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The Man Behind MXXN: An Interview with CEO and Founder Darnell Smith

By Aaron Green
1 Comment

Hangovers are one of the aftereffects often experienced with spirits. Who doesn’t love a good martini or a refreshing margarita? One company is on a mission bring the flavor profile and buzz of spirited drinks without the negative consequences.

Like this article and want to see more? Subscribe to our free newsletter hereMXXN is a California-based cannabis infused beverage manufacturer specializing in 1:1 non-alcoholic replacements for everyone’s favorite spirits, enhanced with a touch of cannabis. By combining new technology in cannabis oil nano emulsions and alt-alcohol, MXXN is able to create flavor matching spirits sold by the 750 mL bottle. MXXN recently launched with three product SKUs including London Dry (gin), Jalisco Agave (tequila) and Kentucky Oak (bourbon) with a rum replacement due to launch soon.

We caught up with Darnell Smith, founder & CEO of MXXN, to ask about the technology going into infused non-alcoholic spirits, regulatory challenges and more. Prior to MXXN, Darnell was a spirits industry veteran, having worked with companies including Diageo, Pernod-Ricard and Bacardi.

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

Darnell Smith: For me, it wasn’t something that was premeditated, in a sense. I had always been a cannabis user in my adult life. I played Division I sports. Cannabis replaced a lot of painkillers and medications that I probably would have had to take just to cope with athletic injuries. That’s how I got introduced to cannabis. And there is the recreational use of it as well.

Darnell Smith, Founder & CEO of MXXN

To get to the origin story of MXXN, I spent a large part of my career working in spirits, namely, on the innovation and commercialization side of bringing new products to market under very well-known trademarks for large multinational companies. A few years into it, my liver was kind of at a point where it was like, “It’s gonna be you or me here, buddy.” So, I made the decision to start making – this is 15 years ago, in New York – a tincture where I would just heat up flower and decarb it and soak it in a high proof spirit. I would cover it for 30 days then strain it and have my tincture.

I’d be the guy in the bar, that would say “Hey, can I get a tonic and lime?” and I would put three drops of my tincture in there, and I would session cocktails along with everyone else. Next day at work, I’m the guy that’s bright-eyed and bushy-tailed and everyone else is kind of feeling a little bit weathered by that alcohol.

Innovation is usually born out of a personal need and that’s the same way here. So, fast forward 15 years and the technology has finally caught up. The rise of non-alcoholic spirits, the rise of cannabis and water-soluble emulsification, those two things combined really made the light bulb go off and say now is the time to offer this product. I feel like MXXN has a very specific place in our consumption of beverages and can fill a unique need that I think is rising.

Green: I’m interested in learning about the technology and the product. We can start with the technology that went into the product development process. I’ll go on to product next.

Smith: From a technical standpoint, up until a few years ago, the way that edibles were made was basically like raw extraction. There was very little ability to be precise about dosage. It was like trying to throw softballs through a chain-link fence. Non-uniformity made it very hard to say, “Here’s how this is going to affect you.” Fast forward and companies like Vertosa and Source have perfected this kind of nano-emulsion technology, which is basically water-suspended cannabis that can uniformly be used in food, beverage and cosmetic applications. And it’s akin to trying to throw sand through a chain-link fence. It’s just much smaller. It can remain more uniform, and thereby be more predictable in terms of dosage and effect.

The MXXN London Dry

So, that technology made it possible for us to then combine it with another wave that’s happening, which in the spirits industry is called alt-alcohol. What we do is distill all the flavor essences of well-known spirits and skip the alcohol. We then add the emulsified cannabis in place of the alcohol. And so with that, we offer a new kind of experience which is basically all the buzz but none of the booze. That’s really where technology-wise things have evolved. The rise of the non-alcoholic spirits and then the rise of being able to do water-soluble compatible cannabinoid emulsions.

Green: Are you selling this then as packaged goods or are you selling it as bladders similar to Coca-Cola in a bar setting?

Smith: This is a CPG packaged product and it really is analogous to a 750 ML spirits bottle similar to Tito’s or Grey Goose. The form factor is the same as spirits bottles, same 750 ML bottle. It doses just like a spirit would. Standard spirit pour is an ounce and a half. For us, an ounce and a half shot has six milligrams of THC.

For the average consumer, you can session cocktails and we give you the option to dose between two and six milligrams between a half ounce and an ounce and a half pour. So, it’s very analogous to what people are experienced in when it comes to spirits from the bottle to the dosage and to the actual recipes. We pride ourselves on being able to demystify something that has been a little bit complex in terms of making cannabis-infused cocktails. We are sticking close to what people are familiar with. People have a lot of experience with tequila or gin or bourbon and so we wanted to stay very familiar but also give people a chance to make the same recipes but sans alcohol.

Green: What kind of flavor profiles are you launching with?

Smith: We’re launching with three SKUs. Our first is London Dry, which is our take on a gin and that one has cucumber, juniper, coriander, and a nice peppery finish. We have Jalisco Agave, which is our take on a tequila or Mezcal. You have notes of agave, flint, salt, oak, and vanilla. And then the last one is Kentucky Oak, which is our version of a bourbon or whiskey. There you have charred oak, vanilla, and other flavor components that make up what bourbon is.

The MXXN Kentucky Oak

Now we have a rum in development that’s nearing the end of a robust R&D pipeline. We have some other options like ready-to-drink cocktails made with MXXN to more high-dose products for what we consider the “legacy consumer” who is maybe more medically inclined in the hopes of being able to give people more options when it comes to consumption of flavored spirits.

Green: On the cannabis side, with the infusions that you’re doing, is it pure THC or are you doing full spectrum?

