Federal regulations have made compliant credit processing in the cannabis industry difficult to achieve. As a result, most cannabis retailers operate a cash-only model, limiting their ability to upsell customers and placing a burden on customers who might rather use credit. While some dispensaries offer debit, credit or cashless ATM transactions, regulators and traditional payment processors have been cracking down on these offerings as they are often non-compliant with regulations and policies.
Two companies, KindTap Technologies and Aeropay, are addressing the cannabis industry’s payment processing challenges with innovative digital solutions geared towards retailers and consumers.
We interviewed both Cathy Corby Iannuzzelli, president at KindTap Technologies and Daniel Muller, CEO at Aeropay. Cathy co-founded KindTap in 2019 after a career in the banking and payments industries where she launched multiple financial and credit products. Daniel founded AeroPay in 2017 after a career in digital product innovation, most recently at GPShopper (acquired by Financial), where he oversaw the design and development of over 300 web and mobile applications for large scale Fortune 500 companies.
Green: What is the biggest challenge your customers are facing?
Cathy Corby Iannuzzelli, co-founder and president at KindTap Technologies
Iannuzzelli: Our customers include both cannabis retailers and their end consumers. As long as cannabis is illegal at the federal level, normal payment solutions such as debit and credit cards cannot be accepted for cannabis purchases. This has resulted in heavy cash-based sales and unstable, transient work-around ATM payment solutions that can be ripped out with little notice, disrupting the entire business. The lack of a mature payment network to support retail payments for cannabis purchases is a huge challenge for all stakeholders. Cannabis retailers bear the high cost and safety issues of operating a heavily cash-based retail business. Consumers encounter several friction points that require them to change their behavior when purchasing cannabis relative to how they purchase everything else.
Muller: Our cannabis business customers have faced a constantly changing and, frankly, exhausting financial services environment. From the need to move and manage large amounts of cash, to card workarounds, added to the disappointment from legislation around the SAFE Banking Act, these inconsistencies have acted as a roadblock to their potential growth and profitability. Aeropay is in the position to be a stable, long-term, reliable payments partner ready to help them scale their businesses. We believe these opportunities are limitless.
Green: What geographies have got your attention and why?
Daniel Muller, CEO and founder of Aeropay
Iannuzzelli: KindTap’s focus is on the U.S. market where federal policy has created the need for alternatives to traditional payment networks. KindTap is available in every U.S. state where cannabis is legally sold. In terms of our distribution channels, KindTap’s digital payment solution was brought to market during the COVID-19 pandemic when curbside pick-up and delivery became critically important. These channels are where the exchange of cash at pick-up posed the greatest security risk to employees and customers. Our early integrations were with e-commerce platforms focused on delivery and pick-up orders, and our integration partners have strong customer bases in California and the northeast. So, while KindTap can provide its “Pay Later” lines of credit and “Pay Now” bank account solutions anywhere, we have heavier penetration in those regions.
Muller: California, for its established tech culture and how it plays into the cannabis industry – your product simply has to live up to their tech standards to be heard. Also, Chicago, our headquarters, with its newly emerged commitment to financing the cannabis industry and bringing with it a more traditional business approach. In Chicago, you have to have elevated standards of professional practices in any industry you enter. And of course, we love to watch emerging markets like New York and Florida as they head towards adult-use and what shape cannabis and payments will take.
Green: What are the broader industry trends you are following?
Iannuzzelli: We continue to see a strong transition from cash and ATM transactions over to digital payments. Since KindTap has a fully-integrated payment “button” on e-commerce checkout screens, the adoption rate of end consumers to that one-click experience is quite strong. We are also seeing trends of more “express lines” in the retail environment – for those KindTap users who paid online/ahead – and faster/safer delivery experiences to people’s homes since there is no longer the need to collect any payment upon delivery. We are firm believers in the delivery/digital payments combination and a strong increase of that trend as more states allow for delivery.
Muller: The cannabis industry is starting to normalize payments and mirror traditional online and brick-and-mortar. With bank-to-bank (ACH) payments, cannabis businesses can now offer modern customer shopping experiences including pre-payment for delivery orders without the need for a cash exchange at the door, offering the option to buy online pickup in-store and contactless in-store QR scan-to-pay customer experiences. With these familiar and customer-driven options now available, we are seeing widespread adoption, as well as meaningful increases in spend and returning customers.
Green: Thank you both. That concludes the interview!
About KindTap: KindTap Technologies, LLC operates a financial technology platform that offers credit and loyalty-enabled payment solutions for highly-regulated industries typically driven by cash and ATM-based transactions. KindTap offers payment processing and related consumer applications for e-commerce and brick-and-mortar retailers. Founded in 2019, the company is backed by KreditForce LLC plus several strategic investors, with debt capital provided by U.S.-based institutions. Learn more at kindtaptech.com.
About AeroPay: AeroPay is a financial technology company reimagining the way money is moved in exchange for goods and services. Frustrated with the current, antiquated payments landscape, we believe there is a better way to pay and a better way to get paid. AeroPay set out to build a payments platform that works for all- businesses, consumers, and their communities. Learn more at aeropay.com.
Increasing cannabis use across the US has come with increased scrutiny of its health effects. Regulators and healthcare providers are not just concerned about the direct effects of inhaling or consuming cannabinoids, however, but also about another health risk: microbial contamination in cannabis products. Like any other crop, cannabis is susceptible to contamination by harmful pathogens at several points throughout the supply chain, from cultivation and harvesting to distribution. Many state regulators have set limits for microbial populations in cannabis products. Consequently, testing labs must adopt efficient screening protocols to help companies remain compliant and keep their customers safe.
Some of the pathogens common to cannabis flower include Aspergillus fungus species such as A. flavus, A. fumigatus, A. niger and A. terreus. Cannabis might also harbor harmful E. coli and Salmonella species, including Shiga toxin-producing E. coli (STEC). Regulations vary by state, but most have set specific thresholds for how many colony forming units (CFUs) of particular species can be present in a sellable product.
The gold standard method for detecting microbes is running cultures.
Growers and testing labs need to develop a streamlined approach to remain viable. Current methods, including running cultures on every sample, can be expensive and time-consuming, but by introducing a PCR-based screening step first, which identifies the presence of microbial DNA – and therefore the potential for contamination – laboratories can reduce the number of cultures they need to run, saving money and time.
The Risk of Aspergillus Contamination
Contamination from Aspergillus species can bring harm to cannabis growers and their customers. The state of Michigan is currently undergoing the largest cannabis recall in its history from Aspergillus contamination.
If contamination grows out of control, the pathogen can damage the cannabis plant itself and lead to financial losses. Aspergillus can also cause serious illness in consumers, especially those that are immunocompromised. If an immunocompromised person inhales Aspergillus, they can develop aspergillosis, a lung condition with a poor prognosis.
A Two-Step Screening Process
The gold standard method for detecting microbes is running cultures. This technique takes weeks to deliver results and can yield inaccurate CFU counts, making it difficult for growers to satisfy regulators and create a safe product in a timely manner. The use of polymerase chain reaction (PCR) can greatly shorten the time to results and increase sensitivity by determining whether the sample has target DNA.
Using PCR can be expensive, particularly to screen for multiple species at the same time, but a qPCR-based Aspergillus detection assay could lead to significant cost savings. Since the average presumptive positive rate for Aspergillus contamination is low (between 5-10%), this assay can be used to negatively screen large volumes of cannabis samples. It serves as an optional tool to further speciate only those samples that screened positive to comply with state regulations.
