How to Purchase Ethanol for Cannabis or Hemp Oil Extraction

There are multiple processes used to extract cannabis oil, one of the most common types is solvent extraction. The main types of solvent used in this process are butane, CO₂, or ethanol. Most commonly, companies choose to use ethanol in their processes. 

If your company is utilizing ethanol as its solvent of choice, it is important to understand the options available and which solution will be best suited for your specific requirements. This post will also help to inform your organization about the licensing and regulations that must be followed when purchasing and storing ethanol.

What are the different types of ethanol available? 

Ethanol is a colorless, volatile and flammable liquid (C2H5OH), it can be made from fermenting corn, wheat, potatoes and other starches. There are different types of ethanol available for purchase that can be used during the extraction process. 

200 proof USP grade ethanol, 190 proof USP grade ethanol

The water content in the solution determines the strength or purity of the ethanol. Ethanol that is 200 proof is composed of 100% ethanol, while 190 proof ethanol is composed of 5% water and 95% ethanol. Companies can choose to reproof their ethanol using distillation equipment to lengthen the usage period. 

This can be a cost effective method, as buying pure ethanol can be expensive. Ethanol used in the extraction processes is usually USP grade. This stands for United States Pharmacopeia and means the product is acceptable for food, drug, or medicinal use. 

Denatured ethanol

Companies can also choose to use denatured ethanol. This type of ethanol has a component that is poisonous and is not suitable for consumption. Denatured ethanol can be bought without a license where other types of ethanol require specific licensing to purchase and store (more information on denatured ethanol). Anyone can purchase it and use it without registering with the Government. 

To summarize, there are three main options: 200 proof USP grade ethanol, 190 proof USP grade ethanol and denatured ethanol. 

What are the regulations around ethanol?

In Canada

Although denatured ethanol does not require a license it still has regulations laid out by the Canadian Government. Those regulations can be found as a part of the Canadian Excise Act. 

The Act also outlines the process of obtaining a license for purchasing and storing bulk alcohol. In order to possess and use bulk alcohol (ethanol) to produce other products, like cannabis oil, a company must obtain a User’s License. 

The corporation interested in possessing ethanol must submit application form L63, Licence and Registration Application Excise Act, 2001 if they are operating within Canada. This license is valid for a maximum of two years and must be renewed at least 30 days before it expires. 

If a company does not hold a license, they must pay excise tax for the ethanol they possess. The rates change each year for inflation and are currently $12.61 per liter for solutions containing more than 7% of absolute ethyl alcohol by volume. These rates change annually in April and for any changes you can check the current Excise Duty Rates. 

This can be very costly depending on the scale of your company’s production, and it may be worthwhile to apply for the license. 

In the US

For US companies, you must submit an application to the Alcohol and Tobacco Tax and Trade Bureau regardless of the type of ethanol being used. Dependent on the specific products you produce, your company could be eligible for tax free alcohol. 

If you use ethanol for scientific, medicinal, and mechanical purposes you can apply for the Tax Free Alcohol permit online. The ethanol must be stored in the properly marked containers as it is flammable, and storage should abide by all local fire codes as well. 

If you are interested in learning more, Maratek can assist you with sourcing ethanol for your cannabis oil production. Get in touch with us today. We would love to help you find the right ethanol solution for your company’s unique needs.