Smith: Yes, full-spectrum cannabinoid. You’ll notice some beverage brands have what we consider a hybrid, some THC and some CBD. For us, and for the effects that we wanted to have the product to have we stuck with a THC-forward blend. There is a trace of CBD in there, but we don’t even claim it. It’s not something that we go forward with. Our emulsion is THC-based.

Green: Where are you at today in terms of the launch and presence?

Smith: We just finished a pilot test here in California. We started late-January, early-February and we’ve been selling direct-to-consumer. Just order and you can have it at your door in 24 hours for about 85% of the state. We’ve blown through our entire pilot run. Now we are entering into what we consider our launch phase which will be available in select retailers late-July. We are gearing up for our next big production run here in mid-July. We are basically all systems go.

At the same time, we’re exploring multi-state expansion. We have a lot of interest in states like Colorado, Nevada, Arizona and we’re having constant conversations with partners in those states to help bring the product to market.

Green: Have you looked at lounges?

Smith: Lounges have been our biggest traction as we start the retail rollout. We literally just started the dispensary piece of what we’re doing last month. And this is by design. First, we wanted to go direct-to-consumers for proof of concept to make sure we weren’t, you know, saying the story to ourselves. I think just by the performance of the pilot run and direct-to-consumer sales, we proved okay, this is a viable concept.

MXXN’s Jalisco Agave

So as we go out, our number one targets are obviously establishments that also are connected to or have connections with a consumption lounge. There aren’t a ton at this point. They’re still kind of proliferating. But I will tell you the moment we walk into one of these accounts is like a no-brainer because it allows this account to offer a whole new experience. When it comes to consumption lounges in terms of great cocktails you already know: gin and tonics, margaritas, paloma, with no real education required on the part of who’s ever going to be serving. We basically take 20 retailers a month in chunks and so far of the 15-20 that we’ve done, four or five of them have consumption lounges and you’ll see it in those very soon.

Green: Are there any challenges there with dosing in a lounge where the onus is on the operator to dose? How do the regulations work there?

Smith: It’s similar to alcohol, right? As an establishment, you have a responsibility to kind of pay attention to what’s happening as the consumer is consuming. Typically, most of the legislation that was written is for an inhaled consumption lounge. Ingestibles weren’t necessarily considered heavily when it came to legislation. What we tell folks is you have the same responsibilities you would if you were a bartender. Our recommended pour in consumption lounges is a lighter dose. This way, the customer has a chance to start low and go slow, and really recognize how it’s going to affect them.

Legally, there is no firm guidance on what overconsumption looks like for the typical consumer. So, we tell folks you have to kind of get a feel for who the consumer is. If they’re curious person who doesn’t have a lot of experience with cannabis, we typically recommend not to exceed a five-milligram serve per sitting until you figure out how it’s going to affect them. However, if you have very high dose legacy consumers, who buy and drink these 100-milligram single-serve bottles it’s a different story. You kind of need to gauge that from consumer to consumer, and what their tolerance level is. A lot of onus is on the consumption lounge. And I think that’s why they’ve kind of been slow to really roll out how they deal with beverages, because it’s just a different beast. It’s absorbed differently by the body from inhalable products

Green: What trends are you looking at in the industry?

Smith: I love seeing more food-based options. Edibles to this point have been mostly candies and gummies and I see the trend going to more high-end, curated food selections. I think that’s super interesting. The condiments that go into cooking is a category that I’m keeping an eye on. I came across a THC and CBD-infused Siracha sauce the other day and I was like, “wow, this is fantastic!”

MXXN logo

In the beverage space, there continues to be innovation, which we are on the forefront of. There’s a point of saturation that’s going to come for how many seltzers can exist in the market at the same time. And I think we’re kind of reaching that point. So, it’s going to be incumbent upon the beverage space to continue to innovate.

I’m also watching where things go with hemp-derived THC, the Delta-8s and those things and how is that going to be dealt with when it comes to the legal market. I think you see varying ways that it’s being dealt with across states. That’s a trend I’m certainly keeping an eye on as things continue to roll out across the country.

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

Smith: Given where the world is today, I feel like we all live in this “OR” mindset. It’s either you OR me, it’s either this OR that. And I think you can see with some of the more recent political things that have happened, it’s this ideology of like, trying to force your beliefs on someone else. For me, it’s more about like, how can we learn to live more in the “AND” right? You can have this AND this and they can coexist, and they don’t have to be in competition. In my personal life, that’s where a lot of my energy is going. How do I spread that thought of getting out of this living in OR. We must move to this kind of mindset of AND. How can we be accommodating for a bunch of different beliefs, a bunch of different approaches? It causes so much friction when we try to impose beliefs on others that may not share the same beliefs.

I am thinking about how I can apply that to the cannabis industry as well. In terms of federal legalization versus state, where can we find that the happy ground? If we think about going across state lines, that’s effectively building a whole other business in the state, and in virtually no other industry does that exist. I can tell you economically this country could use infusion of cannabis to be more freely available. So those are the types of things that keep me moving these days. I’ve had a lot of success in my past and so for me, it’s less about financial achievements, and it’s more about how we can help move folks to this is AND mentality and not everything has to be OR.

Green: Great. That concludes the interview.

FDAlogo

CBD Safety in Edibles: What Regulators are Thinking

By Steven Gendel, Ph.D.
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FDAlogo

Despite the popularity of cannabidiol (CBD) infused edibles among consumers there are storm clouds on the horizon for this market. The potential threat stems from continuing uncertainty about the regulatory status of CBD in the United States (US) and the European Union (EU). Recent statements by government agencies in both areas are reminders that regulators could make decisions or take actions that would suddenly end the viability of this market. Any company that sells, or is planning to sell, CBD infused edibles such as bakery items, candy and beverages needs to understand what the regulators are thinking now and what might happen in the future.

in the US, the 2018 Farm Bill created a category of products called hemp that are derived from the Cannabis sativaplant and contain less than 0.3% tetrahydrocannabinol (THC). This law also explicitly confirmed the authority of the US Food and Drug Administration (FDA) to regulate the safety of hemp-derived infused edibles. This means CBD needs to navigate the New Dietary Ingredient pathway for dietary supplements, and either the food additive petition process or the Generally Recognized as Safe (GRAS) pathway for foods before it can be used as an ingredient in a food. All three of these processes require that someone (an individual, a company or a group) acting as a petitioner or notifier must submit safety data to the agency or arrange for a safety evaluation by independent experts.

