Hikurangi Enterprises business development manager Manu Caddie recently travelled from his home on the East Coast of New Zealand to Northern California and Seattle to visit a number of key companies in the rapidly growing US cannabis industry. The visits were organised and hosted by Dr Lakisha Jenkins.
Dr Lakisha Jenkins
Dr. Jenkins holds a Doctorate in Naturopathy and is a Professional Member of the American Herbalist Guild. She is founder and CEO of The Kiona T Jenkins Foundation of Natural Health (Kiona Foundation Inc, 2003), a charitable holistic health nonprofit organisation. The Kiona Foundation and it’s subsidiary, The Farm’acy – a nonprofit agricultural cooperative – operate a natural health cooperative dispensary in Pleaston. Located in in the agricultural heartland of Northern California, Dr. Jenkins has provided holistic health services to the Central Valley since 2010.
Dr Jenkins is well connected in the Californian cannabis industry and generously hosted me for a day of visits as well as arranging other meetings during my time in the US. She is a wealth of knowledge about the regulatory environment having led the changes that saw California state legislature recognise cannabis as an agricultural crop rather than simply a controlled drug.
Dr. Jenkins is a founding director and President of Jenasis Cooperative Incorporated – a business and employment coop, Brown Hills Ranches Inc. – a collection of ranches and farms dedicated to providing organic and sustainable agricultural products and JECOI Academy of Ag Science and Arts – a private K-12 school with an emphasis on character building and ethics. Additionally, Dr. Jenkins is a founding Board Member of The California Cannabis Industry Association (President, 2012-2015)– the California State affiliate of The National Cannabis Industry Association of which she served on their Board of Directors (2013-2015) and both of which shape the framework around regulating the cannabis industry on a State and Federal level respectfully.
She has a client list of around 15,000 patients with hundreds coming to her clinic on a monthly basis for herbal remedies. The agricultural cooperative that grows cannabis and other botanicals for her had over 200 growers at its peak but this has been reduced to just 15 high quality producers who share in the profits of the cooperative.
FLRish and Haborside
FLRish, the growing operation of Haborside Farms in Monterey County, is the largest indoor cannabis growing facility in the US with 47 acres planned for under-cover growing. Once completed they will have around 360,000 square feet growing 100,000 plants, including a full automated nursery.
Dr Jenkins arranged the visit with co-owner Jeff Brothers who showed us around and explained their current operation and future plans. Steve DeAngelo, the owner of Harborside, the largest medical marijuana company in the world, happened to be there and we had a conversation about the New Zealand situation, our production plans and analysis options for our product. Steve recommended we visit Steephill Laboratories at Berkeley and arranged an appointment for later in the day.
Steve runs thriving medical marijuana dispensaries in Oakland and San Jose that ring up $44 million in annual transactions.
Jeff has been a successful cut-flower grower and obviously knows a lot about commercial nursery operations – he also owns a renewable energy company that is doing innovative things in electricity generation that will help reduce the cost and environmental footprint of energy consumption at the growing facility.
Security is tight – Jeff said some growing operations were seen as soft targets for gangs and that wasn’t something they wanted so invested in high tech fencing and armed guards checking all visitors and vehicles at the entrance.
Their company is investing $25million in building new greenhouses based on Dutch designs as they have already converted the old flower-growing greenhouses for cannabis production.
In the 1980s, producers of cut flowers erected cavernous greenhouses south of Salinas. Heated and cooled by abundant sunshine and ocean breezes, these buildings created the perfect micro-climate for growing lilies, tulips, delphiniums and orchids. Then global competition, particularly from Latin America, decimated the market. The downturn, occurring over the past two decades, left tracts of vacant, collapsing structures and helped to push the recent unemployment rate to more than 11 percent, well above the state’s 5.1 percent average.
