CBD Conversation Joel Sherlock
Introduction:
Joining Anuj Desai (the host) is Joel Sherlock, Chairman and Co-Founder of Vitalis Extraction Technologies. This discussion focuses on extraction with a particular focus on supercritical CO2 extraction (which is what BeYou ues). It's not very often you get to speak to a master of the extraction process and you'll find this conversation is a great insight into how you get your CBD from the farm to the pure CBD oil you know and love!
Summary:
- Joel and his team are the largest manufacturer of extraction machines in the world. They even hold 6 patents!
- They started out when they realised there was no standardised extraction machine across the industry.
- CO2, or other solvents, are added to isolate CBD and THC as well other cannabinoids. Each type of solvent used for CBD extraction has different pros and cons.
- GMP (Good Manufacturing Practice) standards require all manufactured materials to be precise, fully tracked and traced meaning full accountability,
- Hydrocarbon based extraction, while quick, is so 'good' that you end up with oil bonded to the oil. This requires further purification but there is always a risk of risidual solvents.
Why we love it:
With all the questions and research surrounding CBD it’s no wonder it can be a bit of a minefield to learn about! We take our role of creating pure CBD of the highest quality seriously which is why our focus at BeYou is on science, innovation, and products. As a leading CBD brand in the UK we're beholden to the regulation set out by the MHRA preventing us from making claims about CBD. While this often makes it harder for us to answer some of the questions we get, there are some experts in the field that you can go and listen to. The question is, where do you start, and who do you trust?
People have often asked us to do a podcast to help spread our knowledge and those CBD experts we are in contact with. However, we also have an obligation to use our time pushing boundaries and taboos. So we prefer to leave podcasts to seasoned industry experts who have these conversations in an attempt to empower all of us!
The Cannabis Conversation is a podcast which gets deep into CBD as an industry. We provide it as an external resource to give you a starting point for your own research and to help you get started on your CBD journey. We know a lot of you prefer to read about CBD so, hit play and read along, or just listen, or just read(!) and see what all the hype is about.
It is hosted and led by Anuj Desai, a commercial advisor, lawyer and founder of Canverse – a leading consultancy in the cannabis industry.
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The Transcript:
The Cannabis Conversation, a European perspective on the emerging legal cannabis industry.
Welcome to The Cannabis Conversation with Anuj Desai, where we explore the new legal cannabis industry by speaking to the professionals that are helping to shape it. Quick message from me to say that this episode will be the last of the year, having Christmas day off, and so should you. Be back on New Year's Day. I also wanted to say thanks for all your support. It's been an incredible year. I've met some amazing people, learned huge amounts, got so many more ideas for podcasts.
I honestly thought I'd struggle a bit in terms of topics, but the more you dig in, the more you discover that there's more avenues to explore. So I hope you've enjoyed it. We recently topped a thousand downloads a week, which feels like a very fitting end to the year. So I'm very pleased about that. I've got several plans to develop the podcast in 2020. So watch this space.
In the meantime, just like to wish you a brilliant, festive period full of booze, food, and chocolate. I'll see you in 2020. On with the show. I'd just also like to say a big thank you to my fantastic social media manager, Rebecca Fitzgerald, and also to Eric Banagee, who is also looking after my social media earlier in the year. Both of you are brilliant, and I couldn't have done this without you. So big thanks to you, and I hope you have a Merry Christmas.
On today's show, I've got Joel Sherlock. Joel is the co-founder and chief revenue officer for Vitalis Extraction Technology. Vitalis are an engineering and manufacturing company, producing industrial super critical CO2 extraction systems for the cannabis industry. I knew I wouldn't be able to get that in one easy sentence. In case you're wondering what that is, Joel will explain exactly what Vitalis do. Extraction is really important for this industry and is a key component of most, if not a lot, of consumer and medicinal products. So it's great to get Joel on here to explain the science and what it's all about. Welcome, Joel.
Hey, thank you for having me.
Pleasure, pleasure. We've covered lots of different bits of the cannabis industry that's evolving, and a significant area that we haven't covered is extraction, which is really, really important in the whole global industry. So I thought it'd be great to get you on to give us a bit of a 101.
But I guess before we do that, it's customary to, I guess, introduce yourself and give us a bit of your backstory-
Absolutely.
... and how you got into cannabis.
For sure. Yeah. Also, we'll update that company bio and make it simpler.
Yeah. That would be helpful for podcast hosts like myself.