Conclusion
Overall, screening protocols have become a necessary part of cannabis production, and to reduce costs, testing labs must optimize methods to become as efficient as possible. With tools such as PCR technology and a method that allows for initial mass screening followed by speciation only when necessary, laboratories can release more samples faster with fewer unnecessary analyses and more success for cannabis producers in the marketplace.
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.).
Federal regulations have made compliant credit processing in the cannabis industry difficult to achieve. As a result, most cannabis retailers operate a cash-only model, limiting their ability to upsell customers and placing a burden on customers who might rather use credit. While some dispensaries offer debit, credit or cashless ATM transactions, regulators and payment processors have recently been cracking down on these offerings as they are often non-compliant with regulations and policies.
KindTap Technologies, LLC operates a financial technology platform that offers credit and loyalty-enabled payment solutions for highly regulated industries typically driven by cash and ATM-based transactions. KindTap offers payment processing and related consumer applications for e-commerce and brick-and-mortar retailers. Founded in 2019, the company is backed by KreditForce LLC plus several strategic investors, with debt capital provided by U.S.-based institutions.
We interviewed Cathy Corby Iannuzzelli, co-founder and chief payments officer at KindTap Technologies. Cathy co-founded KindTap after a career in the banking and payments industries where she launched multiple financial and credit products.
Aaron Green: Cathy, thanks for taking the time today. How did you get involved in the cannabis industry?
Cathy Corby Iannuzzelli, co-founder and chief payments officer at KindTap Technologies
Cathy Corby Iannuzzelli: I’ve been in the payments industry for a long time. I was doing some consulting a few years ago for a client in Colorado and that gave me exposure to the issues in cannabis like the fact that you couldn’t have real payments in cannabis. Then, a close family member with health issues turned to medical cannabis when nothing else seemed to work. I was amazed by the difference it made in her life. At that point, I put those two things together and I said, I need to focus on helping this industry get a real cannabis payments solution because I thought it was ridiculous that you had an industry of this size and importance that had been abandoned by the payments industry.
Aaron Green: Can you highlight some of your background prior to entering cannabis?
Corby Iannuzzelli: Throughout my career, I’ve been a banker, I’ve been a payment processing executive and I’ve been a consultant. So, I’ve kind of done it all in the payments and financial services space.
Aaron Green: Why is it that most dispensaries only take cash?
Corby Iannuzzelli: In the US, even though cannabis is legal in many states, it’s still illegal federally. There are big banks and card networks like Visa, MasterCard, etc., who are national, even global companies and frankly, the executives of those companies don’t want to end up in jail for violating national laws. So, they have put cannabis dispensaries on what’s called a “prohibited merchants” list. This means you cannot accept Visa, MasterCard, Discover, American Express, or similar payments as a cannabis business and so it’s forcing the industry to a cash-based solution.
About the only thing you’re seeing that’s not cash in dispensaries are ATMs. But if you think about it, ATMs are machines where the consumer goes and pulls cash out and pays upwards of $5 or more in fees for doing that. They then hand that cash back to the dispensary who then has the costs of having to deal with that cash. The industry is just stuck in a cash-based business until federal legislation changes.
Aaron Green: I’ve been to some dispensaries where they accept credit cards or debit cards. What is going on there?
Corby Iannuzzelli: I’ve heard reports of consumers who’ve been able to use a credit card or a debit card in a dispensary. Sometimes the processor who sold that solution to the dispensary says, “Oh, it’s compliant, I guarantee you it’s compliant.” But if you dig in, that’s not the case. And eventually, Visa or MasterCard figures it out and shuts it down. In some cases, it’s outright fraud where the processor who sold the payment terminal to the dispensary is misrepresenting it as say a doctor’s office rather than a dispensary. There’s no merchant category code in the payment networks that says this is for processing dispensary payments, so they pretend it’s something else until they get shut down.
When they do get shut down, I’ve heard of cases in Las Vegas where it was basically 100% Visa or MasterCard one day and 100% cash the next day. It completely disrupted the whole business. It’s not just the retail store, but the inventories and everything else throughout the business.
“About the only thing you’re seeing that’s not cash in dispensaries are ATMs”
There have also been some cases where you’ll see something called a cashless ATM. In a store, they call it a debit card transaction. It’s really a cashless ATM where the consumer is making what looks to the ATM network like a cash withdrawal in $10 or $20 increments, but the consumer is getting a receipt instead of cash, and they’re turning around and handing that receipt back to the dispensary who then makes a change because the cashless ATM only dispensed in $10 or $20 increments.
Now ATM networks are looking at these cashless ATM transactions to see if they are compliant. Do consumers know the fees that they’re paying? Are these transactions coming in and looking to the network like real cash when it’s not? Cashless ATM transactions are probably the most common thing you see, but that’s being called into question after the Eaze incident where a large company was misrepresenting its terminals. The federal government stepped in and called it bank fraud and the individuals behind it, the executives, are in jail. Since then, the networks are looking at this and saying, what about these cashless ATMs? Are those transactions within our rules, or is there something funny going on here?
Aaron Green: So, to summarize here: you’ve got federal regulations at the national level that says that cannabis banking is not allowed so major institutions are not offering it. Yet you found a way through the regulations and compliance issues. I’m curious can you pull back the curtains a little bit and tell us how you came up with a solutionhere?
Corby Iannuzzelli: Well, we came up with the solution by stubbornly refusing to believe that cannabis payment processing could not be done in a compliant manner. We just said, “there is a compliant way to do this, let’s figure it out.” We took the same components that are out there for the financial services and payments industry and reassembled them in such a way that we do not violate any rules. We do not use any of the Visa, MasterCard, Discover or Amex rails, we built our own network. We have direct contracts with the merchants and direct contracts with the consumers. We control everything and all the funds flow through regulated financial institutions. So, we designed something that looks and acts to consumers and retailers the way Visa and MasterCard look and act when a consumer goes to make a purchase, but they run on a separate set of payment rails and in compliance with banking regulations and state regulations. When you’re looking at the problem from a different perspective, sometimes you can come up with a better answer.
Green: On the consumer side, what does that user experience look like?
Corby Iannuzzelli: Our product is completely digital. The consumer experience starts with integration at the online checkout. When it’s an e-commerce shopping cart and somebody is placing an order, they will see a button called “Pay with KindTap.” The first time they click that button they’re automatically brought to our integrated web app where they do a quick and easy application for our digital revolving line of credit product. If approved, they instantly go back to the checkout screen and their first purchase will just happen immediately, with flexible payment options over time. If the consumer decides they don’t want our KindTap credit and would rather have a pay now-product where we pull the funds from their bank account, then the consumer can do so. So, there is no physical card per se, it’s integrated like PayPal or Affirm at the point of checkout online. For the consumers who use KindTap credit, there is a mobile app where they can see their transactions, view statements, pay their bills, etc.
Additionally, there is a loyalty program for all purchases – KindTap credit or through the consumer’s bank, because we feel very strongly that a lot of the reasons consumers choose to pay with one card over another is the points and the rewards that they get. So, we’re providing loyalty rewards with KindTap so that consumers can get rewarded for that spending with KindTap and it’s better for the retailers.
Green: On the retailer side, what does that experience look like and what is your business model?
Corby Iannuzzelli: We are not going store by store doing integrations, rather, we’re integrating with various software, delivery and e-commerce providers. That gives us broad reach and ability to expand rapidly in various state markets where cannabis is legal. Once a merchant says “yes, I want to be a member of the KindTap Merchant Network,” then we work to get them set up on our platform in a matter of days. The merchants receive continuous support from our success team, marketing co-investment and a depth of analytics reporting. We made the entire process and ongoing operations streamlined and frictionless for both merchants and consumers.