There are hundreds of greenhouses abandoned in the area after the flower industry collapsed and the County is anticipating significant income from the new cannabis industry by taxing all commercial growers at $15 per square foot (yep, that’s $5.4 million just in County tax per year). Monterey County, which encompasses the Salinas Valley, has received 73 applications for cannabis farm permits, and more than 40 of those are already operational. The FLRish crop is expected to generate $2.6 million annually in new tax revenues for the county
Under Monterey County rules, marijuana cultivators only can grow in greenhouses in certain areas by converting existing structures or building new ones where old ones used to stand. They can’t plant outdoor farms or otherwise upset the county’s signature $5 billion agriculture economy for leaf lettuce, strawberries, broccoli, cauliflower, celery, artichokes and wine grapes.
There are some useful lessons from this situation for local government in provincial New Zealand looking for new industry with high value commodities to offset the challenges of high volume, low value industries like forestry and dry-stock farming.
Steep Hill Labs
Steep Hill Labs, Inc. says it is the world’s leading cannabis science and technology company with significant capabilities in lab testing, research and development, licensing, genetics and remote testing. Steep Hill’s foundation was built on testing and analysing medical and recreational marijuana to ensure compliance with public safety standards. In 2008, Steep Hill opened the first commercial cannabis lab in the United States and has been on the cutting edge since its inception. Steep Hill is expanding throughout the United States, and globally. With the goal of helping the rest of the world adopt “best practices” in cannabis testing, the company also provides consulting services to legislators and regulators in many countries, states and municipalities around the world.
In addition to the need to characterise cannabinoid levels, a number of contaminated cannabis scandals have meant lab testing is becoming the central service in the industry.
The state of California is currently drafting regulations for seed-to-sale tracking (meaning from the time the seed hits the soil to the moment it’s sold to the consumer). In actuality, there’s a lot of debate among industry professionals about striking a balance between regulations that are strict enough to ensure safe cannabis but not so laborious that they bankrupt growers who don’t have the capital to revamp their cultivation process.
In preparation for the regulations, the industry standard is slowly moving toward cannabis that’s grown without pesticides and tested for contaminants that could pose health risks, including bacteria such as salmonella and E. coli, mold and fungi.
Steep Hill, has found pesticides on 75 to 80 percent of samples from medical marijuana dispensaries across the United States. Thirty percent had a level of pesticides that would fail anyone’s safety threshold. This presents a significant opportunity for ‘clean and green’ organic cannabis grown in New Zealand.
Steep Hill Labs was established by traditional cannabis dealers but have recently become recognised as a leader in independent analytical services and the company has grown over 30% since the start of 2017 with the addition of 10 new positions already. They recently closed a successful investment round with another $2m to assist their growth and expansion internationally.
We have been working with three NZ labs and I’ve put one of them in touch with Steep Hill as the company franchises out their brand and technology. Steep Hill are currently looking at establishing in Australia and have been in negotiation with a number of labs across the Tasman as part of their franchisee selection process.
Hermosa Seeds
Hermosa Seeds started when founder, Vern, became a cannabis patient due to a rare eye condition. Shortly after that, Vern and his brother Mark attended the High Times Cannabis Cup in Amsterdam in 2006 as guest judges. Then things really took off when — due to his love of gardening, in general, and his love for the plant, in particular — Vern has had the pleasure of collecting and crossing seeds and allowing the plant to unlock its unlimited potential.
Hermosa Seeds has created Cali Cure, a strain of the plant that has 15-22% CBD and 7% THC. This cultivar won the 2016 High Time Cannabis Cup award for the best strain.
I had the pleasure of visiting their growing facility near Redding a couple of hours north of San Francisco.
Why seed breeding? Vern points out that clones tend to have weaker bases and need more staking but when you grow from seed the benefits of having a taproot are evident: more vigorous, healthier, higher yielding, higher-quality plants, especially growing outdoors.
Vern showed us the different seed raising and growing areas in the building that Mark built earlier in the year, working through a wet winter. We sat on the deck enjoying canna-brownies and talked about a range of issues and ideas until after midnight when we left for the three hour drive back to Pleasanton.
