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At Delic Labs, We Have a Dream: A Cannabis Better Future

By Dr. Markus Roggen, Amanda Assen, Dr. Eric Janusson
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Many people associate cannabis with eco-friendly, counter-cultural movements, but we know the environmental impacts of the cannabis industry are significant. Given the climate crisis, cannabis production companies have a responsibility to ensure future demands of the industry are met in an environmentally sustainable way. We also know that as the world is seeing the impacts of climate change, consumers are changing their spending habits 1. As a result, companies also have the financial incentive to seriously consider implementing more environmental policies, to align their interests with the interests of consumers. Unfortunately, restrictions on cannabis research and the legal industry create barriers to implementing many environmentally friendly alternatives in production. However, this does not give us an excuse to do nothing while we wait – there are many steps that can be taken while we work to overcome these barriers. Our team at Delic Labs aims to help companies ensure the environmental and economic sustainability of the cannabis industry. So, we did some research and developed the Cannabis Better Future (CBF) concept, a guide that considers the impacts of cannabis cultivation and processing on the environment. The pillars of CBF are:

  1. Use of renewable/recyclable materials in production

The packaging used for legal cannabis products is infamously excessive. A standard 3.5-grams of dried cannabis is estimated to come packaged in more than 70 grams of plastic. This seemingly redundant packaging is done to meet regulations surrounding cannabis packaging that often require single-use plastic with labels and warnings at specific sizes 2. Despite this, there is work being done to get biodegradable packaging approved in the industry.

More companies, such as Knot Plastic, are using plant-based materials to provide medical-grade biodegradable alternatives to single-use plastic 3. As members of the industry, we should support these companies and call for regulations to approve biodegradable packaging. As for immediate actions that can be taken, we can turn to companies that reduce the amount of plastic from the industry that ends up in landfills. The Tweed x TerraCycle Cannabis Packaging Recycling Program accepts all cannabis containers from licensed producers in Canada – free of charge – and melts down the plastic to create new products 4. This includes tins, plastic bags, tubes and bottles with child-proof caps. The program has saved more than 165,000 containers from ending up in landfills.

  1. Upcycle biomass waste

It is estimated that for every pound of cannabis harvested, up to 4.5 pounds of plant waste is generated 5. Cannabis biomass waste can be discarded in four different ways: via landfill, composting, in-vessel digestion or incineration 6. Cannabis bio-waste usually ends up in landfills because this is the cheapest method. However, landfill disposal represents a missed opportunity for companies to use biomass waste for economic and environmentally-friendly uses.

Converting biomass for other uses will drastically limit waste

To reduce landfill waste, some companies are looking at sustainable bio-circular solutions, where cannabis biomass is converted into something of industrial use such as compost, bio-plastics and paper packaging for cannabis products 7.  The easiest way to reuse cannabis biomass with current regulations in place is to upcycle it to produce compost and greywater that can be used for industrial cultivation 8. Currently, bleach is commonly used to remove THC from biomass, making it unfit to be used for these purposes 6. However, Micron Waste Technologies Inc. have shown enzymatic denaturation can be adopted on the industrial scale to remove THC from the biomass, resulting in reusable water and compostable matter 8. Turning to this alternative method would also reduce the amount of required fertilizer and replace bleach with a more environmentally-friendly solution.

  1. Recycle production side streams

Terpenes are the compounds in cannabis that give it distinctive aromas and flavors sought after by consumers.During the cannabis drying stage, over 30% of terpenes can be lost along with the water phase from the product 9. This terpene-containing water phase gets trapped in drying rooms and decarboxylation ovens and is usually thrown out. To reintroduce the terpenes in their products, companies usually purchase them 10.However, they instead could be recapturing terpenes that are otherwise going to waste, and re-introducing them into their products. Recapturing terpenes would not only reduce the production and shipment energy that goes along with purchased terpenes, but also the costs of buying them.

There are many other wasted by-products that can be recycled. Ethanol that has been used as extraction solvent can be reused as cleaning solvent, reducing the need to purchase ethanol separately for cleaning purposes. Further, the condensation caught in HVACs can be recycled to water plants.

  1. Optimize production energy efficiency
LED lights use less energy and omit less heat than other more traditional options

A study by Summers et al. 11 found that from producing one kilogram of dried cannabis flower, the emitted greenhouse gasses emissions range from 2,283 to 5,184 kg of CO2. Electricity used for indoor cultivation is the major culprit in producing these emissions. In fact, over $6 billion is spent annually to power industrial cannabis growth facilities in the U.S. alone12. Growing outdoors is significantly more energy efficient; however, non-auto flowering, high-THC cannabis plants depend on the specific timing of daylight (and darkness) to grow properly 13. Optimal conditions for these plants are not always achievable in outdoor setting. Meanwhile, auto-flowering plants that are hearty outdoors are generally lower in THC content 14. Promoting research into generating more stabilized cannabis cultivars may help outdoor growing be a more feasible solution. Given the recent work being done with genetically modified and transgenic plants, upregulating THC production in cannabis and increasing the heartiness in different climates is well within the realm of possibility 15–17.

In the meantime, cultivation facilities can do their part to maintain a controlled growth environment with reduced energy waste. Companies that are still using high-intensity sodium lights should consider switching to high-efficiency LED bulbs 12. These are a good alternative option as they produce less heat, and as a result, require less mechanical cooling. It has been shown that many plants, including cannabis, might even do better under blue-red LED lights 18,19. Growth under these conditions correlated with an increase in THC and CBD levels, and overall larger plants 18. In addition to low energy consumption, LED lamps have flexible mobility and a tunable spectrum range. This makes it possible to mediate the spectrum specifically for cannabis crops by controlling each spectral range and manipulating spectral quality and light intensity precisely. Finally, lights can also be brought closer to plants, to further reduce the amount of mechanical cooling needed.

  1. Utilize high-precision processes

Reducing energy use while maintaining production rates can only be done if the process is optimized. Our own research improves process optimization in the cannabis industry. A key component of industrial optimization is reducing wasted time on various machines. For cannabis producers, this machine “junk time” can accumulate when the instrumentation is not progressing the reaction.

Reducing energy use in this case means ensuring machines are not in operation if they are not progressing the reaction. For example, many companies spend approximately two hours on the decarboxylation step because decarboxylation is always complete after two hours 20; however, decarboxylations are often complete in as little as thirty minutes 21. Companies can save energy by installing a monitor on decarboxylation systems to stop reactions once they are complete.

Reducing the environmental impacts of the cannabis industry is crucial to combat the developing climate crisis. While lifting restrictions on cannabis research and mitigating stigmas surrounding the legal industry will be what ultimately paves the way for meaningful changes toward a sustainable industry, cannabis companies cannot wait for regulatory changes to occur before considering eco-friendly practices. As outlined by CBF, there are existing actions which all companies can take to reduce their carbon footprint immediately. Delic Labs, and many other companies we have noted, aim to support companies in making these decisions for a better future for cannabis.

