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7 Factors For a Seamless Cannabis Extraction Lab Setup

By Martha Hernández

Published: Oct 12, 2022   
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Cannabis extraction and testing have become fundamental pillars supporting the transition of the cannabis industry from an illicit market to a legal one. According to a recent Grandview Research Report, the value of the global cannabis extract market stood at $2.74 billion in 2021. The market is projected to grow at a rate of 20.6% to attain a value of $15.5 billion by 2030.

Setting up a cannabis extraction facility involves high start-up costs that can easily spiral into hundreds of thousands of dollars, factoring in leasing a location, obtaining licenses, and purchasing extraction equipment. However, if this is well planned, the capital can be recouped in a short duration. In addition, bear in mind that cannabis is federally prohibited and so the industry is highly regulated. This factor affects many aspects of an extraction business, including licensing and the location of a facility.

This article delineates important considerations that must be factored in when setting up an extraction facility.


A colorful schematic representation of the factors to consider when establishing a cannabis extraction facility.

Figure 1: A schematic representation of the important factors you must consider when establishing a cannabis extraction facility (Figure courtesy of CloudLIMS).

1. Location

Unlike most businesses, there are several regulations restricting where a cannabis extraction facility can be opened. While these laws may vary from state to state, the goal is always public safety. In most states where cannabis is legal, a cannabis extraction facility needs to be far apart (approximately 1,000 feet away) from childcare facilities, residential areas, and churches, among other places. Some states insist on a minimum distance between one extraction facility and another. It’s important to check with your state for the exact location requirements beforehand to avoid regulatory pitfalls.

Other than the regulations, you also want to ensure that your facility enjoys a strategic location that’s not too far away from human and material resources. You also want a location with the best infrastructure and waste disposal amenities.

2. Regulatory compliance

Cannabis extraction facilities have to meet specific regulatory requirements. Some of them are described below.

The current good manufacturing practices (cGMP)

This is a set of quality assurance standards that ensure that medicinal products meet the threshold for human safety and intended use. cGMP has five key components:

  • Primary materials and products
  • Premises
  • People
  • Procedures
  • Processes

Cannabis extraction facilities should be GMP certified for standardization of operations and for selling products and services across borders.

National Fire Protection Association (NFPA)

NFPA is a not-for-profit organization that publishes fire safety standards and codes with the aim of minimizing loss and injury to persons or property or even death. 

Local fire codes

The NFPA has published over 300 codes and standards to minimize fire risks and the damage that ensues after a fire outbreak. NFPA mandates that extraction facilities have the following fire safety equipment:

  • Fire extinguishers
  • Smoke detectors
  • Sprinkler heads and pipes
  • Fire signage
  • Fire alarms
  • Fire exits
  • Fire extension cords

Some of the most important codes for an extraction facility include the following:

  1. NFPA 1: The fire code handbook gives the general fire guidelines.
  2. NFPA 45: Extraction facilities handle flammable materials. This code dictates how flammable liquids and gases should be handled.
  3. NFPA 58: This applies to extraction facilities that handle liquefied petroleum gas (LPG).
  4. NFPA 70: This is the National Electrical Code (NEC) and it spells out the safety considerations for electrical installations.

Occupational safety and health administration (OSHA)

OSHA standards are meant to guide the segregation and disposal of waste based on its hazardous risk. Hazardous materials should never be mixed with non-hazardous materials.

3. Staff management

This is a continuous process that starts with identifying human resource needs, recruiting, training and induction, managing personnel, and letting go of staff when the need arises. Cannabis extraction is a highly specialized and intricate science and hence the need to hire the best personnel in the market. Once hired, staff members also need to be provided with the right equipment and a conducive work environment.

4. Waste management

Cannabis waste disposal is complicated due to the unique nature of the plant and the stringent regulatory environment. An extraction facility generates a lot of varied waste including crop trimmings, extraction chemicals, and trashed samples. Cannabis waste disposal involves mixing it with other materials to make it "unusable and unrecognizable”. The waste may also be buried in landfills or composted. The waste must be segregated to separate hazardous from non-hazardous waste. You will also need to decide whether to have an on-site disposal solution or to use a third-party to handle this aspect. When making this decision, it is important to factor in the cost and safety implications.

