The challenges of scale-up are not insurmountable. Resources are available for start-ups and small businesses to overcome and develop plans to scale-up. This support needs to be a holistic approach. Learning from others and planning can help entrepreneurs avoid common pitfalls of scale-up.
Here, we outline a holistic approach to scaling up.
Planning for the unknown can be daunting, of course. If you don’t plan for some variability, however, you may find yourself stuck at some point down the road, especially once government regulations become more detailed. You need to be prepared at some level to make adjustments or upgrades to your facilities as your business develops and for regulatory compliance issues yet to come.
Beyond variability, it is important to model your projected growth. For example, what production levels are you trying ultimately to attain? That understanding is essential to setting budgets for your current plan and for successive years’ planning. No organization has an unlimited budget, and no organization has unlimited space to build. By understanding your projected growth, you can begin to optimize the usefulness of what you have now.
A responsible growth strategy, therefore, must adopt a “modular” approach. In this type of approach you determine the scalability of your existing equipment and create points in your strategic plan in which additional components can be added to that equipment, to accommodate your expansion.
Obviously, you don’t want to buy equipment now only to discard it later, so the idea of modularity gets down to a granular level of whether you can turn up or turn down equipment to match your current and projected output levels. For example, might it make sense to buy a piece of equipment capable of processing a thousand pounds per hour, even if your current capability is 500? Can it still be efficient to use the same piece of equipment?
This is why you and your engineering and production partners must thoroughly understand your business model. You really have to understand where you’re going and where you want to go. And take to heart the advice that comes from your partners. It may be difficult to hear that you may not have enough feedstock to run your plant for a week at a particular production rate. But with that information, you can match your capability to acquire feedstock to the operational needs of your plant. From there, you can begin to understand how to build the next layer on top of that.
Your strategic plan is developed by understanding both the inputs and the outputs of your business operations—beginning with the end in mind and working backwards from there.
Determination of Your Manufacturing Plant’s Capabilities, Purification Levels, and Processes
Here we’re moving our thinking from the strategic level to the component level. You’re still determining what your plant is going to do, and in that determination you will come up against code compliance issues at the state or municipal level. These issues will play a huge role in the capabilities and likely locations for your operations.
The components that drive the front end piece of what your business will be are subject to a variety of codes. Take extraction, for example. Each type of extraction methodology produces a different extract, from CO2 to solvent extraction with ethanol or methylene chloride or heptane and hexane. Once the oil has been extracted and the solvents have been removed, what will you do with it? Crystallize it, further distill it, create isolates, or just sell the raw material? Those are all considerations that factor not only into your strategic plan, but to the very nature of what your plan does and how it is to be designed.
As you go through this methodology, you will find that it is likely to change what your facility is, and what you need to do to ensure code compliance.
This is critically important because besides regulation at the federal level, code compliance at the state or municipal level is the most important aspect of scaling your business. You are creating an environment inside your facility that requires a wide range of code compliances—electrical classifications, hazardous occupancy building classification, storage of solvents, and more.
If you are determined to establish a CBD facility in a small office park to extract material, you are more than likely to run into code compliance issues. Not to be too glib, but if you have large tanks of solvents outside your facility, your neighbors will take note, and you will attract the attention of inspectors who might take a dim view of those tanks in that environment. Consequently, you have to make a decision up front. For example, will you be purifying product on site or have someone else handle that level of processing?
So, what’s your plan? When you’re choosing your location, you must understand the codes in that area, which in turn helps determine your facility design. Code compliance issues and regulatory requirements are the key factors in defining what your facility will be and where it will be located.
About the Author
Charles Jabara is a senior project manager with CRB in Kansas City, Missouri. Direct correspondece to: [email protected].
How to Cite this Article
C. Jabara, Cannabis Science and Technology 3(2), 40–44 (2020).