3 Reasons Why Labs Need to Automate Their Concentrate Packaging
In today’s hypercompetitive world of dabbable extracts, operators that run processing labs need every possible edge they can get to stay profitable. The cannabis concentrates sales opportunity in the US and beyond is only continuing to grow as more markets come online, mature, and consumers demand more potent experiences. Over the last 4 years, sales in the category have increased a staggering 65% from 1.95B to 3.22B and are only expected to keep climbing. With this kind of money at stake, it’s not much of a surprise that manufacturers are increasingly seeking ways to streamline their processes and find ways to increase extracted product margins wherever possible. Solutions for automating the packaging of edibles, flower, and beverages have been available for years, but it was only just recently that options to do so for concentrates have hit the market. If you’re a producer of high-potency THC extracts, there’s a good chance the true cost of manual packaging is eating away at your profits more than you might realize.
Reason #1: Packaging Concentrates Manually is Slow and Expensive
Ask anyone who’s done a stint or longer as a packaging technician in cannabis and they’ll tell you that gramming up jars of concentrates doesn’t happen instantly. It depends on the texture or SKU, but even the best packagers struggle to get through 85 single gram jars completed in an hour, with the average across all skill levels and experience coming in much lower. This means that even if you’ve hired the A team of packagers in your lab, if you’re modestly sized and moving more than 20,000 grams in a month, you’re definitely going to need a couple staff members packaging exclusively.
In most cases, upwards of half the employees at a given processing lab consist of packaging laborers, who run around $25 or more dollars per hour fully burdened, which comes out to over $52,000 per year per employee, or more. Couple this with varying difficulties depending on the concentrate itself, and you have perhaps the tightest bottleneck in the production cycle at any facility that sells extracts. Now that this process can largely be automated with our Concentrate Dispenser which clocks in at 500 to 1,000 dispenses per hour with a single operator, and you’ve got a 580% increase in efficiency instantly.
Reason #2: Most Operators Don’t Realize How Much of their Products Get Given Away for Free
When extracts are being carefully manipulated and packaged into jars, high quality scales are always used to ensure technicians are getting as close to the desired amount with as little over or under as possible. The reality however is that most concentrates are very tacky and viscosities range dramatically between SKUs both for solventless and hydrocarbon made products. This means that packagers have to weigh not only their grams but also speed and accuracy, because they can’t afford to get every single jar exactly right every time lest they fall behind on their target production figures. In our experience most labs will accept a 5% accuracy trade off, meaning over the course of a month or a year, a technician will be allowed to overfill jars by around .05 grams on average.
When you do the math however, this can amount to a staggering loss that is given away to the customer (lucky them, but not so much for you). Suppose you’re a medium sized lab that does around 120,000 grams per year, or 10,000 per month. If your wholesale price is $15 per gram for your live rosin, at 5% overages that means you’re giving away 6,000 free grams per year, which equates to $90,000 in lost revenue. Compare that to a modern automated packager like our Concentrate Dispenser that is accurate down to 1-2%, that means your business would retain an additional $54,000 per year on that factor alone outside of reductions in labor.
Reason #3: High Turnover Rates are the Norm in Cannabis
It’s no secret that turnover in the cannabis industry, high turnover rates for employees is an expected and constant reality. In fact, according to Headset, the average turnover rate at the retail level is a staggering 55%, and although data for processing labs seems to be unavailable, our conversations with clients lead us to believe it’s similar for their operations. Data varies widely but it typically costs thousands of dollars to replace even a low level employee when onboarding and training are factored in, which doesn’t include the loss of knowledge that walks out the door when a great staff member decides to leave or a poor one is fired for underperforming.
That’s why having automation installed in your lab is a hedge against turnover as it allows anyone to walk in the door and start packaging up concentrates immediately with minimal training or supervision. This aspect is one of the hardest to quantify, but is certainly among the top headaches license holders experience on a yearly basis.
Why You Should Automate Your Lab’s Concentrate Packaging Efforts
If you want to really do your homework on this topic, you should start by checking out our exclusive, industry-first white paper on concentrate packaging automation. It covers all of the granular details we’re only skimming the surface of here, so if you work at a lab or own one, cozy up with some brief bedtime reading tonight. It’s not an exaggeration to say that businesses in cannabis live and die by every nickel and penny. Any extra margin gained through reductions in labor costs and increases in efficiency at a lab can translate to a significantly better financial position at year’s end. It’s not even remotely a stretch either to conclude that a single Lowtemp Concentrate Dispenser can save labs a hundred thousand dollars per year or more when all things are considered: less product waste, significantly faster packaging, and less turnover training time. If you’re ready to move past high packaging technician staff counts to get your concentrates out the door, make sure to contact us today to talk about our automation solutions.