By Eric Peterson | Jun 21, 2021
Cannabis extraction equipment
Following 40 years in environmental health and safety, Havelick was eyeing retirement. Then he saw a huge need for safe extraction equipment in the cannabis industry.
"I spent a whole career cleaning up waste sites and keeping researchers from blowing themselves up," he says. "People in the cannabis industry need help to make a safe workplace as much as anybody else."
In a regulatory environment with "zero standards or regulations or even knowledge of chemical-process technology or basic health and safety stuff," Havelick moved to fill the gap by teaching some classes.
"Very quickly, I realized every one of these guys was going to have to meet building-code standards, fire-code standards, and franky the industry was going to have to build its own new standards," he explains. "I looked around and realized, with these flammable solvents they were using and all the fires people were having, there was no standard facility design that worked for these things."
Havelick devised a safety-first system inspired by a paint booth. "I came up with the idea for the extraction booth," says Havelick. "I knew that I had a head start on everybody with this technology."
The end result: the first and only UL-listed cannabis extraction equipment on the market. Havelick was awarded two patents for the modular design in 2019, and the company's IP portfolio now includes 11 patents. Systems range from $12,000 hoods to more than $100,000 for larger systems.
UL (Underwriters Laboratory) is "the world leader in standards development," says Havelick. "They had been really leery of doing anything [in cannabis] because of the taint of the illegal industry. When they saw the approach from a lifetime spent in environmental health and safety and they saw I was trying to take an engineering approach and an approach that would make these facilities safe for individuals, they said, 'Hey, yeah, we'll work with you.'"
Havelick touts the control systems and the overall safety. "The big goal is to keep people from blowing themselves up," he says. "This was destined to become a regular industry just like the alcoholic-beverage industry is just a regular industry today."
"The process inherently has release of flammable gases. What we did is we built a system that has cross-room ventilation. . . . Any solvents that are released exit through the exhaust plenum very quickly before they can get diluted into that room air," says Havelick. "When the sensor sees three or four times the butane, it sweeps it out of there in a hurry to make it safer."
HAL Extraction also works with local government officials to establish extraction regulations and code. "They're scared to death of all this stuff," says Havelick. "In order for our buyers to get approval, we essentially have to sell this technology, that it's working, that we've met every standard we could find and develop, and allow those local jurisdictions to put their stamp of approval on these construction projects. We've really focused on getting to know that community of code enforcement officials and learning what they need and want and what their concerns are, so customers that are buying the booths wouldn't have their projects sitting there for three months while the code official twiddle their thumbs trying to figure out if this is safe or not."
The UL certification carries a lot of value in that regard, adds Havelick. "It all ties back to trying to take this extraction component of the cannabis industry and bring it into at least the 20th century in terms of technologies and standards. I think we've made a tremendous amount of progress doing that."
The company manufactures at its 22,000-square-foot facility in Golden, using suppliers in Colorado and Nebraska for metal fabrication, control panels, and other components, including Shift Engineering. "We work with a variety of vendors," says Havelick. "We assemble the components into a kit for customers. We built these so that we have the minimum number of steel parts that we can get by with, but it gives us the flexibility to expand these from 85 square feet to 350 square feet."
Havelick credits Chief Engineer Josh Gladfelter with the flexible design. "He not only helped us design the booth, but the whole bill of materials and parts numbering system, and the whole manufacturing process that really has made it possible for us to expand and do this right," says Havelick. "I give tremendous credit to this group of people for putting this together."
Growth has exceeded expectations. HAL Extraction has sold about 300 booths since the sole sale of 2016, and now counts most major extraction operations among its customers. Revenue escalated from $800,000 in 2017 to $7.1 million in 2020, and the 2021 forecast is $10 million. " "Like any firm that's going through this kind of growth -- and doing it organically -- it's kind of an exciting ride," says Havelick.
Hal Extraction President Patric Galvin recites HAL's tagline: "We're first in safety because we put safety first."
Challenges: Navigating a steep growth curve while looking for a possible exit for Havelick, who again is eying retirement. "I'm still working on that, so we are putting the company on the market," he says.
Opportunities: Bigger and bigger booths, expots, and industries beyond cannabis, including distilling and biofuels. "We're moving into design/build of some of these facilities," says Havelick. "We're looking towards Europe and South America to expand. We've been in Canada for quite a while. I think Mexico is coming onstream, so I think we want to figure out just what the standards and safety profiles and products that would be appropriate for each of those markets.
The CBD market is another potential growth driver. New technologies will allow for hemp processing in the field, even when the plants are still growing.
HAL is also working on a project in conjunction with the National Renewable Energy Laboratory (NREL) in Golden. "We're working on one of their projects to help support them and provide an environment that's safe for workers doing some research on the cutting edge," says Galvin.
Needs: More talented employees. "When you motivate people properly and give them the tools and give them the agency and ownership of a task, it's incredible what people can do for you," says Havelick.
He adds, "The cannabis and hemp industries really need this banking legislation to get through the Senate. We're a safety equipment manufacturer, but it's always weird when people get freaked out when they hear that cannabis might be used in this product. That would help us and help the industry pretty dramatically."