Aaron Green: What are the benefits of moving from cash to credit type of payments?
Corby Iannuzzelli: On the retail side, there are the obvious benefits of not having all the security, safety and theft issues associated with operating a physical cash business. Consumers very often don’t carry cash anymore, except when they’re making a cannabis purchase. There are a lot of hidden costs to retailers because payments are not just about moving money from the consumer to the business.
“I really am optimistic that with so many scientific breakthroughs we’ve had that we’re going to be able to figure this out.”Payment options – or lack thereof – can shape where people shop, how much they spend and what they buy. It’s a proven science how consumers make impulse purchases. If you’re a cash-based business in cannabis, and you’re trying to get somebody to make an impulse purchase, and they walked in with $100, then you can’t get them to spend more than $100, no matter how creative your marketing is! The consumer is limited by how much cash they have in their bank account or in their pocket at that point in time. So, it’s really about the upsell that comes with the bigger basket sizes that retailers experience when you move from a cash-based business to credit and suddenly, the merchant doesn’t have to deal with long lines of consumers on payday when the store was beyond slow two days before. Now the consumer can spread purchases with the thinking, “I’d rather not be the one standing in that line on payday. I’m going to go Wednesday [instead of Friday] because I have KindTap credit so I can budget and manage my cash flow throughout the month rather than around my paydays.”
So, we think that the lack of an efficient and effective payment system for cannabis is holding back sales. We all focus on how much the industry is growing. KindTap thinks about how much faster it could be growing if it was supported by a decent payment system.
Aaron Green: What are some other cash-only markets you are looking at?
Corby Iannuzzelli: We are laser-focused on the cannabis ecosystem and bringing a compliant credit and loyalty-based digital payments solution to cannabis merchants and customers and rewarding those stakeholders for accepting/using KindTap. Additionally, we are planning to extend the KindTap Merchant Network so that consumers can use/earn our loyalty points with other goods and services they’re purchasing that are adjacent to cannabis or that are important to the cannabis consumer. That’s the direction we’re going.
Aaron Green: Today people can receive gas points for spending with their credit card. Now with KindTap, you can spend to get cannabis points?
Corby Iannuzzelli: That’s exactly right.
Aaron Green: What in either cannabis or your personal life are you most interested in learning about?
Corby Iannuzzelli: Personally, I am most interested in seeing breakthrough technologies in climate change. We’re going to need to correct this situation and I’m reading about collecting carbon dioxide from the air and burying it in the earth and things like that. I really am optimistic that with so many scientific breakthroughs we’ve had that we’re going to be able to figure this out. Certainly, it’s going to take a lot of smart people and a lot of investment, but I really look forward to watching them do their stuff and hopefully taking us out of this nightmare situation that we’re heading into if we don’t make some changes.
Aaron Green: Thanks Cathy, that concludes the interview.
Botanical extraction is not specific to cannabis and hemp, and it is anything but new. Rudimentary forms of plant extraction have existed throughout history and evolved with high-tech equipment and scientific procedures for use in pharmaceuticals, dietary supplements and botanicals.
In food production, examples of hydrocarbon extraction processes are commonplace. Nut, olive and vegetable oil production use solvents to extract the oils. Decaffeinated coffee uses hydrocarbon extraction to remediate the caffeine, and making sugar from beets, or beer from hops, also requires solvents.
As such, the FDA has set guidelines for the amount of residual solvents considered safe for consumers to ingest. Yet, without FDA guidance in cannabis and hemp, many products aren’t being tested against these standards, and consumers will ultimately pay the price.
Understanding solvent remediation technology and processes
If we use ethanol extraction as an example, the extraction process is relatively simple. First, we soak the biomass in denatured or food-grade ethanol, ending up with a final solution that is 90-95% solvent. Then, we perform a bulk removal of the solvents, which takes out most, but not all, of the solvent. The next and final step should be to strip the remaining solvents from the extract entirely.
Stripping remaining solvents in bulk requires the right equipment.
But, in order to do so effectively, you need the right equipment, and unfortunately, this is where many producers fall short. Many producers use a vacuum oven to apply heat while reducing the headspace pressure to lower the solvent’s boiling point and evaporate it off.
However, it’s a static environment in a vacuum oven, which means the material is stagnant. So, the process may effectively remove the solvents close to the surface, but solvents deep inside the material tend to get trapped without some type of agitation or mixing.
The appropriate final step to complete solvent remediation is wipe-film distillation, which feeds small volumes into a column, which is then wiped into a very thin film and heated under vacuum pressure. Although the equipment necessary is costly, this last step removes any residual solvents from the product to create a safe, effective and consumable product.
Residual solvents present huge risks
As stated, many of the same solvents used in cannabis and hemp extraction have been considered safe in food production for decades. Reviewing chemical data sheets, many of the acceptable limits on solvents were determined for ingestion, which is fine for edibles and tinctures, but many cannabis and hemp products are intended for inhalation or vaporization.
Just a few of the dozens of various products types on the market today, extracted with a variety of different solvents
Unfortunately, some solvents can have negative health impacts, especially for those using cannabis or hemp for medical purposes or with compromised immune systems. Plus, as a therapeutic and recreational substance, consumers may be consuming more than the recommended amount, as well as using the products several times a day. Unfortunately, long-term exposure or repeated inhalation of these residual solvents hasn’t been thoroughly researched.
For example, inhaling ethyl alcohol (ethanol) can irritate the nose, throat and lungs. Extended exposure can cause headaches, drowsiness, nausea, vomiting and unconsciousness. Repeated exposure can affect the liver and nervous system.
In the food industry, hexane is approved for extracting spices or hops, and this solvent is widely used in cannabis and hemp extraction. However, if used in an inhalable product, chronic exposure to hexane could be detrimental, with symptoms including numbness in the extremities, weakness, vision problems and fatigue.
Consumers deserve transparency
In the industry’s earliest days, companies were tight-lipped about their processes, the chemicals they used and how they removed them. Everyone thought they had the “secret sauce” and didn’t want to share their approach. Today, companies are more open about what they use, how they process it and providing that necessary transparency.
Lack of quality and consistent regulations in these industries creates confusion for the consumers and loopholes for producers. Some producers test for everything under the sun, and some producers know exactly which labs will pass their products, regardless of test results.
While the regulatory bodies are distracted by the amount of THC that might linger in products, getting sick is overshadowed by the risk of getting high. In the meantime, consumers are left to their own devices to determine which products are safe and which are not.
Although testing mandates and regulations will help clean up the industry, until then, consumers need to demand full-panel COAs that not only show cannabinoid potency but also accurately display the test results for residual solvents, pesticides and heavy metals.
Automated extraction equipment and technologies are rapidly becoming the standard in the extraction sector of the cannabis industry. Like most evolving industries, manual and operator driven processes are what starts an industry, but with explosive growth, demand for increased safety, efficiency and repeatability grows. Specifically within the cannabis industry, we’re noticing a rising demand for higher quality extracts and a safer, more repeatable environment for cannabinoid extraction. These are all reasons for the industry making a shift towards automated extraction equipment and technologies.
