Cannabis refineries could grow to the same size and scope as oil refineries. As the founder of Precision Extraction Solutions, Nick Tennant is at the forefront of cannabis extraction technology. He joins Dan Humiston to talk about how increasing complexity is forcing extraction companies to specialize. He shares the steps they take to help companies select and implement the correct equipment for their market. Produced by PodCONX
Cannabis refineries could grow to the same size and scope as oil refineries.
As the founder of Precision Extraction Solutions, Nick Tennant is at the forefront of cannabis extraction technology. He joins Dan Humiston to talk about how increasing complexity is forcing extraction companies to specialize. He shares the steps they take to help companies select and implement the correct equipment for their market.
Nick Tennant: [00:00:10] If you're talking about 10000 pounds a day, a semi truck full of biomass growing in every single day and you processing that, it's got to be done completely automated.
Nick Tennant: [00:00:20] It has to be done to code. You have, you know, solve it. And Bolz, organic compound environmental regulations that you have to worry about. There's there's a lot of complexity that that lies within that scale.
Nick Tennant: [00:00:31] And you can almost think of it. And you're building a mini mini refinery.
Dan Humiston: [00:00:41] From an MJBulls Media, it's the Raising Cannabis Capital show.
Dan Humiston: [00:01:00] Today on Raising Cannabis Capital, we're gonna dove into extraction technology with our guest, Nick Tennent from Precision Extraction Solutions. Nick, welcome to the show.
Nick Tennant: [00:01:10] Thanks for having me. Pleasure to be here.
Dan Humiston: [00:01:12] Glad you could free up from time. But I'm going to warn our listeners upfront that there's no way we're going to explain everything, blood extraction technology in 10 minutes. So if you want to learn more, go to the show notes and click the link to Precisions YouTube channel. Because precision extraction solutions makes extraction equipment for all sizes of operations and also provides lab planning. Nick's the founder and the CTO. So he's been at the forefront of extraction for a while. Nick, to begin, let's say I'm a startup and I have a very limited budget. Give me an idea what kind of equipment I need and how would I design my my lab?
Nick Tennant: [00:01:53] Sure, absolutely. The first part that I would back into is, you know, you have to be in reality, reality extraction is not by any means a super cheap endeavor to get into. And part of that is because of the compliance specifications and just the overall quality of equipment that you're going to need in order to run a compliant operation that's going to get signed off by the fire marshal, by the building officials, by third party engineers and things like that. So when you start looking at all that, you know, realistic low end budget could be as low as two hundred and fifty thousand dollars. But just to put that in perspective, and we've done obviously projects that have been in the tens of millions and everything in between. So when you're looking at getting into the extraction space, the most important thing is to really understand your niche, understand what your market and business plan is. When we talk about extracted products, we talk about products that fill up to 50 percent of shelf space and most dispensaries. So you can be looking at things like edibles and things like tropicals, lotions. We can talk about smokeable as like resin shatters, borders waxes. We can talk about vape bands. We can talk about a million different products.
Nick Tennant: [00:03:00] And the question is, what is your market like? What does it need? What are the trends in that market? And how are you going to capitalize on them? So assessing all of that upfront, because that's really going to dictate what type of equipment you need. So your equipment obviously is going to dictate what have a budget you need. Also, obviously, the throughputs and the scale that you're operating. So these are all the types of things that we ask our clients. We generally have a lot of clients that come to us that maybe have big grow operations and they see a big opportunity in extraction, which they showed rightfully so. But they ask what products are best for my particular environment? How do I manufacture these? What equipment do I need to do this? And this is kind of where we start designing, consulting, conceptualizing. Okay. We're gonna be at about this scale. We're going to make products a BNC. This is a preliminary conceptual type budget. Here's preliminary conceptual sketches on the square footage and the type of building and real estate that you need. And we kind of tie that all together to paint that initial vision in our client's head in order to bring them into the extraction space. Well educated, I would say.
Dan Humiston: [00:04:05] Yeah. So you provide, in addition to the equipment and helping them design their labs. And you really also have to be almost be a consultant in this process, because I don't think people know what they don't know.
Nick Tennant: [00:04:17] Yeah. I mean, so our firm was always differentiated us as the forefront player in the extraction equipment spaces. We're not just in equipment provider because really ultimately you can go and buy equipment from anywhere. The difference being is how is the company that you're working with going to integrate that equipment? Obviously there's a lot of fire codes, there's a lot of building codes, there's a lot of OSHA codes that this equipment needs to be compliant with. There's a lot of techniques and processes for the production of specific extracts that you're going to need to understand in order for your business to be successful. So the question is, who's going to support you on that? The difference with our firm is that we're an end to end integrator, and that's exactly what we do. So we don't just sell you the piece of equipment. We literally come out, train your staff and stand there, work with your fire marshals, work with your building inspectors, answer questions and like you said, kind of consult to the point where we integrate the entire facility and bring it on line before we're walking away.
Dan Humiston: [00:05:13] I can see why, especially now, because the demand for processing your Cedar's lot with this CBD processors where there's just so much pressure on them to produce more and more and know now they're looking to produce tens of thousands of pounds of biomass a day. Yeah, that's a big endeavor. They have a great video about this piece of equipment for that scale. Just give our listeners an overview on what's involved with that.
