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January 5, 2022

A Conversation with the Founders of Veda Scientific: Part Two

By Aaron G. Biros

This is the second piece in a two-part conversation with the founders of Veda Scientific, CEO Leo Welder and CSO Aldwin M. Anterola, PhD. To read part one, click here.

In part one, we chatted about their backgrounds, their approach to cannabis testing, their role in the greater industry and how they came into the cannabis industry.

In part two, we’re going down a few cannabis chemistry rabbit holes and realizing that what we don’t know is a lot more than what we do know. Join us as we delve into the world of volatile compounds, winemaking, the tastes and smells of cannabis, chicken adobo and much more.

Aaron: Alright so you mentioned the GCxGC/MS and your more advanced terpene analysis. How do you envision that instrument and that data helping your customers and/or the industry?

Leo: Some of the things that we envision will help is a better understanding of what compounds and what ratios will lead to desirable outcomes, things like better effects, aroma and flavor. By better understanding these things it’ll help the industry create better products.

I have a personal connection to this. My wife has some insomnia and she’s always had to take various forms of OTC pharmaceuticals to help with sleep. She tried using a 1:1 vape pen and it was a miracle worker for her for several months. The local dispensary had a sale on it, and she bought some extra. Unfortunately, even though she used it the same way as before, she got very serious anxiety, which obviously didn’t help her sleep. Every time she used the vapes from this same batch, she felt the same extreme anxiety. Sadly, she now had a lot of this product that she couldn’t use because it kept her awake rather than helping her sleep, so she went back to trying other OTC solutions. That’s a problem for both consumers and the industry at large. If people find something that works and provides a desired effect, they need to be able to rely on that consistency every time they purchase the product, leading to similar outcomes and not exaggerating the problem. That’s why I think consistency is so important. We’re taking two steps forward and one back when we have inconsistent products. How do we really grow and expand the availability of cannabis if we lose trust from our consumer base? What a lab can do and what we can do is provide data to cultivators and manufacturers to create that consistency and ultimately allow the market to expand into other demographics that are currently wary and less tolerant of that variance.

Vials of cannabis samples being prepped for collaborative research with the CESC

On a similar note, we have been having a lot of discussions with the CESC [Clinical Endocannabinoid System Consortium] down in San Diego. They are an advanced cannabis research group that we have been working with for over a year. We’ve started looking at the idea of varietals. To be more specific, because I’m not a wine connoisseur, varietals are the pinot noirs, the cabernets and sauvignon blancs of the industry. In the cannabis industry, consumers have indica and sativa, though we still argue over what that concept really means, if anything. But for the sake of argument, let’s say we have this dichotomy to use as a foundational decision tool for consumers- call it the red and white wine of the cannabis industry. How inaccessible would wine be if we just had red or white? Imagine if you went to a dinner party, really liked the wine you were drinking, and the host could only tell you that it was a red wine. You can’t go to a wine store and expect to find something similar to that wine if the only information you have is “red.” At a minimum, you need a category. So that’s what varietals are, the categories. The data that we can produce could help people in the industry who identify and establish the varietals based on their expertise as connoisseurs and product experts to find what those differences are chemically. Similarly, we’re also looking at appellation designations in California. So, we want to help provide tools for farmers to identify unique characteristics in their flower that would give them ability to claim and prove appellation designation.

Aldwin: The GCxGC/MS allows us to find more things besides the typical terpene profile with 20 or 40 terpenes. It allows us to go beyond those terpenes. The issue sometimes is that with a typical one-dimensional GC method, sure you could probably separate and find more terpenes, but the one dimension is not enough to separate everything that coelutes. And it’s not just terpenes. Some terpenes coelute with one another and that’s why people can see this inconsistency. Especially if you use a detector like an FID, we can see the compound limonene on the chromatogram, but there’s another terpene in there that is unknown that coelutes with limonene. So, this instrument is helping us get past the coeluting issue and solve it so that we know what peaks represent what terpenes.

The other bonus with our GCxGC/MS is that the coeluting compounds that were masked behind other terpenes are now revealed. There is a second dimension in the chromatogram where we can now detect some compounds in cannabis that would be hiding behind these large peaks if it were just a one-dimensional GC. Besides terpenes, we’ve found esters, alkanes, fatty acids, ketones, alcohols and aldehydes, as well as thiols. The terpenes are so plentiful in cannabis that these other compounds present at lower levels cannot be seen with just one-dimensional GC. There are just so many compounds in cannabis that the ones in small amounts are often masked. My analogy to highlight the importance of these minor compounds is like a dish; I am from the Philippines and I like chicken adobo. My father does it differently from my mom and someone else will do it differently in a different region. The base of the sauce is vinegar and soy sauce, but some people will do it differently and maybe add some bay leaf, garlic, pepper, or a touch of another spice. It’s still chicken adobo, but it tastes differently. Just like in cannabis, where yes, you have the same amount of THC in two different plants, but it’s still giving you a different experience. Some people say it’s because of terpenes, which is true in a lot of cases, but there are a lot of other volatile compounds that would explain better why certain dishes taste different.

2-D chromatogram showing four peaks separated by the GCxGC. With a traditional 1-D chromatogram, these peaks would coelute and not separate.

Leo: There’s been some recent developments too here that show it’s very significant. It’s like the difference between bland and spicy. And it could be the thiol. We identified a thiol in cannabis at the same time as other scientists reported an article that just came out on this subject.

Aldwin: Thiols are sulfur containing compounds that produce very powerful odors, giving cannabis the skunky smell. Skunks also produce thiols. It is very potent; you only need a little bit. It turns out that yes, that paper described thiols and we also saw them in our GCxGC/MS. These are the kinds of things that the GCxGC can show you. Those very tiny amounts of compounds that can have a very powerful impact. That’s one that we know for sure is important because it’s not just us that’s finding out that GCxGC can detect this.

Not everything is about THC or the high amount of the compounds in the flower. This paper and our concurrent findings indicated that the skunkier smelling strains contained very small amounts of thiols and you can recognize their presence quite readily. It’s not a terpene, but it’s producing a distinct flavor and a powerful smell.

Aaron: Okay, so why is this useful? Why is it so important?

Leo: I would say two things in particular that we know of that are issues currently, both related to scents. We mentioned this earlier. We do know that farmers with breeding programs are trying to target particularly popular or attractive scent profiles, whether it be a gas or fruity aroma. Right now, when they get the flower tested and review the terpene profile, it isn’t enough information to help them identify what makes them chemically distinct. We hear time and again that farmers will say their terpene profile is not helpful in identifying specific scents and characteristics. They are looking for a fingerprint. They want to be able to identify a group of plants that have a similar smell and they want a fingerprint of that plant to test for. Otherwise, you have to sniff every plant and smell the ones that are most characteristic of what they’re targeting. For larger operations, walking through and smelling thousands of plants isn’t feasible.

Once we can identify that fingerprint, and we know which compounds in which ratios are creating the targeted aroma, we can run tests to help them find the best plants for breeding purposes. It’s about reproducibility and scalability.

Another value is helping people who are trying to categorize oils and strains into particular odor categories, similar to the varietals concept we’ve been talking about. Currently, we know that when manufacturers send multiple samples of oils with the same or similar scent to be tested, the results are coming back with significantly different terpene profiles. There is not enough data for them to chemically categorize products. It’s not that their categories are wrong, it’s just that the data is not available to help them find those boundaries.

