Tag Archives: sourcing

April 25, 2022

The Rise of a New Market… And a New Consumer

By Christiane Campbell

The adult beverage industry, like any other category of consumer branded products, is driven by trends. If you’re old enough to remember Bartles & Jaymes wine coolers, you probably also remember Zima and Smirnoff Ice, and more recently “healthy” options like Skinny Girl and Michelob Ultra. The sensation that was craft beer saw many brands being acquired by Big Alcohol so that while the brands remain, ownership and production have changed significantly. Gin, tequila and vodka have had their moments in the sun and the current market is undeniably saturated with what is probably the largest current trend – hard seltzers. However, with the seltzer craze waning, many are wondering what’s next. And with the growing sober/California sober trends, some are betting it is cannabis-infused beverages.

Cannabis-infused beverages offer both an alternative method of consumption of cannabis and are also an attractive alternative to alcohol. Infused beverages are more appealing to the new demographic of casually curious cannabis consumers. i.e., consumers that may not be interested in smoking a joint or vaping, but are comfortable micro-dosing from a can or bottle, as they would a seltzer or beer. The same type of consumer may be moving away from alcohol consumption to eliminate hangovers or other negative health effects.

The emerging market and curious consumer group present an enormous opportunity right now for cannabis-infused beverage brands. Of course, with opportunity and growth come challenges. And while cannabis-infused beverages face a host of legal and regulatory challenges relative to sourcing, manufacturing, packaging, labeling, shipping, marketing, distribution and sale, one of the most critically important business assets to address at inception is the brand.

Lines are Blurring, Gaps are Being Bridged

The U.S. cannabis market is currently a geographic hamburger. Hear me out: Geographically, you have a relatively mature market out west and a relatively new and growing market along the east coast. These are the buns. You have a mixed bag in between, with some states coming online and allowing medical or adult use cannabis use and others that have not yet embraced any form of legalization. The landscape has lent itself to the development of regional brands, such that brands that are so similar they might otherwise confuse consumers, have been able to co-exist in different regions without issue, or because there is little to no trade channel or market overlap. Similarly, adult beverages and cannabis have historically been separate verticals, with an arguably low likelihood that a consumer would assume a particular cannabis product and adult beverage product emanate from the same source.

A drink additive, made by Splash Nano, that uses nano emulsion technology

However, lines are blurring and gaps are being bridged. Walls are breaking down. The increasing number of states coming online with legalized cannabis, and the proliferation of multi-state operators (MSOs), means that cannabis brands can grow to be more than siloed regional brands. This will inevitably lead to brands that previously co-existed bumping into one another and there’s bound to be some pushing and shoving. The advent of infused beverages likewise bridges the gap between cannabis products and alcoholic beverages. While the respective industries were not historically per se related, competing, or overlapping, now you’ve got infused beverages that bridge the gap between the two, and traditional alcohol brands (e.g., Boston Beer Company, Molson Coors, Lagunitas, Pabst.) entering the market (albeit under different brands). This makes a strong argument that cannabis and alcohol (or, more generally, adult beverages) are within each other’s logical zones of expansion, for purposes of a likelihood of confusion analysis.

The growing pains infused beverage brands will experience are analogous to those craft beers saw in the 2000 – 2010s. Many craft brewers had catchy, cheeky names and brands that contributed to their ability to engage consumers and develop a following, but failure to clear and protect the brands prior to launch detracted from the brands’ market values. Localized use prior to expansion also led to many brands bumping into one another and stepping on each other’s trademark toes. This was significant as the brands sought investment dollars or an exit strategy, making clear that the brand itself contributed heavily to valuation.

Mitigating Risks and Overcoming Challenges: Search and Protect

The risks and challenges can be significantly mitigated and/or overcome with proper preliminary clearance searching and assessments, and by seeking and obtaining state or federal protection for the brand or brands, to the extent possible.

Of course, clearance searches and assessments come with their own challenges, as does federal protection. With respect to clearance searches, these typically look at U.S. federal and state trademark databases. These resources are not sufficient for purposes of clearing a proposed cannabis brand. Many brands are not recorded at the federal or state level and indeed may not even show up in a basic search engine. An appropriate search looks at social media resources like Instagram, Twitter, Facebook and known cannabis resources like Leafly and Weedmaps. Additionally, the scope of the search should exceed cannabis products and services and at least look at alcohol and merchandise. Adoption and use of a brand for a cannabis-infused beverage is high risk if that brand is similar to a prior existing alcohol brand. A current example is Cointreau’s taking aim at Canopy’s adoption and use of QUATREAU for an infused beverage.