References:

  1. Statista Research Department. Share of consumers worldwide who have changed the products and services they use due to concern about climate change in 2019. https://www.statista.com/statistics/1106653/change-made-consumer-bevaviour-concern-climate-change-worldwide/ (2021).
  2. Akeileh, O., Moyer, E., Sim, P. & Vissandjee Amarsy, L. Chronic Waste: Strategies to Reduce Waste and Encourage Environmentally-Friendly Packaging in Canada’s Legal Cannabis. https://www.mcgill.ca/maxbellschool/files/maxbellschool/policy_lab_2020_-_strategies_to_reduce_waste_and_encourage_environmentally-friendly_packaging_in_canadas_legal_cannabis_industry.pdf (2020).
  3. Bauder, P. Ry Russell of Knot Plastic️: 5 Things We Must Do to Inspire the Next Generation about Sustainability and the Environment. (2020).
  4. Waste360 Staff. Tweed, TerraCycle Take Cannabis Packaging Recycling Across Canada. (2019).
  5. Peterson, E. Industry Report: The State of Hemp and Cannabis Waste. CompanyWeek (2019).
  6. Commendatore, C. The Complicated World of Cannabis Waste Generation (Part One). Waste 360 (2019).
  7. Drotleff, L. Cannabis-based packaging and paper could reduce waste, promote sustainability. MJBiz Daily(2020).
  8. Waste 360 staff. Micron Secures U.S. Design Patent for Waste Treatment Tech. Waste 360 (2019).
  9. Challa, S. R. DRYING KINETICS AND THE EFFECTS OF DRYING METHODS ON QUALITY (CBD, TERPENES AND COLOR) OF HEMP (Cannabis sativa L.) BUDS. (2020).
  10. Erickson, B. Cannabis industry gets crafty with terpenes. chemical and engineering news (2019).
  11. Summers, H. M., Sproul, E. & Quinn, J. C. The greenhouse gas emissions of indoor cannabis production in the United States. Nature Sustainability 4, (2021).
  12. Reott, J. How Does Legalized Cannabis Affect Energy Use? Alliance to Save Energy (2020).
  13. When To Plant Cannabis Outside: A State By State Guide. aPotforPot.comhttps://apotforpot.com/blogs/apotforpot/when-to-plant-cannabis-outside-a-state-by-state-guide/ (2020).
  14. 15 Pros And Cons of Autoflowering Cannabis. aPotforPot.com https://apotforpot.com/blogs/apotforpot/15-pros-and-cons-of-autoflowering-seeds/ (2019).
  15. Ye, X. et al. Engineering the Provitamin A (β-Carotene) Biosynthetic Pathway into (Carotenoid-Free) Rice Endosperm. Science 287, 303–305 (2000).
  16. Giddings, G., Allison, G., Brooks, D. & Carter, A. Transgenic plants as factories for biopharmaceuticals. Nature Biotechnology 18, 1151–1155 (2000).
  17. Hu, H. & Xiong, L. Genetic Engineering and Breeding of Drought-Resistant Crops. Annual Review of Plant Biology 65, 715–741 (2014).
  18. Wei, X. et al. Wavelengths of LED light affect the growth and cannabidiol content in Cannabis sativa L. Industrial Crops and Products 165, (2021).
  19. Sabzalian, M. R. et al. High performance of vegetables, flowers, and medicinal plants in a red-blue LED incubator for indoor plant production. Agronomy for Sustainable Development 34, (2014).
  20. LunaTechnologies. Decarboxylation: What Is It and Why Is It Important? LunaTechnologies.
  21. Shah, S. et al. Fast, Easy, and Reliable Monitoring of THCA and CBDA Decarboxylation in Cannabis Flower and Oil Samples Using Infrared Spectroscopy. (2021).

Sustainability in Packaging: A Q&A with Dymapak CEO Ross Kirsh

By Aaron G. Biros
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Ross Kirsh launched Dymapak in New York City in 2010. Born into a family with a storied history in manufacturing, he founded the company after working for several years in Hong Kong where his interests, skills and passions for product development took shape.

Filling a niche for smell-proof bags in smoke shops, the business grew as he immersed himself in cannabis markets around the country. After designing and inventing a patented, first of its kind child-resistant pouch for Colorado’s first adult use sale in 2014, the business has continued to achieve global scale and today is recognized as the worldwide leader in cannabis packaging.

While the cannabis industry has long drawn the ire of environmentalists because of its energy problem when it comes to cultivation, the packaging side of the business faces very similar issues; the cannabis industry also has a plastic problem. In most states where cannabis is legal, state regulations require producers and dispensaries to package all cannabis products in opaque, child-resistant packaging, with several states requiring dispensaries to place entire orders inside large, child-resistant exit bags prior to customers leaving with their purchase.

Dymapak, led by Kirsh, is working on initiatives to help address environmental sustainability in cannabis packaging and turn interest into action industry wide. Ross will offer insights and the business’s action plan at the upcoming Cannabis Packaging Virtual Conference December 1. And ahead of that chat, we caught up with him to learn more.

Aaron G. Biros: Tell me a bit about yourself and how Dymapak came to be. What brought you to the cannabis space and where you are today?

Ross Kirsh, CEO of Dymapak

Ross Kirsh: My family has deep roots in manufacturing. Back in the mid 1970s, my uncle and his brothers all launched separate manufacturing businesses after one of the brothers moved to Hong Kong to open a handbag and luggage factory. The 70s happened to be a unique time to work abroad in Hong Kong given few US companies were operating there when China first announced its open-door policy around 1979. And as you can expect, he became a sourcing agent for many large companies in the US who needed trustworthy boots on the ground.

I went to college, pursued IT and in the back of my mind always knew product development and the manufacturing process was too interesting not to follow. I already knew Hong Kong was ripe for learning entrepreneurship so I went abroad to learn more, and fell in love with the culture, the opportunity and the people.  Immediately after graduation, I moved to Hong Kong. I began working with my family, who taught me the trade – end to end. I helped develop several product lines and lived next to one of our factories in southern China to immerse myself.

After 3.5 years abroad, I began running sales operations back in the US. Fast forward a year back in the states, I had unique customers that owned tobacco and smoke shops telling me that cannabis packaging existed in the market, but not really what everyone was looking for. In truth, the business was born the minute a customer said, “Can you make me a retail ready smell-proof bag?” I figured I could, and the rest – as they say – is history.

What began and was established in 2010 truly took shape at an accelerated pace in 2013, when my relationship with one of the first dispensary owner/operators in Denver – Ean Seeb of Denver Relief – came with a golden opportunity; Invent a child resistant package for cannabis, one did not exist but it was mandated under Colorado’s first-ever recreational cannabis regulations. I spent 7 out of the next 8 weeks in China developing a solution and am proud to say our bag was used in the first recreational sale when Colorado went legal in January 2014. From there, the business grew rapidly, and organically throughout the industry.

Biros: Environmental sustainability is a big issue for cannabis. Not just on the energy intensive side, but particularly when it comes to packaging and its plastic problem. How is your company approaching this issue and are you working on any initiatives to eliminate or reduce plastic waste?

Kirsh: We recognize firsthand the issues that plastic presents. While the material is full of advantages, the disadvantages are both imminent and critical to understand.

What many don’t realize is, for most cannabis packaging that’s recyclable to actually BE recycled, the customer must first find a drop off location, either at a dispensary or elsewhere that accepts the material. The process relies exclusively on the consumer to take action because the products cannot be recycled curbside. And unfortunately, the stats show that very few consumers take the time to bring the packaging back in order to recycle it.

So, yes, we produce recyclable bags in our portfolio, but we really want to get to the source of the problem here – pollution. We looked in a few different areas. And we developed a different bag made with 30% post-consumer resin, meaning 30% is made from reused plastics.

Even more, we recently partnered with a socially conscious, industry leader in the space, Plastic Bank, which builds regenerative, recycling ecosystems in under-developed communities. They work to  collect plastic waste from the ocean – extracting it to ensure its opportunity to enter the recycling ecosystem. Through our partnership with Plastic Bank, we’ll help prevent more than six million plastic bottles from entering the ocean this year alone. And I’m really proud of that.

