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As the cannabis extraction industry continues to grow, so does a need to find varying solutions to progress the needs and demands of business within it. One decision that many advancing industries face is consolidation. This process can have advantages and disadvantages specific to each business but often is unavoidable as a natural evolution of ongoing success. For those involved with buying extraction and processing equipment, there can be value from consolidation.
Consolidation is steadily occurring across the cannabis industry and as hemp and cannabis become more mainstream, this trend is sure to continue. This can be seen with the steady vertical integration of the entire seed-to-sale chain within the industry as cultivators, processors, extractions labs, manufacturers, and retail outlets are becoming rolled together under one banner. Larger, national-reaching brands are also integrating and becoming multi-state operations.
A key aim of this process is that these larger-reaching companies, at the head of the push for consolidation, are striving for consistency that will streamline brand development and success on each level of the supply chain. The value of this consolidation is also evident to the extraction and processing equipment buyer. A larger customer support and service network will directly lead to faster response times for customers and the ability to cross-train on more of the purchased equipment. This, in turn, can create higher quality products by keeping manufacturing under one roof while providing a more diverse range of processing solutions.
Another area where consolidation provides a direct benefit is towards pushing progress and innovation with product development and other areas of an extraction business. By opening new and direct lines of communication between businesses that were once separated, integration offers the potential for partnerships to develop replacing competing ideas between different companies. This can lead to a steady stream of ideas, techniques, and improvements that were not as abundant pre-consolidation.
One such company that has seen these benefits occur as a direct result of consolidation is Apeks Supercritical. This brand was purchased by Gibraltar Industries, a construction equipment company, in a series of other acquisitions the company made across the cannabis industry. Apeks hopes to see their extraction equipment business directly profit as a result but, as this acquisition is still fairly recent, direct numbers are not quite available.
In the face of a burgeoning industry, businesses must adapt and change to keep up. In the world of extraction and the industry beyond, this progress is unavoidable, and consolidations are shaping the future of cannabis commerce.
It’s worth mentioning that, while consolidation might work for some companies, making them more profitable, the concept isn’t without its downsides. One obvious downside is that smaller businesses may not be able to compete with larger conglomerates. This has been the case in many other industries, and as the cannabis industry continues to become a global player, the parallels to these other industries will likely continue.
Continue at: https://extractionmagazine.com/2020/04/08/consolidation-in-cannabis-extraction/
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