Extraction Archives - Green Market Report

Debra BorchardtJune 24, 2022
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9min10300

The Food & Drug Administration (FDA) decided to ban the popular vape product Juul and issued a marketing denial orders (MDOs) to JUUL Labs Inc. for all of its products currently marketed in the United States. That’s a long-winded way of saying the products are now banned. The company must stop selling and distributing these products. The ban doesn’t mean that people who continue to use Juuls or have them in their possession will get into trouble, the product just can’t be sold. 

In addition, those currently on the U.S. market must be removed, or risk enforcement action. The products include the JUUL device and four types of JUULpods: Virginia tobacco flavored pods at nicotine concentrations of 5.0% and 3.0% and menthol-flavored pods at nicotine concentrations of 5.0% and 3.0%. 

“Today’s action is further progress on the FDA’s commitment to ensuring that all e-cigarette and electronic nicotine delivery system products currently being marketed to consumers meet our public health standards,” said FDA Commissioner Robert M. Califf, M.D. “The agency has dedicated significant resources to review products from the companies that account for most of the U.S. market. We recognize these make up a significant part of the available products and many have played a disproportionate role in the rise in youth vaping.”

What trigged the FDA response was the company’s lack of data regarding the toxicological profile of the products. “In particular, some of the company’s study findings raised concerns due to insufficient and conflicting data – including regarding genotoxicity and potentially harmful chemicals leaching from the company’s proprietary e-liquid pods – that have not been adequately addressed and precluded the FDA from completing a full toxicological risk assessment of the products named in the company’s applications.”

Cannabis Industry Worries

Vaping products in the cannabis industry are hugely popular, so the ban has attracted a great deal of attention among producers. Seattle-based data-analytics firm Headset recently reported that vapes were the second-largest category by revenue behind flower in the U.S. cannabis market during 2020 and 2021. The category logged nearly $2.6 billion in retail sales across six adult-use markets last year. Vape pens are also growing with sales rising 28% in 2021. Despite the sustainability issues, disposable vapes are proving to be very popular as well growing by 64%. Likely because disposable vape products tend to be cheaper. 

Arun Kurichety, chief operating officer and general counsel of Petalfast said, “ While the FDA’s decision to prohibit Juul from marketing its products in the US does not directly impact the cannabis industry, it suggests we may continue to expect scrutiny on all vaping products — nicotine and cannabis alike. For licensed businesses in the highly regulated cannabis industry, this shouldn’t be huge news. Rather than prohibition, this further highlights the need for consumer education regarding the risks of obtaining vape products in the illicit markets where product testing for safety is non-existent.”

E-cigarettes were originally hailed as an effective way for nicotine-addicted consumers to inhale with fewer terrible side effects. Tobacco companies all created versions for their tobacco-smoking customers with limited success. Yet, when Juul began marketing cotton candy flavored nicotine vapes, teens and young adults swarmed the products. Instead of helping already addicted adults, it created a whole new generation of Juul-addicted consumers. Parents complained and the FDA jumped in to address the situation. At first, it was just a clamp down on the flavors, but now it is banning the entire product line. 

Cannabis vapes also proved to be a nice option for consumers who didn’t want to smoke regular flower. Cannabis vapes were discreet, easy to carry, and didn’t create the distinct smell that burned flower did. They could be expensive, but cannabis consumers were willing to spend money for the convenience of being able to pop a vape in their pocket and ramble on. 

Arnaud Dumas de Rauly, CEO and co-founder of the Blinc Group said, “If the FDA took the time to look at the science surrounding vaping instead of having knee jerk reactions to statistics over youth consumption, they would see that vaping has been beneficial to countless individuals looking to quit smoking. For years, the European markets have embraced vape as such a necessary tool for the cessation of smoking that they offer health insurance breaks to those who vape.”