A U.S. federal trademark registration presents its own unique challenges, but is incredibly valuable and beneficial to a brand since it provides the owner with a nationwide presumption of ownership and validity in a trademark, and can also secure priority for the owner with a constructive first use in commerce date that is years before actual use of a mark begins. The U.S. Trademark Office categorically denies protection of brands that violate its “lawful use” rule, and will treat as per se unlawful any applied for mark that covers marijuana, or that covers foods, beverages or pharmaceuticals that contain CBD. With respect to brands that cover products containing THC, since it is federally scheduled, use of the brand would violate the Controlled Substances Act (CSA). With respect to brands that cover CBD or products containing CBD, these may be lawful pursuant to the Farm Bill and the U.S. Trademark Office’s subsequent allowance of marks that claim CBD “solely derived from hemp with a delta-9 tetrahydrocannabinol (THC) concentration of not more than 0.3 percent on a dry weight basis,” however under the Food Drug Cosmetics Act (FDCA) it is currently federally unlawful to introduce CBD – even if it fits the definition above – into foods or beverages.

Even if cannabis is not specifically claimed in a trademark application, cannabis brands have a natural gravitation toward names and logos that can do some of their marketing for them, and announce to the world they cover cannabis. This increases the chances that a trademark application for the brand will get push-back from the U.S. Trademark Office, and if not at the initial review stage, then at the point in time when the brand must submit to the U.S. Trademark Office a sample of (lawful) use of the applied-for mark. While this all sounds like bad news for cannabis-infused beverages, all is not lost.

There are typically ancillary and federally lawful products and services cannabis companies offer under their brands that can be covered in a U.S. federal trademark application, and arguments to be made that registered protection of a brand for the ancillary items should be sufficient to enforce against third parties using the same or confusingly similar brands in their space. Some cannabis brands’ lawful ancillary products are actually product lines (e.g., beverages) offered under the same brand that contain no cannabis. Others may be more causally related, like online forums and blogs. The former is closer to the actual product, and the latter would be more beneficial to a brand that is inherently stronger and more distinctive. One note of caution: A trademark application and eventual registration that expressly disclaim cannabis (THC or CBD) may be difficult to enforce against a third party using the same or a similar mark on and in connection with cannabis. So, while there is a natural inclination to follow a U.S. Trademark Office request to disclaim coverage of cannabis, there may be enforcement consequences down the road.

The cannabis-infused beverage market is poised for explosive growth. The brands that survive – and succeed – will be those that position themselves for growth by clearing and buttoning up their brands as early as possible. The market leaders will be those that select strong and distinctive brands, with geographic and market space around them for growth and expansion; and those that protect and enforce their brands, to the extent possible, at the federal and/or state levels.

December 3, 2020

Leaders in Infused Products Manufacturing: Part 5

By Aaron Green

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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 fifth and final article in a series where we interview leaders in the national infused products market. In this final piece, we talk with Lisa McClung, CEO, and Glenn Armstrong, senior advisor at Coda Signature. Lisa got started with Coda in 2019 as a board member after transitioning from an executive role at Wrigley. She now heads up the company as CEO and President. Glenn has deep experience in product development and innovation with brands such as General Mills, Whirlpool and Wrigley.

Aaron Green: Okay, great let’s get started here. So we’ll start with Lisa. How did you get involved at Coda?

Lisa McClung: I was lucky. Based on my experience, I was originally asked to be on the board of Coda. I’ve served on nine company boards in addition to my career as an executive at General Electric and at the Wrigley Company where I was heavily involved with innovation. The Board then asked me to consider stepping in as CEO after I’d been working there for six months. I was just overwhelmingly complimented that they considered me and I feel incredibly lucky to be here.

Aaron: Okay, great. Glenn, how did you get involved in Coda?

Glenn Armstrong: We’ve known each other for a long time at Wrigley. I was in innovation for the confectionery side and worked very closely with Lisa. When she became a board member, she asked me to do some advising for her. I’m new to the cannabis industry so, I was really excited about doing something different. When Lisa became CEO, she asked me if I would help her.

