Cannabis Extraction and State Licensing Requirements

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You have decided you want to get into the cannabis industry. You have never had a green thumb, so cultivation is out of the question. You are also not a big fan of retail. That takes opening a dispensary or pharmacy off the table. What’s left? Cannabis extraction. As a processor, you would extract cannabinoids, terpenes, and other compounds from cannabis plants.

Cannabis extraction is big business. It is the foundation of producing everything from CBD tinctures to THC vape cartridges. But in order to operate as a processor, you have to be licensed. Licensing is the first hurdle most processors must overcome in the initial stages of starting a business.

How easily a license is obtained depends on the state. In states with more relaxed cannabis laws, there tend to be a lot more licenses available. Some of those states do not limit license numbers at all. But in states with more restrictive laws, licenses are often limited. In such cases, new processors often have to demonstrate they have the financial resources to launch their businesses, or they risk not being approved.

  • Licensing Equals Control

As a new business owner, you would be wise to complete the licensing process before you ever purchase your first piece of CBD extraction equipment. Why? Because extraction equipment is not cheap. There is no point in spending money on equipment if you do not have a license to operate it.

By now you might be wondering why states require cannabis businesses to obtain licenses. It boils down to one word: control. States with legal cannabis programs in place don’t want those programs to become a free-for-all. So they utilize a number of administrative tools to keep things in line. One of those tools is licensing.

Licensing would not matter much in terms of extraction equipment purchases. You could purchase the same equipment from Houston’s CedarStoneIndustry regardless of the types of cannabinoids you planned to extract. However, licensing does matter in terms of the specific cannabis plants you will be dealing with.

  • Industrial Hemp or Marijuana

Though there are many different varieties of cannabis plants, the two that get most of the attention are industrial hemp and marijuana. Industrial hemp is cultivated for a lengthy list of uses ranging from textiles to health and beauty products. As a cannabis processor, you would be most interested in extracting CBD from hemp plants.

If you were to choose marijuana instead, your main goal would be to extract THC along with other cannabinoids and terpenes. Marijuana itself is cultivated almost exclusively for medical and recreational consumption.

Both the business models are impacted by licensing. For example, most states do not issue a single license for processing industrial hemp and marijuana. You have to choose one or the other or, if you are willing, obtain separate licenses for each.

  • Health and Safety Standards

Along with a license comes the responsibility to maintain strict health and safety standards. Your cannabis extraction equipment must be up to standard. Your extraction processes must guarantee product purity and safety. You must regularly clean and sanitize equipment, maintain that equipment according to state regulations, and ensure that all your employees are properly trained to use the equipment safely.

Licensing is a way for state regulators to make sure that cannabis processing is done the right way. If you are planning to start a cannabis extraction business, expect to have to meet state licensing requirements. Also plan on adhering to a strict set of regulations. Keep things on the up and up and you will have an opportunity to build a very successful business.

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