Even a cursory review of cannabis reveals that the market has been notoriously wasteful, polluting the environment with chemical fertilizers, misused pesticides, contaminated plants, and—perhaps most problematically—thoughtlessly excessive packaging.
The industry is in dire need of sustainable practices, and the easiest way to start an impactful new trend is from the outside in: a.k.a., adjusting how you’re parceling your products.
Honing in on sustainable packaging isn’t just a good move for the environment. It’s also more cost-effective, less labor-intensive and allows you to provide consumers with the best possible version of your flower—no matter how far through the supply chain it’s had to travel before hitting retail shelves.
Cannabis has progressed: It’s time for its packaging to do the same
By the time legalization began sweeping the nation, the industry already had several decades of experience operating underground. With that discretion came a lot of built-in habits around not attracting attention, and for packaging, the focus was solely on not looking like a cannabis product.
An overabundance of plastic isn’t cutting it anymore—not only when it comes to environmental friendliness, but for the integrity of the product itself.
Today, increased legalization grants operators the freedom to expand without the fear of being seen, and as a result, there’s no longer any excuse for wasteful packaging to be the industry’s norm. Glass jars, Ziplocks and an overabundance of plastic isn’t cutting it anymore—not only when it comes to environmental friendliness, but for the integrity of the product itself.
“I’ve been designing packaging in the cannabis industry since 2013, and a lot of trends have come and gone. We used to put flower in plastic Rx jars and paper envelopes. In general, there was a lot of waste: excess boxes and jars that all get thrown away,” says Legacy’s Chief Cannabis Officer Ryan Hedrick. “And when consumers pull the products out of those containers, your marketing doesn’t remain intact. The box gets thrown away, and now they’re just carrying around a labelless jar. Not only is it bad for the environment, but it isn’t helping you promote your brand at all.”
How sustainable storage optimizes curing and shelf life of flower
As for the curing process, Hedrick used to use airtight buckets, which both took up a lot of room and wasn’t at all effective for maintaining cannabis’s ideal humidity levels. He’s since switched to passive atmospheric packaging, which utilizes increasingly popular technology to keep humidity—and sustainability—in mind. “The buckets weren’t letting any moisture out. On top of that, you can imagine how much room 165 five-gallon buckets takes up in a grow space,” Hedrick says.
The same goes for long-term storage. With humidity-controlled bags, operators can rest assured that their product will maintain its efficacy, because as soon as that pack is sealed, the humidity level is guaranteed to stay the same.
Cannabis brand Lava Leaf Organics relies on passive atmospheric packaging for efficient storage—mainly because of the reduction in carbon footprint and increase in terpene preservation.
“When we think about the energy involved in packaging and shipping large amounts of heavy glass jars compared to TerpLoc bags, it was an easy decision for us,” said Lava Leaf Organics CEO Tony Martinez.
“The bags are recyclable, and compared to glass jars with child-resistant lids, they’re much better at preserving terpenes. Using sustainable packaging allows us to put our best foot forward and to better control our customer’s brand experience.”
Tips for making sustainable storage work for you
Sustainable storage is an environmentally-responsible move for the cannabis industry to make, but when weighing the pros and cons of a big switch like this, operators should also keep in mind how positively it will impact their end product, consumer’s experience, and, subsequently, their industry-wide reputation.
Some product packaging examples in the market today
Placing your products in eco-friendly bags is just the start. There are definitely more tips and tricks operators can take advantage of to prolong the use of sustainable materials and ensure they’re leaving as small a footprint as possible. For example, Hedrick’s team reuses their passive atmospheric packaging for maximum efficiency—especially when it comes to bulk storage or curing.
“We mark all of our storage bags with the original strain, so we can reuse that bag for the same strain as long as it passes testing along the way. When I do so, I take a mixture of SaniDate and water to make sure everything is sanitized and clean,” Hedrick said. “That allows me to reuse them for about 3-4 months’ worth of curing and storage. You can reuse a bucket in that same way, but when it’s time to replace it, you’re still spending another $15-$17.”
Sustainable, humidity-controlled packaging is also ideal for testing consistency. If you send in five buckets of the same strain to be tested, you run the risk of them all sitting at wildly different humidity levels, which means some might pass, and others might be rendered trash.
All of the environmental benefits aside, using sustainable packaging just makes cents—literally. “Essentially, I’m saving a minimum of half a million in packaging every year. That’s my entire staff’s salary for two months. That’s incredible, impactful, significant savings that can make a huge difference for a business trying to expand.”
Some consumers participating in the legal cannabis market want to avoid inhalable products. They are concerned about the effects of the smoke or they want their usage to be discreet — without the pungent aroma emanating from burning cannabis flower. For those consumers, edibles are the preferred option and a growing product category.
Within the edibles space, the beverage segment — with limited product options in some states — may offer significant potential for growth. In 2021, cannabis-infused beverages accounted for only 1% of total legal cannabis product sales and about 5% of the edibles segment in the United States, reports market researcher BDSA. But cannabis beverage sales are growing around the U.S.
In California, cannabis drinks grew their market share in the edibles category from 4% in 2018 to 7% in 2021. Nevada saw beverages increase their share of edibles revenues from 7% to 10% in the same time frame. And cannabis beverages’ share of edibles sales in Massachusetts went from less than 1% in 2019 to 8% in 2021.
Pegged at $180 million in revenue last year, the cannabis beverage market is projected to reach nearly $500 million by 2026, predicts BDSA.
Today, gummies and chocolate products dominate the edibles category. Although beverages are currently a small segment of edible sales, they may have some inherent advantages — familiarity, faster-acting products from improved bioavailability, and taste and flavor innovations — over other cannabis products. Since beverages can incorporate many different flavors from fruity, cola and sweet to coffee, tea, sour and bitter, these myriad flavor variations can mask or minimize any off-tastes associated with THC.
Viewed as part of their everyday regimen, consumers drink beverages for hydration, nourishment, refreshment and enjoyment. Cannabis beverages are well-suited for consumers’ lifestyles, while gummies and chocolates may be perceived as sugary treats and special occasion items.
Cruise Beverage B Happy Nitro-Infused CBD Drinks.
Brand owners are beginning to recognize the limited availability of products and growth potential of cannabis-infused beverages and are looking to enter the category. Packaging plays a key role in cannabis beverages, with sustainability, regulatory compliance (e.g., child-resistant), labeling compliance (e.g., warning symbols and text), convenience and branding all contributing to the success of the expanding product category.
Sustainable Packaging
Consumers, especially younger generations, are concerned about the environment and support brands that align with their values. According to the 2020 Sustainable Market Share Index from the NYU Stern Center for Sustainable Business, sustainability-marketed products delivered about 55% of the market growth in consumer packaged goods (CPG) from 2015 to 2019 in the U.S. despite being only 16% of the market. Sustainability-marketed goods grew seven times faster than products not marketed as sustainable and nearly four times faster than the overall CPG market.
As a primary consumer touchpoint, packaging is a good way for cannabis beverage brands to show their commitment to the environment. But finding the most sustainable packaging option for a particular application may not always be as straightforward as it seems. Many considerations are involved — material choice (e.g., plastic, glass, or aluminum), recyclability of the material, the weight of the material, recycled content of the final package, package design (minimalist vs. excessive), transportation costs and other factors like reusability.