Just some of the many hemp-derived CBD products on the market today

In the EU, CBD is regulated as a Novel Food in a process that is triggered by a submission to the European Commission. The submission must include safety data that is evaluated by the European Food Safety Authority (EFSA). In England and Scotland, CBD products are also novel foods and are evaluated using a process like that in the EU. As in the US, it is the responsibility of an applicant to provide the safety data.

The standard used by the FDA to judge the safety of new food substances in all three pathways is that there should be a “reasonable certainty in the minds of competent scientists that the substance is not harmful under the conditions of its intended use.” The standard used by EFSA for novel foods is, “the food does not, on the basis of the scientific evidence available, pose a safety risk to human health.”

It is important to realize that both in the US and the EU the safety standard for evaluating new food substances only considers the safety of that substance. The laws or regulations that define agency authority do not allow for consideration of any potential benefits. Approval (or rejection) must be based solely on the safety of the substance. Further, safety is evaluated in the context of the intended use of the substance, the planned level of use and the resulting consumer exposure to that substance.

What do we know about FDA’s and EFSA’s current thinking about CBD safety? 

Unfortunately, both the FDA and EFSA have made it abundantly clear that they believe the available scientific data does not meet the required safety standards. FDA has issued multiple warning letters to companies that sell CBD products and has rejected two NDI notifications for CBD. Although these actions were primarily based on non-safety issues (illegal health claims and the drug exclusion provision in the FD&C Act, respectively), in each case the FDA also raised safety concerns. This was done by saying that the agency is not aware of any data that would support a GRAS determination or that the products raise “concerns about the adequacy of the safety evidence.” This doubt echoes statements from the agency in public meetings and advisories. These doubts were expressed as recently as June 2022 during a meeting of the FDA Science Advisory Board.

Similarly, EFSA has stated that they feel that there are critical gaps in the existing CBD safety data. In April 2022, they published a statement with a detailed analysis of the relevant scientific literature and explicitly identified critical data gaps. EFSA said that these data gaps prevented them from evaluating CBD as a novel food.

What do the regulators see as data gaps?

Although the details of each of the data gaps are technically complex, for both the FDA and EFSA they fall into few broad categories.

FDAlogoThe first is that the agencies feel that they need better information on how CBD behaves in the human body. This is described as understanding the absorption, distribution, metabolism and excretion (ADMA) of CBD. The agencies also would like to see data on whether repeated use of CBD might cause damage to specific organs that does not occur from single exposures.

The second need is for more data related to the negative effects that have been observed in some previous work. This includes effects on the liver and reproductive system.  In particular, the agencies would like to know whether it is possible to identify a level of exposure that is low enough to not cause any negative effects. This is termed the No Observed Adverse Effect Level (NOAEL). In an ingredient safety assessment, the NOAEL is used to establish a safe intake level, called the Acceptable Daily Intake (ADI). Comparing the ADI to the expected exposure for the intended use allows the regulators to assess overall safety for a substance.  If the expected exposure is below the ADI, the substance is considered safe. Both agencies feel that the existing data do not allow them to identify a NOAEL for CBD.

The third data need relates to the composition of the CBD products used in safety studies. Food safety determinations are based on the total composition of an ingredient that is produced using a fully defined process. Even if the potential ingredient is 95% or 99% pure, a safety evaluation needs to know what is in that other 5% or 1%, and that this is the same from batch to batch. For example, the presence or absence of residual processing chemicals (such as extraction solvents) and the nature and concentration of substances such as other cannabinoids and terpenes will differ between manufacturers and processes. These differences could affect the overall safety profile for each CBD product. Therefore, it is considered important that studies supporting a safety determination for a new substance be carried out with the actual article of commerce.

Unfortunately, many different CBD preparations have been used in past studies, and in most cases these preparations were poorly characterized. This makes it difficult or impossible to combine the safety data obtained using one product with data obtained with a different product. For example, data obtained using CBD isolates from two different sources cannot be combined unless it can be shown that they were made using the same process and have the same overall composition.

What does this mean for the future?

Neither the FDA nor EFSA is likely to take any positive action on CBD until they receive safety data that fill the gaps that they have identified.

Given these data problems, it is likely that there will be little or no movement on regulatory approvals for CBD in edibles (or dietary supplements in the US) for at least several years. In the US, these products will remain in legal limbo, with state regulations playing the leading role in determining what is allowed on the market. Products with health claims will continue to be particularly vulnerable to FDA action.  The situation in the EU will be at least as confusing because, in the absence of action from EFSA, the regulatory and market status of CBD edibles will be determined by each member country independently.

In view of this uncertainty and business confusion, that are three ways that companies making CBD and CBD edibles can respond. First, in the short term, they can develop and implement manufacturing processes that ensure that their products are consistent from batch to batch and that they have the intended dose of CBD per serving or per product unit. This includes working with the analytical community and organizations such as AOAC and ASTM to ensure that there are validated testing methods available for the CBD and for the final edible products.

In the medium term, business risk management plans for companies that make CBD and CBD infused edibles should consider the possibility that new scientific data will push food safety authorities to actively conclude the CBD does not meet the current regulatory safety standards. In that case, the regulators might start to act against all CBD-containing products.