Aaron: How do you think about differentiating in the market?

Glenn: I spent 90% of my career on the innovation side working with companies like General Mills, Quaker Oats and Amway. When I think about how to differentiate almost any company I always focus on innovation. In the cannabis industry, everybody’s got gummies and chocolates but you’ll hear people talking about “gummies are going away.” No, you’ve just got to innovate, right? It’s like the carrot peeler from 20 years ago. It used to sell for about 25 cents, and it was all steel and now they sell for $10.99. Who would have known?

Glenn Armstrong, Senior Advisor at Coda Signature

I believe anything can be innovative. When I looked at the gummies I asked, “what we learned at Wrigley, can we bring into Coda that currently is not in this industry?” Think about various gums and how they can change flavors over time like Juicy Fruit which dissipates really quickly and that’s just how the flavor is.

Or, there are other ways like spearmint. You can get an initial boost and then extend that flavor by encapsulations. I don’t see much of that in the cannabis industry. It’s just taking what’s out there from flavor companies that people like and getting them into this market.

Aaron: Awesome. Do you have any particular technologies or work or products from other industries that really interest you?

Glenn: I would say it’s going to be from the pharmaceutical industry. You think about THC and CBD being so hydrophobic. With chocolate, it’s not such a hard thing to get into. If you try to get those kinds of compounds into aqueous solutions though it can be a challenge, the drug industry has been doing it for years! So, to me, delving into some of their patents and some of their ideas, that’s one of the most powerful industries I see where we could utilize their technologies to advance the industry. I expect big pharma to get into this. We can start looking at what they’re doing that we can leverage quickly to get into Coda products.

Lisa: We’re not necessarily a pharmaceutical brand, but we are committed to helping people live and feel better. It really is about how you weave cannabis into everyday life?

We have a platform of very indulgent products, which is our chocolates ranging from truffles to bars. We also are building our non-chocolate portfolio to include other ways to enjoy cannabis in their daily life. And then to Glenn’s point, I think there’s ideas and technologies from the pharmaceutical area, there’s also things that have been in the food industry for years that provides sensations and experiences.

I think part of our goal is “how many of the five senses can we touch from people in creating product?” The feel of something in your mouth heating, cooling. Not just the psychoactive aspect of it, but the complete end-to-end experience.

These are all dynamics of us delivering the “live and the feel” piece of it. Then people can either use them from a lifestyle perspective for enjoyment, or a medical perspective. Our job is to provide consumers choices and options that provide those type of experiences.

Glenn: If you have a product that’s supposed to “reduce anxiety” why not start with the slight warming of the mouth? Something that feels calming long before the THC or CBD kicks in? Then have a flavor come up that just feels warm and comfortable. By combining all five senses, you have a product that really does something for your consumer.

Aaron: Thanks for that! What’s your process for creating a new product at Coda?

Lisa: Well, I think everybody talks about brainstorming sessions like innovation is something that just pops up. I think innovation has three legs to it. One is really customer-driven. So, we have to produce products that help our retailers make money, and that deliver really good experiences to consumers that we jointly serve.

The second piece of it is thinking about the discipline of innovation. So, when we make a product, what technologies do we bring to bear, can we scale them, and can we produce them at the right price point and delivery?

Then the last piece is the fun piece, trying to listen to what is and isn’t being said in the market to really try to be a solutions company.

We spend a lot of time listening and watching the market to figure out where we can anticipate things. We used to call it “problem detection” at Wrigley.

One project that Glen and I worked on was a mint that was designed really around adult usage in more professional situations. So, meaning the shape of the mint needs to be tucked in your cheeks so you couldn’t see it. And the packaging of it was something you could surreptitiously pop underneath the desk because we were designing it for people to use as really a business tool. You don’t think of mints as a business tool, but they really are, they give you more confidence with breath-freshening and you don’t necessarily want to hold that out with everybody else.

Some problems are about how to make a product more fun with our fruit. I can put pineapple jalapeño in my mouth and have a literal popping experience, which adds to my enjoyment of that experience.

The last piece is not to do too many products. One of the things that I think of in cannabis is that everybody’s still learning. It’s such a wide-open space, in some cases, that you also have to kind of pick what you do well. So, sticking close to our brand and what we stand for is also something that we’re trying to do. We’ve actually pulled in our SKUs recently and are trying to focus on a platform of indulgent experiences and of lifestyle products. We try not to do everything that we see out in the market and focus only on the things that we do well that solve problems for our consumers.