To help facilitate the process, Berlin Packaging uses life cycle analysis to determine a product’s environmental impact or carbon footprint over its entire life cycle, including sourcing & raw materials extraction (minerals resource use), manufacturing (energy and water usage), distribution (freight miles, fuel usage) and end-of-life (recovery, recycling, reprocessing).
We have the know-how to improve the sustainability of any packaging material — whether it be lightweighting, use of post-consumer recycled (PCR) content, greater recycling rates and more.
Regulatory Compliance
Because legal cannabis products are regulated by individual states and not at the federal or national level, the regulations for cannabis packaging requirements can vary widely from one state to another. However, there are some common rules that all states follow.
Child-resistant capable cap fits snugly over the top of a can.
All cannabis products — including beverages — require child-resistant packaging to meet the standards of the Consumer Product Safety Commission. For aluminum cans, Berlin Packaging offers a child-resistant capable mechanism that fits snugly over the top of a can. Available in polypropylene or a bio-based resin, the single-use device can be custom developed to fit the exact specifications of the customer’s cans. In-stock products are available for standard 202 can ends.
Along with child-resistant capable packaging, states also require some type of warning symbol and statement on the label to indicate the product contains cannabis. Depending on the state, the symbol may be a triangular or diamond shaped in a bright or contrasting color to call attention to it on the label. The symbol typically houses a cannabis leaf image or “THC”.
Convenience
Like any packaged drink, cannabis beverages need to check all the boxes for consumer convenience — easy to drink, portability, cupholder friendly and resealable.
Users can easily reseal PET and glass bottles with continuous thread or lug finish closures, but cans present a challenge. Berlin Packaging offers a solution with a resealable can that opens like a traditional stay-on-tab. Here’s how it works. Lifting the pull tab breaks the tamper-evident band and unlocks the slider mechanism. Pulling the slider opens the can and makes the familiar venting sound — even after reopening.
The configuration of the opening creates a smooth laminar flow to improve the drinking experience. Moving the slider back to its original position and pushing down the pull tab, which produces a clicking sound, reseal the closure. The tamper-evident band remains on the can underneath the pull tab.
Branding
Cannabis beverages come in drops, shots, syrups, carbonated, iced tea, lemonade, fruity, water, sports & energy, mocktails, tea, coffee and hot cocoa.
Because cannabis has been associated with medicinal uses, many consumers use cannabis products to manage their wellbeing and health. Thus, some cannabis products have been positioned to relieve stress, promote relaxation and sleep, reduce pain and inflammation, improve mental focus, enhance mood or simply for indulgence and enjoyment.
Product positioning and the experience the brand owner wants to create for the consumer can help inform the brand design, personality, and narrative or storytelling. It’s also important that the brand design and messaging resonate with the product’s target audience.
Studio One Eleven, Berlin Packaging’s in-house innovation division, can help cannabis beverage marketers with their product branding from concept to commercialization. We offer market research and consumer insights, brand strategy and visual branding design, brand name development, structural package design, and more. Our services are available at no additional charge in exchange for a customer’s packaging business.
Cruise Beverage distributes nitrogen-infused CBD drinks with all-natural ingredients in 12-oz aluminum cans under the B Happy brand. The team at Studio One Eleven helped Cruise Beverage and its B Happy brand tell their story of free-spirited enjoyment with updated branding, expressive flavor names (i.e., Loosen Up Lemon, Peaceful Pear, Mellow Mango, and Blissful Blood Orange), and unique packaging graphics.
Uplifting illustrations speak to the brand’s sense of freedom and relaxation, and the hand-drawn style reflects the craftsmanship of the CBD beverage product. A white background with flavorful pops of color says clean and fresh, while tiny bubble imagery communicates the delightful effervescence of the fizzy drinks.
People today are more eco-conscious than ever. The last several years have seen a growing awareness of the impact of human behavior on the environment, and COVID-19 brought real-life context to the catastrophic effects of a global crisis. Lifestyle changes during the pandemic empowered people to make choices with a positive impact for the collective good. In a June 2021 PricewaterhouseCoopers survey , half of global consumers said they’ve become more eco-friendly since the COVID-19 pandemic. Consumers are changing their behaviors, educating themselves about the businesses they support, and evaluating the products they buy through a “green” lens. Terms like circular economy, zero-waste, ESG and carbon footprint are now part of the common vernacular, and sustainability is no longer a nice-to-have but a business imperative.
Cannabis consumers, in particular, value sustainability. They are conscientious of what they’re putting into their bodies and the planet. There is increased interest in brands and businesses that use responsible growing practices, eco-efficient manufacturing, and sustainable packaging. In a nationwide survey conducted by Canivate Growing Systems, 79% of U.S. cannabis consumers said they support establishing environmental standards. And in 2021, the Sustainable Cannabis Coalition (SCC) was formed to promote sustainability best practices.
Sustainable packaging is an important way that brands can show a commitment to the environment. Packaging is a highly visible and tangible representation of your brand and one that matters to consumers. A July 2021 Adweek/Morning Consult poll found that 77% of consumers believe it is the brand owners’ responsibility to make sure their packaging is recyclable. According to Nielsen, of the top five sustainability attributes consumers are willing to pay more for, three are packaging-focused: Recycled packaging, reduced packaging and reusable packaging. While cannabis packaging has unique regulatory requirements and safety guidelines, it can still be eco-friendly. Sustainable cannabis packaging has the necessary properties to protect against moisture and maintain freshness and smell. It can also be child-resistant and include other unique cannabis functionalities.
Image: Nielsen, 2019
When it comes to sustainable cannabis packaging, that which you may believe to be the “greenest” option may not be sustainable at all. Many factors go into this determination, including packaging material, weight, distance traveled from supplier to manufacturer, water and energy usage and more. At Berlin Packaging , we take a comprehensive and integrated approach to sustainability to ensure our solutions meet customer objectives and consumer expectations. We use life-cycle analysis to quantify a product’s environmental impact throughout its entire life cycle, including sourcing/raw materials extraction, manufacturing, distribution and end-of-life. This analysis ensures that the solutions we provide are effective, impactful, and don’t contribute to greenwashing.
One key pillar of sustainable cannabis packaging is material circulation – using recycled and recyclable plastics and alternative materials. It’s important to understand that not all plastics are created equal. HDPE and PET are fully recyclable and have a ~30% recyclability rate. Polypropylene, on the other hand, while recyclable, only has roughly a 3% recyclability rate. Color can also play a role. PET is valued for its transparency, so colored and opaque plastics are not considered recyclable.
Continuous innovation and technological improvements have contributed to several eco-friendlier plastic packaging solutions. One popular choice for many of today’s brands is post-consumer recycled (PCR) materials. Using recycled plastic reduces single-use plastic waste that fills our landfills and threatens our waterways. Bio-plastics, made using renewable plant-based materials, are another sustainable option. Berlin Packaging has partnered with numerous premium packaging manufacturers to provide sustainable solutions for our customers. Many of our offerings – suitable for flower, pre-rolls, edibles, concentrates and more – can be produced using PCR or bio-plastics.
Material circulation means using recycled and recyclable plastics and alternative materials.
We’re also seeing brands embrace new compostable, biodegradable and paper packaging options. Berlin Packaging offers pre-roll tubes that are 100% compostable in industrial or municipal facilities and are better for the environment while also protecting the product inside. With zero migration, zero odor, and zero visibility, these air-tight tubes maintain freshness and meet regulatory requirements. We also offer a variety of paper tubes for pre-rolls, vape carts, and flower that are reusable, recyclable, and biodegradable.