Those are two issues that we know from conversations with customers that this particular piece of equipment can address.

Aldwin: Let’s start from what we find, meaning if you are using the GCxGC/MS, we are finding more terpenes that nobody else would be looking at. We have data that shows, for example, that certain standards are accounting for 60% or so of total terpene content. So a large percent is accounted for, but there is still quite a bit missing. For some strains there are terpenes that are not in common reference standards. Being able to know that and identify the reason why we have different terpenes in here unaccounted for is big. There are other things there beyond the standard terpenes.

What excites me sometimes is that I see some terpenes that are known to have some properties, either medical or antibacterial, etc. If you find that terpene looking beyond the list, you’ll find terpenes that are found in things like hardwood or perfumes, things that we don’t necessarily associate with the common cannabis terpenes. If you’re just looking for the limited number of terpenes, you are missing some things that you might discover or some things that might help explain results.

Leo: It’s also absolutely necessary for the medical side of things. Because of the federal limitations, cannabis hasn’t been researched nearly enough. We’re missing a lot of data on all of the active compounds in cannabis. We are finally starting to move into an era where that will soon be addressed. In order for certain medical studies to be successful, we need to have data showing what compounds are in what plants.

Drs. John Abrams and Jean Talleyrand of the CESC launched the Dosing Project in 2016. They have been studying the impact of cannabis flower for indications such as pain mitigation and sleep improvement, and now more recently mood, and appetite modulation. They categorize the THC & CBD content as well as flower aroma into 3 cannabinoid and 3 odor profiles. They are able to acquire quite a bit of data about how odor correlates with the outcomes. Because they were initially limited in terms of underlying natural product content data, they contacted us when they found out we acquired this equipment in 2020, and have stated that they are certain the data we will now be producing will take their research to the next level of understanding.

Aldwin: For quality control you are looking at specific things that would reflect properties in cannabis. There should be a 1:1 correspondence between properties observed and what we are measuring. The current assumption is that the terpenes we are looking at will tell us everything about how people would like it, with regards to flavor and smell preference. But we know for a fact that the limited terpenes most labs are measuring do not encapsulate everything. So, it is important for QC purposes to know for this particular strain or product, which everyone liked, what is it in there that makes everybody like it? If you just look at the typical terpene profile, you’ll find something close, but not exact. The GCxGC/MS shows us that maybe there’s something else that gives it a preferred property or a particular smell that we can explain and track. In one batch of flower, the consumer experiences it a certain way, and for another batch people experience it another way. We’d like to be able to understand what those differences are batch to batch so we can replicate the experience and figure out what’s in it that people like. That’s what I mean by consistency and quality control; the more you can measure, the more you can see.

Aldwin: Speaking to authenticity as well, in a breeding example, some growers will have this strain that they grew, or at least this is what they claim it to be, but what are the components that make those strains unique? The more analytes you can detect, the more you can authenticate the plant. Is this really OG Kush? Is this the same OG Kush that I’ve had before? Using the GCxGC/MS and comparing analytes, we can find authenticity in strains by finding all of the metabolites and analytes and comparing two strains. Of course, there is also adulteration- Some people will claim they have one strain that smells like blueberries, but we find a compound in it that comes from outside of cannabis, such as added terpenes. Proving that your cannabis is actually pure cannabis or proving that something has added terpenes is possible because we can see things in there that don’t come from cannabis. The GCxGC/MS can be used as a tool for proving authenticity or proving adulteration as well. If you want to trademark a particular strain, we can help with claiming intellectual property. For example, if you want to trademark, register or patent a new product, it will be good to have more data. More data allows for better description of your product and the ability to prove that it is yours.

Leo: One thing that I think is a very interesting use case is proving the appellations. It is our understanding that California rolled out a procedure for growers to claim an appellation, but with strict rules around it. Within those rules, they need to prove uniqueness of growing products in specific regions. The GCxGC/MS can help in proving uniqueness by growing two different strains in two different regions, mapping out the differences and seeing what makes a region’s cannabis unique. It’s valuable for growers in California, Oregon, Colorado to be able to prove how unique their products are. To prove the differences between cannabis grown in Northern California versus plants grown along the Central Coast. And of course, for people across the world to be able to really tell a story and prove what makes their cannabis different and special. To be able to authenticate and understand, we need to have more comprehensive data about properties in those strains. It could be terpenes, it could be esters or thiols. That’s what we’re excited about.

Aaron: From your perspective, what are some of the biggest challenges and opportunities ahead for the cannabis industry?

Aldwin: Getting ready for federal legalization is both a challenge and opportunity. A challenge because when it is federally legal, there will be more regulations and more regulators. It is also a challenge because there will be more businesses, more competition, that might get into the industry. It is opening up to other players, much bigger players. Big tobacco, mega labs and massive diagnostic testing companies might participate, which will be a challenge for us.

But it’s also an opportunity for us to serve more customers, to be more established at the federal level, to move to interstate commerce. The opportunity is to be ready here and now while other people are not here yet.

Another challenge and opportunity is education. Educating consumers and non-consumers. We have to realize and accept that cannabis is not for everybody, but everyone is a stakeholder, because they are our neighbors, parents or part of the medical establishment. It would be a disservice not to educate the non-consumers.

The medical establishment, they don’t have to be consumers but they need to know about cannabis. They don’t know as much as they should about cannabis and they need to know more, like how it could affect their patients for better or for worse, so they know how to help their patients better. There could be drug interactions that could affect the potency of other drugs. They need to know these things. Educating them about cannabis is a challenge. It’s also an opportunity for us to now come in and say that cannabis is here to stay and be consumed by more and more people, so we better know how to deal with it from a medical perspective.“This bucking bronco of a growth style will throw a lot of people off. We need to figure out what we can grab on to and ride out these waves.”

Law enforcement needs to be educated too. What THC level in the blood indicates impairment? It is still a challenge because we’re not there yet, we don’t have that answer quite yet. And it’s an opportunity to help educate and to find more answers for these stakeholders, so we can have regulations that make sense.

Leo: To Aldwin’s point, the biggest opportunity comes along with federal legalization as well as expanding the customer base beyond the traditional market. Since adult use was legalized in CA, we haven’t yet seen the significant expansion of the consumer population. We’re primarily seeing a legal serving of the market that already existed before legalization.

The reality is cannabis can be used in different ways than what we think of. We know it has medical benefits and we know it is enjoyed recreationally by people looking for high THC content and the highest high. But there is also this middle ground, much like the difference between drinking moonshine and having a glass of wine at dinner. The wine at dinner industry is much bigger than the mason jar moonshine industry. That’s really where the opportunity is. What’s the appeal to the broader market? That will be a big challenge, but it’s inevitable. It comes from everything we’ve talked about today, consistency in products, educating people about cannabis, normalizing it to a certain degree, varietals and appellations.