Biros: Where do you see the cannabis packaging industry going in the next five years?

Kirsh: I think that’s a fascinating question. Sustainability will play a huge role in the future of this market. Just like we are seeing single use plastic bags being phased out across the country, we’ll see that happen to other areas too as part of this larger trend.

I predict more on-time and on-demand needs in the future; the ability to see traceability in real time, similar to the pharmaceutical industry. People will expect batch numbers and lot numbers, with data, in real time. It’ll become central to the business.

Gaining and cultivating trust will be another big hurdle for companies in this sector soon. With federal legalization comes a greater sense of professionalism and more sophistication for the market.

Yet, the continued pressure on environmental sustainability will be the biggest change in the next five years. When you look at sustainability in the packaging industry, paying attention to the format or choice of material should be top of mind. For example, if you’re shipping a glass jar, the amount of space that takes up in a shipping container has a huge impact on the environment, what’s called a hidden impact. One shipping container can hold millions of bags, but you need eight shipping containers for glass jars to get the same amount of storing capacity. That’s about efficiency, which is a bit more hidden, and I hope that consumers will become more and more knowledgeable about what companies are doing to stay environmentally sustainable.

Biros: Ross, thank you very much for your time today.

Kirsh: My pleasure, Aaron.

2021 Infused Products Virtual Conference

By Cannabis Industry Journal Staff
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2021 Infused Products Virtual Conference

Click here to watch the recording

 

Agenda

Where to Begin: Leveraging Quality Systems to Improve Operations & Growth

  • David Vaillencourt, CEO & Founder, The GMP Collective
  • Kathleen May, Founders & Owner, Triskele Quality Solutions

In this session, Vaillencourt and May define what a quality system is, how to apply it in your operation and how to create an SOP that actually works for your employees and operation, and provide key metrics to senior management. Understand the key elements of a Quality System including utilizing a Corrective Action Preventive Action (CAPA) Program to identify and prevent recurring issues that hold your operation back.

TechTalk: MilliporeSigma

  • Dr. Stephan Altmaier, Principal Scientist, MilliporeSigma

3 Steps to Create a Compliance Culture with Operational Excellence

  • Dede Perkins, CEO & Co-Founder, ProCanna

This presentation discusses how to create a set of approved and easily accessible policies and SOPs that comply with both external and internal standards, how to create an initial training system with clearly assigned roles, responsibilities, and goals and how to create an ongoing training system with clearly assigned roles, responsibilities, and goals to maintain what you’ve created.

Innovation from an Outside Perspective – For the Purpose of Building Infused & CBD Product Success

  • Jerod Martin, Chief Research & Development Officer, CannGoods

For the cannabis industry to be successful we must start with quality research enabling us to utilize quality ingredients resulting in quality products. We should look to other industries to gain knowledge for a better cannabis industry. This presentation delves into why research matters, why ingredients matter and why quality matters.

Implementing Food Safety Management Systems in Infused Products Production Facilities

  • Dr. Laurie Post, Director of Food Safety and Regulatory Affairs, Deibel Labs

Participants will be introduced to Food Safety Management Programs such as HACCP and FDA mandated Preventive Controls systems, Food Safety Hazard Assessments and how to conduct them and Preventive controls and how to use them to craft a Food Safety system

Click here to watch the recording

From CBD to THCV: Clinical Trials & ECS Brands

By Aaron Green
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The cannabinoid industry has faced an uphill battle from the beginning due to a lack of reliable scientific awareness about cannabinoids, fueled by decades of the hemp plant’s status as an illegal Schedule 1 drug. Today, scientists finally are free to explore the hemp plant’s 115+ cannabinoids and their relationships with the body’s endocannabinoid system. One cannabinoid, THCV, is currently undergoing scrupulous research.

ECS Brands is an established provider of whole-plant extracts. In the first-ever clinical trial for an organic THCV-rich extract, ECS received support from the National Institutes of Health and guidance from the Mayo Clinic to assess its potential for weight loss, anxiety treatment and other therapies using Nitro-V Hemp Extract, an ECS Brands product containing high concentrations of THCV, CBDV and other cannabinoids. Early outcomes of the 90-day, randomized, double-blind placebo-controlled human study were recently released. 100 out of 100 people lost weight, making no changes to exercise while taking the product for 90 days.

We interviewed Arthur Jaffee, Founder & CEO of ECS Brands. Prior to founding ECS, Arthur was co-founder of Elixinol, a company manufacturing and distributing industrial hemp-based products. Arthur took Elixinol public on the Australian stock exchange in 2018.

Aaron Green: How did you get involved in the cannabis industry?

Arthur Jaffee, Founder & CEO of ECS Brands

Arthur Jaffee: I originally was planning on starting a fitness equipment company. I got introduced to my partner at Elixinol, Gabriel, who my old physical therapist at University of Colorado said I had to meet. By the end of our lunch meeting, we shook hands in agreement to partner up on the fitness equipment concept. The timing happened where he got this opportunity to distribute CBD just following our handshake partnership. I didn’t know what it was at the time. He asked me if I wanted to join and get involved. I did my research into the benefits and discovered CBD’s anti-inflammatory and neuro-protective benefits, which for me was relevant given my football experience. I quickly realized what the vast potential CBD could offer with inflammation, neuroprotection and so many of the health and safety concerns arising from contact sports at the time. So, ultimately the opportunity presented itself through a friend of a friend in Australia who had a supply chain in Europe. This was right when CBD first appeared in the media in 2014. It was almost like it just fell into my lap.

I’ve been fortunate to really see that transition, and the evolution of the industry. Back then was probably the most valuable time because growth was so slow. Nobody knew what CBD was back in 2014. The primary demographic was cancer patients and epilepsy patients which presented a significant challenge to develop sales and marketing materials and communicate compliantly. Our first hire was a Medical Doctor to communicate in a more compliant fashion. I had to learn everything there was about the science and the medical research that existed at that time. For me, that was very valuable.

The valuable learning experiences from the early days of the industry is what laid the foundation today with ECS brands where we are focused on education promoting awareness of the endocannabinoid system to take it a step beyond just CBD because in order to understand what constitutes a quality product, or why CBD can have all these various benefits for people, you must first understand how the body is naturally configured to receive and respond to these amazing phytochemicals such as CBD. CBD is just one of hundreds of phytonutrients that the human body is designed to use. The endocannabinoid system is so significant in the grand scheme of things, because once you start accepting that the system is your overarching regulatory system in the body, we can start to look at the endless therapeutic potential.

Green: Being an early player in the CBD space, how would you say you’ve evolved over time to where you’re at today?

Jaffee: Innovation. That’s what really drove me to start ECS brands. Back in 2014, I originally co-founded Elixinol. After we took Elixinol public on the Australian exchange in the very beginning of 2018, there was a shift in direction away from innovation. Nearly all emphasis was placed on just doing what we’re doing better – meaning improving margins. In such a new and young industry and being a pioneer, you don’t get many opportunities to discover and create something for the first time. So, the past three years with ECS brands is with a heavy focus on innovation and technology.

Green: How do you think about innovation for the endocannabinoid system?