Other sustainable packaging strategies include refill & reuse systems, which have gained popularity over the past several years, especially among personal care categories. Other tactics to consider when evaluating your package’s sustainability scorecard are eliminating unneeded packaging components like outer wraps and neck seals, ensuring labels are recyclable, and lightweighting (reducing the weight of your package). Berlin Packaging evaluates all of these avenues when developing sustainable packaging solutions.
Beyond the packaging itself, we encourage our customers to consider aligning their branding design and on-pack messaging to tell their sustainability story. We’re seeing many brands elevate their packaging sustainability benefits on their packaging’s primary display panel. The How2Recycle labeling program is another tool that helps educate consumers about how to dispose of packaging to ensure it gets recycled properly. Berlin Packaging’s sustainability specialists assist companies with comprehensive messaging strategies. Given the rise of greenwashing and consumer confusion and skepticism, effective and impactful messaging is a critical part of a sustainable packaging strategy.
Working with packaging suppliers and design partners who understand the cannabis market and have sustainability expertise is key to a brand’s success. A holistic approach that considers consumer insights, design functionality, aesthetics, manufacturability, regulatory requirements and sustainability results in packaging solutions that grow sales and build brand loyalty.
Natural cannabinoid distillates and isolates are hydrophobic oils and solids, meaning that they do not mix well with water and are poorly absorbed in the human body after consumption. Cannabinoid oils can be formulated into emulsions to form a fine suspension in water to modulate bioavailability, stability and flavor.
Happy Chance is a cannabis infused products company offering better-for-you products to their customers. Happy Chance recently launched a low-glycemic index fruit bite line made from fresh ingredients, distinguishing them from traditional gummies. Splash Nano is a cannabis infused products ingredients company specializing in nano emulsions. Happy Chance utilizes Splash Nano technology in their fruit bites formulations.
We spoke with Katherine Knowlton, founder of Happy Chance, and Kalon Baird, co-founder and CTO of Splash Nano to learn more about their products and how they came to do business together. Prior to Happy Chance, Knowlton worked as a chef. Prior to Splash Nano, Baird was a consultant to the cannabis industry.
Aaron Green: Katherine, how did you get involved in the cannabis industry?
Katherine Knowlton, Founder of Happy Chance
Katherine Knowlton: I am a chef by trade. I went to culinary school in 2015. My partner also got into the cannabis space in 2017, which was right around the time when adult use cannabis became legal in California. As a chef, I am very passionate about cooking for optimal health and well-being. I noticed right away the abundance of candy- and sugar-laden products on the market. I set out to create a wellness driven product blending healthy, whole foods with a better value proposition, better-for-you and better-for-the-planet.
Green: Okay, great. Kalon, same question: how did you get involved in the cannabis industry?
Kalon Baird: I left a corporate job in 2011 and started cultivating in Southern California. I started to develop techniques for horticulture and developed a connection with the plant. I was a consultant for many years, and then decided to take a different path when legalization happened and got into the regulated manufacturing space. My goal was to bring new products to market to help satiate the demand for the infused category, the non-smokeable categories and to pursue niche product development.
Green: Tell me about your recent product development interests?
Kalon Baird, Co-Founder and CTO of Splash Nano
Baird: We’re interested in the research that comes out regarding cannabis minor constituents. We work with other research labs doing two-dimensional chromatography. We’re trying to figure out what compounds exist in the plant that aren’t just the major cannabinoids, and how to work with them in a pharmacological context so that they can be standardized and replicated at scale.
So, it’s not just about making a sugary THC gummy, it’s about seeing what minor cannabinoids, what minor terpenoids and what other unknown compounds can we explore, and then put back into products.
Green: That’s 2D GC-mass spec?
Baird: Yeah, it’s GC-by-GC and tandem mass spec. There are only a couple people that make that piece of equipment. The lab that we work with on that project is called Veda scientific. They’re one of the only people in the cannabis space that uses that machine. And they’re right in our backyard. The tech enables us to further quantify terpene profiles and helps to differentiate our products.
Green: I’d like to focus first on the Splash Nano technology and then we’ll dig into how you got to know each other, and then we’ll finish off with learning more about Happy Chance. So Kalon, tell me more about Splash Nano.
Baird: We employ nano emulsion technology. It’s essentially the science of making oil and water compatible and suspended in a way that reduces droplet size. With nano emulsions, you create an interfacial layer that enhances absorption and solves technical problems like being able to make cannabis oil compatible in water-based matrices, and sometimes in non-water-based matrices. The idea is that as we spread out the particles and as we change attributes of how they’re coated, they’re more bioavailable, and you get a more consistent and faster onset experience like you would in the pharmaceutical or alcohol industry. It’s bringing the industry standard up to the consumer package level and the pharmaceutical level, so that people aren’t waiting the typical hour-long timeframe to absorb that first dose.
Green: Tell me about your business model.
Baird: When we started out in 2018, we were going for a manufacturing license. In the meantime, we saw the drink category evolving and we wanted to be a part of that conversation in that ecosystem. We started developing our own nano emulsions that we knew would be useful when we got our license. We knew that we would sell the base material to co-packers who would put them into beverages. We didn’t want to co-pack the beverages ourselves. So, we developed a drink additive that was our proof of concept that had legs for the technology so that we could show people how to use it. That proof of concept spun off and became its own product and now it’s in the market under the brand name Splash Nano and comes in four distinct product SKUS using minor cannabinoids as differentiators.
The Splash Nano drink additive
Meanwhile, our bread-and-butter business was working with smaller brands, like Happy Chance that needed a path to market but couldn’t get the license or couldn’t go through that whole rigmarole of a two-year waiting period and a half a million dollars and all the other stuff. So, we started taking on all these smaller brands effectively licensing their brand IP and their ideas. In the process, we ended up learning a ton about product development and it became kind of a passion.
We have three core revenue streams. One of them is contract manufacturing, or private labeling. The other one is our own product Splash Nano which is a drink additive. And then the last is we open sourced the technology and sell that as a business-to-business platform so that people can infuse their own products with our fast-acting emulsions. We’re working on a licensing model that will allow other states to create that same consistency, where we send a black box model out to them, and then they infuse the cannabis and then turn that into a product.
Green: Moving on to Katherine here. Tell me about Happy Chance, and how you came up with the brand concept and the product idea.
Knowlton: Going back to what I touched on earlier, many traditional edibles in the space are brownies, cookies and candy type of products that do not contribute to wellness. I wanted to give the wellness driven consumer an option in cannabis. I wanted to create a powerhouse edible that was not only functional and complete but that elevated the consumer’s experience as a whole because of the ingredients we choose and the whole cannabis we source.
Some of the Happy Chance fruit bites
I’m someone who values better-for-you products that contribute to optimal health and well-being. So, I set out to make something. I didn’t really know what I wanted to make in the beginning. I bought a dehydrator and a food processor, and I started messing around with different applications in my kitchen. Over 100 variations later, the fruit bite was born.
The fruit bite is made with dates – a natural sugar that delivers nutritional power: a low glycemic index and high in vitamins, minerals and antioxidants. A sweet you can feel great about. And we use pumpkin seeds which have a lot of great protein. We are working with a company in California that takes imperfect fruits and vegetables and upcycles that back into the food supply chain. We utilize the whole fruits and vegetables as a dried intermediate, capturing all the flavor of nutrients. No added natural flavors and nothing from concentrate.
Green: How does the consistency differ from a gummy?