What Automation Looks Like in Cannabis Extraction
Automation in the cannabis industry doesn’t necessarily mean implementing robotics and creating operator-less facilities; It typically refers to automated process control. Traditional, older technologies are manual and operator-driven. This means the equipment operator is in control of all parameters of the process, which leads to inconsistencies throughout the process caused by human error. As the extraction process has many steps: ethanol holding, chilling, extraction agitation, extraction discharge, extraction solvent removal, particle filtration, semi saturated solution storage, and so much more that involves valves, pumps and controls between each piece of the process, it becomes difficult to control such a tedious process manually. When all of these processes are controlled and monitored using proper automation technology, facilities can safely ensure that each batch is run following the same process and parameters accordingly. This is critical for product consistency, a concern for manufacturers and many end-consumers. As the cannabis industry grows, matures and makes its way closer to federal legalization, product safety and consistency become a top-priority for everyone involved.
Greater Quality Control of End-Products
Automated extraction processes ensures that the same solvent ratios are used batch-to-batch
Consistency and repeatability are just as important for cannabis processors as they are for standard food or pharmaceutical processors. Deploying a manual process of equipment operating and monitoring leaves far too much room for human error, and doesn’t provide the level of control needed for the industry as it continues to progress toward stricter product regulations and requirements. On the other hand, an automated extraction process ensures that the same solvent ratios are used batch-to-batch, the same extraction temperatures and recipe parameters are implemented, the same pump and process flow rates are deployed, and all processes are repeatable, predictable and scalable while producing a safe, consistent product.
Fewer Bottlenecks
The benefits of automated extraction are directly tied to establishing greater efficiency in processes. Efficiency can be experienced via less scrap product from unmanaged batches and/or less labor to operate and control the process. Automation means allowing a recipe-driven control system monitor and control the process, eliminating process bottlenecks that have been notorious for destroying productivity in manual extraction operations.
As Cannabis Extraction Processes Become Automated, They Become Safer.
automated extraction process ensures that the same solvent ratios are used batch-to-batch
A team is what drives any business forward. The safety of that team needs to be a top priority for any business leader. As cannabis extraction processes become automated, they become safer. With less equipment interaction, the likelihood for human error that could lead to safety hazards significantly decreases. Properly programmed automation can establish advanced system interlocks that check multiple points throughout the process for irregularities, and can halt a machine based on these irregularities it detects. That level of process monitoring and control is only available when automation and PLC logic controls equipment.
Data Collection and Validation
When we tie all the benefits of extraction automation together, it makes for a far more attractive system than traditional,manual processes that we’re used to seeing in the cannabis industry. In addition to the major benefits listed above, automation gives a superior level of data collection for process improvements and process validation which is key in cGMP or EU-GPM facilities. This is the future for every processing facility in the arena of cannabis. As the industry matures, it will continue to become more competitive. Facilities with automation will have the capacity to maximize their process efficiencies, produce a far superior and more consistent end–product and will have a competitive advantage in the extraction sector.
Facility layout and design are important components of overall operations, both in terms of maximizing the effectiveness and efficiency of the process(es) executed in a facility, and in meeting the needs of personnel. Prior to the purchase of an existing building or investing in new construction, the activities and processes that will be conducted in a facility must be mapped out and evaluated to determine the appropriate infrastructure and flow of processes and materials. In cannabis markets where vertical integration is the required business model, multiple product and process flows must be incorporated into the design and construction. Materials of construction and critical utilities are essential considerations if there is the desire to meet Good Manufacturing Practice (GMP) compliance or to process in an ISO certified cleanroom. Regardless of what type of facility is needed or desired, applicable local, federal and international regulations and standards must be reviewed to ensure proper design, construction and operation, as well as to guarantee safety of employees.
Materials of Construction
The materials of construction for interior work surfaces, walls, floors and ceilings should be fabricated of non-porous, smooth and corrosive resistant surfaces that are easily cleanable to prevent harboring of microorganisms and damage from chemical residues. Flooring should also provide wear resistance, stain and chemical resistance for high traffic applications. ISO 22196:2011, Measurement Of Antibacterial Activity On Plastics And Other Non-Porous Surfaces22 provides a method for evaluating the antibacterial activity of antibacterial-treated plastics, and other non-porous, surfaces of products (including intermediate products). Interior and exterior (including the roof) materials of construction should meet the requirements of ASTM E108 -11, Standard Test Methods for Fire Tests of Roof Covering7, UL 790, Standard for Standard Test Methods for Fire Tests of Roof Coverings 8, the International Building Code (IBC) 9, the National Fire Protection Association (NFPA) 11, Occupational Safety and Health Administration (OSHA) and other applicable building and safety standards, particularly when the use, storage, filling, and handling of hazardous materials occurs in the facility.
Utilities
Critical and non-critical utilities need to be considered in the initial planning phase of a facility build out. Critical utilities are the utilities that when used have the potential to impact product quality. These utilities include water systems, heating, ventilation and air conditioning (HVAC), compressed air and pure steam. Non-critical utilities may not present a direct risk to product quality, but are necessary to support the successful, compliant and safe operations of a facility. These utilities include electrical infrastructure, lighting, fire detection and suppression systems, gas detection and sewage.
Water
Microbial monitoring methods can include frequent/consistent testing
Water quality, both chemical and microbial, is a fundamental and often overlooked critical parameter in the design phase of cannabis operations. Water is used to irrigate plants, for personnel handwashing, potentially as a component in compounding/formulation of finished goods and for cleaning activities. The United States Pharmacopeia (USP) Chapter 1231, Water for Pharmaceutical Purposes 2, provides extensive guidance on the design, operation, and monitoring of water systems. Water quality should be tested and monitored to ensure compliance to microbiological and chemical specifications based on the chosen water type, the intended use of the water, and the environment in which the water is used. Microbial monitoring methods are described in USP Chapter 61, Testing: Microbial Enumeration Tests3and Chapter 62, Testing: Tests for Specified Microorganisms 4, and chemical monitoring methods are described in USP Chapter 643, Total Organic Carbon 5, and Chapter 645, Water Conductivity6.Overall water usage must be considered during the facility design phase. In addition to utilizing water for irrigation, cleaning, product processing, and personal hygiene, water is used for heating and cooling of the HVAC system, fogging in pest control procedures and in wastewater treatment procedures A facility’s water system must be capable of managing the amount of water required for the entire operation. Water usage and drainage must meet environmental protection standards. State and local municipalities may have water usage limits, capture and reuse requirements and regulations regarding runoff and erosion control that must also be considered as part of the water system design.
Lighting
Lighting considerations for a cultivation facility are a balance between energy efficiency and what is optimal for plant growth. The preferred lighting choice has typically been High Intensity Discharge (HID) lighting, which includes metal halide (MH) and high-pressure sodium (HPS) bulbs. However, as of late, light-emitting diodes (LED) systems are gaining popularity due to increased energy saving possibilities and innovative technologies. Adequate lighting is critical for ensuring employees can effectively and safely perform their job functions. Many tasks performed on the production floor or in the laboratory require great attention to detail. Therefore, proper lighting is a significant consideration when designing a facility.
HVAC
Proper lighting is a significant consideration when designing a facility.
Environmental factors, such as temperature, relative humidity (RH), airflow and air quality play a significant role in maintaining and controlling cannabis operations. A facility’s HVAC system has a direct impact on cultivation and manufacturing environments, and HVAC performance may make or break the success of an operation. Sensible heat ratios (SHRs) may be impacted by lighting usage and RH levels may be impacted by the water usage/irrigation schedule in a cultivation facility. Dehumidification considerations as described in the National Cannabis Industry Association (NCIA) Committee Blog: An Introduction to HVACD for Indoor Plant Environments – Why We Should Include a “D” for Dehumidification 26 are critical to support plant growth and vitality, minimize microbial proliferation in the work environment and to sustain product shelf-life/stability. All of these factors must be evaluated when commissioning an HVAC system. HVAC systems with monitoring sensors (temperature, RH and pressure) should be considered. Proper placement of sensors allows for real-time monitoring and a proactive approach to addressing excursions that could negatively impact the work environment.