Jaffee: One of the early discoveries for me that was most inspiring, was research that evaluated endocannabinoid receptor sites, basically little keyholes for cannabinoids to perfectly fit in – that are made for cannabinoids. When evaluating the number of receptor sites in different individuals experiencing stress and illness it showed there was a higher concentration of receptor sites in those that were sick and experiencing systemic stress. To me, that was that was powerful because if that doesn’t communicate the body’s need for cannabinoid nourishment to heal and restore back to homeostasis as a natural and involuntary response really motivated me to play a part in getting quality cannabinoid products out to the masses and specifically those in most critical need. Our first interaction with cannabinoids is in mother’s breast milk, the cannabinoids that our bodies naturally produce. After breastfeeding, our diets are completely stripped of virtually all cannabinoids, leaving the endocannabinoid system starving, and likely leading to many of the most common and chronic health deficiencies that causes detriment to so many. Rather than cannabinoids, we then get introduced to pharmaceuticals. The writing is on the wall – this must get accepted and integrated into our society.

The Nitro-V Hemp Extract, an ECS Brands product

When it comes to innovation surrounding the public system it requires research and requires scientific evidence. It requires functional products because you can have all these great benefits, but if you don’t have efficient and effective ways of delivering these chemicals to the body, it can almost be meaningless. It’s a delicate balance between consumer appeal, functionality and efficiency when it comes to the delivery into the body. We’re focusing on delivery systems, making things more bioavailable and integrating other natural botanicals that react and influence the system in similar ways as there are more than just cannabis-derived cannabinoids that can create positive impact and ultimately alter the way that the endocannabinoid system can regulate.

Green: An important aspect of innovation is clinical validation. How do you think about clinical trials and designing clinical trials for products?

Jaffee: Clinical trials are instrumental and required to validate claims because otherwise, it’s just speculation. Directional application without the clinical evidence to support in the appropriate way is setting yourself up for failure. Designing a clinical trial is just as important as performing the trial. If it’s not set up right, it can be a waste of time and money. Trials really need to be held to the gold standard of double-blind placebo controlled and thoughtfully organized.

We did organize a clinical trial at the beginning of this year, and it was incredible. We learned so much about a unique extract of ours that’s naturally rich in THCV and CBDV. We intentionally set it up to be a very broad and encompassing study. I personally wanted to see the different mechanisms and how the endocannabinoid system responded and worked together with other systems in the body. We evaluated a broad range of measurements, with complete safety tox study – blood panels to test every organ – measuring kidney enzymes, liver enzymes, ALT, AST, ALP, bilirubin, albumin, creatinine as well as cholesterol – with HDL, LDL and triglycerides, GFR and Complete Blood Count. We also measured blood sugar hemoglobin A1C and five major inflammatory markers of IL-1, IL-6, C-Reactive protein, Homocysteine and TNF. In addition to performing a full safety run-up of the product, we also measured weight, BMI, girth, questionnaires for anxiety, appetite, pain, mood and finally – we bought brand new Fitbit Versa 3’s for all 125 study participants which gave us objective measurements for REM sleep, deep sleep, awake time, systolic/diastolic BP, SpO2 blood oxygen levels and daily caloric output values – which was really cool because it provided tangible objective evidence that participants weren’t going out and secretly exercising. So, we had 100 people taking the product and then 25 on placebo.

Green: Was this a safety trial?

Jaffee: Yes. The primary endpoint study was safety. That’s how we enrolled participants – as a general product safety study for a natural product. I decided to include a lot of additional efficacy measurements, including weight loss, measuring body mass index as well as heart rate for all the blood markers that we looked at. In addition to that we purchased brand new Fitbit Versa 3’s for the entire study group, which was great because they gave us objective measurements for three different sleep readings, deep sleep, REM sleep and rest asleep as well as lower output and blood oxygen levels.

We saw everything kind of working together. We saw deep sleep improve 300% within two weeks. We saw blood sugars come down significantly from those that are considered high, pre-diabetic ranges of hemoglobin A1C. You saw inflammatory markers reduce to normal levels, with 92% efficacy, which basically just means that those who were experiencing inflammation by means of these major inflammatory markers, after 90 days, 92% of subjects were reduced to nominal ranges. So, it was really fascinating to see how, with all the different measurements. that we can correlate different objective measurements. Then, we did subjective measurements too. We had standardized questionnaires for anxiety and pain, as well as an internally developed appetite and cravings questionnaire.

Green: Based on the results of that safety study, are there particular disease states you want to target going forward?

Jaffee: Moving forward, we are interested to look at each blood sugar and Hb A1C. I think one of the most exciting and popular successes of the study was the fact that we had 100 out of 100 participants lose weight without diet and exercise. Because we incorporated the Fitbit, we were able to obtain objective evidence that participants weren’t going and secretly working out. The Fitbit provided a caloric output value. It is basically an algorithm taking the number of steps taken, stairs climbed, heart rate, movement, etc. to populate a caloric expenditure value, which remained completely stable in our study population. Subjects were specifically instructed NOT to change any lifestyle behavior – specifically diet, exercise, and sleep, and that if any changes were to occur naturally that was acceptable. What this ultimately told us is that diets changed, and metabolisms increased, and we were able to support that notion with the appetite and cravings questionnaire that we had participants fill out where cravings did reduce and desire for sugary foods reduced 63%. These were questions that we internally developed for the appetite and cravings questionnaire, which were based on feedback that we received prior to the study.

Green: What are in your personal life or in cannabis are you most interested in learning about?

Jaffee: It’s changed a little bit over the years. My biggest passion I would say is performance. I think the hemp plant has so much to offer when it comes to superior nutrition and healing. Once I learned about the benefits and the potential of hemp with its food applications and specific protein composition – the powerful oxygenating properties of Hemp Seed Oil, the brain health properties it encompasses, and of course the cannabinoid potential… It got me very motivated to commit myself to this plant. It wasn’t long before learning all the incredible industrial applications and solution the plant also offers – such as plastics, textiles, biofuel, building materials – and as an environmental science major – learning about these amazing applications got me that much more excited, but knowing and trusting that CBD would be the first stepping stone in an industry that needs to evolve into all the amazing sustainable applications because it’s all it’s all very real. It will get there, but it won’t be easy.

Green: Thanks Arthur, that concludes the interview.

Jaffee: Thanks Aaron

Cannin Commentary

3 Cannabis Stocks That Can Gain Over 50% According to Analyst Estimates

By Cannabis Industry Journal Staff
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Welcome to the Cannin Commentary Column. We’re happy to announce our partnership with Cannin Investment Group, a cannabis investment analysis firm. In this new column, we will provide readers with a taste of Cannin’s insights and analysis that they offer to their members. Throughout the new installments of this column, you’ll find articles that will touch on investment tips, trends, predictions, market updates and more.

Companies in the cannabis sector have the potential to increase your wealth at an enviable rate over the upcoming decade. But what are the 3 cannabis stocks that can gain over 50% according to analyst estimates?

The wave of cannabis legalization sweeping through the U.S. right now as well as the prospect of decriminalizing or even legalizing adult-use will be key drivers for licensed producers.

Here, we take a look at three cannabis stocks in Columbia Care, Green Thumb Industries and Cresco Labs that should be on your buying radar right now. Each of these stocks is also trading at a deep discount according to Wall Street estimates, allowing investors to derive market-beating gains in the next year.

Columbia Care

U.S.-based multi-state operator, Columbia Care (OTC: CCHWF) is valued at a market cap of $1.12 billion. The company has already increased revenue from $77.4 million in 2019 to $179 million last year.

Now, Wall Street expects sales to more than triple year over year to $625 million in 2021 and surpass $970 million next year. These stellar growth rates in revenue should allow Columbia Care to improve its bottom-line from a loss per share of $0.48 in 2020 to earnings per share of $0.3.

