The Economics of Pre-Rolls: Tube Labeling
In this series of articles by Custom Cones USA, we’re breaking down the economics of pre-roll manufacturing. How much does it cost to pack a cone, to start a brand, to scale up production and more!
This time we are talking about labeling pre-roll tubes – how much does it cost to label tubes yourself, can you outsource labeling, how can you scale up labeling production and more!
Remember there are three main drivers of direct manufacturing cost in any pre-roll brand. Labor, flower, and packaging. By taking a strategic approach to these three costs you can ensure that you maintain the necessary profitability to survive the difficult cannabis industry. So let’s get into it.
How much does it cost and what does it involve to label pre-roll tubes yourself?
You really have 2 main options when you want to label pre-roll tubes yourself. You either do it by hand or you can do it using a machine.
Labeling tubes by hand is a tedious process which cramps your hand and leads to inconsistent label application so it isn’t a path we would recommend – especially given that labeling machines are relatively cheap and will pay themselves back quickly.
However, there are a few advantages to labeling pre-roll tubes by hand, the main one being it requires no capital investment into equipment. So if your really just dipping your toe and making 50-100 pre-rolls at a time it may make sense to start out labeling by hand.
However, if you are doing any amount of production above a few hundred pre-rolls you need to start using a machine to label your pre-roll tubes and jars.
We are often shocked at the number of cannabis producers still labeling thousands of joint tubes by hand. A machine will increase production, improve consistency of labeling, reduce the amount of stress on the employee labeling the tubes, and ultimately reduce costs and increase quality.
What types of pre-roll tube labeling equipment are available?
There are a few types of machines available from manual, semi-automated, to fully automated.
A manual machine will dispense the label and help to apply even pressure on the label however you will still have to crank the handle by hand to rotate the pre-roll tube.
A semi-automated labeling machine will dispense the label, apply pressure and rotate the tube so all you have to do is load unlabeled tubes.
A fully automated labeling machine does all of the above but it also will automatically load unlabeled tubes so that the machine can run on its own without human intervention.
The machine which is right for you will depend on the output you want to achieve, how many different types of packages you have, space constraints, and what your budget is. First let’s deal with output.
What is the output of a pre-roll tube labeling machine?
The manual labeling machine will do between 4-5 BPM (bottles per minute). If you are paying an employee $15/hr and consider an overhead cost of $3.75/hr then the labor cost to label a pre-roll tube using a manual labelling machine is about 6-7 cents per tube.
The semi-automatic labeling machine will do between 9-10 BPM (bottles per minute). If you are paying an employee $15/hr and consider an overhead cost of $3.75/hr then the labor cost to label a pre-roll tube using a semi-automatic labelling machine is about 3-4 cents per tube.
The fully automated labeling machine will do between 20-30 BPM. If you are paying an employee $15/hr and consider an overhead cost of $3.75/hr then the labor cost to label a pre-roll tube using an automated labelling machine is about 1-2 cents per tube.
What types of packages will you be labeling and how much space do you have?
The next piece to look at is how many different types of packages you will be labeling. By looking at the output levels above you may think that the fully automated labeling machine is a clear winner. However, you would be missing two important variable. Size/type of package you are labeling and space constraints.
The manual labeling machine and semi-automatic labeling machine are both benchtop labeling machines. This means they can easily be placed on top of a table with minimal space required and they can also easily be moved around your workspace wherever they are needed.
As compared to the fully automated labeling machine which can require a dedicated 10x10ft working area for the operator to run the machine. The machine is also not easily moved or put away. So all of the time that the machine is not running – it is a cost as it is taking up space which costs rent money.
So in terms of space the lower capacity labeling machines take up a lot less space and can also be moved around the production floor. Do not underestimate the lower capacity labeling machines – many breweries, vineyards, and distillers use manual and semi-automatic labeling machine due to the small amount of space they take up.
Next is the size/type of packages you are planning on labeling. Fully automated machines are great at labeling packages at high speed but they are not great at versatility. Fully automated labeling machines are designed to label a specific type of package whether that be small diameter tubes, jars, bags, or boxes. Each type of package requires a different type of labeling machine. So if you are a grower or manufacturer which produces jars of flower and pre-rolls in joint tubes you will now need 2 machines – one to do jars and one to do tubes as each machine labels differently.
The manual and semi-automatic labeling machine can do both glass jars and pre-roll tubes. Because the machines are manually loaded so they can be modified within minutes to go from labeling jars to labeling joint tubes.
You will also want to think about custom pre-roll tubes - how do you want to show your branding on the pre-roll tube? What type of packaging do you want to use and what will the final labeling look like. These will also play a part in evaluating the economics of labeling tubes.
How Much Do Tube Labeling Machines Cost?
The final variable to consider is cost. The fully automated labeling machine is the most expensive at around $30,000 – $50,000, the semi-automatic tube labeling machine is $5,700, and the manual tube labeling machine is $1,650.
You can see below a summary chart of labeling tubes by hand, by the canna labeler starter and the canna labeler pro.
What About Getting Pre-Roll Tubes with Labels already applied?
Another option to consider is outsourcing the labeling process to a third-party. While you as the grower or manufacturer may not have enough space, enough labor capacity, enough capital or enough economies of scale to label pre-roll tubes in-house a dedicated labeling partner does.
We at Custom Cones USA can label your pre-roll tubes quickly and at an affordable cost. In order to make the transaction seamless and quick we supply the tubes and compatible labels.
Our pre-roll tube labels are tapered at an angle to perfectly match the tube. This ensure that the labels meet evenly at the back and the text is aligned. The pre-roll tube labels have an adhesive meant for tubes to ensure that the labels do not flag or lift.
The project begins when we you approve the print proof. You may also want to receive a physical sample before processing to the final print. If you do want a physical sample, there are 2 options; a press proof – which is a sample of the label not die cut and without an adhesive backing. This is to confirm material and print quality. The second option would be to receive a final sample with the label die cut and with an adhesive backing.
After the artwork is approved there is a lead time of 7-10 days for the labels to be printed. Label application will then take 5 days after that. So the total lead time to have label application done by us would be 12-15 days.
The cost of having label application done by us is under 10 cents at the minimum order quantity. So if you are currently labeling tubes by hand then you should immediately consider looking at having us do the label application for you.
The important thing when outsourcing packaging processes for your business is accounting for the lead time. You will need to keep a certain amount of stock at your location in order to make sure you do not run out. This mean forecasting your sales and inventory needs.
In the end, the decision of whether to outsource or do it yourself comes down to these questions; what resource do you have available, at what scale do you plan to produce, and does the activity bring a competitive advantage?
You need to think about your resources; how much money do you have to spend, how much space do you have available, and how many employees can you put toward labeling?
You need to think about your scale; how many pre-rolls do you plan to sell, at what price do you plan to sell, what market do you plan to serve?
And you need to think about your label; is the way you label or package your pre-roll tube so unique you need to keep it in house? Is it a competitive advantage / does it build your brand?
Once you answer the above questions you will have a clearer idea of what best your path forward will be. It is clear however that in this past year as capital has dried up, financial discipline has returned.
During this transitory period, we have seen profitability become a major concern of many cannabis brands. So now it is more important than ever to dive deep into your cost structure and look at how you can improve efficiencies, reduce costs, and increase margins.