Compressed Air
Compressed air is another, often overlooked, critical component in cannabis operations. Compressed air may be used for a number of applications, including blowing off and drying work surfaces and bottles/containers prior to filling operations, and providing air for pneumatically controlled valves and cylinders. Common contaminants in compressed air are nonviable particles, water, oil, and viable microorganisms. Contaminants should be controlled with the use appropriate in-line filtration. Compressed air application that could impact final product quality and safety requires routine monitoring and testing. ISO 8573:2010, Compressed Air Specifications 21, separates air quality levels into classes to help differentiate air requirements based on facility type.
Electrical Infrastructure
Facilities should be designed to meet the electrical demands of equipment operation, lighting, and accurate functionality of HVAC systems. Processes and procedures should be designed according to the requirements outlined in the National Electrical Code (NEC) 12, Institute of Electrical and Electronics Engineers (IEEE) 13, National Electrical Safety Code (NESC) 14, International Building Code (IBC) 9, International Energy Conservation Code (IECC) 15 and any other relevant standards dictated by the Authority Having Jurisdiction (AHJ).
Fire Detection and Suppression
“Facilities should be designed so that they can be easily expanded or adjusted to meet changing production and market needs.”Proper fire detection and suppression systems should be installed and maintained per the guidelines of the National Fire Protection Association (NFPA) 11, International Building Code (IBC) 9, International Fire Code (IFC) 10, and any other relevant standards dictated by the Authority Having Jurisdiction (AHJ). Facilities should provide standard symbols to communicate fire safety, emergency and associated hazards information as defined in NFPA 170, Standard for Fire Safety and Emergency Symbols27.
Gas detection
Processes that utilize flammable gasses and solvents should have a continuous gas detection system as required per the IBC, Chapter 39, Section 3905 9. The gas detection should not be greater than 25 percent of the lower explosive limit/lower flammability limit (LEL/LFL) of the materials. Gas detection systems should be listed and labeled in accordance with UL 864, Standard for Control Units and Accessories for Fire Alarm Systems16 and/or UL 2017, Standard for General-Purpose Signaling Devices and Systems 17 and UL 2075, Standard for Gas and Vapor Detectors and Sensors18.
Product and Process Flow
Product and process flow considerations include flow of materials as well as personnel. The classic product and process flow of a facility is unidirectional where raw materials enter on one end and finished goods exit at the other. This design minimizes the risk of commingling unapproved and approved raw materials, components and finished goods. Facility space utilization is optimized by providing a more streamlined, efficient and effective process from batch production to final product release with minimal risk of errors. Additionally, efficient flow reduces safety risks to employees and an overall financial risk to the organization as a result of costly injuries. A continuous flow of raw materials and components ensures that supplies are available when needed and they are assessable with no obstructions that could present a potential safety hazard to employees. Proper training and education of personnel on general safety principles, defined work practices, equipment and controls can help reduce workplace accidents involving the moving, handling, and storing of materials.
Facilities Management
Facilities management includes the processes and procedures required for the overall maintenance and security of a cannabis operation. Facilities management considerations during the design phase include pest control, preventative maintenance of critical utilities, and security.
Damage from whiteflies, thrips and powdery mildew could be prevented with an appropriate PCP
A Pest Control Program (PCP) ensures that pest and vermin control is carried out to eliminate health risks from pests and vermin, and to maintain the standards of hygiene necessary for the operation. Shipping and receiving areas are common entryways for pests. The type of dock and dock lever used could be a welcome mat or a blockade for rodents, birds, insects, and other vermin. Standard Operating Procedures (SOPs) should define the procedure and responsibility for PCP planning, implementation and monitoring.
Routine preventative maintenance (PM) on critical utilities should be conducted to maintain optimal performance and prevent microbial and/or particulate ingress into the work environment. Scheduled PMs may include filter replacement, leak and velocity testing, cleaning and sanitization, adjustment of airflow, the inspection of the air intake, fans, bearings and belts and the calibration of monitoring sensors.
In most medical cannabis markets, an established Security Program is a requirement as part of the licensing process. ASTM International standards: D8205 Guide for Video Surveillance System 23, D8217 Guide for Access Control System[24], and D8218 Guide for Intrusion Detection System (IDS) 25 provide guidance on how to set up a suitable facility security system and program. Facilities should be equipped with security cameras. The number and location of the security cameras should be based on the size, design and layout of the facility. Additional cameras may be required for larger facilities to ensure all “blind spots” are addressed. The facility security system should be monitored by an alarm system with 24/7 tracking. Retention of surveillance data should be defined in an SOP per the AHJ. Motion detectors, if utilized, should be linked to the alarm system, automatic lighting, and automatic notification reporting. The roof area should be monitored by motion sensors to prevent cut-and-drop intrusion. Daily and annual checks should be conducted on the alarm system to ensure proper operation. Physical barriers such as fencing, locked gates, secure doors, window protection, automatic access systems should be used to prevent unauthorized access to the facility. Security barriers must comply with local security, fire safety and zoning regulations. High security locks should be installed on all doors and gates. Facility access should be controlled via Radio Frequency Identification (RFID) access cards, biometric entry systems, keys, locks or codes. All areas where cannabis raw material or cannabis-derived products are processed or stored should be controlled, locked and access restricted to authorized personnel. These areas should be properly designated “Restricted Area – Authorized Personnel Only”.
Future Expansion
The thought of expansion in the beginning stages of facility design is probably the last thing on the mind of the business owner(s) as they are trying to get the operation up and running, but it is likely the first thing on the mind of investors, if they happen to be involved in the business venture. Facilities should be designed so that they can be easily expanded or adjusted to meet changing production and market needs. Thought must be given to how critical systems and product and process flows may be impacted if future expansion is anticipated. The goal should be to minimize down time while maximizing space and production output. Therefore, proper up-front planning regarding future growth is imperative for the operation to be successful and maintain productivity while navigating through those changes.
References:
United States Environmental Protection Agency (EPA) Safe Drinking Water Act (SDWA).
United States Pharmacopeia (USP) Chapter <1231>, Water for Pharmaceutical Purposes.
United States Pharmacopeia (USP) Chapter <61>, Testing: Microbial Enumeration Tests.
United States Pharmacopeia (USP) Chapter <62>, Testing: Tests for Specified Microorganisms.
United States Pharmacopeia (USP) Chapter <643>, Total Organic Carbon.
United States Pharmacopeia (USP) Chapter <645>, Water Conductivity.
ASTM E108 -11, Standard Test Methods for Fire Tests of Roof Coverings.
UL 790, Standard for Standard Test Methods for Fire Tests of Roof Coverings.
International Building Code (IBC).
International Fire Code (IFC).
National Fire Protection Association (NFPA).
National Electrical Code (NEC).
Institute of Electrical and Electronics Engineers (IEEE).
National Electrical Safety Code (NESC).
International Energy Conservation Code (IECC).
UL 864, Standard for Control Units and Accessories for Fire Alarm Systems.
UL 2017, Standard for General-Purpose Signaling Devices and Systems.
UL 2075, Standard for Gas and Vapor Detectors and Sensors.
International Society for Pharmaceutical Engineers (ISPE) Good Practice Guide.
International Society for Pharmaceutical Engineers (ISPE) Guide Water and Steam Systems.
ISO 8573:2010, Compressed Air Specifications.