The structure of cannabidiol (CBD), one of 400 active compounds found in cannabis.

Businesses should also be aware that the agencies could make a positive safety determination but that they would use the available data to establish a low maximum allowed dose per serving or set very low limits on the presence of specific contaminants such as other cannabinoids.

In the longer term, the CBD industry as a whole might consider advocating for legislative changes. The best statutory fix is likely to be one that that regulates all cannabis-derived products in a system or agency that is separate from the food safety system. This approach is being used in Canada under the Cannabis Act. It is also similar to the way that alcoholic beverages are regulated in the US. This approach, if appropriately designed, could avoid the need for safety determinations but might also limit market access. While this approach could bring clarity and certainty to the market, it is important to remember that it will take time and effort to create a functionally system under this scenario.

There are many market reports that forecast on-going high rates of growth for the CBD market.  However, the regulatory and scientific developments that are likely to occur of the next couple of years will determine whether those projections can become reality.

Companies making these products need to monitor changes and prepare to respond to either positive or negative events.

These companies should also remember that edible products are mostly made from food ingredients using standard food product processes. It is critical that these products be made under a system that prevents food-borne hazards.

SC Labs Continues National Expansion

By Cannabis Industry Journal Staff
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According to a press release published last week, SC Labs is in the midst of a multi-state expansion under new leadership. The company hired Jeff Journey as their new CEO, coming from a VP position at Thermo Fisher Scientific.

Jeff Journey, the new CEO of SC Labs

Last year, in what seemed like an initial move to establish the lab on a coast-to-coast level, SC Labs developed a hemp testing panel that covers a number of contaminants on a national regulatory level. The hemp testing panel they developed purportedly meets testing standards in states that require contaminant levels below a certain action limit.

Then in February of this year, the company announced a partnership with Colorado-based Agricor and Botanacor Laboratories, with the goal of establishing a national testing network, offering comprehensive cannabis and hemp lab testing. All three of those organizations are certified by the Colorado Department of Public Health and Environment (CDPHE) for compliance testing required for hemp products.

In the press release that was published last week, they hinted at another announcement coming soon: a new partnership with Michigan-based Can-Lab. This, coupled with hints at further expansion and their current presence in California, Colorado and Oregon, means Journey will have his hands full and his sights set on nationwide cannabis testing.

“We’re looking forward to partnering with cannabis and hemp brands at every stage of the supply chain to share our innovative and forward-thinking scientific expertise so they can deliver safe products to the marketplace,” says Journey. “As cannabis legalization expands across the country, the testing industry is rapidly shifting and scaling to meet both market and regulatory demands.”

The leadership team will still have a few familiar faces, such as Jeff Gray as chief innovation officer and Josh Wurzer as chief operating officer. “The most important assets we can offer as a multi-state operator are scientific expertise, financial stability, and unquestionable integrity, the principles on which SC Labs has long stood for and will continue to provide to our valued customers,” says Journey.

Soapbox

Give a Voice to Scientists in the Executive Suite

By Dr. Markus Roggen, Amanda Assen
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What do Aurora Cannabis, Tilray and Pfizer all have in common? They all produce and sell products used for medicinal purposes, they are top competitors in their field and they all have statements on their websites claiming that science is one of the most important things to their business. But unlike Pfizer, Aurora and Tilray do not have any positions in the executive suite for scientists or medical personnel. This led us to wonder, why does the structure of their corporate ladder (as well as so many other cannabis companies) not align with what they claim to be their values?

According to Aurora Cannabis, “Science is at the core of what we do”.1 Look up the definition of “core” and you will get “foundational, essential, central, and enduring.”2 Sounds important. Meanwhile, Tilray’s main page states: “For the therapeutic value and risks of cannabinoid-based medicines to be fully understood, Tilray believes it is critical to evolve current scientific understanding of the field.”3

aurora logoYou would assume that somebody in the executive suite would have a position and an educational background relating to the central and enduring part of a business, right? We looked at 10 of the biggest Canadian cannabis companies, their founders’ educational backgrounds and whether there were executive positions for science, R&D or medicine (Table 1). We also looked at the same data for the top 10 biggest pharmaceutical companies (Table 2). As expected, every pharmaceutical company had upper-level (C and/or P level) positions for scientists and/or medical personnel. However, only 2 of the 10 cannabis companies had this.

tilray-logoTo figure out why this is, (as scientists) we did some research. It turns out, the consensus is scientists are bad at commercialization. Scientists are rarely successful as CEOs because they are (usually) not good at attracting customers and get confused by things like revenue models.4 As Akshat Rathi bluntly put it, “just because you are the smartest person in the building does not make you capable to run a company.” In fact, many CEOs of life science companies got to the top by pursuing business, finance, marketing or sales. In the 90s, some life science companies took a chance on scientists and hired them as CEOs, but when they hit financial turmoil, they quickly undid this.5

So maybe scientists aren’t always cut out to be the CEO of a company. But that still doesn’t explain why so few large cannabis companies have a chief scientific/medical officer, or even a president of R&D.

Maybe we are looking in the wrong place. Maybe their value of science can be demonstrated by their spending on research. Typically, a larger agricultural company will spend 9% or more on R&D, and a smaller company will spend 2-4%.6 Meanwhile, the major pharmaceutical companies we looked at spent between 12 and 25% of their revenue on R&D during their most recent fiscal year. Since a cannabis company falls somewhere in between we approximate they would spend around 9-12%.

