
Extraction and processing play critical roles in making organic cannabis products. Sloppy manufacturing, or even using the wrong cleaning agent on a piece of equipment, can derail plans to capitalize on growing consumer interest in organic products.
That makes it imperative to have a detailed plan from intake to storage when making organic cannabis products.
Careful organic manufacturing pays rewards, though.
Consumers spend 60% to 109% more on organic foods than conventional foods, with double-digit growth for organic options, according to the U.S. Department of Agriculture.
Longtime marijuana and hemp operators say cannabis consumers and retail operators are clamoring for more organic options, too.
Some craft organic cannabis can sell for three times more than bottom-shelf options.
The trend has two main drivers:
- Low-THC hemp producers are now eligible for organic certification by the federal government, meaning they can carry USDA labels certifying that their hemp-derived CBD or other cannabinoids were grown and processed organically.
- Marijuana operators are following their hemp counterparts. Marijuana is off-limits for USDA certification, but a growing list of independent cannabis associations are applying organic standards to high-THC products. And in Canada, cannabis is legal and therefore eligible for traditional organic certifications.
“The organic side is really coming into its own,” said Liz Geisleman, CEO of 710 Spirits, a Denver company that sells organic and conventional solvents to extractors nationwide.
“Organic cannabis is coming fast and furious.”
Settle on a method
The first decision for organic marijuana and hemp extractors is to choose an extraction method – solventless, CO2 or organic ethanol.
Solventless extraction methods, such cold-press extraction, are inherently organic. But they have downsides, of course – they’re slow and difficult to scale.
CO2 or ethanol extraction are the other options. Hydrocarbons such as butane aren’t organic.
But organic ethanol costs at least twice as much – and, in some cases, up to 10 times as much – as conventional corn ethanol.
“It’s not really cost effective at this point to use organic ethanol,” said Smoke Wallin of Vertical Companies, a multistate marijuana operator in Agora Hills, California, and CEO of its hemp-derived CBD spinoff, Vertical Wellness.
Wallin’s companies use CO2 extraction and have plans to expand organic production, especially if U.S. legalization makes organic certification possible for marijuana operators.
“The market is there,” he said. “The future play for processing is going to be significant growth on the organic side.”
In Canada, where cannabis is legal and therefore eligible for government certification as organic, the accreditation gives companies a market edge in an oversaturated landscape.
That’s according to David Bernard, vice president for growing operations for The Green Organic Dutchman in Mississauga, Ontario.
“Being organic, it’s a bit of a slower approach,” he said. “But once the systems are in place, you have a really healthy method of producing cannabis, and as the years go by, the margins increase.”
Even now, marijuana operators in the U.S. can follow organic processes stipulated by the USDA for other goods.
And some marijuana-specific accreditors have popped up in recent years, including the Cannabis Certification Council, Certified Kind and Clean Green Certified. (Notably, dominant global organic certifier Ecocert has stopped certifying high-THC cannabis because its home country, France, does not authorize it.)
Just be careful with labeling: the word “organic” can trigger enforcement if it’s used improperly.
“We can talk about our organic processes without using the word ‘organic.’ There’s a lot of health-conscious consumers who are looking for that branding,” Wallin said.
Focus on inputs, equipment
Once organic processors have settled on an organic extraction method, they need to make sure the equipment they choose will work.
And they must ensure the incoming products were grown organically. Expect to pay up to four times more for organic biomass, said Zachary Nassar, CEO of Gemini Extracts in Erie, Colorado.
“Our biggest input cost is the biomass,” said Nassar, whose company makes both organic and conventional CBD extracts. “Organic biomass is certainly grown in far less quantities than conventional.”
Organic materials can’t mix with conventional products, or there could be cross-contamination. So processors either need separate equipment or an approved method of washing down extraction machinery that has handled nonorganic matter.
First, check that cleaners and sanitizers pass muster on the “National List,” a rundown of approved cleansers and disinfectants maintained by the USDA and widely copied by third-party organic certifiers.
An error here can sabotage an entire organic operation, said Geisleman, recalling a client who invested heavily in organic inputs and solvent only to see the batch fail because of residual cleaning residue in the machines.
“That can be devastating,” she said.
Finally, extracted and processed goods must be stored organically – away from nonorganic material and in reusable food-grade plastic or glass.
The last mile
Once a processor has its system down, it’s time to bring in a third party to certify the operation. Expect to pay $5,000 to $50,000 a year for audits, depending on the size of the operation.
For a first-time organic certification, allow four months.
Bringing in a consultant can add another month and about $20,000, but such a move could save money in the long run by identifying gaps, said Mike Vrabel, CEO at Tennessee Harvester, which makes organic CBD products in Nashville, Tennessee.
“Before you even find a certifier, harden your own SOPs and look at every aspect of what goes into or touches your material through the process at that point,” Vrabel said.
The time and expense can pay off with products that command higher prices as well as get better shelf space and promotion.
“The upcharge margin at the consumer level outstrips the cost of the additional cost of ingredients,” Vrabel said.
“It’s simple. You pay more for ingredients, but you charge much more at the end. It’s positive ROI through and through.”
And for Vrabel and his organic colleagues, the extra effort also elevates a company’s sense of purpose.
“We’re a more sustainable part of the social fabric of the community,” Bernard said.
Kristen Nichols can be reached at [email protected].