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Investing in Extraction Companies

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Written by Derek Johnson

The global extract market is growing at a phenomenal pace.

The economic predictions for the cannabis industry are bright. Over the past couple of years, the value of the global cannabis market has grown exponentially, and this growth is projected to continue. Some experts believe that the US market alone will be worth a whopping $30,000,000,000 by 2025.

A big percentage of this multi-billion dollar pie will be generated by the extraction industry. According to some reports, extractions are on track to generate upwards of $23,000,000,000 globally when 2025 rolls around. This astounding figure makes publicly traded extraction companies an attractive investment.

Extraction Specialists vs Vertically Integrated Companies

Extracts are produced by companies that focus exclusively on extracts and vertically integrated companies that produce other cannabis/hemp products such as flowers and edibles.

Extraction-only or tolling businesses deal purely with extracts and concentrates and have the necessary infrastructure to process the incredible amounts of biomass needed to produce billions of dollars of extracts.

If you are looking into investing purely in the extract market, then going with an extract-only company is a solid bet. And as the state and federally legal cannabis markets mature, extraction companies that provide the cGMP (certified good manufacturing practices) seal of approval should provide the duality of safer products and investments.

Extract Hardware and Extract Production Equipment

Another way to invest in the extract market is to choose companies that create the hardware users need to consume extracts, such as vape pens and cartridges. Additionally, companies that manufacture the machinery and equipment used to produce extracts are also excellent investment choices. These might include supercritical carbon dioxide or ethanol extraction platforms, rotary evaporators, distillation equipment, and many other pertinent ancillary goods.

Another interesting option might be terpene companies. With concerns over cutting agents like vitamin E acetate, adding terpenes back into products like distillates for vape pens can serve to more naturally reduce viscosity, add flavor, and capitalize on the ensemble effect in one stroke.

The extraction market is experiencing tremendous year-over-year growth and is forecast to continue doing so for the foreseeable future. Whether you choose to buy stocks from companies that produce the extracts or from those that make the technology needed to produce or consume them, with a little due diligence, you’ve got the potential to make great returns.

Image Source: https://www.flickr.com/photos/weedporndaily/37890571824 (WeedPornDaily, CC By 2.0)

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Derek Johnson

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