Canopy_Growth_Corporation_logoHowever, Canopy Growth was the only company that fell into our prediction range, spending 10.5% of their revenue on R&D in 2021.7 Tied for a distant second place were Charlotte’s Web and Aurora Cannabis (a subsidiary of Tilray), spending 4.6%. At the very bottom were Tilray which only spent 0.16% on R&D and TerrAscend which spent 0.21% during their most recent fiscal year.8,9 With most of the cannabis companies, we saw a gradual decrease in R&D funding over time, which intensified with the Covid-19 pandemic.

So why the heck are these companies going on about how they value science? To give them the benefit of the doubt, maybe they do think they value science, but they don’t know how to value it.

 It’s hard for a company to take actions that show they value science if there are no voices for scientists at the executive level. After all, how can you make decisions based on science if nobody in the room understands it? Sure, we saw the argument that people who make it to the top can “learn enough science to ascend to the executive suite without much trouble”.5 But what is “enough science”? The mitochondria is the powerhouse of the cell?

This leads to our argument for putting scientists in the executive suites of cannabis companies and giving them a more powerful voice. Whereas scientists are not good at marketing, those in managerial roles tend to overly rely on intuition – even when the evidence is against them.10 For those relying on intuition, R&D is an easy target during times of crisis (like a global pandemic). Cutting costs in R&D yields a short-term immediate increase in profit and the negative impacts are often not felt until years later.11 However, cutting R&D investment is the opposite of what you should do during a time of crisis. Evidence suggests companies that maintain or even increase spending in marketing and R&D and focus on operational efficiency (such as process optimization) are the ones that will come out as the top competitors in the long run.12,13 Having a chief scientific officer or an executive for R&D with a scientific background can help sustain companies by promoting R&D during hard times and indicating what projects will be the most promising to help the company optimize their processes.

Having a scientist in the executive suite can also help keep everyone in check. “Senior execs live in a feedback loop of positive reinforcement making them unlikely to question their decisions,” according to Stefan Thomke and Gary Loveman.10 They claim the best way for those in managerial roles to avoid over relying on instinct and break out of that positive feedback loop is by “thinking like a scientist”. This involves not letting bias get in the way of truth, studying anomalies, being skeptical, developing strong hypotheses, producing hard evidence and probing cause and effect. To add to this, we think a major part of thinking like a scientist is by having at least one high up in the team. In our own company, giving equal value to scientific voices has resulted in all parties learning and thriving by making fact-based decisions.

Finally, scientists deliver! To be a scientist (with a PhD), one must master the field, find a gap in the knowledge, then fill that gap – all for little pay and no guarantee of a job at the end. This makes them dedicated workers whose main goal is to contribute something unique to their field, or in this case, their company.14 Having someone up top who is dedicated, passionate, innovative and trained to look for gaps in knowledge can be an invaluable voice in the executive suite. They are likely to point out potential money-saving solutions (i.e.: optimizing extraction conditions) that others up top may not have thought of on their own.

If you feel strongly that science is at the core of what you do, and you already know that R&D is crucial for the long-term survival of your company, you are already on the right track. In addition to this, consider giving a voice to scientists at the executive level in your company. The cannabis industry is still in its infancy. This means there is potential for R&D in more than just new product development. Basic stuff like extraction, modifying plants to be heartier against harsh conditions and pathogens, curing and safety testing processes have all barely been studied and optimized to reduce costs. These things won’t be solved by a Juris Doctor, an MBA or even an engineer, they will be solved by scientists, and it will take a scientist up top to ensure the whole company recognizes the importance of these projects.

Table 1: Top cannabis companies stats on founders and their educational backgrounds, presence of scientific executive positions and spending on research and development

Company Founders Founder’s Educational Backgrounds Science executive position? % Revenue spent on R&D
Aphria Inc.

(now owned by Tilray)

 

 Cole Cacciavillani and John Cervini Cole: B. Eng

John: Born into a family greenhouse business

 Chief science officer

Garry Leong: B.Sc. Chem,

M.B.A. Quality Management 15

 NA
Canopy Growth Corp

 

  Bruce Linton and Chuck Rifici Bruce: Ba Public Policy, Minor: Economics. 16

Chuck: B. Eng, MBA

 no 10.5% 17
Aurora Cannabis Inc.

(subsidiary of Tilray)

 Terry Booth, Steve Dobler, Dale Lesack and Chris Mayerson Terry: Master Electrician18

Steve: B. Eng

Chris: Concrete business

Dale: Electrician and homebuilder

 no 4.6% 19
Village Farms International Inc.

 

 Michael A. DeGiglio BSc Aeronautic Science no No data available on R&D expenses
Tilray Inc

 

 Brendan Kennedy, Christian Groh, Michael Blue Brendan: Ba. Architecture, Msc: Eng, MBA20

Christian: Ba. unknown, MBA21

Michael: Ba. Finance, MBA22

 

 no 0.16% 23
Ayr Wellness Inc

 

 Jonathan Sandelman Juris Doctor, Law Degree24

 

 no No data on R&D spending available
TerrAscend Corp

 

 Michael Nashat Pharm. D . Post doc in Neuroscience25 no 0.21% 26
HexoCorp

 

 Sebastien St-Louis Ba. Economics, MBA 27

 

 no 3.09% 28
Fire & Flower Holdings Corp

 

 Trevor Fencott Ba (unknown), and Law degree29 no No data on R&D spending
Zenabis Global Inc

(now owned by hexo corp)

 Rick Brar, Mark Catroppa, Monty Sikka Rick: Ba. (unknown)

Mark: Ba. Finance 30

Monty: Ba Accounting and Finance31

 

 Chief science Officer:

Natasha Ryz PhD experimental medicine.32

 

 

 NA

Table 2: Top pharmaceutical companies founders and their educational background, presence of executive positions for scientists and spending on R&D

Company Current Executives Educational Background Science executive positions? % Revenue spent on R&D
Amgen Robert A. Bradway BSc. Biology, MBA33

 

 Chief Medical officer: Darryl Sleep, M.D. 33

Senior VP in R&D:

Jean-Charles Soria PhD molecular Biol, MD

 18.5% 34
Sanofi Paul Hudson Ba. Economics, honorary doctorate in business35

 

 Executive VP, R&D:

John Reed, MD, PhD in Immunology35

 14.51% 36
Bristol-Myers Squibb Giovanni Caforio MD.37

 

 Chief Medical Officer: Samit Hirawat, MD.