As an entrepreneur, I’m looking at this from a business perspective. Everyone talks about the hockey stick growth chart, but it is a very wavy hockey stick. I expect to see very significant growth in the industry for a while, but it will have a lot of peaks and valleys. It’ll essentially be whiplash. We are seeing this in California right now, with sky high prices in flower last year down to bottom of the barrel prices this year. We have to all figure out how to hang on. This bucking bronco of a growth style will throw a lot of people off. We need to figure out what we can grab on to and ride out these waves. The good ones will be fun and the bad ones will be painful and we know they are coming again and again and again. That’s the biggest challenge. People say ‘expect tomorrow to look a lot like today,’ but you really can’t expect tomorrow to look anything like today in the cannabis industry. Tomorrow will be totally different from today. We need to figure out, within all this chaos, what can we hang on to and keep riding the upward trajectory without getting thrown off the bronco.

December 29, 2021

A Conversation with the Founders of Veda Scientific: Part One

By Aaron G. Biros

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Leo Welder, CEO of Veda Scientific, founded the business with Aldwin M. Anterola, PhD in July of 2019. A serial entrepreneur with experience in a variety of markets, he came to the industry with an intrigue for cannabis testing and analysis. After teaming up with Dr. Anterola, co-founder and chief science officer at Veda Scientific, they came together with the purpose of unlocking possibilities in cannabis. From the beginning, they set out with a heavy scientific interest in furthering the industry from a perspective of innovation and research.

Through discussing their clients’ needs and understanding their complex problems, the two realized they wanted to start a lab that goes well beyond the normal regulatory compliance testing. Innovation in cannabis looks like a lot of things: new formulations for infused products, better designs for vaping technology or new blends of genetics creating unique strains, to name a few. For the folks at Veda Scientific, innovation is about rigorous and concentrated research and development testing.

With the help of some very sophisticated analytical chemistry instruments, their team is working on better understanding how volatile compounds play a part in the chemometrics of cannabis. From varietals and appellations to skunky smells, their research in the chemistry of cannabis is astounding – and they’ve only begun to scratch the surface.

In this two-part series, we discuss their approach to cannabis testing, their role in the greater industry as a whole and we go down a few cannabis chemistry rabbit holes and find out that what we don’t know is a lot more than what we do know. In part one, we get into their backgrounds, how they came into the cannabis industry and how they are carving out their niche. Stay tuned for part two next week where we delve deep into the world of volatile compounds, winemaking, the tastes and smells of cannabis and chicken adobo.

Aaron G. Biros: Tell me about how you and your team came to launch Veda, how you entered the cannabis space and what Veda’s approach is to the role of testing labs in the broader cannabis industry.

Leo Welder: I’m an entrepreneur. This is my third significant venture in the last fifteen years or so. So, I was intrigued by cannabis legalization broadly, because it is such a unique time in our history. I was always interested in participating in the industry in some way, but I didn’t see where would be a good fit for me. I used to meet monthly with a group of friends and fellow entrepreneurs for dinner and discussions and one member started working on the software side of the industry. He mentioned the testing element of cannabis in one of our meetings. I latched on to that and was intrigued by the concept of testing cannabis. I began to research it and found the role that testing plays in the cannabis industry is really significant. I found out that regulators rely pretty heavily on labs to make sure that products are safe, labels are accurate and that consumers have some protections. So, I thought that this is a space that I thought I could really find a calling in.

So, from that point I knew I needed to find a subject matter expert, because I am not one. I have business skills and experience in some technical fields but I am not a cannabis testing expert by any means. So, with that I started to look at a few different markets that I thought may have opportunity for a new lab, and I came across Aldwin’s business; he had a cannabis testing lab in Illinois at that time. I reached out to him, talked to him about my vision for the space and his thoughts and his vision and we really started to come together. From there, we researched various markets and ultimately chose to approach Santa Barbara County as our first foray together into the cannabis testing market.

Aldwin M. Anterola: As Leo mentioned, he was looking for a subject matter expert and I am very much interested in plant biochemistry. Which means I like to study how plants make these compounds that are very useful to us. For my PhD [in plant physiology], I was studying how cell cultures of loblolly pine produce lignin. Our lab was interested in how pine trees produce lignin, which is what makes up wood. Wood comes from phenolic compounds. You’ve probably heard of antioxidants and flavonoids – those are phenolic compounds. After my PhD, I wanted to do something different so I decided to work with terpenes.

I picked a very important terpene in our field, an anti-cancer compound called Taxol, produced from the bark of the yew tree. You have to cut trees to harvest it. We have ways of synthesizing it now. But at that time, we were trying to figure out how the tree produces that terpene. Of course, I’m interested in any compound that plants make. My interest in terpenes led me to cannabinoids which turn out to be terpenophenolics, thus combining the two interests in my professional field.

Aldwin M. Anterola, PhD, Co-Founder and Chief Science Officer at Veda Scientific,

So that’s the scientific and intellectual side of why I became interested in cannabis, but practically speaking I got into cannabis because of a consulting offer. A company was applying for a cultivation license, wanted to have a laboratory component of their business in their application, and hired me to write that part of their application. I was very familiar with HPLC, and had a GC/MS in the lab. I also have a background in microbiology and molecular biology so I can cover every test required at that time, and I knew I could research the other analytical techniques if necessary.

So, they did not get the license, but I figured I’d take what I wrote, once I received permission, and set up an independent laboratory together. But it’s hard to run a lab and be a professor at the same time. Also, the busines side of running a lab is something that I am not an expert in. Fortunately, Leo found me. Before that, I really got excited about this new industry. The concept of cannabis being now accessible to more people is so interesting to me because of how new everything is. I wanted to be involved in an industry like this and help in making it safe while satisfying my curiosity in this new field of research. As a scientist, those are the things that excite us: the things we didn’t have access to, we can now do. It opens up a whole new room that we want to unlock. It was my intellectual curiosity that really drove me. This opened up new research avenues for me as well as other ventures if you will. How can I be more involved? I thought to myself.

SIU boasts an impressive cannabis program, thanks largely to Dr. Anterola’s work there.

Back in 2014, I introduced cannabis research to our university [Southern Illinois University] and set up an industrial hemp program, which was DEA-licensed I gathered faculty that would be interested in studying hemp and cannabis and we now have a whole cannabis science center at the university. I teach a course in cannabis biology and because I also teach medical botany to undergraduate students, I was able to introduce [premed] students to the endocannabinoid system. Anyway, I can go on and on.

Outside of that I became involved with the AOAC and ASTM, and became a qualified assessor for ISO 17025:2017. I have been a member of the American Chemical Society since 2000 but there were no cannabis related activities there yet until relatively recently. But when they had the new cannabis chemistry subdivision, I am happy to participate in there as well . There are many avenues that I took to begin dabbling with cannabis, be it research, nonprofits, teaching, testing and more. Cannabis has basically infiltrated all areas of what I do as an academic.

Leo: I read his resume and I was like this is the guy! So back to your question, what’s Veda’s role as a testing lab in this space? What are we trying to build? We spent a lot of time trying to figure out what we wanted to be in this space. We came to understand that labs are not the tip of the spear for the market; that would be the growers, the retailers and the processors. We are a support, a service. We see ourselves as a humble, but competent guide. We provide the data for the tip of the spear, the people pushing the industry forward with support, data and the services to make sure they have the tools they need to build these great companies and great products with good cultivation practices and more, leading everyone to the next level of the cannabis industry. Our job is to support innovation, to provide quality compliance testing, to of course ensure safety, while also providing great R&D to these innovative companies.