He went on to add, “If you look down the road to what this decision could mean for the cannabis vape industry, the federal illegality of cannabis will keep the space safe for now since the FDA is unwilling to regulate the industry while it remains a schedule one drug. However, this doesn’t mean that will be the case forever. I would hope when that time comes that the FDA will recognize that vape is considered one of the safest consumption methods, particularly for medical patients who are looking for the purest stream of cannabinoids and terpenes, and the absence of combustion means less hazardous substances and it’s easier on the lungs.”

A Post Juul World

One company that the trouble has already impacted in the Juul market is Greenlane (NASDAQ: GNLN). At one point in 2019, Greenlane was selling almost $50 million worth of Juul products. With the first ban on flavored products, sales fell over 30% to $33 million in 2020. Just this week, Greenlane noted that it was selling off assets in order to generate cash. The company has been weaning itself off its Juul dependence, but $50 million is a big number to make up elsewhere. 

In Closing

Juul has said it will appeal the ban and try to keep its products on the shelves while it fights the ban. Cannabis vapes may luck out purely due to the fact that the FDA can’t decide what to do about the federally illegal product.  Since the FDA can’t seem to make a decision on CBD products, tackling cannabis vape pens seems unlikely. Cannabis consumers haven’t been complaining about the product as evidenced by the growing sales. Like Dumas noted, the FDA was mostly reacting to angry parents of Juul-addicted teens. In the cannabis industry, not many people are complaining and that seems to have kept the product off the radar for now.


Debra BorchardtJune 16, 2022
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7min9040

Concentrates, like wax, shatter or resin products are more popular in mature cannabis markets. As prices have dropped and familiarity with the product grows, this niche product is slowly finding its place on cannabis shelves and in consumers’ baskets. Headset recently did a deep dive into a new report titled, “Cannabis Concentrates” to see what was happening in the concentrate market and found big differences between Canadian consumers and U.S. consumers. There were also differences in market share in established markets versus newer markets. 

According to Headset, whose data comes directly from sellers, concentrates are the fifth highest revenue category in both the US and Canada. The report also found that younger customers spend relatively more money on concentrates demonstrating their willingness to try something new versus older consumers who want to stick with traditional flower. Men are also more likely to buy concentrates than women. Typically the effect from a concentrate is stronger and more powerful and female cannabis consumers tend to migrate towards smaller dosage products. One vape company described a dollop of wax as being equivalent to smoking 15-20 joints. 

Canadians Growing To Like Concentrates

The concentrate category is increasing in Canada, whereas it’s declining in the U.S. Headset wrote, “This category has increased in Canada (up from 2.9%) and decreased in the US (down from 9.5%). In Canada, Concentrates are the third best-selling ‘Cannabis 2.0’ category behind Vapor Pens and Edibles.” The report also wrote, “The Hash segment, for example, is quite popular in the Canadian market and captures 30% of total Concentrate sales while only accounting for 2% of sales in the US.” Hash is another term for concentrates and really the original term for compressing parts of the cannabis flower until it becomes a sticky residue. Still, the market in Canada seems to have plateaued at 4% of total sales and has dropped in the U.S. In Canada, Alberta has the highest market share with 4.5% of sales to Concentrates, while Ontario has the lowest at 3.6%. After hash, Canadians prefer shatter (25%), live resin (22%), and then rosin (5%). 

Chart provided by Headset

U.S. Consumers

Even though the category has grown in Canada and declined in the U.S., the American market remains larger than the Canadian market. The report said, “US cannabis state markets have higher Concentrate market share than any Canadian provincial markets. Interestingly, the US states with the highest market share in this category are the oldest: Oregon, Colorado, and Washington. Massachusetts, at the low end, is the only US market with less than 5% of sales to the Concentrates category so far this year.”

In Colorado and Oregon, concentrates command 12% of the market and in Arizona and Washington, it’s over 9% of the market. Illinois and Michigan both clock in at 7% of the market for concentrate purchases. Live resin is more popular in the U.S. with 34% of the market so far in 2022 followed by rosin at 12% and then shatter at 7% and hash at 2%.