Glenn: From my perspective — I am not a big process person — I think the best way to do it is to say, “okay, we’ve got these products. We could look at technology, we could look at something else, but let’s just go scour what’s out there. And let’s get outside of our industry.” Look outside your own game, and see what you can use.

Discovering how to use these technologies in a gummy or chocolate as opposed to just drugs isn’t rocket science. My biggest avenue is looking outside and finding what you can apply as opposed to trying to reinvent everything.

Aaron: We’ve focused on the front end of innovation. Can you articulate on the back-end how that moves into product development, manufacturing and commercial launch?

Lisa: We have a new product pipeline with a Stage-Gate process where we will have a number of ideas and whittle them down on certain criteria.

Sometimes the ideas start with the technology and not the market. Glenn will find something and say, “Hey, this is going on, should we be thinking about this in cannabis?” It allows our each of our teams to come up with how they can make it work.

Then, as that product passes through the next stage-gate, we’re looking at the actual economics of the product, and how it fits relative to our other products all while we’re getting consumer input.

We get to that point in the process when we start trialing with consumers to help decide. And sometimes you get the best idea in the world, and then it’s not going to work so in some cases so you put it back in the pantry.

I never like to say that we don’t take an idea forward, even products that we may have taken off the market, we say “we freeze products, we don’t cut products!” because our goal is to have options. Our discipline is around a Stage-Gate process tied to our business goals and objectives. It’s also about playing around with concepts and seeing what materializes.

Glenn: There is this whole notion of a process, there’s a Stage-Gate, but before that, it’s a lot of playing around. What Lisa and I’ve recently worked on was making innovation a way of life so that every time you see something, you say something.

“We don’t think of innovation solely as the next flavor that’s going to be on the shelf.”We always gave people permission to play in the web.The reason brainstorming sessions don’t tend to work, is we expect people to become innovative in these next five hours.

So, if you think of innovation as a way of life, then it becomes what you do daily, and you look at things differently. I like to say when you’re driving home, go a different route, because you never know what you’re going to see. When you get out of that habitual mindset, you’ll think about your business differently, almost naturally. Innovation — this way of life — is one of our buzzwords.

Lisa: I think building that innovative culture is a responsibility, but also a challenge for a company like Coda. I mean, we’re not new. We’ve been around five, six years and we have some of the leading chocolate bars out there. We’re known for flavor systems.

Where our goal is to create a culture of innovation, you get these little pockets of creativity and innovation, and then it starts snowballing. You build on it, get people excited about it, and move it forward. That’s how everybody gets involved in innovation.

One of the goals of that pipeline process is to combine inspiration and discipline. But you don’t just want to be innovative in the next flavor. That isn’t doing enough for our consumers. We’ve educated them on the potential flavors could bring. But now we really want to be much more innovative across the board and see what kind of culture of innovation Coda can do.

We’re looking at the packaging, how we interact with retailers, how we use digital messaging to support our retailers and support our products. We don’t think of innovation solely as the next flavor that’s going to be on the shelf.

Aaron: From a supply chain perspective, how do you go about sourcing ingredients?

Lisa: We have some wonderful partners that have been with us at Coda. People that bring us chocolate from other parts of the earth.

We continue to keep building our ecosystem of partners. We look at different flavor houses and different food type researchers to be partners with us to broaden our ecosystem. It’s something that’s very much top of mind, even more so during COVID, because we’re feeling very fragile about our supply chains.

Glenn: Yeah, I think Lisa, that’s one thing you and I bring, not only to Coda, but I think to the cannabis industry, is the whole CPG discipline of how we look at suppliers and procurement. We need to go out there find some smaller flavor labs with incredibly creative folks.

I think the whole notion of expanding the supplier and vendor base, is pretty unique in this industry and that’s one of the strengths we bring to Coda.

Lisa: Our goal is to really create an ecosystem of different suppliers. I just think that that’s something other industries — you talked about pharmaceuticals earlier — have done. Cannabis is just starting to get there, but that’s where you get exponential opportunities.

