The Difference Between A Processor and a Producer

The arrival of legal cannabis has brought job growth with it. To onlookers interested in learning what is going on behind the scenes or in taking the plunge into the industry themselves, the titles of these jobs can get kind of confusing. Cultivator, extract technician, processor, producer… What exactly are those roles, and how are they different? Read on to find out. 

Cannabis Producers

Cannabis producers are responsible for growing the plant. In addition to the title producer, they go by others like grower and cultivator. Producers are the lifeblood of the industry, and because of this, it is also the most vulnerable and volatile area of the industry in which to enter. Growers are at risk of federal prosecution and are often the most raided cannabis businesses because they’re the easiest to identify.

Natural disasters are a hazard for producersThe federal government is not the only threat that producers face, however. Environmental factors like natural disasters, droughts, flooding, pests, and diseases are also challenges which growers must overcome. Of course, these kinds of obstacles are par for the course when it comes to agriculture, but the nascence of the cannabis industry as well as the lack of insurance and bank support compound the difficulty of these variables. However, growing cannabis can be an extremely rewarding endeavor, and that is why so many entrepreneurs decide to cultivate despite the risk.

The Challenges Facing Producers

In fact, becoming a licensed cannabis grower is extremely competitive. Far more candidates seek licensure than are ever awarded the authorizing permits. It isn’t enough to love cannabis or have some knowledge about the growing process. Regulators are looking for business leaders who bring with them expertise, a solid team, reliable financial backing, and support from their communities. Applicants must also be well-versed in their state and municipality’s cannabis policies since these differ widely within even the same state.

There is a large upfront cost to running a growCultivators must have advanced security and a compliant and secure method of transporting their plants to processors, laboratories, and dispensaries. They must also make sure they are in compliance with local odor regulations. This may involve high-tech ventilation systems that prevent unwanted smells from leaking into the surrounding community. 

Producing is also an expensive job—at least up front. Growers need to secure the land or facility where they will cultivate their crop. They will need the proper agricultural technology. In addition to machinery, growers will need to pay for seed, growing medium, water (a whole world of complexity, especially if located in a water-tight region like California), pesticides, nutrients, and more. The larger the grow-op, the more expensive it will be to start the business. Additionally, growers will want to retain counsel with expertise in cannabis laws. All of these expenses mean that prospective producers will need to begin fundraising well before they’ve received a permit to operate.  And since insurance companies are unlikely to provide payouts if something goes wrong—theft, natural disasters, electrical fires, etc.—growers would do well to have a stash of emergency savings although figuring out where to put that money is tricky, too. Most banks are still hesitant to work with cannabis businesses, especially grows, given the plant’s designation as a Schedule I substance.

All of that is to say that producing is not for the faint of heart. It’s a tough job, and success is almost always preceded by a handful of failures. But with the right combination of capital, resilience, and luck, producing can be an incredibly lucrative and rewarding occupation.

Cannabis Processors

Processors turn cannabis into a different projectCannabis processors are responsible for taking the raw cannabis plant and creating entirely new products from it including concentrates, topicals, and edibles. In addition to creating these products, processors must package them in compliance with their state’s regulations as well. Processors can also be referred to as manufacturers, extract technicians, extract artists, or edibles chefs depending on the way their states have defined industry roles and on their finished products. If your state does not offer a processing license, it probably offers a manufacturing license that authorizes the same type of business described here. Some states even require cannabis producers to do the processing as well. 

The first step to becoming a processor is having an idea for a cannabis-infused product you would like to sell and then developing a business plan. Regulations vary by state, but generally, the expectations are pretty predictable. Processors must have a security plan—a compliant way of protecting the facility from where they do business, keeping track of inventory, and transporting their finished product to the stores where they will be sold. Using traceability software will help to track cannabis as it moves from location to location, and including this kind of technology is quickly becoming the rule rather than the exception. Processors must also have a clear plan for disposal of waste, product testing procedures, and the type of chemicals that will be used to process the raw cannabis.

Machine for making thc suppositoriesOnce a prospective processor has constructed a detailed plan, they must secure the location from where they will conduct their business. Unlike a retailer, a processing facility doesn’t have to be located with consumer convenience in mind. This makes compliance with state laws a little easier. Most states require processing facilities to be a certain distance away from any child-serving institution such as a school, daycare, library, public park, playground, or recreational center. Since customers won’t be purchasing products directly from the processing facility, processors can choose a location that’s far away.

Just like all entrepreneurs, cannabis processors must obtain the financial backing they need to build their business. Most processing requires machinery and chemical solutions. If you want your business to achieve anything of scale, you’re probably going to need to hire a staff. And the security and traceability services you planned for cost money too. Processors must fundraise, and finding local investors is the safest way to do that, especially since some states do not allow cannabis businesses to receive funding from out of state investors.

Once you’ve developed a solid business plan, found a location, and raised the funds, apply for the appropriate licenses. You will probably need to apply for a local permit as well as a state license. No state will grant licensure to a prospective business if it has been denied by its local municipality, so it is very important to be aware of both your state and local cannabis policies.     

Like producing, processing comes with its own unique set of challenges. However, the creativity of the job and excitement of engaging in a new and burgeoning industry makes those challenges well worth the reward.

Dianna Benjamin

About the author: Dianna Benjamin is a freelance writer, teacher, wife, and mom horrified and fascinated by social justice and our inability--yet constant pursuit--to get it right.