The cannabis industry is growing and evolving at an unprecedented pace and regulators, consumers and businesses continually struggle to keep up.
Cannabis businesses: How do you maintain an edge on the market, avoid costly mistakes?
Case Study: Costly Facility Build Out Oversights
David Vaillencourt will be joining a panel discussion, Integrated Lifecycle of Designing a Cultivation Operation, on December 22 during the Cannabis Quality Virtual Conference. Click here to register. A vertically integrated multi-state operator wants to produce edibles. The state requires adherence to food safety practices (side note – even if the state did not, adherence to food safety practices should be considered as a major facility and operational requirement). They are already successfully producing flower, tinctures and other oil derivatives. Their architect and MEP firm works with them to design a commercial kitchen for the production of safe edibles. The layout is confirmed, the equipment is specified – everything from storage racks, an oven and exhaust hoods, to food-grade tables. The concrete is poured and walls are constructed. The local health authority comes in to inspect the construction progress, who happens to have a background in industrial food-grade facilities (think General Mills). They remind the company that they must have three-compartment sinks with hot running water for effective cleaning and sanitation, known as clean-out-of-place (COP). The result? Partial demolition of the floor to run pipeline, and a retrofit to make room for the larger sinks, including redoing electrical work and a contentious team debate about the size of the existing equipment that was designed to fit ‘just right.’
Unfortunately, this is just one more common story our team recently witnessed. In this article, I outline a few recommendations and a process (Quality by Design) that could have reduced this and many other issues. For some, following the process may just be the difference between being profitable or going out of business in 2021.
The benefits of Quality by Design are tangible and measurable:
Reduce mistakes that lead to costly re-work
Mitigate inefficient operational flow
Reduce the risk of cross-contamination and product mix-ups. It happens all the time without carefully laid out processes.
Eliminate bottlenecks in your production process
Mitigate the risk of a major recall.
The solution is in the process
Regardless of whether you fall in the category of a food producer, manufacturer of infused products (MIP), food producers, re-packager or even a cultivator, consider the following and ask these questions as a team.
People
By standardizing and documenting safety procedures, manufacturers mitigate the risk of cannabis-specific concerns
For every process, who is performing it? This may be a single individual or the role of specific people as defined in a job description.
Does the individual(s) performing the process have sufficient education and training? Do you have a diverse team that can provide different perspectives? World class operations are not developed in a vacuum, but rather with a team. Encourage healthy discourse and dialogue.
Process
Is the process defined? Perhaps in a standard operating procedure (SOP) or work instruction (WI). This is not the general guidance an equipment vendor provided you with, this is your process.
How well do you know your process? Does your SOP or WI specify (with numbers) how long to run the piece of equipment, the specification of the raw materials used (or not used) during the process, and what defines a successful output?
Do you have a system in place for when things deviate from the process? Processes are not foolproof. Do not get hung up on deviations from the process, but don’t turn a blind eye to them. Record and monitor them. In time, they will show you clear opportunities for improvement, preventing major catastrophes.
Materials
What are the raw materials being used? Where are they coming from (who is your supplier and how did you qualify them)?
Start with the raw materials that create your product or touch your product at all stages of the process. We have seen many cases where cannabis oils fail for heavy metals, specifically lead. Extractors are quick to blame the cultivator and their nutrients, as cannabis is a very effective phytoremediator (it uptakes heavy metals and toxins from soil substrate). The more likely culprit – your glassware! Storing cannabis oil, both work in process or final product in glass jars, while preferred over plastic, requires due diligence on the provider of your glassware. If they change the factory in which it is produced, will you be notified? Stipulate this in your contract. Don’t find yourself in the next cannabis lead recall that gets the attention of the FDA.
Savings is gained through simple control of your raw materials. Variability in your raw material going into the extractor is inevitable, but the more you can do to standardize the quality of your inputs, the less work re-formulating needs to be done downstream. Eliminate the constant need to troubleshoot why yields are lower than expected, or worst case, having to rerun or throw an entire batch out because it was “hot” (either too much THC in the hemp/CBD space or pesticides/heavy metals). These all add up to significant downstream bottlenecks – underutilized equipment, inefficient staff (increase in labor cost) all because of a lack of upstream controls. Use your current process as a starting point, but implement a quality system to drive improvement in operational efficiency and watch your top line grow while your bottom-line decreases.
Consistency in quality standards requires meticulous SOPs
Have you tested and confirmed the quality of your raw material? This isn’t just does it have THC and is it cannabis, but is it a certain particle size, moisture level, etc.? Again, define the quality of your raw materials (specifications) and test for it.
Remember – ranges are your friend. It is much better to say 9-13% moisture than “about 10%”. For your most diligent extractor, 11% will be unacceptable, but for a guy that just wants to get the job done, 13% just may do!
Test your final product AFTER the process. Again, how does it stack up against your specifications? You may need to have multiple specifications based on different types of raw material. Perhaps one strain with a certain range of cannabinoids and terpenes can be expected for production.
Review the data and trend it. Are you getting lower yields than normal? This may be due to an issue with the equipment, maybe a blockage has formed somewhere, a valve is loose, and simple preventive maintenance will get you back up and running. Or, it could be that the raw biomass quality has changed. Either way, having that data available for review and analysis will allow you to identify the root cause and prevent a surprise failure of your equipment. Murphy’s law applies to the cannabis industry too.
You are able to predict and prevent most failures before they occur
You increase the longevity of your equipment
You are able to predict with a level of confidence – imagine estimating how much product you will product next month and hitting that target – every time!
Business risks are significantly mitigated – a process that spews out metal, concentrates heavy metals or does not kill microbes that were in the raw material is an expensive mistake.
Your employees don’t feel like they are running around with their hair on fire all the time. It’s expensive to train new employees. Reduce your turnover with a less stressed-out team.
Takeaways
Maintaining a competitive edge in the cannabis industry is not easy, but it can be made easier with the right team, tools and data. Our recommendations boil down to a few simple steps:
Make sure you have a chemical or mechanical engineer to understand, optimize and standardize your process (you should have one of these on staff permanently!)
Implement a testing program for all raw materials
Test your raw materials – cannabis flower, solvents, additives, etc. before using. Work with your team to understand what you should and should not test for, and the frequency for doing so. Some materials/vendors are likely more consistent or reliable than others. Test the less reliable ones more frequently (or even every time!)
Test your final product after you extract it – Just because your local regulatory body does not require a certain test, it does not mean you should not look for it. Anything that you specified wanting the product to achieve needs to be tested at an established frequency (and this does not necessarily need to be every batch).
Repeat, and record all of your extraction parameters.
Review, approve and set a system in place for monitoring any changes.
Congratulations, you have just gone through the process of validating your operation. You may now begin to realize the benefits of validating your operation, from your personnel to your equipment and processes.