We’re really looking at cross-functional and interdisciplinary teams with outside partners. Cannabis is at the stage now where I think it’s looking for more sophisticated technologies and new ways of deploying. We’re also really interested, as Glenn said, in some of the younger, more entrepreneurial firms that want to possibly expand their reach into cannabis as well.

Aaron: Okay, great. So my next question is can you give me an example of a challenge that you run into frequently? And this can be either a cannabis challenge or a business challenge?

Lisa: I think one of the challenges that cannabis faces in general is educating consumers about our market. One of the opportunities we have is to bring people into the market. We’re at the same time developing products for people who are in the cannabis space and are active users and have varying degrees of understanding of how they’re using the category in their daily lives.

We’re also trying to create products and education to invite people into the cannabis market. That’s a different challenge than if you’ve had an Oreo cookie, and people kind of understand cookies. They understand Oreos, and then they understand organic Oreos and all the other permutations of two chocolate cookies with a vanilla thing in between. Our goal is to expand the ability for people to access cannabis in their lives.

That is a very unique business problem. And it does represent a bit of a screen, are you going to do some of your products for more sophisticated users and others for less sophisticated users? Cannabis has consumers that have been taught essentially to think about milligrams; there’s one of the key components of choice. People will look at the product and flavor, and then they look at the milligrams and the price point.

That’s very unique to what we would find on CPG. You don’t necessarily look at dollars per milligram when you buy a cookie. So, if you’re trying to make a premium product with premium flavors, how do you say, “Well, yeah, there’s dollars per milligram, but this product has all these other technologies to create the warming or whatever.” “Innovation in products and new categories is critical to get the industry beyond common confections.”

So you kind of have a dual issue. You’re trying to get people educated on a new category and how they use it. But the education of the consumer in terms of the potential and the possibilities that they can access is going to be very important.

Aaron: What trends are you following in the industry?

Lisa: Beyond paying close attention to legalization progress across the country and monitoring how states are setting up their regulatory standards, we’re focused on which consumer demographics are incorporating cannabis into their wellness and self-care practices—and how Coda Signature products fit into their daily routines.

Glenn: For edibles, “fast acting” is probably beyond a trend and it will be interesting to see where this nets out. Consumers appear to be balking at the slightly higher price point for fast-acting gummies, but there may be a market for after-dinner dessert items. In other trends, use of minor cannabinoids and terpenes for specific benefits appears to be a solid consumer need, but this is going to require solid science to see if these products truly work. Innovation in products and new categories is critical to get the industry beyond common confections.

Aaron: Okay great! Lastly, what would you like to learn more about?

Lisa: We’re fascinated by the technological advances being made in the cannabis industry, and how those achievements may enrich the consumer experience moving forward. We’re also interested in the growing body of scientific research around how cannabis products can enhance people’s health and wellness.

Glenn: U.S. legalization and the constant changes in regulations require someone to distill the information and do a weekly report on changes.

Aaron: Thank you both! That concludes the interview!

October 26, 2020

Leaders in Infused Products Manufacturing: Part 2

By Aaron Green

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Editor’s Note: Part 3 will be an interview with Liz Conway, Regional President of Florida at Parallel. In part 4 we’ll sit down with Stephanie Gorecki, vice president of product development at Cresco Labs.

This is the second article in a series where we interview leaders in the national infused products market. You can find the first piece here. In this second piece, we talk with Mike Hennesy, vice president of innovation at Wana Brands. Mike started with Wana in 2014 after moving to Colorado and leveraged his science background to transition into product development and innovation where he has helped develop one of the best-known brands in Colorado.

Next week, we’ll sit down with Liz Conway, Regional President of Florida at Parallel. Stay tuned for more!

Aaron Green: Thank you for taking the time today. Just to start off, can you walk me through how you got involved at Wana Brands?

Mike Hennesy: Thanks Aaron. I got involved in the cannabis industry pretty intentionally. After graduating college in 2012, I was determined to get involved. I moved to Colorado from the east coast. I’m originally from Virginia. I moved out here in 2013 and started with Wana in 2014.

I got involved in the sales side of the business originally – as the company was just starting to emerge into the legal recreational market – and oversaw growth here at Wana during significant changes in the industry. Over time, my role transitioned into innovation and R&D where I am leaning on my background in science.

I now lead new product development and education as Vice President of Innovation, and I’m also completing a master’s degree in cannabis science and therapeutics.

Aaron: So, what does innovation mean to you?