Chart provided by Headset

Cheaper Too

Headset found the average equivalized (EQ) price of concentrate products in both Canada and the US had seen some serious volatility. “We can see that the average EQ price of this category began at nearly $50 before plummeting below $30 and then climbed right back up to the high-$40s by the end of Summer 2020. Since then, the average EQ price of Concentrates in Canada has been steadily decreasing and was $25.97 in May 2022, a 49% drop since January 2020 ($48.99).” It went on to add, “In the US, Concentrate prices have been more steady as the market is much more mature than in Canada. However, there have been some shifts with a fairly steady decline in pricing since August 2020. In August 2020, the average EQ price for Concentrates in the US was $21.86. In May 2022 the average price per gram was $17.85, a decrease of 18%.” The 1 gram package size seems to be the standard in both markets. 

In Closing

The concentrate market has its own holiday it likes to celebrate that brings attention to the category. July 10 or “Oil Day” celebrates all extracts as 7/10 upside down resembles the word oil. Last year, the holiday seemed to have fizzled out as the Fourth of July grabbed all the attention for holiday sales. Still, this is a loyal consumer who is a connoisseur of the concentrate and can’t be ignored.


Debra BorchardtJune 16, 2022
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6min6950

Cannabis companies are cheering a court ruling that will allow the sale of vape products in the state again. Yesterday a Commonwealth Court judge ruled that Pennsylvania medical marijuana companies could resume selling vapes that were taken off the shelves in February in a controversial recall. Earlier this year, the state regulators published a list of over 500 vape products they deemed could not be sold because they did not meet FDA requirements. However, products included in the recall had previously been approved by the state Department of Health for more than three years and the recall specifically focused on medical marijuana vaporization products that contained terpene additives.

Two lawsuits resulted from the recall. According to Law360, “Medical Marijuana Access and Patient Safety Inc., a nonprofit made up of dispensaries, growers, processors, certified patients that use medical marijuana vaporization products, and other industry stakeholders, filed suit against three high-ranking members of the state DOH in February in Pennsylvania state court.” At the time, the court authorized the recalled products to be held in quarantine instead of being destroyed until a decision was reached.

One of the companies affected by the case, Jushi Holdings (CSE: JUSH) (OTCQX: JUSHF) released the following statement:

On behalf of Pennsylvania’s medical marijuana patient community, we would like to extend our appreciation to the Commonwealth Court for its thoughtful assessment of the facts and circumstances upon which DOH’s February recall of tested, approved medical marijuana vaporization products containing terpenes was based, and for the subsequent orders issued on June 2 and June 15 allowing responsible operators to again make these products accessible to patients.

In light of the Court’s Orders, impacted products will be back on the shelves of BEYOND/HELLOTM dispensaries today and the shelves of our partner dispensaries across the Commonwealth in the coming days.

After receiving documents and testimony offered by MMAPS, the Court came to the unambiguous conclusion that DOH “failed to present any evidence” of potential harm to medical marijuana patients associated with the recalled products,” noting that the Department did not call any witnesses or present any evidence of patient complaints or adverse events during the preliminary injunction hearing.

Under Pennsylvania law, all medical marijuana products, including the recalled vaporization products, are subject to rigorous, redundant safety and quality testing and Department approval before they can be manufactured or dispensed. As to the recalled products specifically, DOH was neither able to cite a safety or quality testing deficiency nor a single adverse event relating to any recalled products.

“The Court’s June 2 and June 15 Orders are about more than just preserving patient access to tested, approved, and for many patients, effective medical marijuana products – they deliver peace of mind to thousands of Pennsylvanians that health risks cited by the Department could not be substantiated in any way or any extent.  In fact, the Court noted the Department itself approved the recalled products for patient use following stringent quality and safety testing and found no evidence of a single adverse event related to any recalled product.”  said Jim Cacioppo, Chief Executive Officer, Chairman, and Founder for Jushi Holdings Inc.


