Cannabis Science and Technology, July/August 2023, Volume 6, Issue 6
Pages: 12-14
This piece reviews the rise of distillate in the market, how this has helped and hurt manufacturers, and predictions for the future.
With price compression infecting most legal and medical markets, many cannabis extractors are turning to large scale distillate production or purchasing white label distillate. Producing distillate at scale requires investment in the right equipment and high quantities of biomass at a low cost. However, many markets have a surplus of material and are ripe for this type of production. This article reviews the rise of distillate in the market, how this has helped and hurt manufacturers, and predictions for the future.
The cannabis industry has seen a rise in the popularity of distillate in recent years. Cannabis distillate is a highly refined cannabis extract that is made by extracting and concentrating the cannabinoids from the cannabis plant. Distillate is often found in a cannabis dispensary or on the retail shelf as a vape cartridge with tetrahydrocannabinol (THC) concentrations of more than 80% for a low price. This article reviews the rise of distillate in the market, how this has helped and hurt manufacturers, and predictions for the future.
How Is Distillate Produced?
Distillate is produced through a process called distillation. Distillation is a separation process that involves heating a liquid to its boiling point and then collecting the vapors. The vapors are then condensed back into a liquid, which is the distillate.
Cannabis distillate is typically produced in two steps. The first step is to extract the cannabinoids from the plant material. This can be done using a variety of methods, including hydrocarbon extraction, CO2 extraction, or ethanol extraction. The second step is to distill the extract using short path, thin film, or wiped film distillation. The result is a highly concentrated cannabis extract with cannabinoid concentrations of 80–95%.
What Is the Cost of Distillate?
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The cost to produce distillate varies depending on a number of factors, including the quality of the starting material, the method of extraction, and the cost of production. In general, the cost to produce distillate in a mature market is low (for example, $1/g) relative to the cost of extracts produced from CO2 (such as $4/g) or hydrocarbon extraction (such as $2/g). This is due to mature markets having a surplus of biomass available at low costs and the scale at which many distillate producers are operating. This scalability comes from large scale ethanol extraction and distillation equipment. In markets where the cost of cannabis biomass remains high, distillate is closer in cost to the production of extracts using other methods of extraction and refinement. While scalability affords low cost of production, start-up costs for large scale ethanol extraction and distillation equipment are hefty and can range from $100,000 to $500,000 (1).
The price of distillate for consumers depends on the cost to produce distillate and the supply and demand dynamic for the product. Some markets and consumers value higher concentrations of THC and a clear extract color. Other markets and consumers see distillate as a commodity and place higher value on extracts that are full-spectrum and more encompassing of the plant’s compounds.
Why Is Distillate so Popular?
There are several reasons why distillate has become so popular. The extraction and refinement processes to produce distillate can be done at scale. This makes distillate production an attractive option for processors who are looking to reduce costs or operators who have an excess of cheap cannabis biomass. Many cannabis markets are experiencing steep price reductions or discounts due to either highly competitive retail markets or an excess in cannabis products relative to the consumer population. Price compression is also driven by cannabis consumer buying trends. Consumers have an overwhelming number of choices when purchasing cannabis in most legal markets, and many of them are using THC and price to narrow down their desired options. Distillate can satisfy the perceived cannabinoid “bang for your buck” as a consumer.
The business case for distillate based products is mainly about cost. Producing distillate at scale or purchasing white label distillate significantly reduces manufacturing costs. In addition, distillate can easily be used in small quantities to infuse cannabis edibles or topicals leaving little to no cannabis aroma or flavor in the end product. This is highly attractive to many manufacturers, however, the rise in distillate and commoditization of cannabis has hurt many cannabis business owners over the years. Consumers are being trained to place lower and lower value on cannabis products and higher value on THC alone. Not only are consumers witnessing prices plummet, but consumers are now demanding lower and lower prices. As the race to the bottom infects the cannabis industry and a surplus of cannabis products flood cannabis markets across the nation, many cannabis cultivators and processors have been forced to shut down.
A Note from the Author
As a business owner, I see the case for investing in large scale ethanol extraction and extract distillation equipment. While distillate can be used to produce many types of products, it is a narrow cannabis chemical profile. The cannabis plant is rich with hundreds of compounds that interact with the human body on a biochemical and physiological level. Distillate offers consumers a narrow experience and is far from the chemical profile of the cannabis plant. I see the value in a cannabis marketplace with a wide variety of cannabis product options with different chemical profiles. This is different from most mature markets which offer a wide variety of cannabis brands and product types, but a small variety of chemical profiles. My hope for the future is that cannabis consumers recognize the value in cannabinoid diversity and demand it. I hope this forces the market to shift to meet this demand and bring products closer to the plant.
What Is the Future of Distillate?
The future of distillate appears bright. It is a highly concentrated product that can be used in many products and continues to be in high demand. As the cannabis industry grows, the demand for distillate is likely to increase. This is good news for extractors who are looking for ways to cut costs and make use of a surplus of biomass. However, this makes product differentiation a serious challenge. What makes one distillate based THC product any different from another if the chemical composition of these products are nearly the same? How can any brand demand a higher price or value for their product if it is fundamentally the same as its neighbor? This will continue to be a challenge as companies face consistent price compression and increased competition within the market.
The most affordable extract option may remain the product that moves the most volume, but if companies cannot maintain a sustainable margin on these products they will continue to fail. Consumers will continue to seek differentiation among their product options and companies may need to produce products that have more distinct differences, including cannabinoid and terpene profiles. This competition is great for consumers and product innovators alike.
Conclusion
Distillate is versatile, potent, and a cost-effective option for extractors. It continues to rise in popularity in most markets for both consumers and operators. In addition to the factors mentioned above, the future of distillate may also be influenced by the development of new technologies. Price is a major factor as consumers evaluate their product options. If new extraction methods surface or improvements to efficiency and cost of current methods arise, other extract types may someday capture the market for offering more than just a low price. Until then, it seems that nearly everything from extracts to edibles may continue to be produced with distillate.
Lo Friesen is the founder, CEO, and Chief Extractor of Heylo. With a background in chemistry and clinical research, Lo was inspired to explore cannabis as a medicine and to enter the emerging industry. She joined Eden Labs, a leading CO2 extraction equipment manufacturer to support and expand a Research and Development department. There she managed the development of their latest and greatest CO2 extraction system. In 2017, after working with Eden Labs and another cannabis processor, Lo launched Heylo with a mission to help people get more out of life with cannabis.
How to Cite This Article
Friesen, L., Why Is Everything Distillate?, Cannabis Science and Technology, 2023, 6(6), 12-14.
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