Knowlton: The consistency is similar to a Lara bar or an Rx bar. Essentially, it’s that same consistency in a bite form and so it’s very different than a gummy. It’s a low dose, low sugar alternative to the modern-day gummy.
Green: So, you’ve got this healthy concept for the fruit bite. You’re looking at suppliers and technologies to infuse the product. How did you finally decide on Splash Nano?
Knowlton: I watched my partner lose his company a few years ago to a larger vertically integrated company. The MSO promised the moon and the stars, and they got lost in the weeds of their eco-system, ultimately losing their company. That said, I was very sensitive when I first started on this journey. I even took on my own partners who didn’t work out either. I spoke with a lot of manufacturers in the selection process. Splash Nano was the tenth manufacturer I spoke with.
It was a very organic way of meeting. I am also based in Santa Barbara where Splash Nano is located. My partner’s brother shared an office space with Kalon, so we met through that connection. I learned right away that Splash was founded on wellness, much like Happy Chance. It was important to source clean cannabis, an aspect that Kalon and his team take pride in. We quickly discovered that Kalon’s Splash Nano technology was going to work in my product. Happy Chance immediately found a home, and it has been an organic evolution of realistic business and friendship.
Green: Kalon, I’d love to get your perspective as well. How do you think about partnering with brands?
Baird: Because of our contract manufacturing experience, we’ve been able to touch approximately 50 brands over our three-year tenure in this space. We’ve seen kind of everything from the multi-state operator to the owner-operator and everything in between. I developed a passion for working with these smaller brands for a lot of different reasons. This industry is built on the success of small mom and pops. Yes, the multi-state operators do have a place and they absolutely add a lot of value. But at the same time, they have their own natural challenges. You have essentially a culture of employees versus a business owner that’s making a lot of their own decisions.
There are advantages to somebody like Katherine, who’s in the trenches of business, and understands the ebbs and flows and ups and downs of this industry and be able to get through some of those challenges a lot more organically and a lot more sustainably. Katherine has such a deep pulse on her business and on her customer and on her own money. She tends to make a lot more calculated decisions, and I really appreciate that.
There’s a lot of waste that gets accumulated in this industry through packaging, through bad decisions, and over extensions of capital. It’s sad to watch and you see these people that have great potential, but it’s kind of lost in this sort of the framework of a large organization. Again, I like multi-state operators, they’re great. There’s nothing wrong with them, but it’s just a different flavor. I’m trying to highlight the fact that working with somebody that has a pulse on her business, and the passion for what she’s doing is wonderful. It’s not just about making money; it’s about adding value.
Green: Katherine, talk to me about sustainability and how you’ve woven that into your product.
Knowlton: We’re dedicated to supporting Product, People and Planet. That’s the whole mission and ethos of Happy Chance. As a chef, I wanted to be intentional about where our ingredients come from. We only source organic and upcycled ingredients – an essential recipe in sustaining a healthy, eco-friendly plant. Intention and integrity are always at the forefront of our products. We prioritize partnering with more transparent supply chains. We want to show the world how cannabis can promote positive lifestyle changes that support living more actively and consciously.
To reiterate, we are also not using anything from concentrate. We are using the entire strawberry, the entire blueberry and so it encapsulates all the flavor and all the nutrition that you would have from a fresh fruit into our products.
Green: How do you think about sustainability in product packaging?
Knowlton: As far as packaging goes in this industry, we’re very limited in what we can do. Compostable packaging isn’t really available, but we have partnered with a packaging company that definitely has mindfulness at the core of their mission. They have established their entire supply chain to ensure they are focusing on green practices and reducing waste each step of the way. Their energy efficient machinery creates a zero-waste manufacturing process to reduce their carbon footprint and they utilize soy and vegan inks to help reduce air pollution by minimizing toxic emissions in the air. My hope for the industry is that as it continues to evolve, we can become less wasteful as far as packaging goes.
Green: Rapid fire questions for both of you: What trends are you following in the industry right now?
Knowlton: As a chef and coming from the CPG world, I’m passionate about health and wellness. I think that it’s important to stay on trend with what we’re seeing in CPG. There’s definitely a market as far as people wanting these better-for-you products. I want to bring that into the cannabis space.
Baird: We’re seeing the inclusion of minor cannabinoids, terpenoids, standardized recipes and faster- or slower-acting delivery systems. So, I’m following trends in advanced drug delivery systems paired with minor cannabinoids.
Green: What are you most interested in learning about?
Knowlton: I’m most interested in how I can take what I’ve learned in the food space and help bring that into the world of cannabis through Happy Chance. Ultimately cannabis is plant medicine. So, how can we educate people that the ingredients we choose to make products should be good for us too. I think that there’s a lot that can be done with it from a from a health and wellness standpoint.
Baird: I’m interested in learning more about the analytical overlay between quantifying and standardizing entheogens and plant medicines like cannabis into the product development process in CPG. I’m thinking of ways to blend the two worlds of traditional science and New Age medicine.
Green: Awesome, that concludes the interview. Thank you both, Katherine and Kalon.
By Dr. Markus Roggen, Amanda Assen, Dr. Eric Janusson No Comments
Many people associate cannabis with eco-friendly, counter-cultural movements, but we know the environmental impacts of the cannabis industry are significant. Given the climate crisis, cannabis production companies have a responsibility to ensure future demands of the industry are met in an environmentally sustainable way. We also know that as the world is seeing the impacts of climate change, consumers are changing their spending habits 1. As a result, companies also have the financial incentive to seriously consider implementing more environmental policies, to align their interests with the interests of consumers. Unfortunately, restrictions on cannabis research and the legal industry create barriers to implementing many environmentally friendly alternatives in production. However, this does not give us an excuse to do nothing while we wait – there are many steps that can be taken while we work to overcome these barriers. Our team at Delic Labs aims to help companies ensure the environmental and economic sustainability of the cannabis industry. So, we did some research and developed the Cannabis Better Future (CBF) concept, a guide that considers the impacts of cannabis cultivation and processing on the environment. The pillars of CBF are:
Use of renewable/recyclable materials in production
The packaging used for legal cannabis products is infamously excessive. A standard 3.5-grams of dried cannabis is estimated to come packaged in more than 70 grams of plastic. This seemingly redundant packaging is done to meet regulations surrounding cannabis packaging that often require single-use plastic with labels and warnings at specific sizes 2. Despite this, there is work being done to get biodegradable packaging approved in the industry.
More companies, such as Knot Plastic, are using plant-based materials to provide medical-grade biodegradable alternatives to single-use plastic 3. As members of the industry, we should support these companies and call for regulations to approve biodegradable packaging. As for immediate actions that can be taken, we can turn to companies that reduce the amount of plastic from the industry that ends up in landfills. The Tweed x TerraCycle Cannabis Packaging Recycling Program accepts all cannabis containers from licensed producers in Canada – free of charge – and melts down the plastic to create new products 4. This includes tins, plastic bags, tubes and bottles with child-proof caps. The program has saved more than 165,000 containers from ending up in landfills.
Upcycle biomass waste
It is estimated that for every pound of cannabis harvested, up to 4.5 pounds of plant waste is generated 5. Cannabis biomass waste can be discarded in four different ways: via landfill, composting, in-vessel digestion or incineration 6. Cannabis bio-waste usually ends up in landfills because this is the cheapest method. However, landfill disposal represents a missed opportunity for companies to use biomass waste for economic and environmentally-friendly uses.
