Launching an extraction facility should include sound financial maneuvering.
Building a budget for a botanical extraction facility build-out means considering all of the equipment you will need. Hydrocarbon extractors and CO2 extractors carry different costs, and factors such as the size of your operation, maintenance costs, regulatory requirements, and staff salaries should all be accounted for in your budget.
The botanical extraction industry has officially hit the big time, with market size projected to reach more than $42 billion by 2030. With ROIs looking like a veritable windfall of cash, it’s no wonder entrepreneurs are rushing to establish labs and get a slice of the action.
But anyone jumping into this business sight unseen could be in for sticker shock. The potential profits associated with botanical extraction are worth the investment, but there are some sizable upfront costs to map out. We believe it’s crucial for extractors and extraction company CEOs to do their due diligence when launching their business venture.
What’s the best way to prepare? It’s all about budgeting.
Budgeting is all about asking the right questions before shelling out a single dollar to fund your extraction facility. Crucial budgeting questions include:
- How much does the required extraction equipment cost?
- What are the operating costs of extraction equipment?
- How many staff members are needed for an extraction facility and what should you pay them?
- What is the expected production output for the extraction equipment?
- How many different downstream products can you manufacture?
Answering those questions thoroughly with real numbers and figures is half the battle to launching a successful extraction facility. But now, let’s get down to brass tacks. Here are the factors you need to consider when building a budget for extraction equipment.
Extraction Startup Costs
There’s no use beating around the bush: The price of launching an extraction lab is expensive, usually somewhere between $400,000 and $800,000 when you factor in equipment and the cost of leasing a property. Finding and parting with that much capital is no easy feat, but the incredible potential of the extraction industry could make your investment more than worthwhile.
Startup costs include a handful of unavoidable expenses, such as the costs for an extraction license, property and build-out, extraction equipment, a professional extraction team, employee training, and a safety room.
Quality is a major consideration in startup costs for a botanical extraction lab. As you dive into the day-to-day operations of extraction, you’ll find that while it might cost more to build a safe, fully compliant, and efficient lab, the alternative ultimately isn’t cost effective.
The Size of Your Extraction Operation
Begin your budget by figuring out what size equipment you will need for your facility. This depends on the size of your extraction lab and how much product you plan to process in a day. The standard lab size for an extraction facility is about 2,000 square feet. Construction costs for labs of this size typically range from $60 to $100 per square foot, with cost considerations including an electrical engineer, a mechanical engineer, a designer, and an architect.
As for specific equipment needs, that depends on:
- The type of extract (hydrocarbon, CO2, ethanol, solventless).
- Whether or not you plan to purchase plant material from a supplier or grow it yourself.
- How much product you want to process at the start of your endeavor.
For the standard hydrocarbon extraction (butane or propane), you will need a complete closed-loop hydrocarbon extraction system that is in full compliance with local and state laws. You will also need to invest in additional equipment such a winterization apparatus, distillation system, and more, including:
- Extraction Tanks
- Hydrocarbon Extraction Units
- Temperature Control Units (Chillers, Heaters)
- Recovery Pumps
- Vacuum Pumps
- Vacuum Ovens
- C1D1 Extraction Booth
Let’s further examine the costs associated with different extraction styles.
How Much Does Different Extraction Equipment Cost?
The difference between CO2 and hydrocarbon extraction goes deeper than the mere hardware used in the two disparate processes. These two methods of extracting cannabinoids from raw plant material also differ noticeably in costs.
Hydrocarbon (Butane and Propane) Extraction
Whether you’re talking about the small-scale operation of most entrepreneurs or a large-scale extraction operation, hydrocarbon extraction equipment is often the most economical option. Even when you factor in facility build-out to meet certain fire codes, the upfront costs are significantly lower than that of supercritical CO2 extraction.
One hydrocarbon extraction operating cost you should be aware of is the chiller, which is necessary in order for the hydrocarbon to reach the required low temperatures.
Supercritical CO2 Extraction
CO2 extraction equipment comes at a higher price than hydrocarbon extraction equipment, especially at a small scale. Necessary components such as high pressure valves, seals, components, and ASME pressure vessels all cost more than the lighter equipment used for hydrocarbon extraction.
What’s more, CO2 extraction leads to more wear and tear on equipment, requiring replacement parts on a more regular basis. This is another cost factor to consider. Finally, the carbon dioxide shortage that’s currently roiling the beer industry will also wreck havoc on anyone focusing on CO2 extraction.
Extraction Safety First, Second, and Last
Whether extracting cannabinoids from raw plant material using hydrocarbons, supercritical CO2, or ethanol, a C1D1 (Class 1 Division 1) compliant environment safety room is a smart and safe addition to any facility. These safety rooms are constructed to prevent fires, safeguard against harsh chemicals, protect products, and prevent injuries to staff members. C1D1 rooms include:
- Emergency lighting
- Cameras for remote monitoring
- LED and dimmable lights
- Hood lights
- Ventilation fans
- Outlets and switches
- Exit signs
Prefab C1D1 rooms offer the quickest path toward all the safety features necessary in an extraction facility.
Don’t Forget About Maintenance Costs
Botanical extraction is not a set-it-and-forget-it industry. Even after your extraction facility is designed and built with your equipment installed, it will need ongoing care and attention.
For starters, all equipment that’s operated in your extraction lab must be Underwriters Laboratories Listed (UL-Listed), which certifies that the equipment meets all safety and performance standards.
In addition to that, your extraction equipment must also undergo regular maintenance to guarantee peak efficiency and productivity, prevent accidents, and minimize wear and tear. Of course, there are costs associated with properly maintaining equipment. Obtaining certifications will also cut into your budget.
Speaking of unexpected certification costs ….
Extraction Regulatory Compliance
You might forget to factor the cost of an extraction license into your overall budget, but it’s just as important as equipment and real estate. The price for this certification will vary depending on where your facility is located. This handy state-by-state guide to the fees your extraction processing facility may be subject to will help you know what to expect.
Illuminated Extractors: A Bright Spot in Your Extraction Equipment Budget
Being a disruptor in the extraction sphere means deviating from the norm and delivering something you might not get from other equipment designers and suppliers. Illuminated Extractors envisions, develops, and builds extraction equipment that is meant to accommodate your budget, not blow it up.
That is why we adhere to several key differentiators:
- Our pricing includes everything: That means no hidden installation fees and no extra, unexpected charges down the line.
- We won’t oversell you on equipment you don’t need: You select the items you need. If chillers and heaters are not on your shopping list, that’s no problem.
- We always have extra parts on hand: Replacement parts should always be factored into your budget. We make ordering replacement parts easy.
- Our pricing is completely transparent: We list the prices of all of our equipment so you can make an informed decision that fits your budget.
Illuminated Extractors builds equipment for large-scale hydrocarbon extraction. Connect with us today and learn how to maintain our purpose-built, long-lasting extraction equipment.