Absolutely. A lot of technical info. Then we'll try and pair it down into the 101, as you said. Ultimately, my background, I'm a finance guy who stumbled into this market, but we were extremely early on in the Canadian system. I came out of the real estate world, and we own some buildings and I had a guy approach me and he said, "Hey, $10 a square foot. I'll give you 12."
I thought, "That's terrible negotiating. Why?" He had said, "Well, I have a license to grow cannabis and I have a business license and I've talked to the chief of police and it's a medical collective." I laughed and laughed and ushered them out of my office. But this was in 2011.
Wow.
So very early on, and that was my first exposure to it. So subsequent conversation with our mayor and he knew these gentlemen by name, and I thought, "Well, so this is actually a real program." Then conversations with the bank. It was a very exploratory time for me. We ended up becoming the landlord and then they introduced me to a friend who had another license. We built another building.
Then our first equity investment was into a plant food company, then into a lighting company, and then I was hooked from there. So from a cultivation standpoint, I have a total of zero green thumbs, but when it comes to brands, distribution, extraction, that was where we focused. So we were buyers and equipment financiers in the early days, but it became very problematic to us that this science team had this brand of machine, that science team had that brand of machine. But they couldn't share SOPs. They couldn't share best practices. If we had a spare pump, it wouldn't work on both machines.
So initially we had gone out to just standardize to one platform. Through that, we wanted some customization. Me being the finance guy, I wanted a deal. Then that was going to be the only machine we bought, moving forward. A lot of the groups, we came to learn, were not open to customization. They might not have been building their own equipment. They were buying parts, putting it together, and selling it. So customization became very problematic.
So I initially had gone to some oil and gas engineers. One of them was a friend and past client of my real estate business. He was working for a manufacturer who built oil and gas extraction equipment. So I sat down with him, had a beer, and we were chatting about, "Could you build me five of these and how complicated would it be?"
He said, "What kind of pressure?" I said, "Four or five thousand PSI," and he laughed and said, "Oh, that's cute."
Naive me, I just said, "Well, what do you mean by that?" He said, "Joel, we built stuff at half ton capacity, 35,000 PSI. If it doesn't work 24/7, like Shell, BP, Esso, we get fired."
Wow.
So I thought, "Well, wow, that's the kind of expertise we're going to need in this market." We ventured out, but at the time it certainly didn't feel lucky. But looking back on it now, they, the owner of his manufacturing business didn't want to get into the cannabis market. So took James and I some time to figure out, okay, well, let's start a manufacturing business, which is a whole much more capital than we were planning on. But we brought in a one third partner on the operating side, who's Pete Patterson. So, and still to this day, it's just the three of us.
Our technology is six patents on it. We are the largest manufacturer in the world right now. So ultimately the easiest way to look at it is, is we power most of the industrial product manufacturers who are making cannabis products.
Wow.
We make the equipment that's powering those labs.
Yeah. This is really interesting. Great ancillary play in some ways, in that you're behind that and serving all those customers. So, okay, there's tons to talk about here. If you wouldn't mind, we're going to go a bit naughty on this. If you can give us a 101 on extraction, so maybe just let's start with what exactly are you extracting from the cannabis plant and what parts of the plant, etc.
So I wish there was a simple answer there. When you look at ... There's 147, 150 cannabinoids, and more continue to get documented. Then there's 350, give or take, terpenes. So there's about 500 active compounds in the plant. Of course, so many people talk about CBD, THC and traditionally in early markets, that's where a lot of the focus is.
So from an extraction standpoint, you're taking a biomass. So you're taking grown material. Traditionally, you're going to grind it down to a coffee-like consistency.
So can I just double check, is that both the stalks? Is that the leaves and the buds and everything?
So in each of those pieces is going to have different potencies of materials you're looking for.
Right.
So traditionally seed and stem, it's not going to be economically viable usually to extract that. There are some cases where people will, if they have downtime on their equipment or excess capacity or something along those lines. The flower is going to have the highest concentration of cannabinoids, THC, CBD, everything you may be looking for, but it's also traditionally the most expensive part of the plant.
So trim and lower quality bud is traditionally put into the extraction lab. So when you look at extraction, then we're going to take that coffee-like consistency. You're going to put a solvent over top.
Sorry, I'm going to be really annoying and interject a few times.
No, no. Please.
So that's really interesting that you said that. So the premium buds don't necessarily go into the extraction process. Is that because they are sold for themselves, if you will?