Columbia Care has a presence in 18 jurisdictions across the U.S. and Europe where it operates 31 cultivation and manufacturing facilities.

The company generated $110 million in revenue in Q2 which was 232% higher than the prior-year period. Columbia Care has 73 active dispensaries and another 26 under development, enabling it to target a rapidly expanding addressable market that is forecast to touch $31.6 billion by 2026.

So, is Columbia Care a cannabis stock that can gain over 50%? Well, analysts tracking Columbia Care stock have a 12-month average price target of $9.38 for the stock which is more than 200% higher than its current trading price.

Green Thumb Industries

A cannabis giant trading 46% below its all-time high, Green Thumb Industries (OTC: GTBIF) is valued at a market cap of $4.4 billion. Headquartered in Illinois, Green Thumb Industries has 13 manufacturing facilities, licenses for 111 retail locations and currently operates in 14 domestic markets.

In the second quarter of 2021, the company’s revenue rose by 85% year over year to $222 million – driven by strong demand in Pennsylvania and Illinois. The Q2 of 2021 was also the fourth consecutive quarter where Green Thumb reported a profit, with a net income of $22 million compared to a loss of $13 million in the prior-year period.

Green Thumb currently has 65 retail stores and just opened a third store in the state of New Jersey which is a market that recently legalized cannabis for adult use. While retail sales in New Jersey are expected to begin next year, Green Thumb’s presence in the medical space will enable the company to gain traction in the highly competitive adult-use cannabis vertical as well.

So, is Green Thumb Industries a cannabis stock that can gain over 50%? Well, analysts expect Green Thumb stock to rise by 95% in the next 12-months given its average price target of $37.54.

Cresco Labs

The final stock on our list is Cresco Labs (OTC: CRLBF), another cannabis heavyweight valued at a market cap of $2.16 billion. A vertically integrated cannabis operator, Cresco Labs currently has 40 dispensaries in 10 states and has grown its sales from $43 million in 2018 to $476 million in 2020.

Most states have a limit on the licenses they are allowed to issue and this barrier to entry allows Cresco and peers to enjoy a competitive advantage in the markets they operate in. Cresco Labs reported revenue of $210 million in Q2, a rise of 123% year over year.

It reported a net profit of $2.7 million in Q2 compared to a loss of $41 million in the prior-year quarter. Cresco expects to generate $1 billion in sales by the end of 2021, making it among the first cannabis companies to reach the milestone.

We believe Cresco is certainly a cannabis stock that can gain 50%. Wall Street expects Cresco Labs stock to gain over 60% compared to its current trading price.

Canopy Growth Acquires Wana Brands: An Interview with Nancy Whiteman

By Aaron G. Biros
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On October 14, Canopy Growth announced their plans to acquire Wana Brands, the number one cannabis edibles brand based on market share in North America. The two companies entered into an agreement that gives Canopy the right to acquire 100% of the membership interests of Wana Brands (a call option to acquire 100% of each Wana entity) once a “triggering event,” such as when plant-touching companies begin trading on major US stock exchanges or full federal legalization, occurs.

As part of the agreement, Canopy Growth makes an upfront payment of $297.5 million to Wana Brands. Until the United States moves on cannabis legalization or companies can start trading on U.S. exchanges and Canopy uses the call option to acquire Wana Brands, they don’t get any voting or economic interest in Wana Brands. The two companies are essentially operating completely independently of each other until the US legalizes cannabis.

Nancy Whiteman co-founded Wana Brands in 2010 and since then the company has expanded significantly. Following the legalization of adult-use cannabis in Colorado, their sales skyrocketed. Over the next few years, Whiteman oversaw the company’s expansion into a number of new states. In 2016, they moved into Oregon’s market and quickly grew their brand presence, seemingly overnight. Then they expanded into Nevada, Arizona and Illinois in 2017. After that the company made a major East Coast push, expanding into Maryland, Florida and Massachusetts, with other major northeast markets expected to be added soon. The brand now has products available in twelve US states and nine Canadian provinces, with plans to add four additional states by the end of the year.

Nancy Whiteman, CEO & Co-Founder of Wana Brands

Shortly after the announcement, we sat down together over coffee in Las Vegas to discuss Whiteman’s journey to success, her plans for the company’s expansion and what the future might hold for Wana Brands.

Aaron G. Biros: First of all, congratulations on the acquisition. As a co-founder and CEO, it must be amazing to see the success of your company and all you’ve accomplished. How do you feel?

Nancy Whiteman: I feel ecstatic. I am so excited and so proud of what Wana has accomplished. Just all around a great feeling.

Biros: What was it like leading up to this moment? From the inception of the business, did you ever have any doubts you’d make it this far?

Whiteman: A thousand times. Absolutely. Anyone in cannabis that tells you they didn’t have any doubts is probably not being very honest. I had been thinking about partnership for a while. I felt the timing was right because of a variety of reasons, but also the possibility of federal legalization. I wanted to make sure that Wana was really going to be well positioned for future growth. One of the things that I said in our employee meeting – I quoted the old proverb of ‘If you want to go fast, go alone, but if you want to go far, go together.’ We’ve been going it alone for eleven years and we’ve gone very fast. But I want Wana to continue to be a major player in the industry and to go far. I really felt that this was the time in the industry to strike a partnership.

So that’s a little bit of the thinking behind it. I think when there is federal legalization, there is going to be a host of competitors entering the industry that are going to be unlike anything we’ve faced before. I think it’s going to be challenging for independent brands to scale as rapidly as they’re going to need to scale to compete against all of this new competition on their own. So that’s the why behind the timing of it.

Canopy_Growth_Corporation_logoIn terms of why Canopy, I’ve known Canopy for quite a while. I met them when we were looking for partners about three and a half years ago. We did not end up putting together a deal at that point in time, but I did get to know the company quite a bit. Since then that company has changed significantly with leadership changes and became a very different company with the Constellation Brands investment behind them.

When I think about the future of the industry and particularly post-legalization, I have certain things that I am looking for in partners. Of course, I am looking for financial strength in a partner. I was really looking for a company that has a very long-term perspective on the industry, with both the proper resources and the proper mindset to make long-term investments for the future. And then my belief is that post-legalization, we’re going to see radical changes in the industry including where products are cultivated in a global market, more distribution outside of dispensaries – and I think liquor stores could be a likely form of distribution at some point in time, so the relationship with Constellation was very interesting and appealing to me. But all of those things wouldn’t mean as much to me if I didn’t feel we didn’t have a good fit in terms of our shared values and how we saw the industry. We spent a lot of time talking about that and I think one of the aspects that really attracted me to Canopy was that we are very aligned on how we see the future of the industry shaping up. Certainly, I think there is a wonderfully viable position for cannabis as an alcohol replacement, however we also have a lot of focus on innovation and the health and wellness aspects of cannabis. I was really looking for a partner that felt the same, and it ended up that we really were aligned on those values.

Biros: What does it look like going forward? Since you’re staying on board, how will your new role change?

Whiteman: My new role doesn’t change at all actually. I woke up last Monday—the week after the big announcement–and it felt very normal getting back to work and having my usual meetings. This was my fifteen minutes of fame and thankfully its diminishing so now it’s just back to work as usual.

But moving forward, we have big plans. Wana is launching in four new markets over the next couple of months, we’re in discussions to launch in an additional six markets, and we have very robust innovation pipeline. So, we’re just really busy right now just executing on our strategy. I am looking forward to getting to know our new colleagues at Canopy better and exploring different collaboration possibilities.

