Authors: James Coyne, Mike Coyne, and Matt Hillseth, Federal Equipment Company
As any even casual observer knows, the cannabis market has undergone a radical transformation in recent years. Progressive states began legalizing medical marijuana in the mid-1990s, whereas the first states to legalize recreational cannabis use did so in 2012. Cannabis use is now fully legalized in 18 of the 50 states. However, it is incredible to remember that the industrial cultivation of hemp was just federally legalized in the 2018 Farm Bill.
Thus, a new market was born with the stroke of a pen in Washington D.C. The booming CBD products market, made possible by hemp legalization, offers an incredible assortment of items, from specialty shops to local drug stores. Unsurprisingly, many industry stakeholders are making business plans in anticipation of the federal legalization of marijuana.
Given the aggressive current and future market growth, the sale of new cannabis processing equipment will continue its upward trajectory. However, five key trends have created the conditions for used cannabis processing equipment to play an essential role in the industry’s growth.
1. Rapid Development of Novel Cannabis Product Formats
As cannabis use becomes mainstream, the market will see a barrage of new product formats. Oils, beauty and skincare products, beverages, gummies, chocolates, pet products, capsules, and many other product formats are either on the market or in development. For example, THC-infused hard seltzers might appeal to more trend-conscious consumers, whereas capsules and tablets formed from CBD products powderized oil might appeal to more conservative consumers.
The cannabis market will increasingly resemble the fashion industry, where trends come and go, sometimes rapidly. These opportunities require cannabis processors to be agile to capitalize on market opportunities. As trends emerge and dissipate, different cannabis processing equipment is typically needed to manufacture these new products.
Used cannabis equipment, as well as used food, beverage, and consumer product processing equipment, are well suited to helping manufacturers meet the moment. Used industrial equipment can be online in days rather than months and typically cost half to a third of the cost of new equipment. As a result, manufacturers can rapidly and cost-effectively respond to market trends while reducing their exposure if the market changes direction.
2. Locating and Securing Needed Cannabis Processing Equipment
The COVID-19 pandemic has disrupted and will continue to disrupt supply chains. Equipment manufactured in the U.S. includes components from China and other global markets. Although there is an inventory of new cannabis equipment, that inventory is often not suitable to meet market demands.
Rather than the 6–18 month or longer lead time for new equipment, used manufacturing equipment can be online in days. So, for processors looking to expand capacity, increase capabilities, or face the sudden need to replace a piece of equipment for operational continuity, used equipment is an excellent option.
However, specific types of used equipment are sometimes challenging to find. As a result, cannabis processors turn to Federal Equipment Company’s extensive knowledge, experience, and connections for help with sourcing the cannabis processing equipment they need.
3. Cannabis Industry Vertical Integration
Large and small processors alike have realized that they need to control their entire value chains—growing, cannabis oil extraction, processing, and packaging—to succeed in today’s market.
The move toward vertical integration has created the need for cannabis processors to develop a strategic procurement strategy to acquire ranging types of cannabis processing equipment. Used equipment plays an increasingly important role because it can be available immediately at costs much lower than new equipment.
4. Availability of New Equipment on the Used Equipment Market
Many cannabis processing entrepreneurs launch their businesses without a comprehensive strategy or thorough knowledge of appropriate manufacturing processes. In addition, some entrepreneurs buy cannabis extraction equipment without a full understanding of their needs, such as required ancillary equipment like cannabis filtration systems.
Also, all too many cannabis processing entrepreneurs buy equipment before realizing that their manufacturing plant is not even zoned to have a given piece of equipment or processing line in the building.
The cannabis market is still very young, and many are still learning. As a result, new equipment commonly enters the used equipment market.
5. Cannabis Extraction Process Scale-Up
Numerous small, craft cannabis processors have taken off. However, while growth is exciting, it comes with its own set of challenges. Often, processes that worked well for small-batch operations do not work well or at all for large-batch operations.
Transforming process operations to support growth nearly always requires new processing equipment. Periods of rapid growth are incredible but also typically strain resources. Including used equipment in the procurement strategy allows cannabis processes to secure the equipment they need at a substantially lower price, freeing budgets to fund other aspects of their growth journey.
The growth, change, and maturation of cannabis processing operations nearly always require additional or different processing equipment. Disrupted supply chains, increasing lead times for new equipment, and the need to capitalize on opportunities within a rapidly changing market have led many cannabis processors to incorporate used equipment into their equipment procurement strategies.
Given its dedication to honesty, transparency, and putting its customers’ needs first, cannabis processors frequently turn to the experts at Federal Equipment Company.
To learn more about how Federal Equipment Company can help, visit our used cannabis equipment page.
Selling Your Surplus Cannabis Processing Equipment
Additionally, if you are looking to sell used industrial equipment, please contact us. Finally, for additional preowned cannabis equipment currently available, visit Green Sky Equipment—the cannabis equipment marketplace.