According to a press release sent out last week, Kennebec Analytical Services (KAS) announced that they have acquired Cannabis Testing Laboratories (CTL), which was previously owned by Doane University. KAS is based in Lincoln, Nebraska and provides testing services for hemp and CBD producers in Nebraska.
CTL operates independently of the university, but the lab is a resource for faculty and students. There are internship and experiential learning opportunities available at the lab for students. In addition to that, the lab also helps faculty that teach cannabis-related courses.
Concetta DiRusso, Ph.D. is the CEO of KAS and says CTL has done provided testing for over 50% of Nebraska’s hemp market and provides hemp farmers with educational resources as the market gets off the ground. “Drs. Andrea Holmes, CTL founder, and Arin Sutlief, Laboratory Director, have done an outstanding job for Nebraska hemp farmers,” says Dr. DiRusso. “KAS is committed to continuing these valuable relationships and services for the hemp and CBD industries.”
Dr. Markus Roggen is a chemist, professor, cannabis researcher and founder & CEO of Complex Biotech Discovery Ventures (CBDV). Founder & CEO of Ascension Sciences (ASI), Tomas Skrinskas has been at the leading edge of transformative healthcare technologies, including computer assisted surgery, surgical robotics and genetic nanomedicines, for over 15 years.
Leading researchers from the cannabis industry – Dr. Markus Roggen (Complex Biotech Discovery Ventures) and Tomas Skrinskas (Ascension Sciences) – highlight the challenges facing the industry’s current compliance testing standards and the opportunities emerging from the latest developments in nanotechnology and advanced analytical testing. Here are the key insights from the discussion.
What are the current compliance testing requirements for cannabis products? Are they sufficient in ensuring safety and quality?
In the current landscape, Canada’s compliance testing requirements are clearly laid out in the form of guidance documents. Specifically, for pesticide testing, cannabinoid concentration content in products, heavy metals, etc. Compliance testing can be roughly divided into two categories: 1) establishing the concentrations of wanted compounds, and 2) ensuring that unwanted compounds do not exceed safety limits.
In the first category, cannabinoids and terpenes are quantified. Their presence or absence is not generally forbidden but must stay within limits. For example, for material to be classified as hemp, the THC concentration cannot exceed 0.3 %wt., or a serving of cannabis edible should contain below 5 mg of THC. The second category of compliance testing focuses on pesticides, mold and heavy metals. The regulators have provided a list of substances to test for and set limits on those.
Are those rules sufficient to ensure safety and quality? Safety can only be ensured if all dangerous compounds are known and tested for. Take for example Vitamin E acetate, the substance linked to lung damage in some THC vape consumers and the EVALI outbreak. Prior to the caseload in the Fall of 2019, there were no requirements to test for it. It’s not only additives that are of concern. THC distillates often show THC concentrations of 90% plus 5% other cannabinoids. What are the last 5% of this mixture? Currently, those substances have not been identified. Are they safe? There is no concrete way to determine that.
The aforementioned guidelines have the best intentions, but do not adequately address two key obstacles the industry is currently facing: 1) what happens in practice, and 2) what can easily be audited? Making sure people follow the requirements is the challenge, and it comes down to variability of the tests. Testing has to happen on the final form of the product as well as every “batch,” but there is little guidance on how that is defined. With so much growth happening in the industry, how are these records even tracked and scrutinized?
And finally, there’s the question of quality. How do you define quality? Before establishing quantifiable quality attributes, it can’t be tested.
If compliance testing is insufficient, then why aren’t more cannabis companies testing beyond Health Canada’s requirements?
Compliance testing has always been focused on the end product, THC and CBD levels, and consumer safety. As long as cannabis companies are testing to determine this, doing further testing means added costs to the producer. There is a rush to get cannabis products to the new market because many consumers are eager to buy adult use products such as extracts or edibles, and quality is not the biggest selling point at this very moment.
However, there are unrealized advantages to advanced analytical testing that go beyond Health Canada’s requirements and that offer greater benefits to cannabis producers and product developers. Producers often see testing as an added cost to their production that is forced upon them by the regulators and will only test once the product is near completion. For cannabinoid therapeutics and nutraceuticals, advanced analytical testing is critical for determining the chemical makeup and overall quality of the formulation. This is where contract researchers, such as Ascension Sciences, come in to offer tests for nanoparticle characterization, cannabinoid concentration, dissolution profiles and encapsulation efficiency.
A lack of budget and awareness have prevented cannabis companies from advanced analytical testing. However, testing that goes beyond lawful requirements is an opportunity to save money and resources in the long term. This is where companies, like Complex Biotech Discovery Ventures (CBDV), offer in-process testing that provides a deep characterization and analysis of cannabis samples during every stage of product development. If tests are conducted during production, inefficiencies in the process are revealed and mistakes are spotted early on. For example, testing the spent cannabis plant material after extraction can verify if the extraction actually went through to completion. In another case, testing vape oil before it goes into the vape cartridges and packaging allows producers to detect an unacceptable THC concentration before they incur additional production costs.
Which methods are the most successful for cannabis testing?
The most effective method is the one that best determines the specific data needed to meet the desired product goal. For example, NMR Spectroscopy is paramount in assessing the quality of a cannabis sample and identifying its precise chemical composition.
HPLC (liquid/gas chromatography) is the most precise method for quantifying THC, CBD and other known cannabinoids. However, if a cannabis extractor wants to quickly verify that their oil has fully decarboxylated, then an HPLC test will likely take too long and be too expensive. In this case, IR (Infrared Spectroscopy) offers a faster and more cost-effective means of obtaining the needed data. Therefore, it ultimately depends on the needs of the producer and how well the testing instruments are maintained and operated.
What’s next in analytical testing technology? What are you working on or excited about?
In terms of compliance, regulations to standardize the testing is the hot topic at the moment. For nanotechnology and nanoparticles, the big question now is what is known as the “matrix” of the sample. In other words, what are the cannabinoids, and what else is in the sample that’s changing your results? The R&D team at Ascension Sciences is in the process of developing a standardized method for this to combat the issues mentioned earlier in the interview.
The smoke analyzer in CBDV’s lab
Ascension Sciences is also excited about characterizing nanoparticles over time to determine how cannabinoids are released and how that data can be transferred or made equivalent to consumer experiences. For example, if a formulation with quicker release, faster onset and better bioavailability is found in the lab, product development would be more efficient and effective when compared to other, more anecdotal methods.
At CBDV, the team is working on in-process analytical tools, such as decarboxylation monitoring via IR Spectroscopy and NMR Spectroscopy. CBDV is also looking at quantifying cannabis product quality. The first project currently in motion is to identify and quantify cannabinoids, terpenes, and other compounds present when vaping or smoking a joint using a smoke analyzer.
