Budding Business
The market for processing equipment is flourishing as more authorities legalize cannabis.
By Stefanie Rossel
If you think tobacco is a complex plant to handle, try processing cannabis. The plant consists of more than 100 cannabinoids, with each of them having a different effect on the body. In addition, it contains terpenes, naturally occurring chemical compounds that make certain strains taste or smell different than others.
The herb comes in two different varieties of the Cannabis sativa species: hemp and marijuana. Hemp is usually grown outdoors or in a greenhouse whereas marijuana is cultivated indoors or in a greenhouse.
The major difference between the two, however, is tetrahydrocannabinol (THC), a psychoactive constituent that produces the “high” people feel when they smoke marijuana or eat foods containing it. Hemp contains less than 0.3 percent THC whereas marijuana can have between 5 percent and 30 percent of the compound.
By contrast, the concentration of the nonpsychoactive component, cannabidiol (CBD), which is thought to have various therapeutic benefits, is high in hemp and low in marijuana. The latter species is grown for the highest concentrations of THC and CBD possible, with derivatives ranging from leafy material to THC and CBD extract and products such as candy or drinks. Hemp, on the other hand, is cultivated for CBD and other cannabinoids. It is the basis for CBD extracts, health foods and cosmetics. The stalks of hemp are used to create building materials, plastics, industrial oils, paper and textiles, among other products.
The global cannabis market was valued at $28.266 billion in 2021. With legalization gaining momentum, analysts predict unprecedented growth. Fortune Business Insights expects the global cannabis market to increase to $197.74 billion in 2028, reflecting a compound annual growth rate (CAGR) of 32.04 percent. In the U.S., the world’s leading market, where recreational cannabis is legal in nineteen states and the District of Columbia, the cannabis market was worth $13.5 billion in 2021, according to Grand View Research. Valued at $2.8 billion in 2020, the CBD segment is expected to expand to $13.4 billion in 2028, which corresponds to a CAGR of 21.2 percent. Grand View Research expects sales of hemp-derived CBD to grow even faster, at a CAGR of 23.4 percent post-pandemic due to increasing demand from the pharmaceutical sector and rising health awareness among consumers.
Separating the Green Fraction
Since recreational cannabis was legalized in Colorado a decade ago, a whole sector of dedicated, specialized processing equipment suppliers has emerged throughout the U.S. and Canada. Getting the desired compounds out of a marijuana or hemp plant is a complex, multi-step separation process.
In the case of hemp, it starts with the decortication of the tough woody interior or “hurd” material from the softer, fibrous exterior of the stalk. Depending on the size of their crop, farmers can outsource this procedure to third-party processors or do it themselves with specialized machinery. They can choose from equipment of various sizes, ranging from small mobile machines to industry-scale decorticators, such as the HempTrain, an advanced processing system developed by Canadian Greenfield Technologies Corp of Calgary. Conventional decorticator systems, which are based on a hammermill process, cause damage to the bast fiber and attrition to the hurd and are unable to separate the clean green fraction rich with CBD. The Hemp Train, by contrast, employs high-speed kinematic action, according to its manufacturer.
“The HempTrain is indeed a mini factory,” explains Stephen Christensen, vice president of Canadian Greenfield Technologies Corp. “HempTrains use our patented advanced processing technologies in two different modes: a) to separate dry feedstock into long, structural bast fiber, clean, size-specific hurd, and a nutrient-rich microfiber, and b) to separate fresh/green feedstock into a high-CBD fraction containing bud leaves and a lower CBD fraction containing all other material. Bearing this in mind, the typical target groups would be general hemp processors, or product specific producers—including CBD from industrial hemp or other hemp streams. This is not available from any other technologies.”
The company, which sells its equipment in the U.S. and Canada, is in the process of licensing its technology to an African company to manufacture and distribute its decortication technology and equipment in eight African countries, the U.K. and the Caribbean. Christensen says that currently the U.S., Eastern Europe, Southern Africa and Australia account for the most international interest as these countries have been the most successful in educating their people and governments about the benefits of whole-plant utilization.
Multi-Step Procedure
In the next step, the biomass undergoes an extraction process, during which it is placed inside an extraction vessel with a solvent to remove soluble components.
“There are three primary methods of extracting hemp and cannabis: CO2, ethanol and light hydrocarbons, propane and butane,” explains Fritz Chess, founder Eden Labs, a supplier of cannabis extraction equipment based in Seattle. “All of these methods have their pros and cons. CO2 has the advantage of being a nonflammable, solventless method that also has great marketing cachet. Once the equipment is paid for, it is also the lowest cost method, which means in the long run, CO2 will likely rule the industry. Initial costs for CO2 are much higher than the other two methods—up to 10 times as much.”
Ethanol has the lowest cost of entry, he adds, but involves a multi-step process using large volumes of a flammable liquid.
In many ways, hydrocarbons are the most efficient method, Chess says. “It’s a very fast extraction and requires less post-processing than other methods. Equipment costs are less than the other two methods. The problem is the extreme flammability of these gases adds an enormous burden of safety requirements and regulations, which can negate the cost advantage of the equipment purchase.”
With all three methods, the desired constituents cannabinoids and terpenes, which have value for medicinal and recreational use, can be extracted simultaneously. “Flowers and leaves are the part of the plant that is extracted, with flowers being the most desirable,” Chess points out.
His company has been on the market longer than most other players in the field. It was established in 1994 as a manufacturer of plant botanical extraction but began to include cannabis extraction early on. Meanwhile, the latter generates the majority of his company’s turnover, Chess says. “When proposition 215 passed in California [permitting cannabis] for medical use, cannabis became about 20 percent of Eden Labs’ business. When recreational [use] passed in Washington and Denver, it went to about 80 percent, and the company doubled sales for three consecutive years.”
Eden Labs supplies extraction equipment using CO2 and ethanol but occasionally builds custom hydrocarbon extractors, says Chess. A recent solution by the company combines the advantages of the two solvents CO2 and hydrocarbon, catering to both marijuana and hemp companies. The machines are making use of the higher output achieved by hydrocarbon extraction while at the same time reducing the danger of flammability by diluting the hydrocarbon with CO2. “We have a method combining CO2 and a small percentage of propane, which has the advantages of making a very high-quality extract quickly in a process that is nonflammable. We are currently marketing this design to select customers.”
Refining Exercise
After extraction, the liquid obtained from extraction, which contains cannabinoids, THC and/or CBD, waxes, fats, lipids and terpenes, must be winterized. During this procedure, proof alcohol is added to the oil to thin it and causes the fats, waxes and lipids to coagulate. The consecutive filtration separates them from the oil.
After that, the liquid undergoes solvent recovery, during which the majority of solvent in the crude cannabis extract is removed and the cannabinoids are separated from the solvent. High-speed evaporators help accelerate the process.
The liquid is then filled into a reactor, chiller, condenser or vacuum pump for decarboxylation, a chemical process that converts THCA and CBDA, the biosynthetic precursors of THC and CBD, into THC and CBD via heating and drying. This procedure can take up to ten hours.
Finally, distillation will further refine the cannabis extract. Through vacuum-assisted evaporation, the cannabinoids are separated from impurities, such as terpenes and plant material. The extract is heated and each of the undesired components separated due to their different boiling points.
As ever more countries legalize cannabis for medicinal and recreational use, Chess has a clear vision of how the market will develop. “As cannabis legalizes globally and an import/export market forms, we expect the same market forces to come into play that used to rule the black market. Tropical regions will once again dominate the market because of the longer growing season and superior product that comes from that part of the world. The expensive indoor grows that currently dominate the market will be priced out of existence.”