Converting biomass for other uses will drastically limit waste
To reduce landfill waste, some companies are looking at sustainable bio-circular solutions, where cannabis biomass is converted into something of industrial use such as compost, bio-plastics and paper packaging for cannabis products 7. The easiest way to reuse cannabis biomass with current regulations in place is to upcycle it to produce compost and greywater that can be used for industrial cultivation 8. Currently, bleach is commonly used to remove THC from biomass, making it unfit to be used for these purposes 6. However, Micron Waste Technologies Inc. have shown enzymatic denaturation can be adopted on the industrial scale to remove THC from the biomass, resulting in reusable water and compostable matter 8. Turning to this alternative method would also reduce the amount of required fertilizer and replace bleach with a more environmentally-friendly solution.
Recycle production side streams
Terpenes are the compounds in cannabis that give it distinctive aromas and flavors sought after by consumers.During the cannabis drying stage, over 30% of terpenes can be lost along with the water phase from the product 9. This terpene-containing water phase gets trapped in drying rooms and decarboxylation ovens and is usually thrown out. To reintroduce the terpenes in their products, companies usually purchase them 10.However, they instead could be recapturing terpenes that are otherwise going to waste, and re-introducing them into their products. Recapturing terpenes would not only reduce the production and shipment energy that goes along with purchased terpenes, but also the costs of buying them.
There are many other wasted by-products that can be recycled. Ethanol that has been used as extraction solvent can be reused as cleaning solvent, reducing the need to purchase ethanol separately for cleaning purposes. Further, the condensation caught in HVACs can be recycled to water plants.
Optimize production energy efficiency
LED lights use less energy and omit less heat than other more traditional options
A study by Summers et al. 11 found that from producing one kilogram of dried cannabis flower, the emitted greenhouse gasses emissions range from 2,283 to 5,184 kg of CO2. Electricity used for indoor cultivation is the major culprit in producing these emissions. In fact, over $6 billion is spent annually to power industrial cannabis growth facilities in the U.S. alone12. Growing outdoors is significantly more energy efficient; however, non-auto flowering, high-THC cannabis plants depend on the specific timing of daylight (and darkness) to grow properly 13. Optimal conditions for these plants are not always achievable in outdoor setting. Meanwhile, auto-flowering plants that are hearty outdoors are generally lower in THC content 14. Promoting research into generating more stabilized cannabis cultivars may help outdoor growing be a more feasible solution. Given the recent work being done with genetically modified and transgenic plants, upregulating THC production in cannabis and increasing the heartiness in different climates is well within the realm of possibility 15–17.
In the meantime, cultivation facilities can do their part to maintain a controlled growth environment with reduced energy waste. Companies that are still using high-intensity sodium lights should consider switching to high-efficiency LED bulbs 12. These are a good alternative option as they produce less heat, and as a result, require less mechanical cooling. It has been shown that many plants, including cannabis, might even do better under blue-red LED lights 18,19. Growth under these conditions correlated with an increase in THC and CBD levels, and overall larger plants 18. In addition to low energy consumption, LED lamps have flexible mobility and a tunable spectrum range. This makes it possible to mediate the spectrum specifically for cannabis crops by controlling each spectral range and manipulating spectral quality and light intensity precisely. Finally, lights can also be brought closer to plants, to further reduce the amount of mechanical cooling needed.
Utilize high-precision processes
Reducing energy use while maintaining production rates can only be done if the process is optimized. Our own research improves process optimization in the cannabis industry. A key component of industrial optimization is reducing wasted time on various machines. For cannabis producers, this machine “junk time” can accumulate when the instrumentation is not progressing the reaction.
Reducing energy use in this case means ensuring machines are not in operation if they are not progressing the reaction. For example, many companies spend approximately two hours on the decarboxylation step because decarboxylation is always complete after two hours 20; however, decarboxylations are often complete in as little as thirty minutes 21. Companies can save energy by installing a monitor on decarboxylation systems to stop reactions once they are complete.
Reducing the environmental impacts of the cannabis industry is crucial to combat the developing climate crisis. While lifting restrictions on cannabis research and mitigating stigmas surrounding the legal industry will be what ultimately paves the way for meaningful changes toward a sustainable industry, cannabis companies cannot wait for regulatory changes to occur before considering eco-friendly practices. As outlined by CBF, there are existing actions which all companies can take to reduce their carbon footprint immediately. Delic Labs, and many other companies we have noted, aim to support companies in making these decisions for a better future for cannabis.
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Waste360 Staff. Tweed, TerraCycle Take Cannabis Packaging Recycling Across Canada. (2019).
Peterson, E. Industry Report: The State of Hemp and Cannabis Waste. CompanyWeek (2019).
Commendatore, C. The Complicated World of Cannabis Waste Generation (Part One). Waste 360 (2019).
Drotleff, L. Cannabis-based packaging and paper could reduce waste, promote sustainability. MJBiz Daily(2020).
Waste 360 staff. Micron Secures U.S. Design Patent for Waste Treatment Tech. Waste 360 (2019).
Challa, S. R. DRYING KINETICS AND THE EFFECTS OF DRYING METHODS ON QUALITY (CBD, TERPENES AND COLOR) OF HEMP (Cannabis sativa L.) BUDS. (2020).
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Summers, H. M., Sproul, E. & Quinn, J. C. The greenhouse gas emissions of indoor cannabis production in the United States. Nature Sustainability4, (2021).
Reott, J. How Does Legalized Cannabis Affect Energy Use? Alliance to Save Energy (2020).
Ye, X. et al. Engineering the Provitamin A (β-Carotene) Biosynthetic Pathway into (Carotenoid-Free) Rice Endosperm. Science287, 303–305 (2000).
Giddings, G., Allison, G., Brooks, D. & Carter, A. Transgenic plants as factories for biopharmaceuticals. Nature Biotechnology18, 1151–1155 (2000).
Hu, H. & Xiong, L. Genetic Engineering and Breeding of Drought-Resistant Crops. Annual Review of Plant Biology65, 715–741 (2014).
Wei, X. et al. Wavelengths of LED light affect the growth and cannabidiol content in Cannabis sativa L. Industrial Crops and Products165, (2021).
Sabzalian, M. R. et al. High performance of vegetables, flowers, and medicinal plants in a red-blue LED incubator for indoor plant production. Agronomy for Sustainable Development34, (2014).
LunaTechnologies. Decarboxylation: What Is It and Why Is It Important? LunaTechnologies.
Shah, S. et al.Fast, Easy, and Reliable Monitoring of THCA and CBDA Decarboxylation in Cannabis Flower and Oil Samples Using Infrared Spectroscopy. (2021).
Supply Chain Logistics: Cannabis Challenges in States, Interstate and Overseas
John Hartsell, Co-Founder & CEO, DIZPOT
In this session, Hartsell discusses the current state of the supply chain, how the supply chain crisis impacts the cannabis industry, how the holidays impact logistics and much more.
The Future of Sustainable Packaging
Ross Kirsh, CEO, Dymapak
This talk discusses the critical aspects of sustainability in packaging, misconceptions of mainstream terminology (i.e. sustainability vs. recyclability) and more.
Cannabis Labeling from Seed-to-Sale: Doing More with Less
Nick Recht, Sales Manager, TEKLYNX
This presentation delves into cannabis labeling and how your company can leverage software and technology to make labeling less manual, more streamlined
The presentation gets into the dimensions of sustainability, designing with intention, responsible manufacturing and more. Participants get a better understanding the journey through education and reporting: responsible sourcing, transportation and supply chain.