ISO 22196:2011, Measurement Of Antibacterial Activity On Plastics And Other Non-Porous Surfaces.
D8205 Guide for Video Surveillance System.
D8217 Guide for Access Control Syst
D8218 Guide for Intrusion Detection System (IDS).
National Cannabis Industry Association (NCIA): Committee Blog: An Introduction to HVACD for Indoor Plant Environments – Why We Should Include a “D” for Dehumidification.
NFPA 170, Standard for Fire Safety and Emergency Symbols.
Russell is the CEO of NES Technology Holdings, a technology development and marketing company that operates Vapor Distilled and LifeTonic Brands. NES Technology Holdings has invented a technology portfolio of more than 160 granted and pending patents that cover inventions across several high-value industries, including cannabis, beverage, fragrance and nutraceuticals. The company is currently in license acquisition diligence processes with 7 of world’s 10 largest fragrance companies and has received a joint venture offer from a $3 billion fragrance company to produce perfumes with its extraction technology. It is also launching ionized cannabis beverage products that provide effects as quickly as alcohol in Nevada and Colorado this fall.
Vapor Distilled invented and commercialized an evaporative extraction process with 40 international patents granted and pending that, along with CO2 extraction, is one of only two fundamentally new extraction processes invented in the last 50 years. Instead of using solvents or hydrocarbons to extract oils from plants, evaporative extraction directly evaporates essential oils from plants and condenses the evaporated compounds into an extract. The process takes less than two seconds to complete and extracts higher levels of volatile terpenes than existing extraction methods. Vapor Distilled has built a fleet of commercial-scale extraction machines and has supplied some of the cannabis industry’s largest brands. The company is currently licensing its evaporative extraction technology within the perfume industry and is marketing an aroma hop extract to replace the dry hopping step when making beer.
LifeTonic invented a drug delivery technology with 56 patents pending and granted, that turns oil-based plant compounds like CBD and THC into electrically charged cannabinoid ions that dissolve completely in water without emulsifiers or additives. When cannabinoids are ionized, absorption is significantly enhanced and their effects can be felt in minutes. The effects of a LifeTonic ionized CBD beverage can be felt by most people in less than 5 minutes, whereas the effects of a LifeTonic ionized THC beverage can be felt by most people in less than 8 minutes. For reference, typical onset times for cannabis beverages are 30 minutes or longer. LifeTonic beverage technology will allow cannabis beverages to work as quickly as alcohol, enabling cannabis to become a social drink.
Russell Thomas, CEO of Vapor Distilled and LifeTonic
We spoke with Russell Thomas, CEO of Vapor Distilled and LifeTonic about his cannabinoid evaporation process and rapid onset beverage technologies. Thomas is a career entrepreneur and inventor with 21 years of experience inventing and protecting intellectual property. Russell’s team has generated more than 160 granted and pending patents. Prior to entering the cannabis industry, Thomas worked in the cleantech industry.
Aaron Green: How did you get involved in the cannabis industry?
Russell Thomas: I came to the cannabis industry from the cleantech industry where I worked on technologies that improved the fuel economy of vehicles. I saw opportunities in the cannabis industry to improve cannabis extraction, which was one of the most important supply chain verticals in cannabis. Every product, from edibles to beverages and vape products, requires a cannabis extract. Any product that needs to be accurately dosed requires an extract. The old way of making edible products with cannabis butter was simply not viable as the industry matured, and most people were rapidly moving away from smoking cannabis and embracing vape products. Even with the entire industry almost completely dependent on extraction, no fundamental innovation was occurring. The primary ways that cannabis was being extracted were chemically intensive. The cleaner methods, such as CO2 extraction, were slow and expensive for terpene recovery. I saw this as a great opportunity to provide a better solution within a primary funnel of the cannabis supply chain.
We commercialized an extraction technology that evaporates cannabinoids directly from plant material in the form of vapor, and then recondenses that vapor back into an essential oil. The entire process takes less than two seconds to complete and preserves fragile terpenes. That technology, called Evaporative Extraction, is the foundation of Vapor Distilled.
Green: What timeframe was that roughly?
Thomas: We capitalized our company in 2015 and began selling wholesale extracts in 2017.
Green: Can you talk more about the evaporative extraction process?
Thomas: Our process works in a similar way to a cannabis vaporizer, but on a massive scale. Our extract is literally recondensed cannabis vapor. In one step, we extract, refine, and activate cannabinoids. On one end, plant material goes in the machine, and on the other end, extract and depleted plant material comes out. Our total extraction time is less than two seconds if you measure the time from when the plant material goes into the extractor and when the extract is condensed.
The LifeTonic logo
A continuous feed of dry plant material is introduced into a heated air stream. The air stream pneumatically conveys the plant material through a series of turbulent, heated evaporation chambers. Upon entering the evaporation chambers, volatile plant compounds are instantaneously distilled from the plant material. A centrifugal separator removes the depleted plant material from the air stream. The air stream is rapidly cooled, causing the volatile plant compounds to condense into an essential oil.
We achieve nearly total activation of THCA to THC simultaneously during extraction and, on average, we extract approximately two to four times more terpenes than a conventional extraction process. The cannabis industry is rampant with exaggeration about terpenes, but we are the only cannabis company negotiating a joint venture with a $3 billion fragrance company to produce perfumes, and I think that says a lot about our process.
Green: Is the extract coming out then as an oil?
Thomas: Our extract comes out of our machines as a fully-activated, high-terpene content, full spectrum oil. Unlike the THC crude that emerges from other processes, our extract requires no further distillation, activation or refinement. You can put it straight into a product.
Green: How about terpene recovery?
Thomas: This is by far what we do best. We excel with the recovery terpenes and volatile compounds from plant material. From day one, we noticed that our evaporative extraction process yields about two to four times more terpenes by mass compared to traditional extraction methods.
While we started as a cannabis company, we recently received a compelling joint venture offer from a $3 billion fragrance company to produce perfume products with our technology. We are also under NDA with 7 of the world’s 10 largest fragrance companies to complete diligence processes to license our extraction technology.
As part of our licensing diligence process, we are performing paid fragrance extraction research for three multi-billion-dollar fragrance companies. Our evaporative extracted fragrance extracts are presenting a broader and more complete range of volatile compounds compared reference samples. We are also seeing substantially improved yield of volatile fragrance compounds. Combined, this gives us the advantage of being able to produce more extract at a lower cost, while also producing a superior product. This combination is how licensees can take market share away from any fragrance company that does not have access to our technology, and it is why we are seeing so much rapid traction in this area.
We have also extracted hops with our technology. If you’ve ever smelled a traditional hops resin, it smells good, but the smell doesn’t fill the room. If you put just a drop of our hops extract on any surface, the entire room will smell strongly of a premium IPA beer. It’s so potent you don’t want to get it on your hands or clothes because you will smell like beer for hours. It’s powerful and wonderful stuff!
Green: What is your business model?
Thomas: At our core, we are a technology development and licensing company. We first identify what we believe to be critical verticals and bottlenecks in high-value industries, then we develop and patent highly differentiated and disruptive technology solutions that we believe exist nowhere else. We then demonstrate both market fit and viability at scale through proof-of-concept sales of branded and high-profile, white-labeled products produced with our unique technologies. Finally, we systematically license and exit the various portions our IP portfolio though the orchestration of highly competitive bidding processes that promote both defensive and strategic acquisitions of our technologies. We are currently at the final phase of our model with licensing our extraction technology, and we are receiving offers as part of a competitive bidding process.
