The manufacturing economics of high-quality source CBD

    October 13, 2022 3 min read

    The manufacturing economics of high-quality source CBD

    Pharmaceutical manufacturers who produce CBD-based drugs need source material that is pure, and replicably so, and that can be made in bulk at prices they can afford. They have this, generally, in chemically synthesized CBD. Manufactured from non-cannabis starting material, it is free of residual THC, and plant pesticides, and soil contaminants. And by its nature, synthetic CBD can reach much higher purity levels than plant-derived can. But synthesis is a costly process, even if new techniques are slowly making it less so. So the general budgeting pressure within pharma companies is to choose between plant-derived and synthetic sources, and also between making their own and buying from existing producers.

    Should they eschew the synthetic route, build out cultivation facilities, and extract their own? Should they not build, but buy from established cultivators instead? Should they avoid plants, and expand their existing drug-making infrastructure, investing in high-quality, and high-cost, synthetic techniques? Or perhaps they should just purchase high-quality synthetic material already made?

    The temptation for some is to choose a middle route between making and buying. The strategy is to purchase low-grade material, and ‘remediate’ it for plant-derived undesirables, or purify it some more if it’s synthetic. This may seem reasonable enough to managers used to working with particular suppliers, or who are unaware of price and quality that may be available elsewhere. Optimizing the supply chain for better deals may also run afoul of intra-company politics. There may be vested inefficiencies within the firm.

    But cost-effective it is not, to buy cheap and refine. Final product yield is a function of a number of things, and this strategy complicates most of them.

    The cost of starting materials, half-processed already, and more substrates, is a false-economy to begin with. Another consideration is the enzymes used to combine the starting substrates. Are they themselves efficient? How were they priced and purchased? Refining a poorly begun product reduplicates manufacturing steps, a cost-multiplier in the end. The process steps, and the complexity of each, may very well extend the length of the overall manufacturing process, needlessly. Is the buy-and-refine model really a resource saver?

    Ultimately, the question is yield level. The operative questions are how much CBD is made from the entire process, or concatenation of processes, and how much product was lost during purification. More minutely, yield is normally expressed as a percentage, typically the amount of cannabinoid per liter of reaction solution. Higher is better. A greater concentration means lower solution volume to be removed during purification, which results in lower general cost. At lower solution volume, furthermore, purification equipment can be smaller to produce the same batch size. Smaller volumes also mean shorter batch-to-batch turnaround times. These things may appear to be in place in the final stage of buy-and-refine, but the astute manager will need to remember that the sourcing process and its cost did not begin there.


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    The foregoing is a report on trends and developments in the cannabinoid industry. No product described herein is intended to diagnose, treat, cure or prevent any disease or syndrome.