Eden Labs
Eden Labs was founded in 1996, in Columbus, Ohio to create extraction equipment for botanicals. Before that, Fritz Chess, Founder, was a science journalist, worked in nutraceuticals and had a landscaping business but he always had an interest in herbal medicine. After searching for a device where he could do his own extractions, Fritz decided to create his own and built a table top contraption called Coldfinger, based on the work of Franz Von Soxhlet, a 19th and early 20th century German agricultural chemist.
The Coldfinger device could operate at low temperatures and capture and re-use the solvent used in the original extraction. With its invention, Fritz had himself a new business opportunity.
The original Coldfinger devices used ethanol and water as a solvent, but as Fritz learned more about the process, he began exploring and developing a supercritical carbon dioxide extraction device. After many modifications, he began selling these devices to companies involved in biofuels, flavorings, and plastics. The smaller Coldfinger units were driving his sales volume and revenue, but the potential for the CO2 extractors was evident (some of which garnished as much as $275,000 a unit), although demand was still limited before 2008.
Eden Labs now specialises in both Coldfinger and CO2 extraction systems and has recently experienced significant growth as the cannabis industry has prioritised CO2 extraction technologies.
I met with CEO AC Braddock and partner Fritz on a Sunday morning at their offices and factory in Seattle. They talked through what we are looking for in an extraction system and compared their products with others we have been looking at. Eden Labs have a very positive reputation in the North American market and a deep understanding of the engineering issues to deliver a premium product. They also provided me with critical information on a reliable technology for removing THC from extracts.
AC and Fritz are avid surfers, have visited New Zealand and are keen to return, especially if we purchase a system they can install and provide training for. They are also happy to host our extraction technicians in Seattle to train them.
We discussed an opportunity we have to partner with another New Zealand company who are looking to build a CO2 plant somewhere in the country. Eden have installed a 6000L system at a plant in Washington state, and can organise a visit of this facility if our discussions with the New Zealand progress to the stage of seriously looking for a large scale system.
Eden Labs are specialists in extraction of a wide variety of botanicals beyond cannabis – and process a lot of Kava as well as other flowers and herbs. This experience would be very useful as we plan to start commercial extraction of native plants and other organisms over the next couple of years.
AC has an intense interest in botanicals as medicine and the humanitarian issues surrounding cannabis, drive her efforts to educate the industry and those it serves, on safe, healthful methods of producing concentrates. Eden is currently listed as one of the top 10 fastest growing women led companies in Seattle. AC has a developed a reputation as a thought leader in modern business practice, a unifier across industries, and an inspirational speaker in this emerging industry. AC is a board member of the National Cannabis Industries Association, The Cannabis Alliance and Pacific Century Holdings.
Eden create and build custom solutions for clients and their new manufacturing process produces off-the-shelf adjustable volume Hi-Flo CO2 extraction equipment, Coldfinger devices, distillery equipment, and accessories – they service R&D (1L to 5L and industrial clients (100L +). They have distributors in Israel and Africa, are looking for a South American distributor and are currently negotiating adding distributors in Oregon, California, and Jamaica, to service demand in those growing cannabis markets. Overall, cannabis extraction accounts for 85-90 percent of Eden Labs $25m+ annual sales and it isn’t slowing down anytime soon with the rapidly growing industry demand that will continue as more state’s come online. The company currently employs 20 staff across two manufacturing sites and the company offices in south Seattle.
Another excellent ‘comment’ on this very interesting and expanding topic, Manu! Your knowledge and experience is, or soon will be, at the ‘top end’ in NZ’s quest to produce the products we desire – with three particular benefits: health benefits for many; increased employment especially in areas of need eg in the rural and provincial areas; and income generated for all interested parties. Well done and keep up the high work rate you appear to thrive on!! Cheers, Laurie