5. Worker safety

Workers at an extraction facility are exposed to several safety risks from the machines and chemicals they handle. Worker safety begins with identifying occupational health hazards in the work environment and finding solutions to mitigate them. Staff members must also be provided with personal protective equipment (PPE) based on the nature of hazards that they are exposed to during their work. The worker safety standards that are set should be in compliance with the federal, state, and local health and safety requirements.

6. Supply chain management

Setting up an efficient supply chain system for your extraction facility is the key to ensuring that you meet the demand for your services without feeling “underused” or overwhelmed. A good supply chain will optimize lab processes, minimize costs, and boost profitability. Since extraction is a mid-stream process, several elements are involved in this supply chain. To manage different materials and outputs, it is necessary to have an efficient supply chain management system that’s supported by a laboratory information management system (LIMS).

7. Equipment selection and management

Though mentioned last, the importance of selecting the right extraction equipment cannot be over-emphasized. The first implication for this is cost.  While some equipment may have a high initial startup cost, it may be more cost-effective in the long run. Equipment needed in an extraction facility includes the following:

  • CO2 and LPG extraction equipment
  • LPG extraction exhaust systems
  • Vacuum ovens
  • Flammable liquid distillation equipment/evaporative process equipment
  • Refrigerators

All extraction equipment needs to be listed with the Underwriters Laboratories (UL-Listed) or be certified by the National Recognized Testing Laboratory (NRTL).

Those are the seven important considerations when setting up an extraction facility. Having these in place will ensure a smooth roll-out and improve your odds of success. As it is, about 42% of cannabis businesses are turning a profit, and as an extraction facility, it’s easy to be in this group. Being the tech era, automating your facility is central to its success, and a LIMS comes in handy.

Automating your workflows with a laboratory software for CBD/THC laboratories

A cloud-hosted laboratory software for CBD/THC laboratories, or known as a LIMS, offers your extraction facility an easy way to go digital and remotely accessible. A LIMS automates the entire workflow and streamlines in-house testing processes to eliminate errors and wastage. A LIMS also manages the supply chain and human resources while supporting the compliance process. A suitable LIMS should be configurable to support the broad and specific objectives of the extraction facility.

A screenshot of laboratory software.

Figure 2: A laboratory software for CBD/THC laboratories to seamlessly manage SOPs and documents (Figure courtesy CloudLIMS).

Setting up your extraction facility for success

Setting up an extraction facility for success involves several elements, including finding the right location and equipment, ensuring regulatory compliance, meeting supply chain and fire safety standards, and having proper staff and waste management protocols in place. Automating processes in your facility is instrumental in supporting these key elements. A laboratory software for CBD/THC laboratories paves the way to automate your laboratory processes and drive efficiency.

Martha Hernández

Scientist, CloudLIMS.com

Martha is a chemist with expertise in diverse areas of analytical chemistry. She has worked as an analyst at a licensed third party analytical laboratory, where she focused on developing and validating analytical methods for bioequivalence studies. Later, she had served as a quality control expert in the analytical domain and as a monitor in clinical trials. Her interest in the clinical industry led her to be a part of two of the biggest hospitals in Mexico where she gained expertise in hematology, microbiology, and blood banking. Later, she became a member of the team of forensic chemical experts and started working from day one as a specialist in narcotics and drugs. This enabled her to gain rich experience in GC-MS, FTIR, HPLC-MS/MS, ICP-MS, and other analytical techniques for the separation, detection, and quantification of different molecules such as cannabinoids. She had participated in multiple oral trials defending her legal opinions and worked as an expert consultant. She had worked on the synthesis of small molecules for testing them on multi-drug resistant bacteria and mycobacteria, further developing her analytical skills in column chromatography, thin-layer chromatography, microbiology, and compound elucidation by NMR and HRMS. She carried out a research stay at the University of Barcelona with the organic synthesis team. She had also worked on natural products in France and presented her work at conferences in the USA and France. She received awards and accolades for her exceptional work. She has participated in several conferences as a moderator as well. Martha holds a Bachelor’s in Clinical Chemistry from the Faculty of Medicine UANL and a Master’s in Pharmacy from the Faculty of Chemical Sciences UANL, Mexico.


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