A lack of budget and awareness have prevented cannabis companies from testing beyond what’s required by Health Canada. Compliance testing is designed to ensure safety, and for good reason, but it is currently insufficient at determining the quality, consistency and process improvements. As the above factors are necessary for the advancement of cannabis products, this is where further methods, such as advanced analytical testing, should be considered.
Cannabis infused products manufacturing is quickly becoming a massive new market. With companies producing everything from gummies to lotions, there is a lot of room for growth as consumer data is showing a larger shift away from smokable products to ingestible or infused products.
This is the fourth article in a series where we interview leaders in the national infused products market. In this third piece, we talk with Stephanie Gorecki, vice president of product development at Cresco Labs. Stephanie started with Cresco in 2019 after transitioning from an award-winning career in traditional foods CPG. She now heads up product development where she manages R&D for Cresco, a multi-state operation with tremendous SKU variety.
Next week, we’ll sit down with Lisa McClung and Glenn Armstrong from Coda Signature. Stay tuned for more!
Aaron Green: Stephanie, how did you get involved at Cresco Labs?
Stephanie Gorecki:A few years ago, CBD became the most talked about ingredient in the food industry. CBD-infused food headlines appeared in most of the trade magazines. I have always been curious about working in the cannabis space, and not just with CBD, but THC and other cannabinoids. I researched technical seminars and came across the cannabis infused edibles short course put on by the Institute of Food Technologists.
Stephanie Gorecki, Vice President of Product Development at Cresco Labs
I attended the short course in April of 2019. I realized that to be hands-on with cannabis in the near future, I would need to join an organization that was already in the space. The space was highly regulated which meant that research in the mainstream food and beverage space was limited.
Immediately following that seminar, I began to look for opportunities near where I lived. That’s when I came across the Cresco Labs career opportunity. The Director of Food Science position appeared to be a good match. I applied for the position and went through the interview process. Approximately two months after attending that seminar, I joined Cresco Labs.
Aaron: Awesome! It’s a cool story. In your role, how do you think about developing products that differentiate in the market?
Stephanie: There are many opportunities for brand differentiation in cannabis right now. There is a focus on high bioavailability and water solubility and how that translates to onset times once consumed. Many of these technologies utilize ingredient technologies and systems that I have experience with from my past work in the flavor industry.
Gummies and jellies are a great infusion matrix to start with because of their shelf-life stability. There are a variety of formulation techniques that can be used to deliver on product differentiations. There is an abundance of flavor varieties, colors, processing steps and cannabinoid ratios that can be baked into a formula to make that product line unique.
Here in the cannabis space, SKU variety is essential. It’s exciting to be a part of a company where we develop products that appeal to a variety of customer wants and needs.
Aaron: In that vein, what’s your process then for creating a new product?
Stephanie: I’ll start with how we develop an edible. Most of my background is in this type of product development, but the same process is applied to how we develop and extract vape, topical, flower SKU, or ready-to-smoke type products. We follow a similar stage/gate process utilized by most CPG companies.
Marketing typically presents our product development team with a brief on a new concept based on how they’ve read the needs of the market. There are opportunities for us to come to marketing with ideas for innovation, too. The product development team regularly works in our processing facility, so we as a team are aware of the different capabilities of each state and production line. During the briefing phase, we determine what is needed to be achieved and the parameters that the team would like the new product to deliver on.
For edibles, we begin our development work at The Hatchery. The Hatchery is our non-infused product development space that we utilize outside of our processing facility. In this space, we have several pieces of pilot equipment that allow us to scale and create prototypes that are highly representative of what our finished product will look like. For vapes, flower SKUs and RTS (ready-to-smoke) products, development and processing trials happen within our cultivation center.
All infusions are conducted in our licensed processing center. We also conduct stability testing and analytical testing in-house on our products. Our analytical lab is amazing – we have talented chemists and the ability to run GCMS, HPLC, microbiological testing, and many other analytical tests that are important for ensuring consistency and product uniformity.
Aaron: Can you expand on a point about testing? How do you think about testing at the different points in your manufacturing or production process?
Stephanie: Testing comes in several forms. We focus heavily on analytical testing since that does not involve product consumption. Potency uniformity and consistency is critical for edibles. For infused products, we have one shot at hitting our potency – infusion science is extremely important for us. Our gummies and chocolates cannot be re-worked, so hitting our potency range on the first attempt is important. If we miss the target, the product has to be destroyed.
We have methods developed to conduct in-process potency testing where we can. With the processes and infusion methods that we have implemented, we are rarely outside of our targeted potency ranges.
Aaron: Okay, awesome, then, can you walk me through your experience with one of your most recent product launches?
Stephanie: We recently launched Mindy’s Dark Chocolate Peppermint Bark, a limited time offering for our Mindy’s chocolate line. There’s a series of commercialization trials that we will conduct prior to launch. We use these trials as an opportunity to train our production teams on the new manufacturing instructions and processes.
When it comes to launching products, our technical teams are very hands on with new product introductions. Since we cannot manufacture product in one state and ship it to another state, we have to build processing centers and secure the proper licenses in every state that we’d like to operate in. When we have a new product ready to launch in a new state, our team works with Operations on the tech transfer piece. We’re there on-site during launches to oversee and train on the entire process until our teams are comfortable with manufacturing and packaging the new SKUs.
We monitor launches carefully to ensure product looks as it should before and after leaving our facility for sale in licensed dispensaries across the state. When there are opportunities to optimize a process post-launch, we will do what we can to make the process work as well as possible for the teams producing our products.
Aaron: Okay, so next question is, how do you go about sourcing ingredients for your infused products?
Stephanie: We manufacture our oils and extracts in house, and then source other ingredients externally. We have a supplier quality assurance process for new supplier approval, and we have documentation needs that we need each supplier to be able to deliver on.
Several of our suppliers have invested in research and development of products that will help us to meet our deliverables in the cannabis industry. Our suppliers, at times, have provided applications support in order to help with our speed to market and early phase prototyping. These types of partnerships are essential to us being able to make quick modifications and decisions on ingredients such as flavors and colors.
Aaron: Can you give me an example of a challenge that you run into frequently? This could be a business challenge or a cannabis-related challenge.
“I’m a scientist at heart. I look forward to more spending on cannabis research to show how THC and other cannabinoids can be used to treat a variety of conditions.”Stephanie: A big challenge for us and other multi-state cannabis operators are the variations in compliance regulations state-to-state. We have compliance managers in every state who work to ensure we are meeting all of the state regulations. Our packaging reviews are in-depth because of all the language that needs to be included on our packaging.
Each state needs its own packaging with proper compliance labeling. Some states require a cannabis warning symbol of a certain type. If we sell Mindy’s Gummies in 8 flavors and THC mg SKUs in four states, that is 32 different pieces of artwork that need to be managed and cross-checked for accuracy. We have 32 separate pieces of packaging for this one line of products. We have many lines of products with multiples strains (flower and vapes) and flavors (edibles).