Mike: Innovation for the cannabis industry is pretty unique and interesting. We are just beginning to unpack the pharmacopeia of the cannabis plant as well as starting to understand our own bodies endocannabinoid system.

Innovation spans from genetics of plants and how they are grown to how you deliver cannabinoids to the body and what different ratios and blends of cannabinoids and terpenes you are actually putting in there. So, innovation is not a one size fits all category for cannabis.

Aaron: Sounds like an interesting role! At Wana Brands, and in your role in innovation, how do you think about differentiating in the market with your products?

Mike: I would describe the way we perceive differentiation as going beyond simple developments, such as product forms or new flavors. We see the future of product development trending towards what active ingredients and in what ratios we are putting into products. For example, what kinds of cannabinoids and terpenes are we using? What kinds of drug delivery systems might we be harnessing? How do we put all of these ingredients and technologies into a product to make it more effective?

A simple way to think about all of this is: how is our product going to work better for the consumer? Because that is really the key here. Tasting great is important, but we are delivering a product that provides an experience. We want to continue to make a better experience and a better way for customers to enhance their life.

Aaron: I think that leads nicely into our next question, which is, when you’re thinking about creating a new product for the consumer, what’s your process for creating a new product?

Mike: We have a very full pipeline of new products, and many of these ideas come from networking and speaking with innovators and following the research and science for inspiration and direction. We take this information and start brainstorming as a team. We have a decade of experience in the cannabis space that provides us with a unique lens on how we apply new research to our product development.

From there, we build a product development pipeline of potential ideas and start to prioritize, looking at the feasibility of each of these ideas and their market readiness. Sometimes we have a great idea for a product, but a lack of consumer knowledge may mean we don’t move forward with launching.

Aaron: Can you expand a bit on what you mean by education and how you guys think about education to the end consumer?

Mike: Since product innovation must move with consumer knowledge and cannabis is so new, education is critical. We have a very robust education platform with topics that range from cannabis 101 to the endocannabinoid system, to lessons on terpenes and CBD, as well as trainings on our products themselves. We have both bud tender-facing and consumer-facing trainings. The consumer trainings are on our website, and bud tender trainings are hosted through dispensaries.

Aaron: Is that training electronic training or written material?

Mike: Both, but the primary platform is online in the form of interactive training courses. We also have printed flip book training material in dispensaries and offer in-person presentations, but with the pandemic, we’ve been heavily leaning on the online training content.

Aaron: Alright. So, we’re going to take a different direction here on questions. From your perspective, at the innovation level, can you walk me through your experience with your most recent product launch?

Mike: Most recently, we launched the line of Wana Quick Fast-Acting Gummies. I am extremely excited and proud of this line. They have absolutely exploded in popularity!

The idea for these products started a few years ago as we were learning cannabinoids are not very bioavailable. This means most of the cannabinoids that you consume from an edible do not end up in the bloodstream. Edibles also have a delayed onset and undergo a conversion of THC in the liver, called first pass metabolism, that gives a heavier sedating high. This slow onset and difference in effects with edibles can be a turn off for some consumers, leading us to the idea of developing a fast acting gummie that works differently.

It was about two years of research looking at technologies developed by pharma and nutraceutical companies to improve bioavailability and bypass first pass metabolism. We started looking into nano-emulsions and encapsulation of cannabinoids that help with bioavailability and reduce the onset time. These technologies envelop the cannabinoids like a disguise that tricks the body into absorbing the oily compounds more easily. The encapsulation bypasses the liver and is absorbed into the bloodstream quickly, so their effect starts within five to fifteen minutes. Since they are not processed in the liver, they deliver delta-9 THC instead of 11-hydroxy-THC, giving an effect I describe as a “smoker’s high.”

We trialed and tweaked many technologies before we landed on one that is truly effective and worked with our line of gummies. With this revolutionary technology inside, we then crafted delicious flavors and a new triangular shape to differentiate them from our classic gummies. Because they take effect so quickly and only last about three hours, we thought the Quick Fast-Acting Gummies were the perfect product to use during happy hour. So, we have Happy Hour inspired flavors like Pina Colada, Strawberry Margarita and Peach Bellini.

We launched in March, and already right now, these SKUs in Colorado are #4, #7 and #11 out of all edibles sold in Colorado. And overall, Wana produces eight out of the ten top SKUs in Colorado. That’s according to BDSA, so a pretty impressive achievement!