I feel very optimistic. I was thrilled our employees were delighted with the news and morale is very high. The feedback from the rest of the industry has been really positive and overall, I am feeling very good about this decision.

Biros: So you mentioned some expansion plans for four new markets in the next few months. How does the acquisition help Wana Brands expand?

Whiteman: You know we haven’t announced the new states so I can’t speak to those publicly yet. They were all in the works before this deal and are currently in the process of being onboarded. Where it will get interesting is how this deal impacts new states that we move into. Until Canopy decides to exercise the call option [to acquire 100% of membership interests in each Wana entity], we are still an independently owned and run company. So we are still going to be looking for the best partners that we can find in new markets, and the Canopy connection will certainly be helpful to us. But to your point about the plans, we’ll be announcing those new market expansions in the coming weeks.

Biros: As a woman leader with an extremely significant position in the cannabis industry, do you have any advice for young aspiring entrepreneurs, women leaders or other women in the cannabis space?

Whiteman: I do. I posted something on LinkedIn the other day and I’m going to make the same comment to you as I made in that post because I think it’s important and particularly important for young women. People have said a lot of nice things about me in the past couple of weeks and of course everybody loves to hear nice things about themselves. But the truth is, some of them are not true. And one of them that is definitely not true is that I am somehow fearless. And I guess what I would say to women and young entrepreneurs is that fearlessness is a myth.

Being an entrepreneur is hard. You’re putting your money on the line, you’re putting your time on the line, you’re putting your reputation, you’re potentially putting your family’s, your friends’ and your investors’ money on the line. Who would not be afraid against that backdrop? We all have times of feeling fearful, of feeling anxious, of having sleepless nights. So, what I would say is don’t aspire to be fearless. There are other aspirations that are much more useful. For example, aspire to be resilient, aspire to be persistent, aspire to be of service to other people, aspire to be very true to your values and your strategy. Don’t let this mythology of what a “leader” is supposed to look like make you feel bad about your emotions. It’s not about having those emotions, it’s what you do with them.

That’s what I would say to young entrepreneurs and especially to women. Because I do believe that women hold themselves to a very high standard a lot of the time and have a lot of misconceptions of what they’re supposed to be living up to when it comes to leadership.

Biros: What an incredible perspective to have. Okay, one last question for you: what are you doing to celebrate?

Whiteman: So far, I’ve been too busy to celebrate! This just happened so recently. I would like to take a great trip with my kids. I don’t really know I have not had time to figure that out. People tell me I need to go to Disney. But right now, it’s still taking a little while to let it all sink in. 

Biros: Wonderful! And Nancy, thank you so much for your time I really appreciate it.

Whiteman: And thank you! So nice to see you in person.

The Path Forward to a Safer Cannabis Industry

By Roshan Sebastian
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Two decades ago, California became the first state to legalize the medical use of cannabis. In 2021, medical use of cannabis is legal is 36 US states, and 17 states allow adult (‘recreational’) use. This trend of rapid legalization of the cannabis industry, while encouraging for industry growth, attracts more attention from federal regulatory bodies such as the Occupational Safety and Health Administration (OSHA). Following a number of incidents and near misses, cannabis facilities have been increasingly frequented by OSHA visits, leading to a spike in citations and fines. A review of past OSHA citations reveals that the most common citations in the cannabis industry pertains to the employer’s lack of awareness about the hazardous nature of some operations and materials handled in the facility. This leads to an absence of a formal fire prevention plan, lack of proper hazardous chemical training, deficiency in proper documentation related to workplace injury and limited evaluation of required personal protective equipment (PPE).1

Cannabis industry data suggests that as of today, an incident is often followed by an OSHA inspection.  This naturally leads to the facility asking, ‘How do we prepare for an OSHA inspection and prevent future citations?’ The answer is a combination of identifying and mitigating risks in advance to avoid incidents and developing management systems that support the identification and risk mitigation efforts. Recent collaboration between cannabis business owners and organizations that write codes and standards have provided a framework in which to address the industry’s unique safety challenges to help reduce inherent risk to a facility. These codes and standards typically impact building construction/safety features and operation of the facility, however, additional risk mitigation can be drawn from the best practices already in place in process industries with similar hazards. These process industries have embraced process safety management (PSM) programs, which are built around principles flexible enough to be successfully implemented in the cannabis industry. Adopting such programs will serve the dual purpose of improving the overall safety record of the cannabis industry while enhancing company sustainability2 and help avoid events that lead to OSHA citations.

Figure 1. Risk Based Process Safety Management System

The risk-based process safety (RBPS) approach developed by the Center for Chemical Process Safety (CCPS)3 may prove to be the most effective framework to implement PSM programs in the cannabis industry. Unlike the prescriptive regulatory approach provided by OSHA 29 CFR 1910.119, the RBPS methodology recognizes that not all hazards and risks are equal. By assessing risk, an organization can develop an effective management system that will prioritize allocation of limited resources to address the highest risks. Figure 1 shows the four foundational blocks (pillars) of RBPS and the various elements that make up each pillar.

If a cannabis business owner were to develop programs on each of the pillars presented in Figure 1, a comprehensive safety program would be in place that delivers sustainable risk reduction and mitigation.  However, as with any industry, the elements can be prioritized and tackled over time, starting with the elements having the most influence on the overall safety of a given facility. For example, a given facility may have great procedures and practices, but may not consistently train or instill employee knowledge or competency. Conversely, a facility may have personnel with great knowledge of hazards and risks, but are less developed with regard to documenting procedures, safe practices or training for new hires. Focusing available resources on the less developed elements will lead to an overall improvement in facility risk, leading to a lower likelihood of an incident and OSHA inspection.

Figure 2. Still image from surveillance video of an explosion at New MexiCann Natural Medicine in July 2015.

As with any industry, positive and negative public perception is driven by the media, which tends to focus on attention-grabbing headlines. The majority of past incidents reported in the news for the cannabis industry were explosions that occurred during the extraction process. One such extraction explosion, shown in Figure 2, occurred in July 2015 at the New MexiCann Natural Medicine facility in Santa Fe, New Mexico. With a focus on the ‘hazard identification and risk analysis’ pillar of RBPS, future such events may be mitigated.

Of the twenty RBPS elements, hazard identification and risk analysis (HIRA) stands out as having the highest potential for immediate impact on the cannabis industry’s safety profile.

HIRA is a collection of activities carried out through the life cycle of a facility to ensure that the risks to employees and the public are constantly monitored to be within an organization’s risk tolerance. The four major areas to analyze are:

  • Hazards – What are the possible deviations from the design intent?
  • Consequences – What are the worst possible consequences (or severity) if any deviation occurs?
  • Safeguards – Are there safeguards in the system to reduce the likelihood of this event?
  • Risk – Is the risk within the tolerable level? If not, what steps are needed to reduce the risk? (Severity X Likelihood = Risk)
Figure 3. A simplified HIRA flow chart for an Extraction Process

Let us consider an example case where the extraction process utilizes propane or butane as the extracting solvent. Figure 3 shows a simplified HIRA flow chart for the extraction process.

This systematic approach helps to understand the hazards and evaluate the associated risk. In addition, this approach highlights operator training as a crucial safeguard that can be credited to lower the overall risk of the extraction facility. Remember, lack of proper safety training (another element!) is one of the most cited OSHA violations in the cannabis industry. Another advantage to the HIRA methodology is that other safeguards that may be present can be identified, their effectiveness evaluated and additional risk reduction measures may be recognized. This will help business owners allocate their limited resources on the critical safeguards that provide the greatest risk reduction. Identifying, analyzing and solving for potential hazards is a key step in safe operation of a facility and avoiding OSHA citations.