Aaron: You mentioned packaging, do you do all of your packaging in house?
Stephanie: We design our packaging artwork in-house. We have a creative team who works on our product artwork, and then a team of cross-functional members tasked with packaging editing and review. Packaging reviews go through multiple rounds before being released for printing. We source a variety of packaging depending on the needs of the product going into the packaging. For edibles, our packaging has to be opaque. Product cannot be seen through the packaging in most states. This is great for our products that are made with natural colors that may be light sensitive.
All of our packaging needs to be child resistant. This limits the amount of packaging variety that we have, but this is a big opportunity for packaging developers. We want and need more sustainable forms of packaging that are differentiated from other packaging forms currently on the market.
Aaron: What trends are you following in the industry personally?
Stephanie: Cannabis trends that are of interest to me personally are fast-onset and water solubility technology. There have also been many discussions surrounding minor cannabinoids and how those can be blended together to drive customer experience.
There are traditional food trends that also impact how we formulate. Our Mindy’s Edibles line is flavor forward. The flavors are sophisticated. In the Mindy’s line, you won’t find a generic orange or grape flavor. Instead, you’ll find a Lush Black Cherry or Cool Key Lime Kiwi Flavor. This flavor development work starts with Mindy Segal, who is the face and talented James Beard award-winning chef behind our Mindy’s Edibles line of products.
Aaron: Okay, so the last question I have for you is, what are you interested in learning more about?
Stephanie: I’m a scientist at heart. I look forward to more spending on cannabis research to show how THC and other cannabinoids can be used to treat a variety of conditions. People use cannabis for many reasons: to relax, to ease aches or pains, etc. It’s exciting to lead part of our technical team during a period of time where cannabis is rapidly growing and is of great interest and increasing acceptance across our country and in the world.
Aaron: Okay. So that’s it. That’s the end of the interview!
Cannabis infused products manufacturing is quickly becoming a massive new market. With companies producing everything from gummies to lotions, there is a lot of room for growth as consumer data is showing a larger shift away from smokable products to ingestible or infused products.
This is the third article in a series where we interview leaders in the national infused products market. In this third piece, we talk with Liz Conway, Regional President of Florida at Parallel. Liz started with Parallel in 2019 after transitioning from her healthcare IT consulting practice. She now heads up Florida operations for Parallel which runs the Surterra Wellness brand.
Next week, we’ll sit down with Stephanie Gorecki, vice president of product development at Cresco Labs. Stay tuned for more!
Aaron Green: Liz, very nice to meet you. Can you tell me how did you get involved at Parallel?
Liz Conway: Well, I’ll give a little bit of background. Previously, I was working in healthcare technology and in that field, really coming out of health care reform. I was also living in Northern California and so was conscious of a bunch of startups that needed help with highly regulated spaces and policy and how to navigate both the today and the tomorrow of “Hey, we’re trying to build something super fast, but we’re not interfacing with government well enough to know how to build what we’re building and not be set back again.”
And so cannabis actually came to me. I started working with some early stage cannabis IT companies and I was the principal where I founded a firm to do this very thing, which was to help highly regulated companies get through what is today, what is tomorrow, and what can we change. I was really fortunate to be living in Northern California, and I started to help them navigate the California rules.
Then in 2016, when California went adult use, that was just a major time to turn everything on its head and see what we could get. From there, it was history. I started to work with companies, both nationally and in Canada, and met some of the folks with Parallel and was a consultant with them for a while and then joined the team.
Liz Conway, Regional President of Florida at Parallel
Aaron: So, are you in Florida now?
Liz: I relocated to Florida in January 2019.
Aaron: At Parallel, how do you think about differentiating in the market?
Liz: I think that we differentiate in terms of the quality of our product, of course, and I will speak specifically to Florida where our focus is still a medical market. Every day we are trying to manage the vertical from end-to-end so that we can get the products that our people want as quickly as possible over a vast territory. Well-being is such a critical ethos that everything we do comes down to, “alright, what does this mean for well-being and how are we delivering that both in the customer experience as well as in the product?”
Aaron: With regards to differentiation, can you speak to any products in particular that you feel are differentiated in the Florida market?
Liz: In the Florida market, I think that we were the first to launch thera-gels, and the thera-gels really are medicated jelly. You can use it sublingually, or take it as an oral to swallow. From that we developed thera-chews. That line, it’s really great tasting, it’s long lasting, and the effects are getting great reviews from the patients. So that’s one area that I think we distinguish ourselves and we’re a forerunner in the Florida market.
Aaron: So, if you take one of those products as an example, can you walk us through your process for creating a new product like that?
Liz: Well, so remembering that we’re part of companies in other states, because Parallel operates in Nevada, Massachusetts and in Texas. So, we’re not developing products on our own, but we certainly are doing Florida market analysis to say, what should come next, we are listening to our customers, we listen to our people, we’ve got 39 stores across the state. We have a number of employees who are always listening. We also have employees who are part of the medical program who are using the products to address different needs and they are looking at our competitors.
So, we’re doing some competitive analysis. We’re also knowing what it is that we’re really good at, and we take it through a product development lifecycle that involves testing because we are fully vertical. In Florida, we have to always ask ourselves are we able to do this end-to-end and thus far, we’ve been fortunate enough to either build or buy that capability.
Aaron: You mentioned there’s 39 stores in Florida? Are those dispensaries?
Liz: Yeah, they are our stores. There are other stores that other companies have, but we’re the second largest footprint in the state and all over from the very edges of Pensacola down to the Florida Keys, and then over to Miami and up through Tallahassee. So, covering really all corners in the state.
Aaron: Now, with those stores do you also market your products in other people’s stores?
Liz: No. The vertical really means that our stores only carry our own products. We’re marketed in Florida as Surterra Wellness and that’s the name of our stores. Anywhere you go that there’s a Surterra Wellness, you have the same product sets and we’re not allowed to sell other folks’ products. It’s a big difference between Florida and other states.
I’ll tell you one of the nice things is, when I have a product, I know that we grew it. I know every single quality step along the way. I don’t have to go and then look at other vendors and constantly monitor their quality. Everything that we do, we touched it from the very first moment hitting the ground. So it’s nice.
Aaron: Can you walk me through one of your most recent product launches? And if you can, the full lifecycle from the initial marketing briefing up to commercialization?
Liz: Well, I can do some of that. Speaking specifically about those thera-chews – that oral dosing mechanism – we’ve got it in a couple of different flavors. We said to ourselves, “hey, there’s a real need in this market for people to experience something that was like an edible, because Florida just launched edibles.” But we didn’t consider this as an edible because they weren’t allowed at that point. We knew from other states that particularly patients like to dose, you know, with something that is long lasting and flavorful. And so we said, “how can we bring this to market as an oral-dosing product?” And so we conceived the machinery that was able to do it. We had to do quite a bit of tooling.