Green: Okay, let’s change gears here and start talking more about LifeTonic and your cannabinoid ionization technology. Can you talk high level about the onset times of cannabinoids in different matrices and media?
Thomas: Through LifeTonic, we invented 56 international patents granted and pending cannabinoid ionization technology that compresses the normal onset time of cannabis beverages from 30 minutes down to just a few minutes. Our cannabinoid ionization technology can also be used as a rapid onset vape alternative when sold in a breath spray format. We are currently selling hemp-based versions of these products through LifeTonic.com, and we are bringing THC versions of these products to market in Nevada and Colorado this fall and winter under the brand name LifeTonic.
All conventional and even nano-emulsified cannabis edibles and beverages take a long time to work. A cannabis chocolate can take 45 minutes to two hours before the effects kick in. Cannabis gummies are faster, but it still takes half an hour to 45 minutes to feel the effects. The very best nano-emulsified cannabis beverages take about a half an hour to work on average, if you are lucky. That long of a time delay effectively eliminates the social aspect of consuming cannabis, so most people instead choose to vaporize or smoke cannabis.
If you look at the largest investments that have been made across cannabis, some of the most prominent have been made by alcohol companies. Constellation Brands invested nearly $4 billion into Canopy Growth, with a mission to find an alternative to alcohol in cannabis. Molson Coors has partnered with Hexo and AB InBev has partnered with Tilray, both with that same mission. Even after all this effort and investment, cannabis beverages represent just a sliver of the market because current cannabis-based beverages take too long to work. The fastest ones on the market, on average, take around a half hour to kick in.
Imagine going to a bar and knowing that every time you got a shot of tequila or a shot of whiskey it’s going to take thirty minutes or more for the effects to even begin to kick in. That would be terrible. That would be the end of social drinking. Unfortunately, that is how a conventional cannabis beverage works.
You can’t really get a social drinking experience with cannabis yet, so most people vape it because it’s fast. But a lot of people don’t want to smoke something; in fact, they don’t want to inhale at all. So, we saw beverages as a huge opportunity. How do we make cannabis beverages work as fast as alcohol? That’s what our ionization technology delivers. From all the people we’ve surveyed – hundreds of people – they say that they reliably feel an onset within about seven to eight minutes with our technology. That is just about as fast as a shot of tequila or whiskey.
“With our partners, we will be featuring LifeTonic beverage products on tap in a cannabis cocktail lounge right off the Las Vegas strip, where social consumption rules are welcoming.”What we’ve done is very different from available nanoemulsion technologies. All those technologies try to mix oil and water, and oil and water don’t mix. In a nanoemulsion, you mix cannabis, a carrier oil, an edible detergent and water, and then you run it all through an ultrasonic homogenizer that breaks the cannabinoids and oil into microscopic droplets suspended in water. There are a lot of styles of nanoemulsions, from spray-dried nanoemulsions to liquid liposomal encapsulations, and they all confer certain absorption benefits when compared to straight-up oil absorption. But still, even the microscopic oil droplets suspended in water are quite large compared to what we have done, and still take quite a long time to digest.
We looked at the cannabis molecule and we said, “You know what? If we can put a strong negative charge on it, if we can ionize it, then we can make it behave more like a dissolvable salt instead of an oil.” When we treat it this way, the cannabis molecule dissolves completely in the water without emulsifiers or additives. When something is dissolved, there is no nano-emulsion droplet size. It is single molecules dissolved water. A single ionized cannabinoid molecule is about 1,000 times smaller than an average nano-emulsion droplet – and this greatly enhances absorption. The onset speed of ionized cannabinoids compared to nanoemulsions is measurable as just a few minutes instead of a half hour or more.
We have 56 granted and pending patents on LifeTonic’s ionization technology. We can ionize THC, CBD, CBG and CBD – most cannabinoids are compatible. There are also several herbal products that are compatible with our ionization technology, like the curcuminoids in turmeric, which are normally very hard to get into water. We can also ionize the eugenol that is in cloves. Ionized eugenol is an intoxicant, so we have big plans for alcohol alternatives outside of cannabis.
We’re using this technology to enter the Nevada cannabis market with one of the largest dispensary chains and cannabis product manufacturers in Nevada. With our partners, we will be featuring LifeTonic beverage products on tap in a cannabis cocktail lounge right off the Las Vegas strip, where social consumption rules are welcoming. We’ll craft every kind of cocktail you can imagine, only without alcohol. All these beverages will work in a matter of minutes to provide the first true social drinking experience with cannabis. After you enjoy a beverage, you may purchase a package of ionized THC beverage powder sachets in the cannabis cocktail lounge or at any of the dispensaries within our distribution network. You can pour the powder into any beverage, and it becomes a friendly, fast-acting THC beverage that will get you high, but not leave you with a hangover. We will also be selling a breath-spray format that works almost as quickly as vaping.
Green: What kind of validation studies have you done?
Thomas: We have conducted several broad market studies for our ionized products and almost all people report a profound onset within a few minutes. We have not completed a formalized clinical trial, but we are closing a major funding round that will allow us to do so. We plan to begin controlled pre-clinical trials focused mainly on ionized CBD because it’s far easier to get FDA approval for clinical trials on CBD than for THC. Our studies will monitor a couple dozen volunteers with a functional MRI and watch the change in the brain using our oral spray and beverage products compared against a standard CBD tincture control. We know that we’re going to see fast action because everybody who uses it says that a feeling develops in minutes.
Green: What geographies are you active in and exploring?
Thomas: CBD and hemp products from our extraction technology have been sold in every US state and parts of Europe. Additionally, hemp-based CBD and CBG versions of our ionized products and ionized turmeric products have been sold in several states through our LifeTonic.com, our ecommerce site. We have also sold white labeled versions of our ionized products through partner brands. We will be launching THC versions of our ionized products with our partners Nevada this fall. We expect THC versions to also be available in Colorado this winter.
Green: So, you are creating the powders on site?
Thomas: Yes. We manufacture ionized CBD, CBG, eugenol and turmeric beverage powders on site. We also manufacture and fast acting ionized sprays. These products are sold through our own retail site and we white label for other brands. Per our long-term licensing strategy, these sales establish market viability through sales. Selling products and establishing market viability prior to licensing significantly increases the value of our licenses and exits. It’s very important to answer the question: Do people buy it and do people love it? So far, we like the feedback!
On the THC side, we manufacture ionized products through partners in each cannabis state that we enter. We manufacture the ionizing base here in Colorado, then we ship it to other states where our partners add the THC and package it in LifeTonic-branded packaging. The analogy is that we sell a proprietary Coca-Cola formula without the caffeine, then our partners add the caffeine and bottle it in Coca-Cola branded bottles. In this way, we ensure that the hardest part of our process is controlled house to ensure consistency and quality across all states. It also allows us to be a non-plant touching business, since we only sold upstream base products that did not contain THC. We pick the best manufacturing and distribution partner in each cannabis state and grow from there.
Green: What’s the one thing you’re most interested in learning about?
Thomas: Increasing the bioavailability of cannabis. I have been most passionate about making cannabis work as quickly as alcohol and giving people an alternative to inhaling it through smoking or vaping. That’s definitely what we’ve been most excited about as a company.