Aaron: Okay, great, I’d say so! The next question here goes deeper in the supply chain. How do you go about sourcing for the ingredients?

Mike: I am going to start with the cannabis side of things. As I mentioned earlier, cannabis is unique. It is not just one ingredient. It’s many different compounds like the cannabinoids THC, CBD and others, but also terpenes and other beneficial compounds. To make the most effective edibles we partner with growers that care about their genetics, how they are growing, and how they are extracting to create high quality cannabis extracts.

We also understand terpenes are so important in the entourage effect, and that different terpene blends synergize with cannabinoids to produce different effects. Some can be energizing while others are more relaxing. Wana has innovated the terpenes we use by formulating proprietary blends of thirty terpenes or more that replicate indica, sativa and hybrid strains.

We did this by strain hunting the best cannabis in each class and analyzing the strains to understand their profiles. Then using organic, botanically derived terpenes, we build blends in the ratios they are found in the plant and reintroduce them into our edibles. This means Wana edibles match the terpenes that you will find in cannabis, unlike other products that just use distillates where the terpenes are degraded and lost in extraction. This also means we can replicate these blends with our partners in other states, so when you consume a Wana indica or sativa product you’re going to have the same terpene blends and the same experience and feeling every time.

Beyond cannabis and terpenes, we are extremely selective in all of our ingredients. And in the near future we’re implementing an optimized recipe that is all-natural, with no high-fructose corn syrup, as well as moving towards organic ingredient sourcing.

Aaron: Can you give me an example in your role of a challenge that you run into frequently?

Mike: I think that is the exciting thing about working in R&D and new products: there is always a new challenge. I guess I would say if you are not making mistakes, you are not really trying to push the envelope in product development.

We are working with plant matter, terpenes and encapsulation technologies, things that don’t always taste good, and putting them all into edibles. That means we frequently run into the challenge of figuring out how to put the right ingredients for effect in a product, but still make it taste delicious. We are very selective in what ingredients we use and how we’re introducing them to make sure the product still tastes good. We oftentimes come across a great technology—such as a terpene blend or a quick onset delivery system—that does the job, but is not optimal for a gummie recipe, such as the resulting consistency or taste.“These developments are all heading in the direction of delivering consistent repeatable experiences for consumers, which is what I see as the future of cannabis.”

Aaron: Would it be correct to say that formulation is a common thing you run up against in terms of challenges?

Mike: Yes, especially because a lot of the ingredients and technologies we are working with are new. There isn’t a guidebook for how to incorporate encapsulated cannabinoids into a gummy, for example.

That’s the novel aspect of a lot of this: how do you take a terpene blend that’s designed to mimic the cannabis plant and put it in your gummies? What’s the right way to introduce it so they’re not degraded by heat? Formulating with cannabis is about problem solving, and is the backbone to what we do in R&D

Aaron: We’re getting towards the end of the conversation here. And these questions are more geared towards you individually. So, what trends are you following in the industry right now?

Mike: I’ve got to have my eyes on a lot of things. That’s how you innovate in this industry!

I would say No. 1 is still terpenes. We are already innovating there, but I think we’re just scratching the surface of where we’re going to go. I think terpenes are going to unlock a lot of potential in cannabis products in the future, and Wana is going to be innovating there, leading the pack.

Next is minor cannabinoids. Through decades of an illicit black-market, the genetics have skewed towards high THC strains, but the cannabis genome actually allows for many other cannabinoids to be formed. Through the right cultivation and breeding programs, we are going to see a lot more CBG, CBN, CBC, and even more rare cannabinoids like THCV and others. These currently rare cannabinoids are going to be important for new product development as we learn more about their therapeutic effects.

Then there is continued innovation on delivery systems and bioavailability, functional ingredient blends and more natural products. These developments are all heading in the direction of delivering consistent repeatable experiences for consumers, which is what I see as the future of cannabis.

Aaron: Awesome. What are you interested in learning more about? This could be cannabis related or business related.

