John SchroyerNovember 2, 2022
The company cited an "underperforming wholesale market" for the move.
Extraction Archives - Page 2 of 6 - Green Market Report
John SchroyerNovember 2, 2022John SchroyerSeptember 23, 2022
The acquisition further expands Halo's cultivation footprint in the Pacific Northwest.
StaffAugust 26, 2022
Can genetic testing yield the finest marijuana on the planet? Chemists at a Warren lab are betting on it.
Debra BorchardtJune 24, 2022
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
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%).
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%.
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, 2022Cannabis 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
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.”
A 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
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.”
Debra BorchardtJanuary 26, 2022
Icanic Brands Company, Inc. (CSE: ICAN)(OTCQB: ICNAF) is buying California-based extraction company LEEF Holdings, Inc. in a deal valued at approximately $120 million. The acquisition is expected to close in the first quarter of 2022. Leef is one of the largest cannabis extraction companies in the state of California and is a leading provider of bulk concentrates for many of the largest brands in the state. Leef’s manufacturing capabilities include a 12,000 sq. ft state of the art extraction and manufacturing facility with up to 45 tons of biomass throughput per month and up to 3,000 liters of distillate extraction capability per month.
“Today represents a huge milestone for Icanic. Our ability to come together as one with an amazing company like LEEF will only further enhance our position in the market. Micah and the rest of the team have done an amazing job building one of the leaders in the California market and we couldn’t be prouder to call them our partners” said Brandon Kou, CEO of Icanic Brands. “This marriage will allow us to accomplish our collective goals quicker and I am proud to say that the combined teams have already been hard at work analyzing the synergies and identifying efficiencies allowing us to build towards a singular infrastructure.”
Leef is Headquartered in Willits, California, and its core manufacturing competencies include ethanol extraction (Type 6 manufacturing license), hydrocarbon extraction (Type 7 manufacturing license), and solventless extraction. Leef also has an edibles production line and is in the process of building out a 45,000 sq.ft mid-stream processing facility which will allow it to dry its own product and provide additional services including processing, distribution and delivery to its customers. Leef also recently received a 186.7-acre cultivation land use permit, which will make it the owner of one of the largest cannabis cultivation sites in California. The site sits on over 1,900 acres of prime California real estate.
Micah Anderson, CEO of Leef said, “I am incredibly excited to be taking LEEF into the next stage of its development and together with our new partners at Icanic. We look forward to continuing to build significant shareholder value for many years to come. It’s because of the relentless hard work of LEEF’s employees that we have found ourselves at what I believe is the starting point to the next chapter. I have been in the cannabis industry for many years and, along with the other founding partners of LEEF, have devoted our entire lives to building our company. Winning is the result of having the right people working together with the right vision and Icanic’s management team only strengthens the talents and relationships LEEF brings to the table. I look forward to working with the Icanic team to add tremendous value to the combined organization as it continues to expand and grow in the coming years.”
Icanic Brands is a leading cannabis branded products manufacturer based in California & Nevada. The company’s brands include GonjaGold and Taylor’s. The company has been under management cease trade order by the British Columbia Securities Commission due to a delay in filing the company’s financial statements. Icanic said it expects to file the Annual Filings and the Interim filings for the period ended October 31, 2021, on or before January 29, 2022. “During the MCTO, the general investing public will continue to be able to trade in the Company’s listed common shares. However, the Company’s chief executive officer and the chief financial officer will not be able to trade in the Company’s shares.”
Julie AitchesonDecember 10, 2021
In the cannabis industry, branding (which includes packaging, product makeup and thoughtful analysis of the target consumer among other things) has proven to be a major factor in promoting customer loyalty across a wide range of products. Headset’s latest report, “Cannabis Brand Loyalty: A Look At California Vapor Pens”, leads off by invoking the archival image of a plastic baggy full of musty weed traded off in parking lots and clubs. But today’s cannabis product packaging runs the gamut from the utilitarian to the wildly creative. With the horizons of the cannabis market constantly expanding, it is crucial for companies to identify the ideal consumers for their products and how to market towards them for maximum profits.
The report defines brand loyalty as the tendency of a customer to continue to purchase from one brand loyalty is the tendency of a customer to purchase from the same brand over time. To this end, using California Vapor Pen brands as a model (a product sector that sees a high amount of brand loyalty), Headset’s report investigates three different ways to measure brand loyalty. Using real-time sales reporting, Headset’s data comes directly from partner retailers. This specific report looks at purchase patterns (or how a customer shops over time) and uses the results to paint a picture of customer loyalty. The report is careful to note that both high and low brand loyalty have their merits, citing companies who have the goal of reaching new customers in the market as those with a deliberate low brand loyalty strategy that can still yield solid profits.
Headset’s first strategy for measuring brand loyalty was looking at repeat purchase rates or the percentage of customers that repurchase a brand in a set time period. In California, 45% of customers re-purchase their products after 6 months. 12.6% of these customers will only re-purchase from a particular brand while 32.6% will purchase other brands in addition to their previously chosen brand. The report highlights this as significant given that people have such varied tastes and there are so many products to choose from. STIIIZY and Plug Play two vape pen brands with markedly high brand loyalty hardware are highlighted here as they both have proprietary hardware that pushes customers to repurchase their brands. However, over 50% of both brands still purchase from other brands even if they have to purchase different batteries, reflecting the aforementioned desire for variety among consumers.
Next, the report measures brand loyalty by looking at switching behaviors, which is when a customer chooses to buy a product from a brand similar to the initial brand chosen. This is a valuable metric as it helps businesses understand their own brands, how they are perceived by their, who their greatest competitors are and why. Headset’s report looks at Legion of Bloom customers and what other brands they are purchasing. The analysis showed that nearly a quarter of Legion of Bloom’s customers purchased a STIIIZY product- valuable information for both brands when considering branding strategies and how to make themselves more competitive.
Finally, the Headset report sought to measure brand loyalty by exploring wallet share across product categories, which is the percentage of a customer’s cannabis spending that goes towards a specific brand. Nearly 40% of the average Vapor Pen consumer’s wallet share is spent on their top brand, which reinforces the high rate of brand loyalty in this product category and may prompt vape pen brands to consider strategies like proprietary technologies to capitalize on this particular market dynamic.
Get the latest cannabis news delivered right to your inbox
Unpack the industry with the daily cannabis newsletter for business leaders.