Prior to that, we did some market testing from our customers and our associates as well as our brand team to say “is this going to be right? Can we bring it to market?” We did the projections around anticipated demand and program growth as well as the cost. We had to figure out what it would it take to adjust the machinery. Will it work? We did some pretty significant testing on that machinery and a lot of flavor testing.
We’re fortunate enough to have one of only four licensed kitchens that can do this kind of R&D in Florida. We’re licensed by the Department of Health for cannabis R&D on an edibles-type kitchen. So we were really fortunate to be able to do that to bring it to market. And from there, it really took on a life of its own. The flavors were tested across all of us (non-dosed flavors, obviously) and we voted on the best products to hit the shelves.
Aaron: When you’re making that decision, how much of the decision was weighted by market demand from your existing customers, and just observing other markets and seeing how products perform in other markets?
Liz: Data is not as prolific as I’d like it to be in cannabis. When you hit the edge of that state line, your consumer is very different, your stores are very different, your marketing capability is very different. So we really had to look across the US and say, “how are products like this performing? Is that how Florida is going to perform?” We did use that state-by-state evidence as well as our own evidence — the response to therapy gels — if we have thera-gels, what type are we selling in terms of dosage and flavors. There are slight differences there in effect-states. And so it was a little bit of both.
Aaron: Next question gets more into like the supply chain. How do you go about sourcing ingredients for your products?
Liz: So again, in a fully verticalized state, we have to source 100% of the active cannabinoid ingredients. Then we have an authorized vendor list that we’ve worked with for other things in terms of flavors and terpenes. Then we have to go back to the DoH to make sure that the other ingredients, whether that be sweeteners, or the kind of wrapping on those thera-gels are okay — the gelatin elements in particular.
“The Florida environment all day long is the biggest hurdle that I think we face.”We use an authorized vendor list. One of the great things that we’ve done recently is to focus our vendor list on minority women and veteran-owned businesses, and so really looking deep in the supply chain to source whatever we can from a diversity of suppliers. I love that original ethos of cannabis to be of the people, by the people and for the people, as well homegrown.
Aaron: Can you give me an example of a challenge that you run into frequently?
Liz: Well, I’ll say in Florida, if you’re growing your own cannabis, it’s way different than if you’re growing it in Colorado or California. So, I’m going to start there. The great news is that after Florida allowed us to start selling smokable flower last fall, we’ve come such a long way. We’ve got new indoor grow facilities. It’s making the environmental issues much, much lower.
“I think that the best thing that we can do is try to look five years ahead and ask what could this look like?”Bringing those on-line is going to bring a much more consistent consumer experience because while I know consumers have a lot of tolerance for variations in their cannabis, but as the industry matures, they’re going to treat us much more like other CPG companies. They’re not going to want that variation. Between that and then Florida’s new testing regulations which also are making sure that the product that’s delivered only meets what’s on the label.
The Florida environment all day long is the biggest hurdle that I think we face. The humidity is much higher here than in other states.
We’re also looking at live resin. What I am watching is the next generation. A lot of live products get us really close to the plant. We’ve done so much to pull out of the plant but where are we going to preserve that original plant in all of its most original formats without having to necessarily smoke the flower itself. We’re working with the Florida Department of Health to help them understand live resin products from a health standpoint.
Aaron: What trends are you following in the industry?
Liz: As you can imagine, as the regional president of a division that goes really end-to-end on monitoring trends in edibles and infused products, medical and recreational, I’m watching the election pretty closely. It will impact banking. It could potentially impact interstate commerce and it could potentially impact research.
I’m also watching things like HR trends, what’s happening in who we employ, our leadership, and how we deal with some of the emerging union issues around the country. I think that the best thing that we can do is try to look five years ahead and ask what could this look like? Where do we put our investment dollars now to meet the future, as well as where do we put our regulatory efforts for the best public policy to have the outcomes that we want consumers to trust us with? I know that’s a really broad answer, but from where I sit, it really is what I’m looking at, across a universe of excitement, but it includes challenges also.
Aaron: The last question is, what would you like to learn more about in the cannabis industry?
Liz: Well, of course, if I had a crystal ball, that would be great. I think the data is always missing. The more data that we could get, there’s so much out there that people are using cannabis for and we just don’t understand the impacts on how is this wonderful well-being product helping so many people because a lot of people don’t like to talk about it. So the more data about our consumers and what they like and what they don’t like, even across state lines, as we could aggregate that in a uniform way. I think it would help a lot of the people who are fearful of cannabis and it would help a lot of us who are in the business, get the consumers exactly spot on what they want, which at the end of the day is why we’re all here.
Aaron: Thank you Liz, that’s the end of the interview.
In a press release sent out this week, Trichome Analytical, based in Mount Laurel, New Jersey, announced two new developments for their business: They have achieved ISO 17025:2017 accreditation and they are officially registered with the DEA for hemp compliance testing.
The press release also mentions their collaboration with Shimadzu, who supplies 80% of the lab’s equipment and supports the Trichome’s operations with technical guidance.
For the hemp industry, pre-harvest testing for THC levels is a requirement and labs are required to get registered with the DEA in order to perform that testing.
These announcements are somewhat timely, given the results of the election. Voters in New Jersey approved adult use cannabis legalization just last week.
In a press release published last week, Shimadzu Scientific Instruments announced a partnership with MoCann Testing, a division of EKG Labs. MoCann Testing is the first state-certified medical cannabis testing lab in Missori.
It sounds like the partnership involves Shimadzu supplying MoCann with instruments and supporting their testing efforts with training, method development and maintenance, though the press release does not mention any details.
“We are excited to support MoCann’s mission to help individuals across the state of Missouri have access to safe medical marijuana through accurate sample testing and quality results,” says Bob Clifford, Ph.D., general manager of marketing at Shimadzu. “Because selecting the right analytical solutions is a critical investment, we provide more than just advanced instrumentation and software. We assist with method development, instrument training and maintenance that keep systems operating at the highest level.”
MoCann Testing is certified by Missouri, accredited to ISO 17025 and they offer the full gamut of testing services for growers and manufacturers in Missouri.
While we’re pleased to report that 2020 is almost over, 2021 will be a mixed bag. New jurisdictions will open their doors to cannabis and consumption will continue to rise, but competition from new operators and illicit supplies will increase. As California’s cannabis industry matures and turns the page on a bizarre year, market uncertainty will linger as the pandemic drags on and overtaxation and regulation strangle profits. But let’s remember, cannabis has been cultivated for over 6,000 years and has withstood far worse—this market isn’t going anywhere and will continue to grow and become more impactful.
