Last year, the federal government projected huge profits for the Canadian cannabis industry. Last Wednesday, five of its leading CEOs gathered at a Parliament press conference to highlight the challenges many LPs are facing.
The struggle continues for licensed providers to scale sustainably amid high government taxation and inflation. Executives making their pilgrimage to the Hill are looking for a review of current cannabis taxation after surviving a year of increased inflation. So what can LPs — and extractors in particular — do now to maximize profit margins?
There are avenues licensed producers can take to streamline production, reduce costs, develop high-quality products — and make the most of their margins. One of those avenues is to adopt a portable testing solution to get potency results in real time at each phase of production. In this blog, we’ll provide a high-level overview of extractors’ daily challenges and explore the larger role testing plays in each — including how solutions like Ekidna can help.
While accurate testing won’t solve larger industry challenges, it will make day-to-day expenses and operations more manageable.
What are extracting companies prioritizing day to day?
Within the extraction sector where profit margins are tight, production efficiency is crucial to increase output while improving the potency and quality of each extraction. It’s about fine-tuning timelines and bringing costs down wherever possible. The largest opportunity to do both lie in the testing phases of processing.
What overarching costs and challenges are extractors dealing with?
Extractors’ main challenges fit into three categories: qualitative, financial, and operational.
- Qualitative challenges lie in the complexity, consistency, and potency of extractions amid inconsistent lab testing results.
- Taxation aside, financial challenges loom large in the form of underutilized inputs, difficulties entering the U.S. market and expensive on- and off-site lab testing.
- Operational challenges are predictably unpredictable, lying in frequent delays and availability of equipment and people-power.
Where are the opportunities for improvement, and how can rapid cannabinoid potency testing help?
The qualitative opportunity
Extractors have an opportunity to adopt innovative and accurate testing solutions that allow them to test potency themselves at the point of production — as often as needed — to ensure consistent methods and product quality are achieved.
Accurate and uniform testing is essential at each stage of production to confirm ideal isolate levels. This poses a challenge because lab testing has proven precise but inaccurate in measuring THC and CBD potency. What’s more, its timeframe makes it impossible to obtain the real-time results needed to fine-tune products, increase run frequency, and preserve consistency and quality.
The current lab testing landscape is not designed to accommodate the need for rapid and reliable potency testing results to support production. Extractors have the opportunity to adopt a point-of-production cannabinoid test to aid in increasing run frequency, ensuring accurate output and rapid finetuning during each stage of extraction.
The financial opportunity
Across Canada, high federal taxation and limited opportunity to sell to the U.S. limits growth in the Canadian cannabis space. Day to day, underutilized inputs and expensive on- and off-site lab testing make it hard to economize in the face of overarching, industry-wide expenses. Large industry players, like Canopy Growth, have recently prioritized optimizing their operations to reduce costs.
While accurate testing is essential to competing in extraction production, lab testing is expensive. On-site labs are pricey to build, staff, and maintain — while each sample sent to a third-party lab offsite can cost between $100 and $300. Fortunately, innovative and portable solutions are available to accurately measure potency without the lab. They help extractors affordably test as often as they need to finetune their extractions and create higher-value blends.
The operational opportunity
Time is money, and developing operations to be as efficient as possible is an industry-wide goal. Daily challenges to operations include but aren’t limited to meeting demand and preserving product quality — leaner and quicker.
For extractors, sending tests to the lab is very inefficient. It’s a slow process that ropes in the third-party labs’ own processes, taking up to two weeks for results to return. Establishing an on-site lab carries high startup costs and requires additional staff, and testing may still take up to two days. Extractors are unable to begin another batch while waiting on lab results due to product remaining in the extraction equipment to avoid oxidization.
What’s more: without real-time updates on THC and CBD levels in their products, companies can’t tune their processes. Extractors can seriously benefit from saving as much time as possible during potency testing — and there are solutions available. Ekidna, is a decentralized testing solution that allows companies to measure potency with the same accuracy quoted by labs (with error rates of +/- 1% by weight) in sub-ten minutes without the lab or its staff.
So what more is there to know?
How Ekidna helps extractors.
Ekinda under a microscope
- It delivers results in sub-ten minutes
- No maintenance or calibration needed
- Ekidna is fully portable and takes up limited counter space
- Anyone can learn to test in minutes without scientific training
- Ekidna’s patented technology delivers error rates of +/- 1% by weight
- Test in as many locations as you like, as often as you need to keep processes running
- Ekidna test kits are much less costly than mailing samples to a lab or setting up staffing and maintaining your own lab.
- The Ekidna system and software cost $2,995, and our basic test kits cost $60
Ekidna exists to decentralize point-of-production testing by answering the operational, financial, and qualitative challenges of potency testing in the cannabis industry. For extractors, it provides meaningful opportunities to produce premium products efficiently, reliably, and at lower cost.
Extractors need to have confidence in the consistency of their own products as well as the accuracy of testing results — and they need this testing to be efficient and affordable. It’s the only way to get a leg-up in a saturated market and produce inventory as quickly as possible. Making the most of profit margins for extractions means ensuring highest product quality, consistency and availability — or consumers will find other options.
These are the challenges Ekidna aims to help extractors meet head on.
Want to learn more? Book a test!
- Lopez-Martinez, Melissa. “‘Canadian Cannabis Is in Peril’: Industry Leaders Call on Feds to Help.” CTV News. CTV News, February 15, 2023. https://www.ctvnews.ca/business/canadian-cannabis-is-in-peril-industry-leaders-call-on-feds-to-help-1.6275404.
- Smith, Brian C., Paul Lessard, and Rich Pearson. “Inter-Laboratory Variation in Cannabis Analysis: Pesticides and Potency in Distillates.” Cannabis Science and Technology2, no. 1 (2019). Accessed February 17, 2023. https://www.cannabissciencetech.com/view/cannabis-extraction-facility-setup-101