StaffApril 1, 2022
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4min5560

In 2020, SpaceX announced it would be supplying cannabis and vaporization devices to astronauts on its Mars missions with the company citing several groundbreaking studies on the positive impacts of cannabis in zero gravity,

“We have been improving our understanding of every system necessary to carry both crew and cargo on long-duration interplanetary flights, and help humanity return to the Moon, and travel to Mars and beyond,” noted SpaceX CEO Elon Musk. “In doing so, we have identified mental health as a critical success factor in long-term travel. From a weight-to-efficacy perspective, cannabis is the least expensive and most effective method to solve for this concern.”

successful 2021 collaboration between Tesla Motors (TSLA) and Prrl Labs, Inc. to incorporate their proprietary NBT (no-burn tech) into Tesla’s automotive climate control system in 2021 made it possible to easily integrate the same technology into SpaceX’s Starship launch vehicle.

“It was a real pleasure working with the engineers at SpaceX,” said Prrl Labs CEO Mark Lewis, a former rocket scientist himself. “Developing the additions of the BFP and BFP Heavy to the line of Terp Surfer smokeless pipes with their engineers and having them stress-tested by some of Elon’s celebrity friends is an experience we will always remember. Carl Sagan would be so proud of our space program right now.”

Astrophysicist Neil DeGrasse Tyson seems to be on board with the idea saying

“The problem with space travel is that so many things can kill you. One can see how altering your understanding of reality for short periods of time, especially during long flights, could improve your mental health. Why not lock yourself in your cabin, get high, play a little Bowie, and enjoy the trip if all of your other responsibilities are complete?”

“We are excited to make humankind an interplanetary species, but what’s the point if you aren’t having some fun along the way?” Musk added.


Debra BorchardtFebruary 2, 2022
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4min5010

Agrify Corporation (Nasdaq: AGFY)  is buying the distillation company Lab Society in a deal valued at $8 million. Agrify said in a statement that Lab Society’s annual revenue for 2021 was approximately $10 million, and the acquisition is expected to be accretive in early 2022. The acquisition is part of Agrify’s strategy to expand beyond just lighting and cultivation software. 

“We are ecstatic to add Lab Society to our portfolio of high-quality extraction solutions,” said  Raymond Chang, Chairman, and CEO of Agrify. “As federal legalization edges closer to reality, we believe the United States government will likely increase its role in setting the quality,  consistency, and safety standards for medical and recreational cannabis products. By owning  the top key solutions that produce the highest quality and the widest range of extracted cannabis  products at scale, we expect it will provide Agrify with a significant competitive differentiation,  enhanced customer value-add, superior industry leadership position and significant growth  opportunities globally.” 

Since September 2021, Agrify has been on a tear buying up companies in the extraction space. These acquisitions include Precision Extraction Solutions, which is involved in developing and producing high-quality hydrocarbon extraction solutions, Cascade Sciences which is known for developing and producing high-quality vacuum purge ovens and decarboxylation ovens, and also PurePressure, a maker of high-quality solventless extraction solutions. Lab Society brings distillation and solvent separation extraction solutions to the table.

Despite a recent short-seller report, Agrify stock has been moving higher over the past few days. Shares were lately selling at $6.39, moving up from a recent low of $5.28.

Purchase Details

The purchase price for Lab Society consists of $4 million in cash and $4 million in unregistered shares of Agrify common stock, subject to adjustments as set forth in the definitive agreement. There is also an additional earn-out opportunity of up to $3.5 million if the revenue generated from Lab Society’s products reaches certain milestones in 2022 and 2023. 

Lab Society was founded in 2015 and is headquartered in Boulder, Colorado. The company has a proprietary software, called EliteLab that provides the comprehensive ability to maximize hardware utilization featuring control of temperature control units (TCUs), pressure controllers and gauges, balances, and scales, and agitation stir controllers. The company said that the ability to take cannabis compounds distilled into their pure forms, and then recombine them into specific,  purposeful end-products could have significant potential for the pharmaceutical industry in the future. 

“We are excited to be a part of Agrify’s extraction division,” said Michael Maibach Jr., Founder  and CEO of Lab Society. “With a much larger sales team and additional resources, we are  excited to be in a position to drive rapid growth and future innovative product development.”

 


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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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