Mike: Well, fortunately, I am working on a master’s degree right now and so I get to learn a lot every day. I am most curious to see where science takes us with the endocannabinoid system. It was pretty much unheard of until a few decades ago, and now we understand that it interacts with almost every other system in the body. It is like missing the elephant in the room when you are talking about human biology. The amount of information that we’re going to unlock about how the ECS interacts and regulates our body is going to continue to revolutionize the industry There’s a lot more to be understood around how different compounds interact with the ECS and affect us, and I think we are going to learn how we can use it to tailor other products for outcomes such as sleep, pain, anxiety, energy and focus.

Aaron: Just a clarification there. What are you working on for your master’s?

Mike: I’m getting a Master’s in Medical Cannabis Science and Therapeutics from the School of Pharmacy at the University of Maryland. It is the very first master’s level program of its kind, and is taught by doctors and pharmacists, so we discuss cannabis as a drug and how it effects the brain and the body. It has been really exciting and I’m looking forward to continuing learning more about this amazing plant!

Aaron: Okay, that concludes our interview!

August 22, 2016

Hemp-Derived CBD Oil: Maintaining Quality in the Manufacturing Process

By Aaron G. Biros

3 Comments

Hemp-derived cannabidiol (CBD) products are quickly becoming a burgeoning industry. Consumers can purchase the products in all fifty states and can receive the therapeutic effects of certain cannabinoids without any psychoactivity. Commonly used to help treat inflammation, pain, seizures and anxiety, CBD comprises a sizable portion of the cannabis market that patients and consumers are flocking to.

Founded by Paul Benhaim in 2013, Colorado-based Elixinol is reaching this market with a line of hemp-derived CBD oils and capsules. The company has grown rapidly and now has agreements with exclusive distributors in Japan, Puerto Rico, The United Kingdom and South Africa.

According to Chris Husong, sales and marketing director at Elixinol, achieving superior quality is central to the company’s growth strategy. “We are thinking about the long-term play here,” says Husong. Achieving the highest quality possible starts with sourcing from industrial hemp farms in Northern Europe, according to Husong. Through good manufacturing practices (GMPs), the company pays close attention to every detail involved in producing the hemp-derived CBD oil.

Safety and transparency are two core tenants in the company’s goal to strive for quality products. “We use third-party independent labs for our testing including one in Northern Europe where we source from in addition to Proverde Labs when it reaches us in Colorado,” says Husong. They test their products for over 300 chemicals (including pesticides, residual solvents and heavy metals) as well as for microbiological contamination and a unique terpene profile using GC-MS/GC-FID.

Co-founder Paul Benhaim at their extraction and testing facility in Europe.

In addition to stringent manufacturing safety procedures and testing, tracking is a huge part of meeting quality standards. Each product batch also has a lot number. While batch numbers are a requirement in GMPs, lot numbers mean that they are well equipped in the event of a product recall. After the product is packaged, they perform additional spot-checks periodically.

Contract manufacturing and white-labeling products is a large part of their business, so the company needs to meet rigorous quality standards for their partners as well. “We provide our oil to a variety of associates, but we are always looking for new partners on the cutting edge, innovating with new products that we can help with,” says Husong. Very often, this means doing a full plant extraction for different uses. Utilizing a full-spectrum plant extraction helps maintain a well-balanced cannabinoid profile with many of the original terpenes found in the plant.

Japan's first lady, Akie Abe, purchasing Elixinol's hemp-derived CBD oil. — Akie Abe, first lady of Japan, purchasing Elixinol’s hemp-derived CBD oil.

What makes their product so appealing to consumers is not just the quality, but also the method of delivery into the bloodstream and very precise dosing. “Our liposome products have a relatively new technology that allows the oil to be absorbed into your system via fatty acids, which lets you absorb the compounds much faster, requiring less of it and more consistency,” adds Husong. In addition to their fast-acting delivery mechanism, they produce capsules dosed to precisely fifteen milligrams and a delivery system they call ‘Xpen,’ which draws the oil in an oral applicator to a precise dose of fifteen milligrams every time.

After the manufacturing process, the company pays close attention to detail in their packaging and distribution. “The packaging is built to maintain that quality in the manufacturing process and to extend the shelf life of our products,” says Husong. The technology that goes into their packaging involves using Miron Violet glass, which is anti-fungal and prevents external light from deteriorating the oil inside.

This growing sector in the cannabis market is representative of a greater trend: the commodification of hemp and cannabis. When businesses like Elixinol scale up production of goods such as CBD oil, a lens focused on consistency and quality can not only improve business operations but also raise the standard across the entire industry.