Access to Traditional Finance Services
The U.S. Senate will likely pass legislation providing cannabis businesses access to traditional banking and financing services. This will be a game changer for the industry. Valuations will go up. Increased liquidity will smooth transactions. Companies will look to affordable debt to expand their footprints and capacity to compete on a new scale. Full federal legalization could be a game changer if 280E tax restrictions are lifted and interstate and international cannabis trade open up, but the timing of this is hard to predict.
Continued Quarantine-Induced Consumption
Cannabis consumption will continue to increase as Californians seek to ease pandemic-related stress, temper quarantine conditions, and sample an eye-popping array of new products. Sophisticated consumers will be open to spending more on unique and niche products. But hemp-derived cannabinoids may present a new source of competition, especially if CBD remains unregulated. By the end of 2021, cannabis beverages will begin to compete with mainstream alcohol categories. Pharmaceuticals will increasingly take notice of this industry and the increasing share of consumers turning to plant-based remedies.
Ever More Cultivation Opportunities
In pursuit of revenue, agricultural counties will liberalize their policies on cannabis cultivation by permitting more acreage and streamlining permit processes. Neighborhood groups will push back, but policymaker concerns will be assuaged when they see cannabis farms operating innocuously (and sustainably) around the state. Advances in seed breeding, pest-and-disease control, outdoor growing techniques and odor abatement technology will help too.
New Retail
Cities and counties will revisit opening their borders to cannabis retail storefront and delivery as they attempt to fill budget gaps. Many cities will allow cannabis retail for the first time and/or expand the number of licenses available. These new dispensaries will provide a much-needed outlet for the influx of licensed flower and will continue to spur innovation and consumer education. But a “second wave” of retail speculators seems poised to let optimism override judgement, setting themselves up for failure or acquisition by incumbents.
Getting Social Equity Right
2021 will be a pivotal year for social equity, which will establish a foundation for a just cannabis economy. The industry will have to grapple with how to ensure that those most impacted by the criminalization of cannabis and most often excluded from traditional financing exposure are provided with equitable access to meaningful opportunities. As California’s regulated cannabis market grows, getting social equity right will be important if the industry is to firmly establish itself as an inclusive industry that addresses impacts on marginalized communities and responds to customer demands.
Formalizing Appellations
California’s new CalCannabis Appellations Program will provide cultivators and brands a way to credibly market the value of their unique growing regions and cultivation methods. These distinctions only apply to cannabis planted in the ground, excluding greenhouse and warehouse grows. The expectation is that high-end consumers, trained to recognize place-based designations and quality certifications in other products, will reward products that boast these designations. How many consumers will be willing to pay the premium and how long full implementation of the program will take, remains to be seen.
Prices May Begin to Drop
2020 was a great year for the few fully licensed cultivators in California permitted to sell to the regulated market. 2021 may be different. Numerous licensed cultivation projects will complete the permitting processes and come online next year. While growing demand may outpace supply at first, by Q3 supplies could swamp the market. Premium flower is perhaps an exception. Adding to the pricing pain, as always, is California’s illicit market, which will continue to undercut prices, as legal growers toil to comply with a labyrinth of state and local regulations. Nonetheless, cannabis will remain the most profitable crop on a per acre basis for some time.
Business Turmoil
The drop in prices coupled with continued high taxes and regulatory burdens will result in turnover of assets and businesses. Less efficient and inexperienced cultivators will struggle, many unable to ultimately withstand pricing pressure. Others will be hit by enforcement actions for failing to comply with California’s myriad regulations. Retailers, already burdened by punitive tax structures, real estate finance commitments and onerous local regulations, will need to be disciplined and have a clear strategy to address new competition.
Consolidation
Driven by business failures and renewed investor interest, California’s regulated cannabis industry may consolidate rapidly in the second half of 2021. Institutional finance will enter the space with a much more disciplined approach than prior capital sources. Traditional agricultural interests will invest in cannabis cultivation projects. Well-run retail chains will begin to outcompete, and then acquire, mom-and-pop competitors. Big brands will continue to expand their shelf space, relegating smaller competitors to niche and novelty status.
In short, the cannabis industry will continue to be highly dynamic, exciting, enticing and risky.
In a press release published last week, the American Association for Laboratory Accreditation (A2LA) announced that they have successfully accredited East Coast Cannalytics (ECC) to ISO/IEC 17025:2017. ECC Labs, based in Blacksburg, Virginia, is an analytical and microbial testing lab.
The news is rather timely given Virginia’s recent efforts to reform their cannabis laws. Earlier this year, the state passed legislation legalizing medical cannabis and the very first dispensary in the state opened its doors in Bristol, VA last week.
According to Becky Hobden, CEO of ECC, their mission is to support the rapidly growing cannabis industry in Virginia and the greater Southeast. “ECC is thrilled to be ISO/IEC 17025 accredited! In the cannabis industry ISO/IEC 17025 is a beacon for labs that have rigorously validated methods and hold the highest standards for quality,” says Hobden. “As a leading cannabis lab in the southeast, we are honored to work with A2LA and demonstrate that we meet the quality standards set forth in ISO/IEC 17025. Thank you!”
Cannabis infused products manufacturing is quickly becoming a massive new market. With companies producing everything from gummies to lotions, there is a lot of room for growth as consumer data is showing a larger shift away from smokable products to ingestible or infused products.
This is the first article in a series where we interview leaders in the national infused products market. In this first piece, we talk with Keith Cich, co-founder of Sunderstorm, Inc. and the brand Kanha Gummies. Keith and his business partner, Cameron Clarke, started Kanha Gummies in 2015 after long careers outside of the cannabis industry. In 2015, they went all in and started the brand, which grew to be a major player and driving force in the California market.
Next week, we’ll sit down with Mike Hennesy, director of innovation at Wana Brands. Stay tuned for more!
Aaron Green: Keith, nice to meet you. Thank you for taking the time today. Tell me about how you got Sunderstorm off the ground and how you got involved in the company?
Keith Cich: Absolutely. So, my business partner, Cameron Clarke, is a lifelong friend. We met as undergraduates at Stanford University. I went on to work on Wall Street and did commercial real estate. Cameron has been a serial entrepreneur, from a much more technical side working in software. He was actually one of the first people to bring the Açai Berry to market and put it on the shelves of Whole Foods. So, he’s kind of the science and operations guy and I’m the finance and business guy. It’s been very synergistic.
Keith Cich, co-founder of Sunderstorm, Inc.
By 2015 we had both traveled extensively and were big advocates of plant medicine and cannabis as another form of plant medicine. We also have a 15-year track record of going to Burning Man together. Really, explorations in consciousness and plant medicine were what tied us together. When cannabis came up as a business opportunity, we just kind of looked at each other and said, you know, we have a lot of business experience to bring to the table. We have a love of the plant and an appreciation for how it will impact society. So, we kind of went all in in 2015 under proposition D, and set up operations in Los Angeles at that time.
Aaron: How did you decide to get into infused products from the list of choices?
