Opportunities for Cannabis Extraction Labs in the Pharmaceutical Industry

With the DEA (Drug Enforcement Administration) rescheduling of marijuana (cannabis) to Schedule III,  your cannabis extraction lab business will no longer need to be confined to a particular state or be a resource-intensive multi state operator (MSO). With DEA registration and FDA GMP compliance, your cannabis extraction lab can be nationwide, and even worldwide, by transitioning to pharmaceutical production of cannabinoid extracts and APIs (active pharmaceutical ingredients). 

Rapid Growth in Global and North American Pharma Contract Manufacturing 

As the global pharmaceutical contract manufacturing market burgeons, projected to soar from $172 billion in 2023 to an impressive $330 billion by 2033, cannabis extraction processors are uniquely positioned to capitalize on this trend. With North America holding a 36% market share in 2023 and anticipated rapid growth in the Asia-Pacific region, the time has never been better for cannabis extraction lab businesses to consider evolving into CROs, CDMOs, or CMOs.

The terms CRO, CDMO, and CMO are all related to the outsourcing services in the pharmaceutical, biotechnology, and health care industries, but they focus on different aspects of the production and development process.

1. CRO (Contract Research Organization): CROs primarily focus on the research phase of drug development. They provide support to the pharmaceutical, biotechnology, and medical device industries in the form of research services outsourced on a contract basis. A CRO might conduct all phases of clinical trials, from preclinical research (labs and animal studies) to Phase I through IV trials, and even post-market studies. They help with data management, statistical analysis, regulatory compliance, and much more.

2. CDMO (Contract Development and Manufacturing Organization): CDMOs offer a broader scope of services than CMOs, encompassing both development services (like process optimization, formulation development, or pilot scale-up) and manufacturing. This dual role enables them to take a drug from its developmental stages through to full-scale production. They can assist with both small molecule drugs and biologics, providing crucial support from the prototype to the final product.

3. CMO (Contract Manufacturing Organization): CMOs are primarily focused on the manufacturing aspect. They provide comprehensive manufacturing services ranging from production of bulk drug substances to final dosage forms. This includes the production of pharmaceuticals and packaging in various forms. Unlike CDMOs, CMOs do not typically engage in the drug development process but focus solely on the scale-up and commercial manufacturing based on the client’s specifications.

Each type of organization plays a crucial role in the pharmaceutical supply chain, offering different services depending on the specific needs of their clients. While CROs are research-oriented, CDMOs provide a bridge between the laboratory and the market, and CMOs are heavily production-focused.

Deciding Between CRO, CMO, or CDMO for Your Cannabis Processing Lab

When it comes to determining whether your cannabis extraction lab should function as a CRO, CMO, or CDMO, the decision hinges on your lab’s specific expertise, resources, and strategic goals.

If your lab’s focus is primarily on conducting clinical research, such as drug efficacy or safety studies, then becoming a CRO might be the optimal path. This role focuses on supporting scientific experiments and trials without the complexities of large-scale manufacturing.

For extraction labs that are more inclined towards the mass production of cannabis products or extracts, a CMO could be the better choice. A CMO would allow you to concentrate on scaling up production and enhancing manufacturing processes, which is ideal if your expertise lies in product output rather than in the initial development stages.

However, if your cannabis extraction lab is looking to offer a full spectrum of services from the development of new cannabis products all the way to their manufacturing and distribution, then operating as a CDMO is advisable. This integrated model not only streamlines operations from R&D to production but also positions your lab to handle everything from formulation development to final market release. Additionally, as a CDMO, you would have the capability to navigate complex regulatory landscapes effectively, offering a more comprehensive package to potential clients.

Each choice—CRO, CMO, or CDMO—offers distinct advantages depending on your lab’s specialties, the current stage of your business development, and your long-term objectives in the cannabis industry.

No matter what you decide, PRODIGY is here to help you achieve your goals with state-of-the-art pharmaceutical and biotechnological hemp and cannabis extraction equipment solutions that are FDA cGMP compliant. We look forward to hearing from you, feel free to Contact Us, we love to talk pharmaceutical cannabis extraction!