The Cannabis extraction business is gaining immense popularity due to its ever-increasing demand and profitability. It is among one of the most booming businesses, which explains why entrepreneurs are rushing to climb the bandwagon. But before you invest in this business, you need to know all about the startup costs of setting up the lab, equipment, and the return on investment.
Startup costs of extraction is comparatively low and therefore making it easier to turn investment into profits. However, starting an extraction process involves careful planning. To develop a successful extraction process, it is essential to have an in-depth understanding of the business and its processes.
The startup costs of setting up labs, such as leasing of a property, falls under a budget range of $400,000-$800,000. Although it might seem like a huge initial investment, it is well worth the price. As an entrepreneur, you can lower the risk through efficient and prudent planning and wise investment.
Buying a property
The initial cost of investment includes securing a property for the extraction lab. Investments on buildings will vary from one place to another. It will also depend on whether the property is owned or leased. However, the initial costs of leasing a building will mark up to $22,500.
There are several types of equipment that are required while setting up an extraction lab. It is important to know the price of the equipment before venturing into the business. As an example, a CO2 extraction machine will vary depending on the productivity. The price may range from $150,000 to $450,000. The price of a centrifuge will be approximately $30,000 to $100,000.
Setting up a professional team is another very important aspect of this type of project. The cost can range upwards of $75,000. A good support team includes a mechanical engineer, designer, electrical engineer, consultant, equipment supplier and so forth.
Return on Investment
With an efficient lab, state of the art equipment, and a good team the Return on Investment (ROI) can be quick and high. ROI depends largely on the quality of the input and profits can be attained from initial production. If the volume of extraction is high, the Return on Investment is equally high.
Booming Industry of Cannabis
Cannabis extraction has become a booming industry for entrepreneurs and investors. Due to the high Returns on Investment and low capital investment, it is considered to be one of the most lucrative business opportunities. Most of the extraction machineries and equipment can be bought at affordable price rates as well. It is easy to find some of the most efficient and effective tools and machineries used for extraction at reasonable prices from reputed stores.
The overall Return on Investment depends on the cost of input material, experience of the operator, startup expenses and the marketing strategies adopted for the sale of the final product.
In a nutshell, compared to the startup cost of setting up a cannabis extraction business, the Return on Investment is vast. This alone prompts entrepreneurs to invest in this business.