Rupert Vessey:

Executive VP: R&D PhD molecular immunology 37

 

 24.58% 38
Takeda Christophe Weber PhD. pharmacy and pharmacokinetics, Msc. pharmaceutical marketing, accounting, and finance39

 

 

 Director

President, R&D:

Andrew Plump, MD.  Ph.D. in cardiovascular genetics 39

 14.25% 40
AbbVie Richard A. Gonzalez No college degree. Practical experience in biochemistry research. Vice chairman and president, R&D:

Michael E. Severino, MD, Bsc biochem41

 

 12.60% 42
Novartis Vasant Narasimhan Bsc. Biology, MD, Msc Public policy President, Biomedical research, James Bradner M.D.

President innovative medicine, Victor Bulto: Msc. Chemical engineering, health economics, and pharmaeconomics, MBA. Chief medical officer, John Tsai BEng. MD43

 

 18.04% 44
Merck Robert M. Davis Ba Finance, MBA, Juris Doctor45

 

 Executive VP and president of Merck Research Laboratories; Dean Li MD, PhD cardiology45 25.14% 46
Johnson & Johnson Joaquin Duato

Vanessa Broadhurst

Peter Fasolo

 Joaquin: MBA, Master of international management

Vanessa: Ba, Master of Business Administration

Peter: PhD in organizational behavior, Msc. Industrial Psychology, Ba Psychology47

 

 Executive VP, Chief Medical Safety Officer; William Hait MD. PhD Oncology

Executive VP, Pharmaceuticals R&D; Mathai Mammen MD. PhD Chemistry

 15.69% 48
Pfizer Dr. Albert Bourla

Sally Susman

Payal Sahni Becher

Rady Johnson

 Albert: Doctor of Veterinary Medicine (biotechnology)

Sally: Ba Government

Payal: Ba psychology, Msc Psychology

Rady: Accountant49

 

 

 Chief Development Officer:

William Pao: MD. PhD oncology

Chief Scientific Officer, Worldwide R&D:

Mikael Dolsten; MD. PhD Tumor Immunology49

 17.01% 50
Roche Dr. Severin Schwan, William N. (Bill) Anderson, Dr. Thomas Schinecker, Dr. Alan Hippe Severin: Ba economics, PhD law

William: Msc in management and chemical engineering

Thomas: Bsc genetics, Msc molecular biology, Phd molecular biology

Alan: Ba, Phd in administration51

 

 

 CEO Roche Diagnostics; Dr. Thomas Schinecker; PhD in Molecular Biology51

 

 23.563% 52

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CDPHE Certifies More Labs for Hemp Testing

By Cannabis Industry Journal Staff
2 Comments

Aurum Labs, a cannabis testing laboratory based in Durango, Colorado, announced last week that they have become certified by the Colorado Department of Public Health and Environment (CDPHE) for all of the compliance testing required for hemp products. The press release says they are the first independent lab that is actually based in the state to receive the CDPHE certification for every compliance test.

Last year, Colorado rolled out hemp testing regulations that are some of the most comprehensive in the world. The required pesticide screening includes testing for more than 100 different types of pesticides. The new rules, along with the certification requirement, make it difficult for labs to enter the market, with only eleven total labs certified by the CDPHE for various hemp compliance panels and only five certified for every type of test, according to the department’s website.

Most of the companies on that list certified to conduct hemp compliance testing are familiar labs with large footprints, such as Eurofins, Kaycha Labs, Columbia Labs, SC Labs, InfiniteCAL and ACS Labs. Most of these labs are out of state and by the looks of it, only four independent, Colorado-based labs are certified so far: Aurum Labs, Gobi Analytical, Botanacor Labs and Minova Labs. Gobi and Minova, however, are not yet certified for pesticide testing, while Aurum appears to be certified for all compliance testing. Botanacor Labs, based in Denver, was certified back in June of 2021 to every compliance test except for pesticides.

“It’s difficult to compete with these large, private-equity-funded labs, but Aurum is passionate about serving the evolving hemp industry” Liz Mason, director of operations at Aurum Labs, said in a press release. “We are committed to staying on the scientific forefront to give the most comprehensive services to our clients.”

Pennsylvania Recall Overturned by State Courts

By Cannabis Industry Journal Staff
No Comments

Back in December of 2021, The Pennsylvania Department of Health sent emails to registered medical cannabis patients, notifying them of a safety review being conducted on ingredients found in cannabis vape products.

Then in February this year, the state’s health agency sent a third email. This one notified patients that they were recalling more than 650 products and ingredients. “As you know, the Department recently conducted a statewide review of all vaporized medical marijuana products containing added ingredients,” reads the email to patients. “After finishing this review, the Department has determined that certain vaporized medical marijuana products containing some added ingredients have not been approved for inhalation by the United States Food and Drug Administration (FDA).”

The recall generated a lot of controversy for the state’s medical cannabis market, leaving patients, dispensaries, processors and other cannabis businesses with little guidance from the state’s health department. Cannabis companies in Pennsylvania, like Curaleaf, Jushi and Trulieve, formed a coalition and sued the state’s health department in February, alleging that regulators ordered the recall preemptively and did so without going through the proper channels, according to the Philadelphia Inquirer.

