Private Labeling vs. In-House Production: Which is Right for Your Cannabis Business?

If you’re looking to expand your cannabis business and take it to new levels to meet new consumer demands, then you’ve come to the right place. The way we see it, you can easily expand your green empire one of two ways: private labeling or in-house production.

But which is best for your budget, goals, and manufacturing possibilities? In this blog, we’ll delve into the pros and cons of each approach so you can understand how they align with your business goals and operational needs. 

However, first things first, what is private labeling and how does it differ from in-house production? Let’s take a look at the main differences between these two cannabis manufacturing options. 

What is Private Labeling in the Cannabis Industry?

Private labeling for cannabis businesses involves partnering with a third-party manufacturer to produce unique products under your own brand name and image, allowing you to design and market the product however you like. 

On the other side, the manufacturer is normally in charge of farming the plants, harvesting them, transforming the strains into specific formulations and products, and, in some cases, packaging the end product for you to ensure it’s in compliance with the regulatory standards of cannabis packaging and labeling. 

Furthermore, partnering with a reputable private label manufacturer can offer multiple benefits to your cannabis brand, including:

• The improvement of your brand reputation, given that private labelers normally offer third-party lab testing to ensure the consistent quality of your products.
• Compliance with the regulatory standards set in place to monitor farming, harvesting, cultivation, transformation, and packaging of cannabis products. 
• The possibility of creating personalized products to meet your consumers demands, given that you can work with them to develop specific formulations and designs.
• Reductions in costs and time for your operations given that the manufacturer handles all aspects of production and packaging.
• And the freedom to concentrate on the creative aspect of your products and your marketing strategies, which we all know, is what sells. 

It is because of these benefits that private labeling is becoming increasingly popular amongst cannabis businesses looking to scale quickly and adapt to market changes without the substantial overhead of in-house production. 

However, the cost-effectiveness that comes with private labeling manufacturing isn’t the only difference from in-house cannabis production. So let’s take a look at what this manufacturing process can offer you in comparison to private labeling. 

What is In-House Production for Cannabis Businesses?

Contrary to private labeling, in-house production refers to when you manage the entire production process within your own facilities, meaning that from cultivation and extraction to packaging and distribution, you are solely in-charge and have complete creative freedom. 

Choosing in-house production to expand your cannabis operations, though more expensive then private labeling, can bring your cannabis business multiple benefits. So let’s take a look at the most important: 

• You can ensure that every product meets your specific standards and your specific consumers demands. 
• By overseeing production directly, you can implement rigorous quality control measures, ensuring consistency across your product line.
• It allows you to maintain full ownership of your product’s quality and characteristics, which can be an advantage in differentiating your brand in a competitive market.

As you weigh your options, consider how these factors align with your business goals and capabilities. And to further help you make an informed decision, let’s take a quick look at some of the pros and cons that come with each option. 

Private Labeling vs. In-House Production: The Pros and Cons

When it comes to these manufacturing options, each of them has significant advantages and some possible pitfalls you may want to consider before making a final decision. So let’s take a look at how private labeling and in-house production compare. 

Manufacturing Method	Pros	Cons
Private Labeling	You can avoid the capital investment required for setting up production, significantly reducing your upfront expenses.	You have limited control over the production, which can lead to poor product quality if their standards don’t align with your own.
	You can quickly adapt to market trends and changing consumer preferences by using different formulations from your partner, keeping your brand competitive.	Your business becomes reliant on the manufacturer’s ability to meet deadlines and maintain quality, which can impact your product availability and brand reputation.
	Leveraging an established manufacturer’s processes and expertise can accelerate your time to market, allowing you to launch products more quickly.	The long-term costs of private labeling tend to be higher than in-house production, given that they normally charge by batch, affecting the yield of your products.
In-House Production	It gives you complete oversight of every stage, which allows you to ensure product quality and consistency.	Establishing and maintaining an in-house production facility requires significant capital investment in equipment, facilities, and labor.
	Managing production internally can lead to better margins and profitability over time, allowing you to retain more revenue.	Navigating cannabis regulations in production requires thorough knowledge and compliance, which can be time-consuming.
	You can create unique products and processes that distinguish your brand in the market.	It demands specialized knowledge and equipment for cultivation, extraction, and processing.

By weighing the pros and cons for both private labeling and in-house production, you can make an informed decision about which best aligns with your operational goals and marketing strategies. 

Now that we have covered what private labeling and in-house production are and how they differ from each other, let’s explore some key factors you may want to consider when making your final decision. 

The 4 Factors to Consider When Deciding Between In-House Production and Private Labeling

Deciding between private labeling and in-house production is a pivotal choice for any cannabis business. So let’s take a look at a few factors that may help you make your final decision and determine which best suits your needs.

Factor	Private Labeling	In-House Production
Budget	It requires a lower initial cost and a reduced financial risk, which is ideal if you want to avoid upfront investments, though you have a reduced yield per product.	It requires a substantial capital investment for equipment, facilities, and staffing, which is ideal if you have the financial resources, given it provides better long-term gains.
Business Size	It is scalable for businesses of all sizes, which allows smaller businesses to compete without the burden of production costs.	It is often better suited for larger businesses with the capacity to manage extensive production operations.
Scalability	It offers quick scalability by leveraging the manufacturer’s existing infrastructure.	It scales with your business growth but requires additional investments in facilities and technology.
Expertise	It requires minimal expertise beyond branding and marketing, given that production is handled by experts.	It requires specialized knowledge in farming, cultivation, formulation, extraction, packaging, and regulatory compliance.

By considering these factors and taking your business goals and resources into account, you will be able to make an informed decision that aligns with your strategic objectives and operational capabilities, furthering your chances of success during your expansion. 

Conclusion

In choosing between private labeling and in-house production, remember that neither option is universally better—it’s all about what aligns with your business's specific needs and goals.

While private labeling offers cost efficiency, flexibility, and a faster market entry, in-house production provides full control over product quality, leading to higher long-term profits. So the decision is ultimately up to you. 

Just keep your budget, business size, scalability plans, and expertise in mind and will surely choose the manufacturing option that best aligns with your goals and how much you’re willing to invest in your expansion.

And if you have decided that private labeling is the way to go for you, then be sure to check out our manufacturing options as well as our in-house designers who you can work with to create the cannabis products of your dreams and expand your business into an empire.