Why Cannabis Oil Is Big Business (and How to Capitalize on It)
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Legalization brings a lot of opportunities, including many that are unexpected. One of the biggest areas for expansion is cannabis oil.
Cannabis oil can mean a lot of different things but most importantly, it’s giving consumers and entrepreneurs a new way to explore and benefit from the marijuana industry. Here’s why cannabis oil is big business, and how any entrepreneur can tap into this nascent market.
The cannabis oil market is huge.
There are many different kinds of cannabis oil on the market. All of them are growing in popularity. The CBD market alone is predicted to reach $22 billion in 2022, according to Brightfield Group.
But cannabis oil goes beyond CBD: THC-rich concentrates and waxes are also technically oils, and recreational cannabis concentrates sales are projected to reach $8.5 billion by 2022.
Vaping is convenient, safer and will get you higher.
Cannabis oil can be a type of concentrate high in THC (short for tetrahydrocannabinol), the weed compound responsible for making you feel "high." Typically, THC-rich oil is vaped. Other types of high-THC concentrates include wax, shatter and resin.
All types of concentrates gain more popularity every day. According to a survey of California cannabis users, vaping cannabis oil is one of the preferred delivery methods among young and old consumers. There are several reasons for this:
It’s considered a safer delivery method than dry herb because the process by which you extract cannabis oil kills bacteria.
Vaping oil is more convenient and a lot more discrete. It’s easier to carry a vape around, rather than pack a bowl or hit a bong, for example.
Vaping allows for a steadier "high" than flower because the oil has consistent THC and CBD levels.
Since oil is, by definition, concentrated, vaping causes a stronger high.
The CBD market is blossoming.
But cannabis oil goes beyond the recreational concentrate market. One of the fastest growing subsets of concentrates is CBD, which won’t get you high at all.
CBD, short for cannabidiol, is the main non-psychoactive compound found in marijuana and hemp. It does not interact with the body the same way as THC and cannot get you high. At the same time, CBD has many of the plant’s most significant medical and medicinal benefits. CBD can reduce seizures in epilepsy patients and a growing body of research finds it useful for reducing pain, acne, anxiety, inflammation and more.
Additionally, CBD has been found to be a significant preventative measure against neurodegenerative diseases (think: Alzheimer’s and Parkinson's disease) and arthritis.
Making cannabis oil is a relatively new and expensive process.
Despite the rising popularity of cannabis oil, it’s still a relatively undeveloped market because of how it’s produced. Technically, cannabis oil is what you get when you extract a concentrated oil from the marijuana or hemp plant. THC and CBD oil are technically in the same category because they’re produced with the same type of equipment.
Creating cannabis oil takes some expertise and a fair amount of equipment. Generally, there are two ways of doing it:
CO2 (carbon dioxide) extraction
CO2 extraction is the preferred and more expensive version. In this process, you remove any unwanted chemicals and cannabinoids, meaning cannabis compounds, from the final product. It involves using pressurized and cooled carbon dioxide, which is a costly process but creates a cleaner oil.
By contrast, solvent extraction typically involves using butane or ethanol to extract the desired compounds. Though this process is cheaper, it involves working with highly flammable gases.
Both of these methods involve overhead and expertise, which means that there is a lot of room for expansion in all subsets of the cannabis oil market.
How to capitalize on the cannabis oil boom.
There are a host of opportunities for entrepreneurs looking to break into the industry. Here are a couple of examples.
Get into the extraction business: There is so much weed in Oregon (over a million pounds extra) that they want to export it to California. You do not hear the same story about weed extraction businesses. Instead, demand for cannabis oil vape cartridges continues to grow. In 2018, vape sales accounted for 22 percent of all dispensary sales in California, Colorado, Arizona and Oregon according to BDS Analytics. This makes vapes the second largest product category, behind flower.
Starting an extraction business comes with the same hurdles as any weed company. This means creating a supply chain management system, grappling with banking difficulties and navigating strict real estate regulations. Plus, extraction comes with the added price tag of buying the right equipment. A CO2 extraction machine typically costs a minimum of $150,000. Combined with rent and other equipment requirements, starting an extraction business has more than half a million dollars in startup costs.
But due to intense demand for extracted cannabis oil, shatter, wax, and other concentrates, extraction companies can turn a profit within the first months of starting out.
Start a CBD company: In the past two years, CBD has gone from a compound we knew little about to a flourishing industry with medical and medicinal uses. that could soon become a global market. The World Health Organization recently recommended rescheduling cannabis and removing CBD from the list of substances subject to international drug control laws.
Though CBD has an impressive array of medical uses, most people who benefit from it are relatively healthy and use it as a medicinal supplement. And the ways to consume it are endless. You can add CBD to lotions, smoothies and treats, or simply take it as a tincture.
Additionally, CBD for pets is a growing market. CBD benefit animals suffering from epilepsy, joint pain, and anxiety the same as it does for humans.
With cannabis oil means new opportunities.
The cannabis industry isn’t as young as it was two years ago. This doesn’t mean that there aren’t opportunities within it, only that they’re slightly different.
Businesses beyond production and retail have a lot of room for growth on both East and West coasts. And with the rise in THC rich concentrates and medicinal CBD, cannabis oil is one of the biggest potential areas for entrepreneurs and investors alike.