Aldwin: I’d like to add a bit to that thought. Okay so that’s who we are, but what are we not? Because as Leo said I had a testing lab before we met [Advanced Herbal Analytics]. From there, I approach it as safety testing, making sure that before it gets to the end consumer, we are sort of like gate keepers keeping consumers safe. That’s one side to it, but we are not the people who are trying to make sure that none of the products get to the market. For some, that’s how we’re treated as.

People often look at testing labs like the police. We are not the people trying to limit products to market. Our approach is not to find faults. There is another way of being a testing lab that is less about finding faults in products and more about finding uniqueness. What makes your product different? With this new approach, we are much more focused on helping the best products make it to the shelves.

Aaron: Given that all state licensed labs have to provide the same tests as the other labs in that state, how does Veda differentiate itself?

Leo: Location was the first thing. We picked Santa Barbara County intentionally. We knew that some of the biggest operators, some of the most forward-thinking innovators were setting up shop here. Looking down the road, not just this year or next year but very long term, we wanted to start building a great, sustainable company. We wanted to build a brand that those kinds of companies would be receptive to. Building better and greater products. There’s one other lab in the county and that’s it. Whereas there are clusters of labs in other parts of the state. Part of the draw to Santa Barbara for us was that it is such a small, tight-knit community. We have worked very hard to build relationships in our community and to understand their challenges, helping them however we can.

Location and relationships. Getting to know the challenges that different size customers face, be it our greenhouse customers versus outdoor customers, or large-scale operations versus smaller manufacturing operations, the challenges are all different. Some people care about turnaround times, some more about R&D. If we understand our client’s problems, then we can provide better service. We see ourselves as problem solvers. We lean heavily on our technical team members like Aldwin, who not only have tremendous amounts of experience and education, but also great networks to utilize when a customer needs help, even when it falls outside of our local expertise.

The GCxGC/MS instrument, used for Veda’s advanced R&D testing

Last but certainly not least is the advanced R&D testing that we do. When we first started, we started talking to farmers and manufacturers trying to understand their challenges. What data were they not getting? How would a testing lab better serve them? So, we started investing strategically in certain instruments that would allow us to better serve them. We’ll get into this later as well, but we invested in a GCxGC/MS, which allows us to get more visibility into things beyond the typical panels, like more terpenes and other volatile compounds including thiols and esters. We did that because we knew there is value in that. The data our customers were getting prior just wasn’t enough to put together really great breeding programs or to manufacture really consistent products, you know, to move toward that next level of innovation in the industry.

Aldwin: Leo mentioned advanced R&D and it’s basically the same approach that I mentioned before. It’s not just telling you what you can and cannot do. It’s about asking them what do you want to do and what do you want from a lab? If we have a problem, let’s see if we can solve it. That’s how the GCxGC/MS came into play because we knew there was a need to test for many terpenes and other volatile compounds. The common complaint we received was why two terpene profiles differ so much from each other, even from the same genetics.

This is something that would actually give the customer, the cultivator or the manufacturer: data about their product that they can actually use. For consistency, for better marketing and other reasons. We are trying to help them answer the questions of ‘how can I make my product better?’

You know, for example, clients would tell us they want something that has a specific taste or smells a certain way. Nobody is telling them what makes the flavor or smell. There is a need there that we can fill. We are trying to provide data that they, the customers, need so that they can improve their breeding programs or their formulations. Data they can use, not just data they need in order to comply with regulations. They would ask us what we can do. We listen to our customers and we try and help as best we can. We don’t know every answer. We are discovering there is a lot more to terpenes than what you can find on a traditional one dimensional gas chromatogram. Some of the terpene data that our clients had previously is not really actionable data, which is where the GCxGC/MS is helping us.

In part two, we delve deep into the world of volatile compounds, winemaking, the tastes and smells of cannabis and chicken adobo. Click here to read part two.

December 11, 2020

MORE Act Passes the House – Is Legalization Around the Corner?

By Steve Levine, Alyssa Samuel

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On Friday, December 4, 2020, the US House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement Act of 2019 (the MORE Act), which would effectively legalize cannabis by removing it from the Controlled Substances Act. The bill (H.R. 3884) has several key components:

Most importantly, the bill would remove cannabis from the list of controlled substances in the Controlled Substances Act, as well as other federal legislation such as the National Forest System Drug Control Act of 1986. This would effectively end many of the obstacles created by the federal illegality of cannabis such as the lack of access to banking, tax consequences such as 280E, adverse immigration impacts and threats of federal criminal enforcement.
Rep. Earl Blumenauer (D-OR) donning his cannabis mask as he presides over the Congress
Second, not only does the bill preclude future prosecution for cannabis-related crimes, the bill is designed to be retroactive and would provide for the expungement of past non-violent cannabis offenses.
The bill creates a prescribed excise tax on cannabis and cannabis products. The funds collected from the taxes would be channeled into opportunity and reinvestment programs.
A Community Reinvestment Grant Program would be established aimed at the provision of services for “individuals most adversely impacted by the War on Drugs,” such as job training, education, literacy programs, mentoring, and substance use treatment programs;
A Cannabis Opportunity Program would be established providing state funds for small business loans in the cannabis industry targeted at social equity candidates; and
An Equitable Licensing Grant Program providing funds for states to implement equitable cannabis licensing programs aimed at minimizing “barriers to cannabis licensing and employment for individuals most adversely impacted by the War on Drugs.”
The bill would require all cannabis producers to obtain a federal permit. Cannabis businesses would need to be licensed at the state, local, and federal levels to operate.

This MORE Act is a substantial step in cannabis legislation. Reactions to the proposed legislation have been mixed. While the bill does include some measures aimed at social equity, critics of the bill claim it does not go far enough. Similarly, while the bill includes a federal permitting provision, this would be the beginning of a nascent federal regulatory scheme.

What does this mean for your business?

While this bill passed in the US House of Representatives, it would still need to pass in the U.S. Senate this term, which by most accounts does not seem likely. However, the passage of this bill signifies the progress that has been made and provides insight on what further legislation may look like.

May 12, 2020

The Brand Marketing Byte

The Hottest Edibles Brands in the United States Right Now

By Cannabis Industry Journal Staff

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The Brand Marketing Byte showcases highlights from Pioneer Intelligence’s Cannabis Brand Marketing Snapshots, featuring data-led case studies covering marketing and business development activities of U.S. licensed cannabis companies.

In this week’s Byte, we’re taking a look at the top edibles companies in the country. Using a scoring methodology that factors in a wide variety of data sets, Pioneer’s algorithm tracks brand awareness, audience growth and engagement. Using more than 80,000 relevant data points per week, they analyze business activity across social media, earned media and web-related activities.

For April 2020, here are the top 25 hottest U.S. edibles brands:

Kiva Connections
Wyld
Tyson Ranch
Wana Brands
Serra
STIIIZY
1906
Kushy Punch
Coda Signature
Kush Queen
PLUS
Theory Wellness
Incredibles
Kikoko
Dixie Elixirs
Fairwinds
Deep Roots Harvest
Willie’s Reserve
Chalice Farms
Care By Design
Beboe
District Edibles
Bhang
Satori
Betty’s Eddies

February 10, 2020

Judge A Book By Its Cover: Why Understanding Information Economics is Critical to Gain Consumer Trust and Build a Sustainable Brand

By Nathan Libbey

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Information economics has existed for decades and drives much of how products, including cannabis, are marketed and purchased. One of the essential frameworks that guides information economics are the search, experience, and credence properties of a product (Patterson, 2017). Understanding these different product attributes is key to setting up a sustaining cannabis product, corporation, and industry.

