CEO Michael Maibach has developed a hybrid model of manufacturing and reselling to foster a one-stop-shop for extraction equipment.
After researching the available equipment for a never-launched brand, Maibach saw a bigger opportunity as a reseller of lab-grade equipment into the cannabis and hemp industries. “Through that, we realized there were a lot of holes in the product line,” says Maibach.
And that led to the founding of Lab Society as a reseller, and revenue doubled every year for the first three years as the company evolved into a one-stop shop for extraction and distillation equipment.
“We sell thousands of different products,” says Maibach. “We’ve weeded through and found the best-in-class solutions and provide them all to our customers so they can have one point of contact and purchase from one company that understands the process from the beginning to the end.”
Early on, the company moved into manufacturing. “We started creating our own solutions through prototyping,” says Maibach, noting that a lack of competition kept prices high.
That epiphany led to Lab Society’s G3 Series of short path distillation kits. “I basically went out and sourced everything myself, and then put it all together in a package,” says Maibach. “We started out with distillation and then we slowly branched out into other technologies that evolved throughout the entire extraction process, from biomass through end products.”
Now it’s all about being a turnkey supplier, he adds. “It’s a blend of internal product sales and reselling sales, so we value-add to other people’s products. We don’t just sell it — we actually provide service, helping people reduce bottlenecks in their operation. If we’re starting at the beginning of a laboratory build, we’ll actually size the equipment correctly, all the way from soup to nuts. We do a lot of consulting, we do engineering, pretty much whatever the customer needs to get their project off the ground, and then we do install and training.”
Some manufacturing takes place in Boulder, but Lab Society also partners with other companies on certain products. “We partner with strategic manufacturers around the U.S. to do specific jobs,” says Maibach.
“Everything is American-made, so we work with one of the most reputable glass plants in the country and they do all of our glassware. All of our steel is done in Illinois, where we have a partner who has been in the business for over 30 years. Then we have some other manufacturers for other things. There are a lot of products we have intellectual property on our designs we have other people making.”
He continues, “We do have a lot of patents. We do have a lot of intellectual property that we own, but we typically work with people who are best-in-class manufacturers to get that done.”
For example, Lab Society works with InCon Process Systems on its industrial-scale distillation units, branded CannaBeast. Maibach elaborates on the strategy: “On the more industrial side of things, we actually came in to take market share, because we were more on the small, benchtop side of things and doing a good job there, but we wanted to expand into the larger pieces of equipment to support other customers. The way we did that was partnering with industrial manufacturers from other industries and help them dial in the equipment and produce an industry-specific product line.”
Lab Society has emphasized the coming need for certifications and professionalization of the cannabis and hemp sectors. “We definitely have focused all of our core product lines to be applicable in use for the correct environments within the facility,” says Maibach. “All of our products are GMP-ready. GMP is not a certification you can get on your equipment, it’s how it’s used within a facility, and all of the products we sell, especially our internal products, are applicable for use inside GMP facilities.”
The company has its offices and a R&D lab for testing and benchmarking in Frederick and a showroom and light manufacturing at itsBoulder location.
Along with COVID-19, the deflation of a “big bubble” in the hemp market impacted Lab Society’s sales in 2020. “CBD crashed, so a lot of those sales trickled out,” says Maibach. “Now we’re seeing stable, steady growth and stabilization within the industry.”
Challenges: “I think the space has gotten a lot more competitive,” says Maibach. “There’s a lot of people overcharging the industry for technology that doesn’t need to be overcharged for, so our mission was always to fill that gap while also maintaining quality.”
“The bigger challenge is the corporatization of the industry,” he adds. “It’s just different. The industry is maturing — so Lab Society is maturing with it.”
Opportunities: Maibach says Lab Society has a slate of new products coming out in 2022 — including software solutions — as well as new iterations of existing ones. “We’re hoping to really focus on our software solutions to improve the software/hardware interface on the HMI [human-machine interface] element of our product so we can improve the user experience and drive up efficiency and repeatability,” he explains.
The space offers new opportunities as states (and other countries) reform their cannabis laws, he adds, and Lab Society is increasing its focus on consulting services. “There’s a lag time between when the state implements legislation and when the actual people can build their businesses,” says Maibach. “We’re seeing that in a lot of states that just dropped a couple of years ago.”
Needs: Capital, says Maibach. “We’ve never taken any money — we never had millions of dollars in the bank to aggressively go after a new market. I think that over the next couple years is what will make the difference between a massive amount of growth and stable growth.”
