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Tetrahydrocannabinol Active Pharmaceutical Ingredient

The Profit Opportunity is Immense

With the anticipated rescheduling of cannabis to Schedule III by the DEA, state-licensed cannabis extraction and processing labs have an incredible ROI opportunity to capitalize upon by pivoting into pharmaceutical cannabinoid API manufacturing. Here are the key definitions, reasons and benefits for making this strategic transition:

What is an API? 

The active ingredient in a pharmaceutical drug is called an active pharmaceutical ingredient (API). An example of an API is the acetaminophen contained in a pain relief tablet such as Tylenol. Active ingredients are the substances in drugs that are responsible for the beneficial health effects experienced by consumers. Generally an API is of at least 99% purity.

What do APIs have to do with cannabis extraction?

Upon DEA rescheduling of marijuana to Schedule III, Delta-9 THC (tetrahydrocannabinol) will be a highly desired API for pharmaceutical drug products in the USA and worldwide.

Other cannabis-derived APIs, such as Cannabidiol (CBD) also constitute an incredible ROI opportunity with CBD API selling in Europe for 5,900 to 9,000 EUROS per kilogram. (Source: https://www.statista.com/statistics/1375642/europe-price-of-cbd-api-per-kg/). Due to its current scarcity, Tetrahydrocannabinol THC API is anticipated to be much more expensive, and therefore immensely lucrative to pharmaceutical API manufacturers.

In the United States, both THC and CBD have been approved by the FDA for certain pharmaceutical applications. THC (dronabinol) is the active ingredient in the approved drug products, Marinol capsules (and generics) and Syndros oral solution. CBD is the active ingredient in the approved drug product, Epidiolex. Neither THC nor CBD are approved by the FDA as food or dietary supplement ingredients, but under Schedule III they are FDA approved as active pharmaceutical ingredients.

Converting to pharmaceutical API manufacturing–including as a CMO, CDMO, or CRO–opens access to the broader pharmaceutical market throughout the United States, Europe, Australia, and worldwide, which is significantly larger and more lucrative than the state-confined recreational or medical cannabis markets. This includes opportunities to supply APIs to pharmaceutical companies globally, thereby expanding market reach and revenue potential.

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Crude Cannabis Oil to C₂₁H₃₀O₂ Δ-9 Tetrahydrocannabinol (THC)

As of Aug 2024: Cost of 1 lb of cannabis trim containing approx. 10% THCA/THC by volume by weight is $10 – $15 (confirmed for California and Oklahoma). Delta-9 THC API market rates in EU pharmaceutical industry range $20,000 – $45,000 while CBD API is $5,000 – $9,000 (estimates do your own research).

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More Reasons to Upgrade to Pharmacuetical Cannabinoid API Manufacturing

Enhanced Credibility and Consumer Trust

Building Trust with Consumers and Partners:

  • Producing pharmaceutical-grade cannabinoid APIs enhances a lab’s credibility and reputation for quality and safety.
  • This trust can attract partnerships with established pharmaceutical companies and foster long-term business relationships.

Differentiation from Competitors:

  • Being an early adopter of pharmaceutical standards can differentiate a lab from competitors who may still be operating under less stringent cannabis-specific regulations.

Operational and Technological Advantages

Advanced Technology and Processes:

  • Transitioning to cannabinoid API manufacturing necessitates the adoption of advanced extraction and processing technologies, improving operational efficiency and product consistency.
  • These technological advancements can also streamline processes, reduce costs, and maximize ROI and profitability in the long run.

Improved Facility Utilization:

  • Upgrading to meet pharmaceutical standards for cannabinoid API manufacturing can optimize facility use, ensuring that the lab operates at maximum efficiency, productivity, and profitability.

Regulatory Alignment and Compliance

Enhanced Regulatory Compliance:

  • Transitioning to pharmaceutical cannabinoid API manufacturing aligns with stricter regulatory standards, ensuring compliance with FDA and international guidelines, such as EudraLex Volume 4 GMP standards.
  • This shift positions the lab to meet stringent quality control and safety requirements, which can lead to higher product quality and consumer trust.

Preemptive Compliance with Future Regulations:

  • By adopting pharmaceutical standards early, labs can stay ahead of future regulatory changes and avoid potential compliance issues as the cannabis industry evolves.
  • Pivoting to cannabinoid API manufacturing as a licensed pharma lab positions you to avoid the precarious regulatory environment confronting state-licensed cannabis operations

Strategic Positioning for Future Opportunities

Adaptability to Market Changes:

  • As the cannabis industry continues to evolve, being positioned as a pharmaceutical cannabinoid API manufacturer allows for greater adaptability to changing market demands and regulatory landscapes.
  • This flexibility ensures the lab can pivot and innovate as needed to stay competitive.

Potential for Future Licensing and Expansion:

  • Successfully transitioning to cannabinoid API manufacturing can open doors for additional licensing opportunities and expansion into new product lines or therapeutic areas within the pharmaceutical industry.

Conclusion

Converting a state-licensed cannabis extraction and processing lab to pharmaceutical API manufacturing offers numerous strategic advantages. From enhanced regulatory compliance and market expansion to increased credibility and operational efficiency, this transition positions the lab for long-term success and growth. As the DEA moves towards rescheduling cannabis to Schedule III, now is the opportune time to make this strategic pivot and capitalize on expanding and highly lucrative opportunities within the domestic and international pharmaceutical industry.

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