Nick Tennant: [00:05:38] Sure. So, you know, when we talk about industrial Hemp and getting to an industrial scale, we're talking about doing 10000 pounds or more a day. And most people throw out that number kinda arbitrarily, not understanding what type of infrastructure that really takes. If you're talking about 10000 pounds a day. A a semi truck full of biomass rolling in every single day and you processing that. It's got to be done completely automated, it has to be done to code. You have solvent and volatile organic compounds. Environmental regulations that you have to worry about. There's a lot of complexity that lies within that scale. And you can almost think of it as you're building a mini refinery. I know we spoke a little bit earlier about comparing it to the oil or natural gas processing or something like that. It's not totally indifferent if you think about the crude oil that comes out of the plant. Ultimately, that's refined to distillate or isolator or whatever your product is going to be. But it's not and different than crude oil refineries that you'd be building to take the crude oil to make it into kerosene or gasoline. Ironically, a lot of the processes are quite similar. But with that being said, understanding the scope of what you're getting into on the scale that you're getting into it without arbitrarily throwing out a number is something that we absolutely always ensure that your clients are in reality.
Nick Tennant: [00:06:54] We've done this before and we can explain to them, hey, guys, this is the best approach. This is how to do this. This is how you're going to actually make this work from a compliant standpoint, from an environmental standpoint, from a long jabuti and profitability from an operational and overhead costs from running this gigantic equipment. All these things add up in a long term business plan. Looking at the operational costs of a lot of these pieces of equipment is crucial because you're ultimately going to have margin compression on these commodities, which we've already seen, drastic margin compression. I mean, last year, the price of CVT Islip was seven thousand dollars a kilo. It's seven hundred dollars a kilo. So when you talk about margin compression and operational efficiencies at scale, it's really the key to having a successful business. Once you get to those efficiencies, it's going to be like anything else. You're going gonna have a 15 to 25 percent. Even our business. And that's what all your competitors are going to do also. So you have to be a good operator. You have to have a deep and thorough understanding of what you're doing at the scale you're doing it. And if you don't, you need to have somebody on your side that does.
Dan Humiston: [00:07:55] Yeah. And I think, like we said, when you're trying to lower your cost, that continuous processing method just seems to make the most sense. You can reduce the number of payroll hours or staff necessary to do it again. I'm learning all this from watching one video, but you can maintain a lot of your solvent environmental issues is just a whole nother issue that you don't want to have to get checked for not being environmentally conscious or being fined for not doing something.
Nick Tennant: [00:08:23] I think all those things add up to a better ah, why? If you work with a company that has thought through this whole process. Absolutely. 100 percent. I want to take a short break to play you a preview of our next episode and to thank our sponsors.
Nico Botti: [00:08:44] And we keep you organized in those kind of events. So the next time you open up the app, we're going to see that it's going to tell you two dates, one day or two dates, fertilizer A. It keeps you organized. He keeps everything clear. He tries to drive you towards taking interest as well, because there's something really powerful about seeing where you where and where you are right now and see the progress. And that's a beautiful thing.
Nico Botti: [00:09:09] Patting yourself in the back, but also to be able to see, well, maybe I did something wrong to do it.
Dan Humiston: [00:09:14] On Tuesday to the Cannabis crowdfunding podcast, which is available at Apple, Spotify, wherever you're listening now to hear about another great crowdfunding opportunity with Nico body for Broetje James. And now let's get back to today's show.
Dan Humiston: [00:09:29] You know, I do know that the demand for X reac is there, and I'm sure there are a lot of these companies that are looking to increase their capacity. But building this equipment is gotta be capital intensive. It's all front loaded. Are you guys raising capital to keep up with all this demand?
Nick Tennant: [00:09:46] Yes. Our company is actually quite well capitalized. We did a round of financing in early 2019. And we've got not only that round of financing under our belt, but also we've always had strong organic growth prospects and just ran operationally really well. What we are doing, though, is, as you mentioned, for the capital intensive portion of the equipment purchase, we're really helping our clients to obtain financing. So as we progress in this industry, there's a lot of finance companies that are opening up to Cannabis in a very welcoming way and also providing better terms to Cannabis and Hemp companies. I think that's one of the biggest catalysts, is once you can bankroll this entire industry and once the financing really opens up for a lot of these companies, it's going to be a very good catalyst to be able to put a lot more of this processing infrastructure online, which right now is, you know, most people know it's lacking, especially in the large scale Hemp space, because it is capital intensive.
Dan Humiston: [00:10:45] The processor is looking for you to carry the load. And, you know, you can't possibly carry the load for every one of the companies that need this equipment. And they can't really justify just coming out of pocket while it's being built and everything. That makes a lot of sense to bring in a third party finance arm for this. And I suspect there's a lot of companies interested in that more and more every day. Well, we'll have all your contact information and links to your YouTube site in the show notes. So if anybody is interested in learning more about extraction equipment and wants to speak directly with Nick or wants to talk about maybe helping finance some of these purchases, you can just click the link or go to MJBulls dot com.
Dan Humiston: [00:11:29] Nick, let's have you back on. We can go into deeper dove in one area of extraction. This was good. I really appreciate you being on the show.
Nick Tennant: [00:11:37] It was my pleasure. And you guys know anything you need, bro, now?
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