Search

The search attribute of a product is largely what we see prior to the purchase of a product. Images, claims, and packaging may all contribute to the search attribute of a product. You’ve got a good-looking, flower, pre-roll or edible, and it shows well on your insta page. Information is seemingly symmetrical between agency and consumer, what you see is what you get. In the developing cannabis industry, firms are investing a tremendous amount of resources into search attributes.

Experience

What is the effect of the product? There are two aspects of the experience attribute in information economics. Testimonials may be also considered experience attributes, as they give a user knowledge of how a product tastes, how long it takes to kick in, how long it lasts and descriptions of how others perceived the product’s deliverables. Despite testimonial power, experience is largely personal and occurs only after the product is consumed. Information is seemingly symmetrical; you get the experience that the agency planned and you anticipated. Advances in genetics, homogeneous production methods and potency testing demonstrate that the cannabis industry is investing in experience attributes.

A level playing field where transparency is at the forefront of all transactions will help solidify trust and drive sustainable growth. So, your product looks good, tastes good, and has very positive reviews. Customers can’t get enough; they are voting with their wallets for your product. But there is a third part of information economics you may be missing.

Credence

Credence attributes rely on information asymmetry. Think of used cars as a textbook example: sellers of used cars rely on asymmetry to motivate purchases. Highway miles, adult driven, oil changes every 3,000 miles, etc. are claims that can only be verified by the seller, the buyer has no way of knowing if these are true or not. Credence attributes can’t be verified by the seller due to lack of knowledge or expertise (Ford et al, 1988). The same goes for a consumable good like cannabis, only the grower or manufacturer knows what occurred in the “back of the house.” Product safety, therefore, is a credence attribute of cannabis products.

Investing in credence attributes in a young market may seem cost prohibitive. Many in the cannabis industry simply want to follow whatever the state they operate in dictates as the minimum allowable. In hemp we see states that require QR codes on each product that link to a COA, but many do not. Does the cost to produce the COA and QR code make a product more eye-catching or enhance the experiences? No, but those producing it may pay a hefty price if and when the product makes someone sick.

If a firm relies on fragmented, disparate regulatory bodies to dictate their investments in product safety, they will eventually face credence issues. Is smokable flower grown in Texas safer than that grown in Maine? We don’t have data to support either regulation’s effectiveness, so a firm or industry must dictate what the standard is and stick to it.

We need only look at the leafy green industry to see an example of a product that did not break any regulatory guidelines yet continued to sell a good with very negative credence attributes. How long were folks getting sick from leafy greens prior to them identifying the source? No one knows and that is what makes credence attributes so hard to pin down and develop an ROI formula for. Inputs that yield not-sick people aren’t known until someone gets sick. For leafy greens, they had an advantage – years of studies showing that they were good for you. Cannabis, unfortunately, doesn’t have that leg to stand on and faces an uphill battle gaining public trust.

As soccer moms (and dads) across the nation start to work cannabis into their play date wine sessions, the industry must ensure that they are investing in all avenues of information economics. A level playing field where transparency is at the forefront of all transactions will help solidify trust and drive sustainable growth.

References

Patterson, M. (2017). The economics of information. In Antitrust Law in the New Economy (pp. 39-60). Cambridge, Massachusetts; London, England: Harvard University Press. Retrieved February 7, 2020, from www.jstor.org/stable/j.ctvc2rkm6.6

Ford, G., Smith, D., and Swasy, J. (1988), An Empirical Test of the Search, Experience and Credence Attributes Framework, in NA – Advances in Consumer Research Volume 15, eds. Micheal J. Houston, Provo, UT : Association for Consumer Research, Pages: 239-244.

June 26, 2019

Branding for Cannabis Companies 101: Part 2

By Jennifer Whetzel

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Editor’s Note: In Part 1, Jennifer Whetzel introduced the concepts of branding, marketing and advertising for cannabis companies. Part 2 takes a closer look at the benefits of branding. Stay tuned for Part 3 coming next month.

The Value of Branding

Think back: do you remember the very first Nike ad you saw? Probably not.

But when you see the swoosh, you immediately think of Nike. When you see the swoosh, you probably even think “Just do it.” A whole sensibility, one that signifies perseverance and athletic excellence, gets conjured up by that swoosh. A lot of people think that’s the power of advertising, but they’re only partially correct.

The fact that you don’t just know the swoosh but have thoughts and feelings that bubble up when you see it is due to branding. Companies like Nike don’t spend millions on branding reflexively. They do it because brand recognition and the feelings that come with it turn potential consumers into buyers. Branding success is necessary, measurable and valuable – especially for brands looking to establish themselves.Strong branding is what will increase the chances that your marketing and advertising will be effective, and it’s why branding must be one of your top priorities.

Branding: The Precursor to Advertising

You might not know specifically what ads work on you. But the ones that do work are driven by a strong brand.

For example, check out this ad campaign run by McDonald’s: Essentially, the fast food giant used fractions of its logo to make a wayfinding system on highway billboards. It’s clever and memorable, but it only works thanks to McDonald’s strong branding. McDonald’s has spent years building that shorthand because they understand that immediate recognition pays off in the literal and figurative sense.

Similarly, you know an Apple or an Under Armour ad when you see one. And you know this because there’s a consistent look and sensibility that these companies have worked to codify – that’s the branding piece. If you immediately recognize who these messages are coming from even before you engage with the ad, you’re more focused on the message rather than trying to suss out which company it’s coming from or what they’re selling.

This is why branding has to be a precursor to advertising. If you create ads before you build your brand, you may get a message out about what you’re offering. But if you do this, you’re talking at your customer rather than building a relationship with them. Strong branding is what will increase the chances that your marketing and advertising will be effective, and it’s why branding must be one of your top priorities.

The Benefits of Branding

Branding is about building a lasting, positive relationship with your customer. When you present a consistent brand personality and identity to your audience, you build trust. Consider how you form any long-term relationship; it’s through repeated positive, consistent encounters that allow you to see the other party for who they are. You trust them because you feel that you understand them and that they understand you.

Strange as it seems, it’s also true of brands. Building that bond with your customers will give you an advantage against brands that aren’t very distinct. With proper branding, a company can build and solidify consumer trust, trust that pays off in the form of increased sales, loyalty and good reviews. These brands aren’t constantly introducing themselves to consumers because over time, the branding itself does the selling and makes it easier to introduce new products down the line. Companies that don’t build that trust will have to fight for recognition, and things only get worse with more competition.

The Dollar Value of Branding

And of course, there are numbers to back this up. Every year, Forbes puts out a list of the world’s most valuable brands, and they use complex math to determine the actual value of this intangible thing called a Brand. Based on their thinking, a branded product should earn an 8% premium over a generic product. You can see some of their findings in the table below for a few categories that are traditionally very well-branded.