Keith: Yeah, we initially set up extraction, but we felt that cultivation and extraction would ultimately be commodities. However, if you could develop popular brands you could carve out valuable shelf space and have longevity.
We acquired a small gummy company in February 2016. In the beginning of it all – I call it “Cannabis 1.0.” At that time, a lot of the packaging was really oriented around men in their 20s focused on “high consumption.” The packaging was a lot of black and skull and crossbones, and it didn’t really represent who Cameron and I were as people. You know, we were a little bit older and well-traveled. And we just felt like when adult use would come in that brands would take a different pathway. So, we hired a branding person to come in and help with packaging.
We really focused on a product that would appeal to females because it was clear they were going to be 50% of the market – and packaging that would really appeal to older people, which we thought would come on board once the stigma of cannabis was reduced. And so, we really set up Kanha gummies, at that time in early 2016, to be this adult use product that would appeal to a wide spectrum, both medical users as well as adult users in the time that would come in the not too distant future.
Aaron: Yeah, that’s interesting. You talked about how you thought about differentiating in the early days getting off the ground. How do you think about differentiating today?
Keith: The two things that really set Sunderstorm apart from the crowd is automation and innovation. We were the first gummy company to invest hundreds of thousands in European confectionery equipment, which allowed us to scale our business, but more importantly, produce an identical product every time. The reason we hear people come back to Kanha gummies is that they have the same replicable experience every time, which is really the key to CPG companies. So, it’s really stringent automation that allowed us to develop precise dosing. In fact, in 2019, we won the award from CannaSafe, which is the largest lab in California, for the most accurately formulated edible. We dialed in manufacturing and that’s what set us apart in the early years.
My partner is really geared towards science and implementing new delivery systems for cannabinoid products. We were the first company to come out with a nano edible about a year ago in 2019 and we are still the leader in offering consumers nano-molecular delivery systems. What does that mean? One of the common problems with edibles is that it takes 45 minutes to an hour for it to kick in. We all know friends who take a cookie and double up on the cookie and end up having too big of an experience. Rapid onset curbs that risk. Our nano gummy kicks in about 15 to 20 minutes, and it’s got just this really nice journey to it. We’ve separated the audience between the people that have our classic gummies, which takes longer to kick in, maybe a little bit stronger and the nano technology, which has a really fast onset, and really kind of a discrete journey. We stay ahead of the competition today, because of the nanotechnology that we’ve implemented in gummies.
As I always say, it’s not about how much vitamin C you take – it’s more about how much vitamin C gets in your blood stream. And it’s the same with cannabis, right? It’s how much THC and CBD or other molecules get in your system. So it’s about really having the highest bioavailability and the best performing products. And that’s what our customers have come to believe about Sunderstorm.
Aaron: You’ve talked about a couple new products from Kanha. At a high level, can you talk about your process for ideating and creating a new product?
Keith: Sure. I could use an example of a product that we’ve just kind of relaunched. It’s called the Tranquility gummy and it’s targeted for sleep. What we’ve discovered is there’s a whole host of medical reasons why people take cannabis – as well as the adults who take cannabis for entertainment – but sleep is a major issue for Americans of all ages. It’s surprising. It impacts 20 year olds and it impacts 60 year olds.
Part of the process of coming up with a product is trying to figure out what’s the need in the marketplace. So in this case, we really looked and said, hey, let’s target sleep and see if we can experiment and come up with a product. Our first round of Tranquility had a mix of CBD and THC in it because both of those are valuable for sleep. CBD is a chill-pill that kind of makes you calm so you can go to sleep. THC is often something that helps people stay asleep.
“We go through many iterations of a product before it actually hits the marketplace.”In that product, we also added 5-HTP, which is a serotonin booster, which once again, people take when they have anxiety or stress. So it’s kind of a stress reliever, and it helps you be calm, which again, I think a lot of the problems for people who have an issue with going to sleep, it’s having so much on their mind that they can’t stop the monkey mind to actually enter into sleep to begin with.
We also added just a small amount, one milligram, of melatonin. We know that Melatonin is a sleep aid, but you don’t want to take so much melatonin that your body stops producing melatonin because you’re taking the supplements. So at the end of the day, you want to just encourage and coax your body into healing and not overkill it with a pharmaceutical. Right?
So that was our first generation and we worked with that but my partner looks through a lot of research that’s occurring on different cannabinoid particles, and it became clear that CBN, which is kind of a new cannabinoid that’s hitting the press, actually had really strong properties for sedation and keeping people asleep. So, we added the largest dose of CBN in any gummy, and then re-launched that product a month or two ago. And we’re getting incredible feedback from shops that they’re selling out. It’s awesome, because people are actually taking the gummy and having the effect of falling asleep and staying asleep.
It’s the combination of the different factors. No one factor is so overwhelming like a pharmaceutical drug. But it’s the combination of the different factors together that make for a great product. And we fortunately have dozens of people in our company who are happy to do R&D for our new products. We also have some people outside the company that are consultants and experts as well. We go through many iterations of a product before it actually hits the marketplace. And that’s the second thing: it’s a lot of rigorous R&D testing of products before we launch it for the end consumer.
Aaron: Yeah, so if we can touch on that, can you tell me about your experience with your most recent product launch? Whether it’s the NANO5 or the Tranquility gummies? How did you think about preparing the market for the launch? Preparing your team for the launch? And then how did it go?
Keith: I’ll talk about our sublingual line called NANO5. Again, it’s a nano product where every molecule of CBD or THC is wrapped in a molecule of fatty lipids, so that when you spray it on your tongue, it tricks your body into absorbing it directly into the bloodstream and doesn’t actually go through the digestive tract and the liver. The bioavailability of these sublinguals is high and 70 to 80% of the cannabinoids actually get into your bloodstream.
We’ve done blood sampling tests versus your standard tincture. Your standard tincture is just MCT oil and cannabis, it’s pretty crude, kind of caveman-ish, quite frankly, when compared to the delivery of pharmaceuticals are today. NANO5 is a much more advanced delivery system.“We’re here to really try to educate people the best that we can.”
Now we have the product… right? This is a sophisticated product that’s challenging for bud tenders to explain when consumers come in with their medical needs. We had to create a lot of written brochures about how the product works, what the dosages are and that sort of stuff. Then our sales people go in and actually train the shops. They’ll pull bud tenders out and do training sessions and talk about NANO5, what makes it different from other tinctures, what medical conditions is it good for, etc. It’s kind of old fashioned, in-store training.
Then we finally have implemented a new piece, which is digital bud tender and consumer training. We are leveraging a platform for bud tender training, we talk with the shop, talk about the product and if the shop manager agrees we send a link out to all the bud tenders who take a quiz. The bud tenders get educated on an online platform, take a quiz, and then when they pass the quiz, they get a licensed sample of the product to try themselves so they have firsthand experience.