Let’s just say it. There is an undeniable chaos in the cannabis industry. It doesn’t matter if you’re a big or small operator, it’s likely that you don’t have a documented system for creating and managing ever-changing SOPs or for consistently training all employees on the most current versions of those SOPs. This chaos is often the result of rapid growth, mergers and acquisitions, and the ever-present turnover in our industry. When department leadership changes, and it often does, established policies and procedures are often left behind. In some cases, this is a positive sign of growth. As a company outgrows SOPs and as it develops more sophisticated ways to cultivate, extract, process, manufacture, package and sell cannabis and cannabis products, inevitably, the old ways of doing business need to be replaced. For those operators who have prioritized operational excellence, whether they want to position their company for new investment, merger or acquisition, or just want to create a consistent and standardized, branded product, it’s critical to get control of SOPs, training and documentation.
By standardizing and documenting safety procedures, manufacturers mitigate the risk of cannabis-specific concerns
As with most big goals, to obtain operational excellence, you need to break the goal into manageable steps. Assuming you have accessible quality policies and procedures in place, properly training employees when they first start work and on an ongoing basis as policies and procedures change is the number one key to successful operations. When employees know how to do their job and understand what is expected of them, they are positioned for success. When employees are successful, it follows that the company will also be successful. Documenting operations is a second important step in obtaining operational excellence. While training and documentation appear to be different, in best-practice organizations, they are inextricably linked.
One Set of SOPs
Those of us who have been in the cannabis industry for a while have experienced firsthand or heard stories of facility staff working off of two sets of SOPs. There’s the set of SOPs that are printed or digitally available for the regulators, let’s call them the “ideal” set, and then there are the SOPs that actually get implemented on a day-to-day basis. While this is common, it’s risky and undermines the foundation of operational excellence. Employees often know there are two sets of SOPs. Whether they express it or not, many are uncomfortable with the intentional or unintentional deception. When regulators arrive, will they have to bend the truth or even lie about daily operations? Taking the time to establish and implement one set of approved SOPs that is compliant with both external regulations and internal standards is good for employee morale, productivity and ultimately, profits.
What’s the best way to get control of a facility’s SOPs? Again, break it into manageable steps:
First, task someone with reviewing all SOPs that are floating around. Determine if any are non-compliant, which ones need to be tossed and which ones need to be revised so they work for the company as well as outside regulatory authorities.
At a minimum, establish a two-person team to draft, review, publish and distribute the final SOPs. Ensure that at least one member of the team has management level authority. Assign that employee the responsibility of reviewing the SOPs before “publication” and distribution.
Archive, delete, or actually throw away outdated or non-compliant SOPs
Revise or create new best-practice SOPs that are in compliance with external regulations and internal standards
Establish a system to update SOPs when external regulations and internal standards change
Use a naming convention that distinguishes draft SOPs from final SOPs, for example, “Post-Harvest Procedure, FINAL”
Inform employees that they will be retrained on the new SOPs and that approved SOPs will always have the word “Final” in the title
Store the final SOPs in an easily accessible location and give employees access, not only during training, but on an ongoing basis
Centralized Repository for Final SOPs
Storing final, approved SOPs in one easily accessible, centralized location and giving employees access sounds simple, but again, this is the cannabis industry, so this often doesn’t happen. Many of us have or are currently working for an organization that stores SOPs in multiple places. Each department may have its own way of updating, disseminating and storing SOPs. Some SOPs are stored in a printed binder stuffed in a drawer or left on a bottom shelf. Others are stored digitally. Some use both systems, which creates confusion. Who knows if the digital versions or the printed versions are the most current? Surely someone knows, but often the front-line staff do not.“Once you’ve established a single set of compliant SOPs and have stored them in one accessible location, it’s time to train your employees.”
Establishing a centralized repository for final, approved SOPs is the foundation of operational excellence. It lets employees know that operations are organized and controlled, and it reassures regulatory authorities and external stakeholders—think insurers, bankers, investors—that the company prioritizes compliance and organization. And external stakeholders who believe that an organization is proactive and well-run tend to be more forgiving when the inevitable missteps occur. Companies that are organized, have effective training systems, regularly conduct internal audits to identify potential issues and take identifiable action steps when necessary to remediate issues, receive fewer deficiency notices, violations and fines than their less organized competitors.
Train Employees
Many states require cannabis operators to provide a specific number of training hours prior to an employee beginning work, and a specific number of continuing and refresher training hours annually. Once you’ve established a single set of compliant SOPs and have stored them in one accessible location, it’s time to train your employees. To do so, set clear expectations and decide who is responsible for what. Is the HR manager responsible for initial onboarding and training? Are department managers responsible for ongoing and annual training? Create a training responsibility chart that works best for your company; write it down and share with all stakeholders.
Documenting all key areas of operation on a recurring basis will help you keep track of a large facility and workforce
The next step is to figure out how to train your employees. Individuals have different learning styles, so ideally, you’ll offer multiple ways for them to master the requirements of their position. Assign written materials and if possible, attach short videos showing the best way to complete a task. Follow up with a quiz to determine comprehension and a conversation with a department lead or manager to answer questions and review the key take-aways. Ideally, the department manager or lead employee will work with the employee until they are competent and comfortable taking on new assigned tasks and responsibilities.
Sum It Up
Operational excellence begins with:
Knowledge of and access to current external rules and regulations and internal standards
One set of approved and easily accessible policies and SOPs that comply with both external and internal standards
An initial training system with clearly assigned roles, responsibilities, and goals
An ongoing training system with clearly assigned roles, responsibilities, and goals
Systems to:
Test knowledge before employees begin unsupervised work
Stay up-to-date with all changes to external rules and regulations and internal standards
Control policy and SOP revision process
Inform all stakeholders when policies and SOPs change
Test that employees understand new standards
Document all key areas of operation on a recurring basis
Address deficiencies and evaluate whether SOP revisions are warranted
Document and implement necessary remediation when necessary
For those of you rolling your eyes and thinking you don’t have time for this, ask yourself, “Can you afford not to?”
For those of you committed to operational excellence and doing what it takes to get there, congratulations on being a visionary leader. Your efforts will pay dividends for your own company and will help the cannabis industry grow into a well-respected, profitable industry that improves lives.
Change control, when it comes to quality management systems in manufacturing, processing and producing products such as cannabis edibles or vape pens, is a process where changes to a product or production line are introduced in a controlled and coordinated manner. The purpose of change control process management is to reduce the possibility of unneeded changes disrupting a system, introducing errors or increasing costs unnecessarily.
ASTM International, the international standards development organization, is developing a new standard guide that will cover change control process management for the cannabis and hemp market. The guide is being developed through the D37 cannabis committee.
The WK77590 guide will establish a standardized method for change control process management for cannabis companies so that they can document and track important decisions in manufacturing and quality systems.
For example, an edibles manufacturer would utilize change control process management if they want to use a different type of processing equipment or introduce a new shape or design of their product. Without change control process management, that edibles producer might switch to a new piece of processing equipment without knowing that it requires more energy or uses different raw materials, thus making production unexpectedly more expensive.
While that’s a very cursory example, the premise is simple: Before you undergo a change to your process, plan it out, analyze it, review it, test it out, implement it and make sure it works.
Change control process management can often be summarized in six steps:
Change control is designed to coordinate changes to manufacturing so they don’t disrupt a process.
Plan/Scope
Assess/Analyze
Review/Approval
Build/Test
Implement
Close
Maribel Colón, quality assurance consultant and vice chair of the ASTM subcommittee on cannabis quality management systems, says producers and testing labs will benefit the most from the guide. “As the cannabis industry grows, the quality, expectations, and control challenges grow within,” says Colón. “The creation and implementation of this standard guide will increase cannabis business efficiency and minimize risk, time, and potential cost of poorly managed changes.”
According to a press release, ASTM International is open to collaboration on this as well. Specifically, they are looking for professionals with change control who might be interested in helping advance and develop this guide.
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