Industry	Brand	Brand Value (Billions)^[1]
Technology	Apple	$205.5
Technology	Microsoft	$125.3
Consumer Packaged Goods	Coca-Cola	$59.2
Restaurants	McDonald’s	$43.8
Apparel	NIKE	$36.8
Restaurants	Starbucks	$17.0
Apparel	Adidas	$11.2
Consumer Packaged Goods	Kellogg’s	$8.0

These numbers, however, make it difficult to compare how well a company’s branding works for them because the brand’s total value is influenced by the size of the company. After doing a few simple calculations, we compared the Brand Value to the total Enterprise Value of each company to determine what we will call their Brand Contribution, which demonstrates how their branding efforts paid off.

When you compare the percentage of total company value that solely comes from the value of the brand, we can see that Nike significantly outperforms competitor Adidas, McDonald’s has a stronger brand than Starbuck’s, and Apple comes close to doubling the brand performance of Microsoft — none of which is surprising.

What might surprise you is the brand at the top of the list when it comes to contribution versus overall company value. Kellogg’s is one of the smallest companies to make the list in terms of Brand Value, and it has the lowest enterprise value in our list. Yet, Kellogg’s has the highest brand contribution. This makes sense in the high-stakes world of consumer-packaged goods; the competition is fierce, well-funded and global, which means that branding that resonates with customers is extremely important.

Industry	Brand	Brand Value	Enterprise Value^[2]	Brand Contribution^[3]
Consumer Packaged Goods	Kellogg’s	$8.0	$28.4	28.2%
Apparel	NIKE	$36.8	$133.4	27.6%
Restaurants	McDonald’s	$43.8	$187.2	23.4%
Consumer Packaged Goods	Coca-Cola	$59.2	$254.8	23.2%
Technology	Apple	$205.5	$950.3	21.6%
Apparel	Adidas	$11.2	$59.0	19.0%
Restaurants	Starbucks	$17.0	$109.7	15.5%
Technology	Microsoft	$125.3	$990.9	12.6%

These companies are all massive and wealthy because they prioritize trust and consistency as part of their long-term plan to sell products. Branding promotes loyalty, but its ability to promote trust can be even more powerful by paying off in the long-term. And in this new legal cannabis market, trust is going to be just as critical as it is for traditional companies. After all, the power of branding isn’t just getting people to know who you are — it’s getting them to believe in you.

https://www.forbes.com/powerful-brands/list/#tab:rank
Enterprise value gathered from ycharts.com on 6/20/2019. Ycharts defines enterprise value as: Enterprise Value (EV) is a valuation metric alternative to traditional market capitalization that reflects the market value of an entire business. Like market cap, EV is a measure of what the market believes a company is worth. Enterprise value captures the cost of an entire business, including debt and equity. It is a sum of claims of all preferred shareholders, debt holders, security holders, common equity holders, and minority shareholders – unlike market cap, which only captures the total value of common equity securities.
Ladyjane’s valuation of the strength of a brand. What percentage of the company’s overall valuation can be attributed to the brand? Brand Contribution = Brand Value / Enterprise Value

August 1, 2018

Orange Photonics Introduces Terpenes+ Module in Portable Analyzer

By Aaron G. Biros

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Last week at the National Cannabis Industry Association’s (NCIA) Cannabis Business Summit, Orange Photonics unveiled their newest product added to their suite of testing instruments for quality assurance in the field. The Terpenes+ Module for the LightLab Cannabis Analyzer, which semi-quantitatively measures terpenes, Cannabichromene (CBC) and degraded THC, adds three new chemical analyses to the six cannabinoids it already reports.

CBC, a cannabinoid typically seen in hemp and CBD-rich plants, has been linked to some potentially impactful medical applications, much like the findings regarding the benefits of CBD. The module that tests for it, along with terpenes and degraded THC, can be added to the LightLab without any changes to hardware or sample preparation.

According to Dylan Wilks, chief technology officer of Orange Photonics, this could be a particularly useful tool for distillate producers looking for extra quality controls. Cannabis distillates are some of the most prized cannabis products around, but the heat used to create them can also create undesirable compounds,” says Wilks. “Distillate producers can see potency drop more than 25% if their process isn’t optimized”. With this new Terpenes+ Module, a distillate producer could quantify degraded THC content and get an accurate reading for their QC/QA department.

We spoke with Stephanie McArdle, president of Orange Photonics, to learn more about their instruments designed for quality assurance for growers and extractors alike.

According to McArdle, this could help cultivators and processors understand and value their product when terpene-rich products are the end goal. “Rather than try to duplicate the laboratory analysis, which would require expensive equipment and difficult sample preparation, we took a different approach. We report all terpenes as a single total terpene number,” says McArdle. “The analyzer only looks for monoterpenes (some common monoterpenes are myrcene, limonene and alpha-pinene), and not sesquiterpenes (the other major group of cannabis terpenes, such as Beta- Caryophyllene and Humulene) so the analysis is semi-quantitative. What we do is measure the monoterpenes and make an assumption that the sesquiterpenes are similar to an average cannabis plant to calculate a total terpene content.” She says because roughly 80% of terpenes found in cannabis are monoterpenes, this should produce accurate results, though some exotic strains may not result in accurate terpene content using this method.

As growers look to make their product unique in a highly competitive market, many are looking at terpenes as a source of differentiation. There are a variety of areas where growers can target higher terpene production, McArdle says. “During production, a grower may want to select plants for growing based on terpene content, or adjust nutrient levels, lighting, etc. to maximize terpenes,” says McArdle. “During the curing process, adjusting the environmental conditions to maximize terpene content is highly desirable.” Terpenes are also beginning to get recognized for their potential medical and therapeutic values as well, notably as an essential piece in the Entourage Effect. “Ultimately, it comes down to economics – terpene rich products have a higher market value,” says McArdle. “If you’re the grower, you want to prove that your product is superior. If you’re the buyer, you want to ensure the product you buy is high quality before processing it into other products. In both cases, knowing the terpene content is critical to ensuring you’re maximizing profits.”

Orange Photonics’ LightLab operates very similarly to instruments you might find in a cannabis laboratory. Many cannabis testing labs use High Performance Liquid Chromatography (HPLC) to analyze hemp or cannabis samples. “The primary difference between LightLab and an HPLC is that we operate at lower pressures and rely on spectroscopy more heavily than a typical HPLC analysis does,” says McArdle. “Like an HPLC, LightLab pushes an extracted cannabis sample through a column. The column separates the cannabinoids in the sample by slowing down cannabinoids by different amounts based on their affinity to the column.” McArdle says this is what allows each cannabinoid to exit the column at a different time. “For example, CBD may exit the column first, then D9THC and so on,” says McArdle. “Once the column separates the cannabinoids, they are quantified using optical spectroscopy- basically we are using light to do the final quantification.”

July 17, 2018

From The Lab

Quality Plans for Lab Services: Managing Risks as a Grower, Processor or Dispensary, Part 3

By Dr. Edward F. Askew

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Editor’s Note: The views expressed in this article are the author’s opinions based on his experience working in the laboratory industry. This is an opinion piece in a series of articles designed to highlight the potential problems that clients may run into with labs.

In the last two articles, I discussed the laboratory’s first line of defense (e.g. certification or accreditation) paperwork wall used if a grower, processor or dispensary (user/client) questioned a laboratory result and the conflicts of interest that exist in laboratory culture. Now I will discuss the second line of defense that a laboratory will present to the user in the paperwork wall: Quality Control (QC) results.