Ross Kirsh launched Dymapak in New York City in 2010. Born into a family with a storied history in manufacturing, he founded the company after working for several years in Hong Kong where his interests, skills and passions for product development took shape.
Filling a niche for smell-proof bags in smoke shops, the business grew as he immersed himself in cannabis markets around the country. After designing and inventing a patented, first of its kind child-resistant pouch for Colorado’s first adult use sale in 2014, the business has continued to achieve global scale and today is recognized as the worldwide leader in cannabis packaging.
While the cannabis industry has long drawn the ire of environmentalists because of its energy problem when it comes to cultivation, the packaging side of the business faces very similar issues; the cannabis industry also has a plastic problem. In most states where cannabis is legal, state regulations require producers and dispensaries to package all cannabis products in opaque, child-resistant packaging, with several states requiring dispensaries to place entire orders inside large, child-resistant exit bags prior to customers leaving with their purchase.
Dymapak, led by Kirsh, is working on initiatives to help address environmental sustainability in cannabis packaging and turn interest into action industry wide. Ross will offer insights and the business’s action plan at the upcoming Cannabis Packaging Virtual Conference December 1. And ahead of that chat, we caught up with him to learn more.
Aaron G. Biros: Tell me a bit about yourself and how Dymapak came to be. What brought you to the cannabis space and where you are today?
Ross Kirsh, CEO of Dymapak
Ross Kirsh: My family has deep roots in manufacturing. Back in the mid 1970s, my uncle and his brothers all launched separate manufacturing businesses after one of the brothers moved to Hong Kong to open a handbag and luggage factory. The 70s happened to be a unique time to work abroad in Hong Kong given few US companies were operating there when China first announced its open-door policy around 1979. And as you can expect, he became a sourcing agent for many large companies in the US who needed trustworthy boots on the ground.
I went to college, pursued IT and in the back of my mind always knew product development and the manufacturing process was too interesting not to follow. I already knew Hong Kong was ripe for learning entrepreneurship so I went abroad to learn more, and fell in love with the culture, the opportunity and the people. Immediately after graduation, I moved to Hong Kong. I began working with my family, who taught me the trade – end to end. I helped develop several product lines and lived next to one of our factories in southern China to immerse myself.
After 3.5 years abroad, I began running sales operations back in the US. Fast forward a year back in the states, I had unique customers that owned tobacco and smoke shops telling me that cannabis packaging existed in the market, but not really what everyone was looking for. In truth, the business was born the minute a customer said, “Can you make me a retail ready smell-proof bag?” I figured I could, and the rest – as they say – is history.
What began and was established in 2010 truly took shape at an accelerated pace in 2013, when my relationship with one of the first dispensary owner/operators in Denver – Ean Seeb of Denver Relief – came with a golden opportunity; Invent a child resistant package for cannabis, one did not exist but it was mandated under Colorado’s first-ever recreational cannabis regulations. I spent 7 out of the next 8 weeks in China developing a solution and am proud to say our bag was used in the first recreational sale when Colorado went legal in January 2014. From there, the business grew rapidly, and organically throughout the industry.
Biros: Environmental sustainability is a big issue for cannabis. Not just on the energy intensive side, but particularly when it comes to packaging and its plastic problem. How is your company approaching this issue and are you working on any initiatives to eliminate or reduce plastic waste?
Kirsh: We recognize firsthand the issues that plastic presents. While the material is full of advantages, the disadvantages are both imminent and critical to understand.
What many don’t realize is, for most cannabis packaging that’s recyclable to actually BE recycled, the customer must first find a drop off location, either at a dispensary or elsewhere that accepts the material. The process relies exclusively on the consumer to take action because the products cannot be recycled curbside. And unfortunately, the stats show that very few consumers take the time to bring the packaging back in order to recycle it.
So, yes, we produce recyclable bags in our portfolio, but we really want to get to the source of the problem here – pollution. We looked in a few different areas. And we developed a different bag made with 30% post-consumer resin, meaning 30% is made from reused plastics.
Even more, we recently partnered with a socially conscious, industry leader in the space, Plastic Bank, which builds regenerative, recycling ecosystems in under-developed communities. They work to collect plastic waste from the ocean – extracting it to ensure its opportunity to enter the recycling ecosystem. Through our partnership with Plastic Bank, we’ll help prevent more than six million plastic bottles from entering the ocean this year alone. And I’m really proud of that.
Biros: Where do you see the cannabis packaging industry going in the next five years?
Kirsh: I think that’s a fascinating question. Sustainability will play a huge role in the future of this market. Just like we are seeing single use plastic bags being phased out across the country, we’ll see that happen to other areas too as part of this larger trend.
I predict more on-time and on-demand needs in the future; the ability to see traceability in real time, similar to the pharmaceutical industry. People will expect batch numbers and lot numbers, with data, in real time. It’ll become central to the business.
Gaining and cultivating trust will be another big hurdle for companies in this sector soon. With federal legalization comes a greater sense of professionalism and more sophistication for the market.
Yet, the continued pressure on environmental sustainability will be the biggest change in the next five years. When you look at sustainability in the packaging industry, paying attention to the format or choice of material should be top of mind. For example, if you’re shipping a glass jar, the amount of space that takes up in a shipping container has a huge impact on the environment, what’s called a hidden impact. One shipping container can hold millions of bags, but you need eight shipping containers for glass jars to get the same amount of storing capacity. That’s about efficiency, which is a bit more hidden, and I hope that consumers will become more and more knowledgeable about what companies are doing to stay environmentally sustainable.
Biros: Ross, thank you very much for your time today.
Controlled environment agriculture (CEA) is a hot area of investment right now for the USDA, holding the promise of improved efficiencies and productivity for indoor growing operations. The cannabis industry, long accustomed to indoor growing has emerged as a spearhead in CEA innovation.
The Resource Innovation Institute has been supporting cannabis enterprises as a non-profit entity since 2016, providing a benchmarking platform called Power Score to help cannabis cultivators be more efficient with resources in their growing practices. Recently, RII submitted a proposal to the USDA to bring best practices from the cannabis industry to other CEA crop producers. They have also recently been responding to the Cannabis Administration and Opportunity Act, providing comments to frame an energy and environmental policy framework for future federal regulation.
We interviewed Derek Smith, executive director of Resource Innovation Institute (RII). Derek engages RII’s advisory bodies, including the Strategic Advisory Council and Technical Advisory Council Leadership Committees and develops global partnerships and oversees the organization’s policy work. Prior to RII, Derek was CEO of Clean Energy Works and policy advisor to the City of Portland Bureau of Planning and Sustainability.
Aaron Green: What are RII’s plans for the USDA? I understand you’ve also been working on the CAOA recently?
Derek Smith: We’ve been working in cannabis for five years, publishing best practices and capturing data to inform governments and utilities on how much energy is being used. Our mission is to help producers become more efficient in their use of resources. In addition to informing policies that support producers, we also engage utilities to help them evaluate efficient technologies, so they can put incentives on them and so they can help buy down the cost for cannabis producers to install more efficient technologies.
We submitted a proposal to the USDA, saying we’ve been doing all that in cannabis. This was under the banner of a Conservation Innovation Grant, which is an innovation funding mechanism from the USDA. They specifically wanted something related to indoor agriculture and energy and water efficiency. So, we essentially said, we’ll give you a three-year project that will basically be the blueprint for the controlled environment agriculture (CEA) industry to transform itself toward a more sustainable production path. This applies to both the urban vertical farms growing leafy greens, as well as the growing greenhouse sector that is producing a range of crops, from tomatoes, to berries, to leafy greens to mushrooms, hemp, etc.