On June 2, the coalition of cannabis companies won and a judge stopped the recall. The very next day, the health department took issue with the judge’s decision and filed an appeal with the PA Supreme Court. For now though, as the appeal makes its way to Pennsylvania’s top court, the recall is lifted and dispensaries can restock their shelves with vape products.

2022 Infused Products Virtual Conference: June Program

By Cannabis Industry Journal Staff
No Comments

2022 Infused Products Virtual Conference: June Program

Sponsored by Millipore Sigma, Berlin Packaging and Cannabis Safety & Quality (CSQ)

Click here to watch the recording

Agenda

Elevating Edibles: Defining the Next Cannabis Experience
Sam Rose, Director of Operations, Herve

Attendees will learn during this session:

  • Luxury edibles and form factor: Moving away from get high first and think about what you’re consuming second, a pivot from sugar filled, bad tasting edibles to delicious and refined ingredients. Non-juvenile form factors, healthier options, efficacy
  • Concentrates and infusion: Providing the consumer with the right high using the right ratios and concentrates. Bioavailability, highlighting the plant, absorption method (sublingual)
  • Giving the consumer what they NEED not what they WANT: We’re at a fragile point in time where people are either trying cannabis for the first time or experimenting with it again for the first time in a long time. We need to make sure these people have a good experience and not scare them away. High MG edibles and high % Flower is not the way to do this – the how high for cheap model is really toxic for the industry. We need to educate, we need to provide clean low dose edibles and more curated flower.

TechTalk: Millipore Sigma

Dr. Sunil P. Badal, Senior Scientist, Innovations/Advanced Analytical R&D, MilliporeSigma

Cannabis Beverages: The Rise of a New Market & a New Consumer
Christiane Campbell, Partner, Duane Morris, LLP

Attendees will learn during this session:

  • The current landscape and regulatory red tape surrounding cannabis beverage brands
  • Selecting and adopting a cannabis beverage brand
  • Protecting a cannabis beverage brand

TechTalk: Berlin Packaging

Julie Saltzman, Director of Cannabis Business Development, Berlin Packaging

One Symbol to Rule Them All! Harmonization is Finally Here!
Darwin Millard, Owner & Founder, TSOC LLC, ASTM Subcommittee Co-Chair

A picture is worth 1000 words, but with a hogbog of “universal” symbols, is something getting lost in translation? ASTM International’s new standard, ASTM D8441/8441M, Specification for an International Symbol for Identifying Consumer Products Containing Intoxicating Cannabinoids, serves to establish a truly harmonized international warning symbol. Learn about the significance and use of this all-important standard from one of the members of ASTM Committee D37 on Cannabis who helped developed it.

TechTalk: Cannabis Safety & Quality (CSQ)

Tyler Williams, Founder & CTO, Cannabis Safety & Quality (CSQ)

Evaluating the Safety of CBD – Data Needs
Dr. Steven Gendel, Principal & Advisor, Gendel Food Safety, LLC

Attendees will learn during this session:

  • Understanding how regulatory agencies think about safety for the ingredients in edibles
  • What we can learn from the EFSA data call
  • What is a realistic time frame for the process

Click here to watch the recording

Study Finds Only 7% of CBD Brands Conduct Proper Lab Testing

By Cannabis Industry Journal Staff
2 Comments

Leafreport released the findings from their expansive CBD testing study that revealed some pretty alarming results. According to their study, only 7% of CBD brands they sampled actually conduct legitimate contamination testing for pesticides, heavy metals and microbial contamination.

Leafreport is an Israeli company founded in 2019 that does product reviews, independent testing and provides educational resources for consumers. The company produces studies on CBD products in the market and reports their results on its website. Back in 2020, the watchdog company conducted independent lab testing on 22 different CBD-infused beverages and found a lot of inconsistencies with the actual amount of CBD found in the beverage and what the product’s label claimed.

In this latest study, finalized in late May of 2022, the consumer advocacy group found a lot of inconsistencies throughout the CBD market. For their study, they reviewed 4,384 products from 188 brands, with the goal of looking at overall transparency in the CBD products market. Judging by the results they share, the CBD market is unsurprisingly not very transparent.

Here are some highlights from this most recent study:

  • 20% of the brands reviewed didn’t carry out any purity tests to check for the presence of microbes, pesticides, or heavy metals. In 2021, 25% of the brands Leafreport reviewed didn’t carry out any purity tests.
  • 42% of brands test almost all of their products for potency (90%-100% accurate) and share their third-party lab results with consumers — the same as in 2021.
  • Only 12% of brands had all their products fall within acceptable potency variance limits.
  • 88% of brands that tested their products for potency had at least one product test beyond the 10% variance for potency, in comparison to 84% in 2021.
  • 28% of brands didn’t carry out any testing at all for pesticides (such as glyphosate), 26% didn’t test for the presence of any heavy metals (such as arsenic), and 24% didn’t test for microbes (like bacteria).
  • Two brands carried out no lab testing at all for either purity or potency, compared to 3 brands in 2021.

2022 Cannabis Labs Virtual Conference: June Program

By Cannabis Industry Journal Staff
No Comments

2022 Cannabis Labs Virtual Conference: June Program

Sponsored by Millipore Sigma

Click here to watch the recording

Agenda

Protecting Consumer Health: The Need for More Stringent Lab Testing Rules

  • Milan Patel, CEO, PathogenDx

In this session, Milan Patel discusses:

  • The current problems with testing in the cannabis industry.  (Loose regulation and enforcement, allowing operators without scruples to endanger consumers, E.G. increasing moisture to products to increase weight, while also increasing risk of mold.
  • Potential solutions to this problem. (Bring more attention to the problem, states need to follow CGMP for recreational markets, companies should test at every step of the supply chain)
  • Why this matters (beyond protecting consumers, this will help protect the reputation of the industry and individual companies within it.)