Do not be discouraged by the analytical jargon of the next few articles. I suggest that you go immediately to the conclusions to get the meat of this article and then read the rest of it to set you on the path to see the forest for the trees.

QC in a laboratory consists of a series of samples run by the laboratory to determine the accuracy and precision of a specific batch of samples. So, to start off, let’s look at the definitions of accuracy and precision.QC Charts can provide a detailed overview of laboratory performance in a well-run laboratory.

According to the Standard Methods for the Examination of Water and Wastewater:

Accuracy: estimate of how close a measured value is to the true value; includes expressions for bias and precision.

Precision: a measure of the degree of agreement among replicate analyses of a sample.

A reputable laboratory will measure the Accuracy and Precision of QC samples in a batch of user samples and record these values in both the analytical test report issued to the user and in control charts kept by the laboratory. These control charts can be reviewed by the user if they are requested by the user. These control charts record:

Accuracy (means) chart: The accuracy chart for QC samples (e.g., LRB, CCV, LFBs, LFMs, and surrogates) is constructed from the average and standard deviation of a specified number of measurements of the analyte of interest.

Precision (range) chart: The precision chart also is constructed from the average and standard deviation of a specified number of measurements (e.g., %RSD or RPD) for replicate of duplicate analyses of the analyte of interest.

Now, let’s look at what should be run in a sample batch for cannabis analyses. The typical cannabis sample would have analyses for cannabinoids, terpenes, microbiological, organic compounds, pesticides and heavy metals.

Each compound listed above would require a specific validated analytical method for the type of matrix being analyzed. Examples of specific matrixes are:

Cannabis buds, leaves, oil
Edibles, such as Chocolates, Baked Goods, Gummies, Candies and Lozenges, etc.
Vaping liquids
Tinctures
Topicals, such as lotions, creams, etc.

Running QC analyses does not guarantee that the user’s specific sample in the batch was analyzed correctly.

Also, both ISO 17025-2005 and ISO 17025-2017 require the use of a validated method.

ISO 17025-2005: When it is necessary to use methods not covered by standard methods, these shall be subject to agreement with the customer and shall include a clear specification of the customer’s requirements and the purpose of the test and/or calibration. The method developed shall have been validated appropriately before use.

ISO 17025-2017: The laboratory shall validate non-standard methods, laboratory-developed methods and standard methods used outside their intended scope or otherwise modified. The validation shall be as extensive as is necessary to meet the needs of the given application or field of application.

Validation procedures can be found in a diverse number of analytical chemistry associations (such as AOACand ASTM) but the State of California has directed users and laboratories to the FDA manual “Guidelines for the Validation of Chemical Methods for the FDA FVM Program, 2nd Edition, 2015”

The laboratory must have on file for user review the following minimum results in an analytical statistical report validating their method:

accuracy,
limit of quantitation,
ruggedness,
precision,The user must look beyond the QC data provided in their analytical report or laboratory control charts.
linearity (or other calibration model),
confirmation of identity
selectivity,
range,
spike recovery.
limit of detection,
measurement uncertainty,

The interpretation of an analytical statistical report will be discussed in detail in the next article. Once the validated method has been selected for the specific matrix, then a sample batch is prepared for analysis.

Sample Batch: A sample batch is defined as a minimum of one (1) to a maximum of twenty (20) analytical samples run during a normal analyst’s daily shift. A LRB, LFB, LFM, LFMD, and CCV will be run with each sample batch. Failure of any QC sample in sample batch will require a corrective action and may require the sample batch to be reanalyzed. The definitions of the specific QC samples are described later.

The typical sample batch would be set as:

Instrument Start Up
Calibration zero
Calibration Standards, Quadratic
LRB
LFB
Sample used for LFM/LFMD
LFM
LFMD
Samples (First half of batch)
CCV
Samples (Second half of batch)
CCV

The QC samples are defined as:

Calibration Blank: A volume of reagent water acidified with the same acid matrix as in the calibration standards. The calibration blank is a zero standard and is used to calibrate the ammonia analyzer

Continuing Calibration Verification (CCV): A calibration standard, which is analyzed periodically to verify the accuracy of the existing calibration for those analytes.

Calibration Standard: A solution prepared from the dilution of stock standard solutions. These solutions are used to calibrate the instrument response with respect to analyte concentration

Laboratory Fortified Blank (LFB): An aliquot of reagent water or other blank matrix to which known quantities of the method analytes and all the preservation compounds are added. The LFB is processed and analyzed exactly like a sample, and its purpose is to determine whether the methodology is in control, and whether the laboratory is capable of making accurate and precise measurements.

Laboratory Fortified Sample Matrix/Duplicate (LFM/LFMD) also called Matrix Spike/Matrix Spike Duplicate (MS/MSD): An aliquot of an environmental sample to which known quantities of ammonia is added in the laboratory. The LFM is analyzed exactly like a sample, and its purpose is to determine whether the sample matrix contributes bias to the analytical results. The background concentrations of the analytes in the sample matrix must be determined in a separate aliquot and the measured values in the LFM corrected for background concentrations (Section 9.1.3).Laboratories must validate their methods.

Laboratory Reagent Blank (LRB): A volume of reagent water or other blank matrix that is processed exactly as a sample including exposure to all glassware, equipment, solvents and reagents, sample preservatives, surrogates and internal standards that are used in the extraction and analysis batches. The LRB is used to determine if the method analytes or other interferences are present in the laboratory environment, the reagents, or the apparatus.

Once a sample batch is completed, then some of the QC results are provided in the user’s analytical report and all of the QC results should be recorded in the control charts identified in the accuracy and precision section above.

But having created a batch and performing QC sample analyses, the validity of the user’s analytical results is still not guaranteed. Key conclusion points to consider are:

Laboratories must validate their methods.
Running QC analyses does not guarantee that the user’s specific sample in the batch was analyzed correctly.
QC Charts can provide a detailed overview of laboratory performance in a well-run laboratory.

The user must look beyond the QC data provided in their analytical report or laboratory control charts. Areas to look at will be covered in the next few articles in this series.

March 14, 2018

The Global Price of Cannabis

By Marguerite Arnold

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Cannabis pricing, globally, is a topic that is going to remain heated if not highly fluid for some time to come. Why? Government regulation (or lack thereof), compliance and even transport along with different models for commerce and consumption are creating an odd and absolutely uneven map of commodity pricing. We live in a world where accurate information is hard to come by. Even from ostensibly “official” sources that track operational markets. Black or legit.

It may sound complex today but it used to be a lot harder. As of just 2014, the UN’s Office of Drug Control listed the price of a gram of (black market) cannabis in Lichtenstein at $1,020 (as reported by a bemused Business Insider). While this could have been a simple matter of misunderstanding that Europeans frequently use commas rather than periods as decimal points in numbers, the fact that this was later corrected to $10.13 suggests human error in transcription rather than reporting. And the world has certainly changed since then.

Yet with no international legal marketplace or even platform yet in existence to track the global price of legal cannabis in different jurisdictions, this is the kind of issue that faces not only those in the industry but those trying to analyze it.

That said, there are beginning to be data points for those who are interested and those who must have this information for professional reasons. Here is a break-down of regional (legal) prices, per gram from a selection of sources generally considered fairly accurate. This is also made a bit more difficult by the difference in measurement systems and currency fluctuations. For ease of reference, these figures are in grams and U.S. dollars. An ounce is about 28 grams.