While this article discusses only a single RBPS element, this example demonstrates how best practices from process industries can become a powerful tool for use in the cannabis industry. The “hazard identification and risk analysis” element of the RBPS approach is pertinent not only for the extraction process as discussed above, but also directly applicable to other aspects of the industry (e.g., dust explosions in harvesting and processing facilities, toxic impacts from fertilizers, hazards from the CO2 enrichment process in growing facilities, etc.).

References

  1. Top 5 OSHA Infractions for Cannabis Businesses
  2. The Business Case for Process Safety; 4th Edition; Center for Chemical Process Safety; 2018
  3. Guidelines for Risk Based Process Safety; Center for Chemical Process Safety: An AICHE Technology Alliance; published March 2007
  4. Video: Explosion rips through medical marijuana facility

The USDA & Controlled Environment Agriculture: A Q&A with Derek Smith, Executive Director of the RII

By Aaron Green
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Controlled environment agriculture (CEA) is a hot area of investment right now for the USDA, holding the promise of improved efficiencies and productivity for indoor growing operations. The cannabis industry, long accustomed to indoor growing has emerged as a spearhead in CEA innovation.

The Resource Innovation Institute has been supporting cannabis enterprises as a non-profit entity since 2016, providing a benchmarking platform called Power Score to help cannabis cultivators be more efficient with resources in their growing practices. Recently, RII submitted a proposal to the USDA to bring best practices from the cannabis industry to other CEA crop producers. They have also recently been responding to the Cannabis Administration and Opportunity Act, providing comments to frame an energy and environmental policy framework for future federal regulation.

We interviewed Derek Smith, executive director of Resource Innovation Institute (RII).  Derek engages RII’s advisory bodies, including the Strategic Advisory Council and Technical Advisory Council Leadership Committees and develops global partnerships and oversees the organization’s policy work. Prior to RII, Derek was CEO of Clean Energy Works and policy advisor to the City of Portland Bureau of Planning and Sustainability.

Aaron Green: What are RII’s plans for the USDA? I understand you’ve also been working on the CAOA recently?

Derek Smith: We’ve been working in cannabis for five years, publishing best practices and capturing data to inform governments and utilities on how much energy is being used. Our mission is to help producers become more efficient in their use of resources. In addition to informing policies that support producers, we also engage utilities to help them evaluate efficient technologies, so they can put incentives on them and so they can help buy down the cost for cannabis producers to install more efficient technologies.

We submitted a proposal to the USDA, saying we’ve been doing all that in cannabis. This was under the banner of a Conservation Innovation Grant, which is an innovation funding mechanism from the USDA. They specifically wanted something related to indoor agriculture and energy and water efficiency. So, we essentially said, we’ll give you a three-year project that will basically be the blueprint for the controlled environment agriculture (CEA) industry to transform itself toward a more sustainable production path. This applies to both the urban vertical farms growing leafy greens, as well as the growing greenhouse sector that is producing a range of crops, from tomatoes, to berries, to leafy greens to mushrooms, hemp, etc.

We’re essentially taking the Power Score benchmarking platform that we’ve been serving cannabis producers with to help them understand how competitive they are relative to the rest of the data set that we have on energy use and on water use and opening that platform so that more producers of other types of crops can use it. It also feeds into their Environment, Social & Governance (ESG) reporting needs.

We’re going to write a series of best practices guidance for CEA producers, covering a number of topics: facility design and construction, lighting, HVAC, irrigation and water reuse, controls and automation. This will all be very similar to what we’ve done in cannabis. These best practices guides are peer reviewed by subject matter experts throughout the supply chain. A lot of the supply chain in cannabis is the same in CEA. So, we’re bringing them all together to give this kind of good guidance to the producer community.

Green: You started with cannabis and created these white papers. Now you’re branching out into the larger CEA space?

Smith: Exactly. The federal government is literally funding us to develop a green building rating system like LEED, or like the Living Building Challenge, but for the CEA industry for indoor agriculture. The cannabis industry can leverage this federal investment and basically ride right alongside of it so that we can create a “LEED for weed” type of certification system.

Derek Smith, Executive Director of Resource Innovation Institute

That’s one of the main features in our comments to the CAOA when they asked, “what else should we be thinking about on any number of topics as it relates to federal cannabis regulations?” We proposed an energy and environment policy framework for federal cannabis regulation. We did that in partnership with a group called the Coalition for Cannabis Policy Education and Regulation (CPEAR). We just held a webinar two weeks ago. Hawthorne Gardening Company was featured on there as well. They’re very supportive of the federal government playing a “carrots rather than sticks” role as it relates to cannabis energy and environmental policy issues.

That’s essentially our platform at the federal level. The stuff that the USDA is funding us to do will come back and benefit the cannabis industry, because we’ll have this broader set of best practices guidance, data, etc. And then we’ll be able to leverage the federal investment into a certification system for the cannabis industry.

Green: The specific comments you made to the CAOA were primarily related to this energy efficiency certification system work you’ve been doing?

Smith: Yes. It’s more resource efficiency – it’s broader than just energy efficiency. Well, it was three things. So, I’ll just unpack this quickly. One, is learn from the states that have already initiated some form of regulation or support on helping producers be more efficient. Massachusetts is one example. They put lighting requirements on the industry that don’t explicitly mandate LEDs, but it comes close to that. California passed an energy code that will take effect on January 1 of 2023, that also has lighting requirements.

Green: Is this applied to all greenhouse growers?

Smith: Yes, at a certain size and level of energy usage. In California, it’s the first market where their Title 24 regulations apply not just to cannabis, but to all horticultural operations. Yes. So that’s what we’re seeing is that cannabis is sort of the tip of the spear for the way governments are thinking about policy for indoor agriculture more broadly. We’re trying to get them to focus more on having the federal government play a supportive role. The states are doing the regulation, the federal government can be more focused on carrots, not sticks, right?

So, back to the list of three things. Number one is learn from the states. Don’t add regulatory stuff, just learn what’s going on, and then decide about how to act. Number two is recognizing the need for data. So, supporting state requirements on energy and water reporting like Massachusetts, Illinois, California – a lot of states have either enacted reporting requirements, so the producers must tell the state how much energy and water they’re using and they’re using the Power Score benchmarking platform, which has a compliance function for free to do that reporting. Then what we’re doing is helping everybody understand what the aggregate data is telling us. We protect the producer’s confidentiality, and we’re building this valuable data set that’ll inform the market about what is the most efficient path going forward.

Then the third thing is focused on carrots, not sticks. For example, support the development of a certification system that recognizes leadership, that’s based on a market driven voluntary action by a producer where they say, “I’ll be transparent with my data, because I’d like to be showcased as a leader and get recognition for the good work I’ve done to create an efficient operation.” Then there’s valuation through the real estate transaction as well because you even have a plaque on your building that says this is certified to this agricultural standard.

That’s all the vision that we’re laying out, and we’re looking for partnerships at the MSO level to join in and be recognized and get in the queue as leaders for the investments they’ve made in efficiency.

Green: Great, thank you Derek. That concludes the interview.

Smith: Thanks, Aaron.

Cannabis Safety & Quality: An Interview with the Founder of CSQ

By Aaron Green
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The supply chain for consumer cannabis products is complex, involving cultivation, extraction, manufacturing and packaging. While global best practices exist for Good Agricultural Practices (GAPs) and Good Manufacturing Practices (GMPs), the certifications are not tailored to the cannabis industry.