We’re essentially taking the Power Score benchmarking platform that we’ve been serving cannabis producers with to help them understand how competitive they are relative to the rest of the data set that we have on energy use and on water use and opening that platform so that more producers of other types of crops can use it. It also feeds into their Environment, Social & Governance (ESG) reporting needs.
We’re going to write a series of best practices guidance for CEA producers, covering a number of topics: facility design and construction, lighting, HVAC, irrigation and water reuse, controls and automation. This will all be very similar to what we’ve done in cannabis. These best practices guides are peer reviewed by subject matter experts throughout the supply chain. A lot of the supply chain in cannabis is the same in CEA. So, we’re bringing them all together to give this kind of good guidance to the producer community.
Green: You started with cannabis and created these white papers. Now you’re branching out into the larger CEA space?
Smith: Exactly. The federal government is literally funding us to develop a green building rating system like LEED, or like the Living Building Challenge, but for the CEA industry for indoor agriculture. The cannabis industry can leverage this federal investment and basically ride right alongside of it so that we can create a “LEED for weed” type of certification system.
Derek Smith, Executive Director of Resource Innovation Institute
That’s one of the main features in our comments to the CAOA when they asked, “what else should we be thinking about on any number of topics as it relates to federal cannabis regulations?” We proposed an energy and environment policy framework for federal cannabis regulation. We did that in partnership with a group called the Coalition for Cannabis Policy Education and Regulation (CPEAR). We just held a webinar two weeks ago. Hawthorne Gardening Company was featured on there as well. They’re very supportive of the federal government playing a “carrots rather than sticks” role as it relates to cannabis energy and environmental policy issues.
That’s essentially our platform at the federal level. The stuff that the USDA is funding us to do will come back and benefit the cannabis industry, because we’ll have this broader set of best practices guidance, data, etc. And then we’ll be able to leverage the federal investment into a certification system for the cannabis industry.
Green: The specific comments you made to the CAOA were primarily related to this energy efficiency certification system work you’ve been doing?
Smith: Yes. It’s more resource efficiency – it’s broader than just energy efficiency. Well, it was three things. So, I’ll just unpack this quickly. One, is learn from the states that have already initiated some form of regulation or support on helping producers be more efficient. Massachusetts is one example. They put lighting requirements on the industry that don’t explicitly mandate LEDs, but it comes close to that. California passed an energy code that will take effect on January 1 of 2023, that also has lighting requirements.
Green: Is this applied to all greenhouse growers?
Smith: Yes, at a certain size and level of energy usage. In California, it’s the first market where their Title 24 regulations apply not just to cannabis, but to all horticultural operations. Yes. So that’s what we’re seeing is that cannabis is sort of the tip of the spear for the way governments are thinking about policy for indoor agriculture more broadly. We’re trying to get them to focus more on having the federal government play a supportive role. The states are doing the regulation, the federal government can be more focused on carrots, not sticks, right?
So, back to the list of three things. Number one is learn from the states. Don’t add regulatory stuff, just learn what’s going on, and then decide about how to act. Number two is recognizing the need for data. So, supporting state requirements on energy and water reporting like Massachusetts, Illinois, California – a lot of states have either enacted reporting requirements, so the producers must tell the state how much energy and water they’re using and they’re using the Power Score benchmarking platform, which has a compliance function for free to do that reporting. Then what we’re doing is helping everybody understand what the aggregate data is telling us. We protect the producer’s confidentiality, and we’re building this valuable data set that’ll inform the market about what is the most efficient path going forward.
Then the third thing is focused on carrots, not sticks. For example, support the development of a certification system that recognizes leadership, that’s based on a market driven voluntary action by a producer where they say, “I’ll be transparent with my data, because I’d like to be showcased as a leader and get recognition for the good work I’ve done to create an efficient operation.” Then there’s valuation through the real estate transaction as well because you even have a plaque on your building that says this is certified to this agricultural standard.
That’s all the vision that we’re laying out, and we’re looking for partnerships at the MSO level to join in and be recognized and get in the queue as leaders for the investments they’ve made in efficiency.
Green: Great, thank you Derek. That concludes the interview.
Flower continues to be the dominant product category in US cannabis sales. In this “Flower-Side Chats” series of articles, Aaron Green interviews integrated cannabis companies and flower brands that are bringing unique business models to the industry. Particular attention is focused on how these businesses navigate a rapidly changing landscape of regulatory, supply chain and consumer demand.
Audacious (OCTQB: AUSA) is an Aurora (TSX: ACB) spinoff formerly known as Australis Capital, Inc. They have focused on an asset-light expansion strategy whereby they leverage their expertise in designing cannabis facilities in exchange for favorable cost plus arrangements for a percentage of the facilities’ production.
We interviewed Marc Lakmaaker, SVP of Capital Markets at Audacious. Prior to joining Audacious, Marc worked with Terry Booth at Aurora. His background is in investor relations.
Aaron Green: Marc, how did you get involved in the cannabis industry?
Marc Lakmaaker: I was working for an investor relations agency. and one of my colleagues left and she had a cannabis client that I took over, which was Bedrocan, Canada. I started working with them. They were then acquired by Tweed, which became Canopy. The guy I was working with at the time at Bedrocan was Cam Battley, who then went to Aurora. As soon as he joined Aurora, he said, “I need some help.” So, I came in house and worked there until July 2019. When I left, I set up my own agency, but by that time, I’d been working with Terry Booth for a few years. Then, this past December, Terry got in touch with me and said he needed my help. It was after the concerned shareholders had won the shareholder battle around Australis and the rest is history. So, I’ve now been working with Audacious, which was Australis, since December of last year, roughly.
Green: Just quickly on Australis: So, Audacious is basically a spin off of Aurora, correct?
Lakmaaker: Correct. So, at the time, Aurora had a couple of US assets on its balance sheet, a piece of land an annuity through a company Michigan. We were listed on the TSX. We were going to list or had just listed on the NYSE and were arranging for loan facility with a syndicate of banks. They said, “even though these assets are dormant, you can’t have any US assets on your balance sheet.” So, we spun Australis off – a little bit how Canopy had spun off Canopy Rivers. But it was really the idea that Australis is going to become the foothold for Aurora in the US cannabis market because Aurora has back-in rights.
The management team was put in place and started making some investments in the cannabis space, but kind of drifted away, sort of more into FinTech. First, it was FinTech related to cannabis and then FinTech, full stop. That’s when the shareholders were like, “we don’t agree with this.” Then the proxy battle started in which the dissident shareholders, or the concerned shareholders, won overwhelmingly. The Board left. The management team left. A new management team was put in place, a new Board in place, and it was kind of a restart.
So, we feel like we’re a bit of a startup. But a very rapidly moving startup. We’ve done an incredible amount of work in just the last seven to ten months. There was a lot of housekeeping to do. A lot of stuff related to restructuring the company, dealing with the departing management teams, dealing with bringing new management, etc. There were some deals that had to be unwound… Housekeeping if you will.
Green: Australis went down the FinTech route. What are the plans for Audacious now?