Medical grade cannabis also means different things in different markets. Outside the U.S., in Canada and the EU in particular, medical grade cannabis must meet a certification process that adds to the cost of production considerably. Certainly in comparison with outdoor grows. It is still, for the most part, imported, from either Canada or Holland, although look for that to start changing this year as domestic cultivation in multiple countries finally gets seriously underway.

The U.S.

Pricing really depends on where you are. It is also dropping fairly dramatically in established markets. The most recent example of this is Oregon – which has seen its higher-than-normal state retail market begin to normalize with California, Washington and Colorado. This is the price of establishing regulatory schemes on a non-federal level. That said, the competition is so extreme at the moment that Oregon, in particular, is a buyer’s market, with recently reported prices as low as $1 and change for a gram.

Retail pricing, in particular, will remain all over the place on a national level, especially given the amount of local competition between dispensaries underway. On average, however, medical grade-ish cannabis runs between $6-30 a gram, retail.

According to the website Cannabis Benchmarks, which tracks U.S. wholesale prices, the domestic spot index of wholesale cannabis was at $1,292 per pound at the end of January. Or about $5 per gram.The theory that the legit market has to price the black market out of existence is unpopular with those who want to collect more taxes from rec sales.

Nationally, at the moment, uncertainty over how the new post-Cole Memo world will play out, plus oversupply in certain markets, is creating strange pricing. Note to consumers, particularly in recreational markets: There are deals to be had.

Canada

This market is interesting for several reasons. The first is that several of the regional governments are considering establishing a Canadian $10 per gram price for the recreational market. Medical grade runs about $8 at the moment in local currency. That means, with a 20% differential in current f/x rates, a recreational gram will be set at USD $8 and a medical gram at about $6. That said, the theory that the legit market has to price the black market out of existence is unpopular with those who want to collect more taxes from rec sales.

Theories abound about the future of recreational pricing, but for the moment, a great deal of supply and new producers will keep prices low at least through 2019. After that? It is impossible to even guess. At that point, Canadian producers will still be supplying at least German medical patients with some of their imported bud. Regardless, the country will continue to play an important role in global pricing – even if it is to set a recreational and medical standard that plays out in markets already from the EU to Australia.

Israel

Like Canada’s market, although for different reasons, the Israeli official price on legal cannabis is absolutely constant. It is set by government policy. Those who have the drug legally, in other words with a doctor’s prescription, pay about $100 for a month’s supply. That amount on average is about 28 grams. That means that a medical gram in Israel will set you back about $3.50 per. U.S. not Canadian.

Europe

Price deltas here are the most impacted by changing national laws, standards and medical legalization. There are only two semi-legitimate recreational markets at the moment that include THC. Those are Holland and Spain. In Holland, via the coffee shops, the low-end of passable bud starts at between $12-15 per gram and goes up to about $30 for the really exotic breeds. This being Holland, they exist and are obtainable. In Spain, add the cost of joining a social club (about $50), but in general, the cost of a gram is about $10.Price deltas here are the most impacted by changing national laws, standards and medical legalization.

Medical markets in places like Germany are still skewed by integration of the drug into the country’s healthcare system and the fact that it is still all imported. The horror stories are real here. Patients must pay out-of-pocket right now for cannabis flower that is also being pre-ground by local apothekes for an additional price per gram that is eye-wincingly high. However, once the price and supply normalize, look for a medical standard here of about $10 for a month’s supply. That will be about 28 grams too.

Germany, in other words, will eventually be one of the cheapest markets for patients after reimbursement by insurance. That shapes up to be about $0.50 per gram at point of sale. It could be far less for those who are able to obtain authorization for higher amounts up to five ounces per month. The flat fee stays the same. Do the math. That works out to some pretty cheap (high grade) medical relief.

Black market cannabis and hash, which is also far more common in Europe than the U.S. at least, is fairly widely available for between $12 and $20 a gram.

The rise of cannabis production in Eastern Europe and the Baltics (which is also still largely pending and based on ongoing government talks and emerging distribution and cultivation agreements) will also dramatically drive down the cost of legal cannabis in the EU within the next several years. Production in this part of the world, along with Greece, may well also source rec markets all over the continent once that happens.

Africa & Central and South America

While the African cannabis trade has yet to break out – even in the media much of yet, there is definitely something green growing in several African countries including South Africa and Ethiopia. That trade unlike most of what is going on in South America with the possible exception of Uruguay is already looking for export opportunities globally. With African cannabis going for less than a buck a gram in most places (as in about a fifth of even that), look for certified African medical cannabis in select Western markets where price is going to be a major issue. Think medical standards. On the South American front, prices are equally low. However, remember that these are not regulated markets yet. And domestic government standards, starting with GMP and both indoor and outdoor grow requirements are basically non-existent. Growers who want to export to higher regulated markets are planning accordingly.

Assorted Outliers

It goes without saying that in places where cannabis is both illegal and carries the death penalty or other harsh penal retaliation, that the price is not only much higher, but the source is black market. In the UAE for example, a gram will set you back well over $100.

October 26, 2017

Shimadzu, Cure And CK Sciences Partner On R&D of Pharmaceutical Cannabis Products

By Aaron G. Biros

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Yesterday, Shimadzu announced the formation of a partnership with Cure Pharmaceutical Group and CK Sciences to research and develop pharmaceutical cannabis-based products, according to a press release. The three organizations entered a collaborative agreement with the goal of researching and developing products, then moving them through clinical trials using FDA guidelines.

According to the press release, the partnership’s primary goal will be researching and profiling the synergistic effects of the cannabinoids and terpenes, called the “Entourage Effect.”

Shimadzu, a well-know analytical instrument manufacturer, has been making a name for itself in the scientific cannabis space with a number of exciting new ventures. They have worked extensively with cannabis laboratories throughout the country in refining methods and improving analytical chemistry in the space. For example, Shimadzu powers EVIO Labs Florida with over $1.2 million in the latest testing instrumentation.

Tracy Ryan, chief executive officer and founder of CK Sciences, says outfitting their lab for pharmaceutical research was a big priority for starting their venture. “When we met with Shimadzu, and we saw their passion for our mission, we knew we were in incredible hands! When analyzing cannabis everything has to be so precise,” says Ryan. “With Shimadzu’s platforms and team of brilliant scientists supporting our efforts, we have already set ourselves up for success.”

Back in March, Shimadzu launched their Cannabis Analyzer for Potency, a high-performance liquid chromatograph (HPLC) designed specifically for quantitative determination of cannabinoid content. The organizations in the partnership will be using that instrument, in addition to a headspace Gas Chromatograph Mass Spectrometer (GCMS) for terpene profiling. Both Cure and CK will use the instruments to generate data, with the goal to validate cannabis as a viable pharmaceutical treatment, according to the press release.

Bob Clifford, Ph.D., general manager of marketing for Shimadzu, says they are excited to work with the organizations. “The emerging pharmaceutical cannabis market requires dedicated, thoughtful leaders eager to showcase the pharmaceutical benefits of cannabis on a scientific level,” says Clifford. “The Cure/CK Sciences group has continuously demonstrated such a leadership commitment, and we’re excited about the opportunities this agreement provides.”