CSQ has developed tailored standards for the cannabis industry to assist cannabis companies in improving their quality. As a division of ASI, a woman-owned business that’s provided safety solutions to the food industry since the 1940s, the CSQ standards were built in 2020 to meet ISO requirements, GFSI requirements and regulatory cannabis requirements from seed-to-sale. CSQ is the first cannabis certification program to meet the GFSI Benchmarking Requirements with plans to be benchmarked in 2022.

We interviewed Tyler Williams, CTO and founder of CSQ. Tyler founded CSQ after working at ASI – a family-owned food safety company in St. Louis.

Aaron Green: Nice to meet you, Tyler. How did you get involved in the cannabis industry?

Tyler Williams: It’s kind of a long story, but it’s a good story. My mom worked for ASI for 15+ years. That company has been around since the 1940s and is one of the oldest food safety companies in the world. The owners were ready to sell about five or six years ago, and my mom ended up using a small business loan to purchase the company. That’s how I got started in a food safety and dietary supplement space.

About three to four years ago, we started getting inquiries from cannabis companies asking about GMP audits and certification and different things. We started doing certifications to our GMP food processing standard or dietary supplements depending on what they wanted but realized that there were a lot of things that weren’t applicable to cannabis companies or there were extra things needed for cannabis companies. That’s how I started working with cannabis companies to start developing the CSQ certification program and it has just kind of grown over the years.

Tyler Williams, CTO and founder of CSQ

We currently have four standards at the CSQ level. CSQ plans on being benchmarked to GFSI which stands for Global Food Safety Initiative. We plan on going through that process to get the benchmark next year. There are four standards underneath CSQ: one for growing and cultivation; one for extraction; one for food and beverage edibles; and then cannabis dietary supplements. We’re looking to add standards for cosmetics, cannabis contact packaging materials, retail and consumption lounges.

Last year, when we were doing our pilot audits, we realized that the CSQ standard was great for medium to big sizedMSOs because they’re already doing these best practices. It’s easier for them to, you know, implement a few things, and then get certified, whereas for the smaller guys who might be coming from the illicit market, it’s a lot harder – it’s a lot bigger jump from them to go from zero to 100. Last month, we released our unaccredited cGMP, cGMP+, cGAP and cGAP+ standards. The difference between the regular and the plus is that the plus has HACCP (Hazard Analysis Critical Control Point) and then it also includes a recall module where the site must do a mock recall while the auditor is on-site.

CSQ doesn’t perform the audits. We license the use of our standard to accredited certification bodies and then they must get accredited to be able to certify companies under the CSQ name.

Green: Can you tell me a bit about the genesis of CSQ and the structure of the organization?

Williams: We’re a for-profit company. We thought about going the non-profit route but it’s a lot more intricate and a lot more people involved when you go that route. Our parent company is ASI, and we are under the ASI global standards division which is responsible for developing standards. So, CSQ is one of those standards under that brand and that’s kind of the foundation of it. We have two licensed certification bodies right now. ASI has a certification body, and they are one of our licensed CBs and then WQS, who’s based out of North Carolina and has a big presence in South America which is great because we’re starting to get inquiries from companies in South America as well.

Green: How do you go about building industry awareness and acceptance of the standard?

Williams: Building awareness really started with going out to the medium- to large-sized companies and saying, “Will you open your doors and let us come and basically do all these audits for free at your facility just so we can kind of get a baseline across the industry?” So, that started the conversation with industry. The MSOs in the medium- to large-sized companies, are more ready to go through the certification process because they know that federal legalization is around the corner. They know these things are going to have to be in place already so they’re just doing it as preparation. There isn’t much demand for retailers right now like there is in the food and or dietary supplement space. So that’s where the demand is really coming from – wanting to self-regulate in preparation for federal legalization.

Most of our outreach is education-based. We speak at a lot of conferences. We host a lot of webinars and free events and things like that, just to get the word out about CSQ. A lot of people know what GMPs are, or know that they should be following GMPs, but they don’t necessarily know how to get from point A to point B. Our job is to educate them that it’s not as hard as they think it is and it’s not as expensive as they think it is. The cost of an audit is relatively inexpensive. What I always tell people is the sooner you start preparing, the cheaper the whole process is. What happens a lot of times is a facility will not build out their facility to GMP specifications, and then they want to get GMP certified so they must move the hand washing station from the back of their facility to the front where the employee entrance is or things like that. The sooner these companies start thinking about it, the better and that’s basically what we’re trying to do is just educate the industry about that kind of preparation.

Green: cGMP and cGAP are perhaps more broadly accepted outside of the cannabis industry. Do cGMP and cGAP fall under the CSQ certification?

Williams: There are four ingredients that make up the CSQ standard. There are industry best practices, which are specific to just the cannabis industry. There are good manufacturing practices, or good agricultural practices, that are just accepted globally. Then we look at the Codex Alimentarius, which is the global food code. Every country mustwrite their federal rules on food based off this standard. We use the Codex when we’re talking about edibles and things like that. And then the last aspect of CSQ is the GFSI benchmarking requirements. So that’s kind of the basis of our program, making sure that the auditors have certain amount of audit hours, and we have training and processes in place for that. That’s where the GFSI benchmarks are coming out. So, all those four things kind of really create the CSQ standard.

Green: There are clear internal benefits to a company for holding to a quality standard. What are the downstream benefits to the companies that have CSQ? How do the end-users know about it?

Williams: I come from the food industry and if you go to the grocery store, you just assume that everything’s safe.Consumers don’t even think about the certifications that those companies must get to even be able to sell their product in retail stores. They don’t necessarily put those certifications on the packaging material, because as a consumer “SQF” means nothing to most consumers, right? It would only mean something if you’re in the industry.We’re trying to be different with CSQ and get more consumers aware of it. One of the things that we have is a database of certified facilities. Consumers will be able to say, “Okay, maybe I’m interested in this new brand. Are they certified to this program or not?” and be able to see that. We’re also trying to get companies to put the CSQ logo once they’re certified on their marketing materials.

Now, one thing that we cannot do yet is put the logo on the finished product packaging, because we don’t have a testing addendum, but we’re working on that. There’s not a lot of demand for it right now and it’s more expensive audit costs, where you’re talking about lab tests, and things like that. So, it’s something that we’re working on, but we haven’t fully developed yet.

Green: Next question is around d-8 THC and federal regulations. What’s your position on d-8 and how are you thinking about d-8 trends in the future?

Williams: d-8 THC itself as a product, I think it’s fine. I think if it’s made safely, we know all the components I think it’s fine from that aspect. The problem that we have right now is it’s not regulated. That’s where I think we need to have these states that have legalized THC or hemp to then implement rules and regulations and bring d-8 THC into those rules and regulations. And so maybe then it’s only those licensed facilities that are inspected by the state that are producing those products and not just some guy out of his garage. I think a lot of people right now are just wanting to ban it completely and I don’t think that’s the best approach. There’s nothing wrong with the product itself, it’s just how it’s being produced right now in the gray area where no one’s regulated.

Green: What in your personal life or in cannabis are you most interested in learning about?

Williams: I love what I do. I’m always looking at and reading regulations and then trying to learn something new. I’ve been going through organic certification training right now. At some point, CSQ will probably go down the route of having some sort of organic certification. So that’s been kind of what I’ve been working on and learning right now. But I’m a sponge and I like to absorb new information about the industry.

Green: Thanks Tyler, that concludes the interview!

Williams: Thanks, Aaron!