TechTalk: Millipore Sigma

  • Maria Nelson, Technical Consultant, AOAC International

Why Use an Accredited Laboratory to Test your Cannabis 

  • Tracy Szerszen, President & Operations Manager, Perry Johnson Laboratory Accreditation (PJLA)

This presentation will educate listeners on the various aspects laboratories must meet in order to obtain ISO/IEC 17025 accreditation. This will include an overview of what the ISO/IEC 17025 standard mandates on laboratories, the accreditation process and timelines as well as best practices to become prepared for an assessment. Utilizing an accredited laboratory is critical to this market resulting in less retesting and reliable results to support safe products.

How Authenticity Testing Can Help Cannabis Businesses

  • Dr. Arun Krishnamurthy, NMR Spectroscopist, Purity-IQ

Attendees of this session will learn:

  • NMR and cannabis, an innovative analytical tool
  • How CAPS measures product quality
  • How to improve your bottom line

Click here to watch the recording

An Interview with Flowhub CEO Kyle Sherman

By Aaron Green
No Comments

At its core, Flowhub is a point-of-sale and compliance software company, but they offer much more than that. After becoming the first company to integrate with Metrc in 2015, the platform quickly became a leading software company in the space.

The system helps dispensaries manage inventory, report sales data to regulators, manage payment processing, manage workflows and simplify compliance. Following a few stints at Dixie Elixirs, Weedmaps, and Neos Vape Pens where he saw the day-to-day inefficiencies of cannabis compliance, Kyle Sherman launched Flowhub about eight years ago.

As Founder & CEO, Sherman and his team have taken Flowhub to the next level, with over 1,000 dispensary partners processing $3 billion in annual sales. We caught up with Sherman to ask about compliance challenges facing the industry, 4/20 sales data, integration technology and more. 

Aaron Green: What are the major inventory and point-of-sale challenges that retailers face?

Flowhub Founder & CEO Kyle Sherman

Kyle Sherman: Cannabis has yet to be federally legalized and the industry remains a highly regulated environment that’s subject to a patchwork of state and local regulations. Dispensaries face an influx of challenges compared to traditional retailers due to strict compliance requirements. Cannabis retailers are required to report all sales activities and inventory movements to their state regulators, sometimes in real time. If physical inventory does not match what has been reported to regulators, their license is at risk for suspension. Maintaining accurate inventory records across systems (including point of sale, Metrc, and ecommerce menus) is one of the biggest struggles we hear from retailers.

In addition to compliance, lack of financial services and support from large banks and credit card companies is a big challenge for the cannabis industry. This means most transactions in the industry are limited to cash. Managing such large quantities isn’t easy and it puts dispensaries at risk of theft, both internally and externally. While cash alternatives like ACH are becoming increasingly accessible, some retailers are choosing partners with predatory financial terms or those that don’t operate in compliance.

Flowhub’s point of sale software enables a dispensary to provide best-in-class customer experiences without worrying about compliance. The software is purposefully built for the cannabis industry, focused on making the jobs of dispensary owners and staff members as streamlined as possible. Flowhub also helps dispensaries hide the complexities of a cash-intensive industry by allowing customers to use alternative forms of payments at checkout, like ACH and Point of Banking. Cannabis businesses should be able to transact as easily as if they were selling coffee and doughnuts.

Aaron: We’re about a month past 4/20, how was 2022 different and how can retailers prepare for next year?

Kyle: 420 2022 was the highest cannabis sales day in history! Dispensaries brought in twice the revenue compared to an average Saturday which is typically the busiest day of the week.

While ecommerce has become a major trend for dispensaries since the pandemic, traditional retail shopping is still by far the preferred mode of purchasing for consumers. With loosening COVID restrictions, 420 2022 saw a return to in-store shopping and in-person events. We also saw that while flower still stands as the most popular product category, customer product preferences are beginning to shift toward alternative options like edibles, beverages, vapes and concentrates.

To prepare for next year, retailers should analyze their 420 data to understand customer preferences. Dig into customer demographics to find out who was shopping, at what times, and for which products. This information can be used to curate a strategic marketing and execution plan in 2023. With many dispensaries offering similar products, it’s more important than ever to have a distinct experience that differentiates from the competition. Consider forming unique partnerships, ways to give back to your local community and how you can facilitate a shopping experience others cannot replicate.

At Flowhub, you can track your dispensary analytics from your smartphone with our mobile View app. Retailers can see real time performance metrics including sales data (track your sales, before and after-tax, by product category, average basket size, and total number of transactions), employee data (see top selling budtenders for the most recent day, week, month or quarter), and inventory data (view total identified inventory discrepancies by room, or see your most popular vendor and products at a glance). With data at your fingertips, you can stay on the pulse of your business and more adequately prepare for key dates and specific times of year, like 420.

Aaron: Flowhub was the first to integrate Metrc. What synergies were unlocked with this integration?

Kyle: Flowhub has always been involved in federal legalization advocacy. In 2014, I lobbied the CO Department of Revenue to build an open API to Metrc. Integrating with Metrc opened the door for cannabis operators to accelerate workflows, increase accuracy and simplify compliance. Prior to the API, tracking and reporting cannabis sales was painful. We were all handcuffed to manual pen and paper processes. Flowhub paved the way for other software companies to integrate to the Metrc API which is now the standard for track and trace systems in most legal cannabis markets.

Aaron: What’s next for Flowhub?

Kyle: Flowhub is strategically growing alongside the cannabis industry. We’re looking forward to supporting newly legal markets like New Jersey, where AU is now legal. We also recently integrated with Aeropay to offer dispensaries compliant ACH payments. Later this year we’ll have some major product developments coming out that I can’t disclose just yet but they’re very exciting! Stay tuned.