Lakmaaker: We’ve already started. We pivoted right away. In early January, we announced two acquisitions. One of ALPS, and the other one of Green Therapeutics. ALPS is really what is enabling us to execute on our strategy. It’s a very different strategy. It’s an asset light model, because we figured out that in order to grow quickly in this market without spending huge amounts of shareholder money, you need to be able to get into markets in a capital-light fashion. ALPS is the world’s preeminent greenhouse design company. Not just greenhouses, but also indoor facilities. They’ve got a 35-year track record in fruits and vegetables. They’ve got an eight-year-plus track record in cannabis – and built some of the best facilities in the world. They’ve got a lot of IP.
Marc Lakmaaker, SVP of Capital Markets at Audacious (formerly Australis)
The proof point of that is our relationship with Belle Fleur. It’s a social equity license holder in Massachusetts. We helped them build their facility. We’re not contractors, but we do the design and engineering. We help them with partner selection. We do the construction management. We bring in a general contractor. Then we do the commissioning, and optionally, post-commissioning services, making sure that the facilities are dialed in. In return for all that IP, because what people know that what they get at the end of it is high quality, consistent cannabis and very low operating costs, we ask our clients to dedicate a certain percentage of their canopies to grow with our cultivars. Those we will buy back on a cost plus arrangement and we use that to launch our brands into whatever jurisdiction.
So, in Massachusetts, we’re working with Belle Fleur. We’re getting 10% of their canopy. We’re buying it back at cost plus 5%. So, we don’t have to sink money into building the facility. We’re not carrying the cost of capital there. We’re also not paying wholesale prices. And these relationships are locked in for a long time. I can’t remember if it was five or 10 years. So, it’s a very, it’s a different strategy, but it’s not contrarian – it’s very de-risked, that allows us to launch into new countries.
Then for Green Therapeutics, we’ve got a number of award-winning brands like Provisions and Tsunami. We’re kind of phasing out GT Flowers and there will be something else in its place. We also acquired Loose, which caters to a younger demographic, with a high potency shot beverage line that is now for sale in California.
We also have a partnership with PBR, the Professional Bull Riders Association. There’s some statistics around that that just absolutely blew me away – 83 million permanent fans! That’s 25% of the US population. I think the average income is $70,000. That’s well above the national average and the general split is fairly even too; it’s 53/47, male/female. Proper American sport! They have hundreds of hours of exposure on CBS. They’ve got 2 billion imprints on social media. So, with PBR, we launched Wreck Relief, which has several recognized and approved pain products in the lineup.
Green: What markets are you in right now?
Lakmaaker: Right now we’re in Nevada with cannabis products. This is our home market where our head offices are in Las Vegas. We’re in California. We just bought a dispensary in San Jose that comes with a partnership with Eaze. On top of that, we’re operationalizing in Missouri and Oklahoma, and officially building in Massachusetts.
Then through ALPS because they does both cannabis and non-cannabis, we’re in a number of states. We’re looking to get more of the supply deals. We’re also doing a lot of vegetable facilities throughout the entire world. We’re in Europe, we’re in Asia, in the Middle and in North America, we build these facilities from the desert up to the Arctic.
There’s a big movement right now to produce food that is safe and has a smaller carbon footprint. So, our facilities are kind of inherently more sustainable. They use up to 95% less water, less labor, less energy, they are less prone to disease, crop failure, everything. And because you are local producing for local communities, you reduce the transport carbon footprint.
Green: What in your personal life or in cannabis are you most interested in learning about?
Lakmaaker: I really like the sciences. I’m a chemical engineer by training. I think what is going to take an incredible flight in the years to come is the application of medical scientific research that’s being done right now. To me, that’s fascinating because the cannabis plant is something special. It’s got such a broad utility that we know, anecdotally. I think we’re moving towards a world where we’re going to see a lot of breakthroughs on the medical side.
I’m very excited about the other end too – cultivation. I think tissue culture is going to play an incredible and important role.
Cannabis has long been considered a green industry by the masses.
As a standalone item, the cannabis plant is very environmentally friendly. This is particularly true when it comes to hemp, a variety of the cannabis plant with a huge range of environmental benefits. An extremely versatile and robust crop, hemp uses far less land and water than other common crops and even captures carbon dioxide and regenerates soil. Approximately 20,000 products can be made from its seed, fiber and flower, from biodegradable plastics to food supplements, meaning all in all – it is an environmentally and economically sustainable crop
Yet as with most things, when cultivated in mass, the cannabis plant isn’t quite so green anymore. With its high demand for water, land and artificial lighting, cannabis cultivation can actually leave a large environmental footprint (this does however, pale in comparison to the food industry).
What’s more, many firms do not properly understand how to correctly treat and apply chemical fertilizers and pesticides, and use a machine gun approach to growing their crops. This can result in unnecessary bleed waste, which in turn can kill micro-organisms and contaminate soil, water and other vegetation. Packaging has also been cited as particularly environmentally unfriendly in the cannabis industry, with several organizations using single use plastic for their products, due to the strict guidelines attached to packaging products of a medical or pharmaceutical nature.
A field of hemp plants, (Cannabis sativa L.)
So as the CBD, medical and even adult use cannabis industries become increasingly commercialized across the globe, there is risk cannabis might start moving in the wrong direction when it comes to sustainability.
Still relatively new, the cannabis sector is nascent and exciting, with the global cannabis market size valued at $10.60 billion in 2018 and projected to reach $97.35 billion by the end of 2026. Yet as the industry grows, so too will its footprint.
I’ve seen it first-hand. The industry being hugely competitive, so for companies vying for precious investment and fighting for a spot on the stock market, often, sustainability is the last thing on their minds. In my opinion, this is wrong. Not only morally – we all play a part in looking after our planet – but it’s also a poorly calculated business decision.
It’s no secret sustainability and ESG have become a hot topic when it comes to investing. Just yesterday, Credit Suisse told CNBC that the pandemic has accelerated the trend towards sustainable investments. The bank has even introduced an exclusion strategy whereby those investing can actively exclude controversial sectors.
So with the environment firmly on investors’ minds, cannabis firms need to realize that actually, if they want to secure the support of forward-thinking shareholders, they need to consider more than just the bottom line and truly take the sustainability of their operations into account.
Outdoor growing can require less energy inputs
Luckily, there are practices which cannabis cultivators can take on board to reduce their environmental footprint. To start with – growing outdoors. This enables cannabis farmers to harness the sun’s natural power, saving them money on electricity bills and increasing energy efficiency. With cannabis being a rather thirsty plant, water use is also a major concern – although this is nothing compared to the amount of water used by cotton plants. However, it is in fact possible to design indoor operations which recycle close to 100% of the water use, including capturing the perspiration from plants – at AltoVerde this is something we are looking to implement in our upcoming Macedonian sites.
Firms keen to improve on sustainability should also cultivate in a way in which soil is fully replenished and repaired after use – this is called regenerative farming, and it’s extremely effective for maintaining and improving soil quality, biodiversity and crop yields. Another interesting concept is the use of hemp. Some farmers have started using hempcrete – a concrete-like material made from harvested cannabis plants. As if the recycling aspect wasn’t good enough, hempcrete is actually carbon negative, meaning the production of hemp for hempcrete removes more carbon from the atmosphere than it produces.
It’s been incredibly exciting to be a part of the cannabis industry and I am excited to watch its growth in the years to come. It’s taken hard work for the sector to improve its traditionally poor image and to be accepted across the globe, so now, cultivators must lead by example and stop industry from being branded as one which pollutes. By transitioning to more environmentally sustainable practices, firms will be doing their bit for the planet, attracting the investors of tomorrow and ensuring their own success for years to come.
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