What we find in many shops is that the consumer is still not that educated about cannabis, particularly for medical uses, and particularly what I call the “new consumer” that hadn’t used cannabis in their lives, because it had such a high stigma to it and now with the reduction of the stigma it means a 40 or 50 year old woman might go into a store to find something to help with pain, or help with anxiety. Now, the bud tender can use the training that they’ve learned on NANO5, and understand that this could be a good product for them, and then talk about it intelligently and give some materials to the consumer before they walk away.
It can be intimidating for consumers to go into a shop, you know, it’s a new experience. It’s like going to the doctor’s office, you don’t always hear what they say, because you’re kind of nervous. So giving them the written materials, and even a test to follow up on online really allows for a form of education that is in tune with the user needing to learn at their own speed and really to just take away what’s important for them.
Aaron: Did I hear you correctly? The user – the end consumer – can also do a quiz?
Keith: Yes. Sunderstorm is about science and education. There’s a lot of assumptions in the marketplace that may not be correct. So, we’re here to really try to educate people the best that we can. And we really believe the rest of the world acts in a digital manner for education. In some ways, cannabis is a little bit behind the times because it’s difficult to advertise on Facebook and traditional venues. So we have one hand tied behind our back when we’re dealing with the digital world. But we at Sunderstorm are big believers that digital will be the way that cannabis consumers learn about brands, learn about products and learn about cannabinoids, and we want to be at the forefront of that education process.
Aaron: OK, we talked about some challenges. One of the challenges I hear a lot is about sourcing ingredients for infused products. How do you go about sourcing ingredients in your infused product lines?
Keith: Our primary ingredient that we source is distillate. And starting back in prop 215 days, we have a zero parts per billion policy on pesticides. What we discovered is before lab testing and licensure came in place is that 80 to 90% of the oil out there actually had pesticide levels that were way beyond safe. It really took licensing and the implementation of lab testing to change that regime. We now buy distillate from third party extractors and we have a handful of really big, really solid players onboard who provide that oil to us. The key is that if there’s any detectable trace of pesticides, we send it back and they replace it with a not-detect batch. So for us, that’s really the key to the whole supply chain: starting with oil that’s clean and really good quality.“Delivering the product in a compliant manner has been one of our logistical challenges, but one that I think we’ve done quite well at day in and day out.”
Fortunately, we’re one of the bigger brands in the industry so we have a little clout to make sure that the people that give us our oil are giving us their top shelf, and not their bottom shelf. We then have also made it a point to use only natural flavoring and natural coloring in our gummies. Believe it or not some of the red coloring actually is derived from beets and beet juice. We use spirulina as a source for our blue green colors. All of the gummies that we produce, not only have no pesticides, but they have no artificial flavors and no artificial coloring, which is of course standard in mainstream gummies that you buy at CVS or the local drugstore. So we really feel like we want to put out a healthy product and Cameron and I always look at each other, like, ‘we wouldn’t sell a product that we wouldn’t put into our own bodies.” And we’re very health conscious, you know, buying organic produce and not wanting pesticides to be inside us.
Aaron: Can you give me an example of a challenge you run into frequently, and this could be a business challenge, a marketing challenge, financials… something that you run into frequently?
Keith: Yeah, so we not only manufacture our products in California, but we also do self-distribution to over 500 retailers, meaning in store dispensaries and delivery services throughout California. With these 500 customers, we have two distribution points, one in LA and one in the Bay Area where I’m located. It’s an amazing challenge logistically. Not only are we running a manufacturing operation that requires precision – and it’s highly regulated – but we run a distribution company that’s highly regulated. For us the challenge is how do we efficiently deliver product to the Oregon border when we’re manufacturing in LA? We’ve had to spend a lot of time developing protocols for logistics and distribution to be able to basically meet demand throughout the state. And we’ve been growing like crazy. We add 10 new shops probably every week.
Delivering the product in a compliant manner has been one of our logistical challenges, but one that I think we’ve done quite well at day in and day out.
Aaron: What kind of trends are you looking at in the industry? And what keeps you excited?
Keith: I think COVID-19 has touched every aspect of our lives and it is impacting how we consume cannabis. Because it’s a respiratory disease, I think people have been wanting to shy away from smoking flower or vaping to keep their lungs healthy as a precaution in case they get it. So edibles have been kind of a natural choice for that. As well as the simple act of sharing something; sharing a joint raises a lot of safety risks, especially during the pandemic. It’s a lot easier to share a single gummy out of a bag safely.
Secondly, what I’ve noticed is that parents have their kids at home and yet they still want to consume cannabis as they did before. Edibles have been big because of discretion. So mom or dad can pop a gummy and have a spritzer before dinner and enjoy the night and my theory is happy parents make happy kids. So discretion has been critical.
Then I think there’s a whole round of new entrants that I mentioned before. These are people that maybe smoked weed in college or high school and haven’t touched it for 20 years and now that the stigma has been reduced, they’re coming back to the marketplace and wanting to explore. They may try a vape product, but very few of them want to smoke, as the country is generally pretty anti-smoking.
I think edibles and gummies have been a way for new cannabis consumers, particularly those who are older, to come and enjoy the positive effects, the medical effects and the social lubricant that cannabis offers, while being safe and discreet at the same time. I think COVID has definitely changed the way that that people think about consuming cannabis.
Aaron: Okay, awesome! Lastly, what would you like to learn more about? What are you interested in?
Keith: I have a degree in philosophy and religion. I’m a big fan of the evolution of consciousness. I think that is the container of the story through which we view human civilization and I honestly think we’re at a turning point for how humans in Western society view plant medicine.
I think cannabis is just the first to come along and be legalized. They’ve been doing phase II and III clinical trials on psilocybin and end of life anxiety. People, particularly war veterans, are using ecstasy or MDMA for depression.
What we’re discovering is that what we think we know about the mind is only the tip of the iceberg on how the mind works. I’m interested in exploring how these plant medicines impact individually with our psyche. Secondly, what happens to society when we reach a tipping point and a majority or at least some significant portion are taking these plants and medicines on a regular basis? It opens us up to a whole new perspective on ourselves, on society and on the universe that we live in. So I read a lot in those fields. And that’s what really excites me.
Aaron: Great. So that’s the end of the interview. Thank you for that.
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Start with the raw materials that create your product or touch your product at all stages of the process. We have seen many cases where cannabis oils fail for heavy metals, specifically lead. Extractors are quick to blame the cultivator and their nutrients, as cannabis is a very effective phytoremediator (it uptakes heavy metals and toxins from soil substrate). The more likely culprit – your glassware! Storing cannabis oil, both work in process or final product in glass jars, while preferred over plastic, requires due diligence on the provider of your glassware. If they change the factory in which it is produced, will you be notified? Stipulate this in your contract. Don’t find yourself in the next cannabis lead recall that gets the attention of the FDA.