Well, yeah. Now again, when you look at which market, and this is where, because we're the largest in the globe. So we have a very global viewpoint on it. We have a very unique look over the market. So in Columbia, for instance, everything has to go to extraction, right now in the regulations. So there, you'd have days where you're running just flower. You'd have days when you're running just trim, and you'd batch those quality levels into one extraction.
Go ahead.
Then going back to, so then you put a solvent over top and now the leading solvents in ... There's three main categories: CO2, ethanol, and then there'd be in the US markets and in more recreational areas, you'd have hydrocarbons like butane or propane.
Right.
We specialize in CO2. We also operate in cryo-ethanol. But for us, ethanol is a very powerful solvent. It's a binary solvent, meaning it's on or off. That can work for some products and some methodologies, whereas CO2 is a very selectable solvent. So the pressures and temperatures and all of those ranges and combinations, we can isolate or focus on different parts of the plant.
So when you get into lavender and extracting lavender oil, that's single volatile is ... You get the best extraction technology to isolate that one volatile. Where you get into cannabis, and everyone was focused on THC and CBD. Well, now CBG, CBN, all of these other cannabinoids are becoming more and more valuable. So you really need an extraction lab that has the flexibility to be able to pivot, because the only thing that's guaranteed in the cannabis market is change.
Well, 1000 percent, I could agree with you on that. Right. This is so interesting. So to recap, you take whatever the biomass is and you put it in a solvent to extract what you want out of it effectively. Is it basically coming in an oil form mostly? Or is it different types of things that you extract?
Yeah. So traditionally, your extraction step is going to get all the cannabinoids out and traditionally some other pieces. So CBD and THC would usually come out together. You're going to pick up the other cannabinoids you're looking for. If you're processing very cold, you can keep a lot of the terpenes and monoterpenes that are also very valuable. As we build out that crude oil, if you will, that would be the first step of extraction.
Then from that crude oil, then we're going to send it to the lab and that's where they're going to post-process and formulate products.
Right. Okay, cool. So that's what I thought. You do a level one extraction to get the crude out. Then from there, you have the material to take out the specific things you need?
Exactly.
Yeah? Okay, cool.
Ultimately, if we were talking to one of our oil and gas engineers right now, they would say you don't reach into the ground and pull up rubber. You reach in and you get a crude oil, and then it gets processed into jet fuel diesel. All of these things now.
In medical products, it's far more precision, far ... GMP products and EU GMP standards mean that there's far more precision in the equipment. All the materials need to be fully tracked and traced. Then when a sensor is reading 14 degrees or seven degrees, how we test it and validate it, that that's actually true and accurate because the precision in this and the consistency and replicability of the machine is super, super important for the consistency of output product.
Yes. I can imagine, particularly in medical, very high bar in that regard. Right. Okay. So we've got to the stage in our process where we've got some crude oil, as well as extracting constituent parts. Is there then a further purification step after that? What are the things that you're purifying?
There could be multiple. Again, it depends on the output you're looking for. You're going to hear a lot of talk, especially in your market, as the medical products evolve. There's things like Epidiolex, Sipadiolex. There's lots of talk around CBD isolates, which would be in in Holland & Barrett and Boots, in a ton of different stores.
So isolated products are when there's multiple processing steps to remove everything other than the CBD or CBG. That's where you're going to have a 99.9% pure CBD. Then there's going to be broad spectrum distillates, which would be less processing steps. Then you've got to isolate out the THC and remove it. So traditionally there, you're going to need more expensive or sophisticated equipment in order to keep the multitude of cannabinoids and pieces that you want, but isolate and remove the THC, which you don't want in some of those novel food products, but you certainly would want them and in a lot of the medical grade products.
Yes. Yeah, of course, of course. Are you also at this stage, or it sounds like there's quite a few stages, but are you also removing any contaminants and/or any biomass?
Well, so in that main extraction step, we're going to remove all of the fibers coming out.We're concentrating everything that's in the plant. THC, CBD, all the cannabinoids. If we're extracting very cold, all of the terpenes and monoterpenes as well. But we're definitely removing all the fiber, all the stock, so the gross weight of that crude oil is significantly less than what you put in.
Yeah, and heavy metals and things like that, if there are such in the ... ?
Yeah. In any kind of concentration, you're going to concentrate everything that's in the plant. So if low quality ... it's the old adage of "garbage in, garbage out."
Sure.
So if you're putting biomass, which has microbutanol in it, the molecular weight and composition of microbutanol is quite similar to THC. So you're absolutely going to concentrate both of those together.
Right.
There are extremely expensive machines, which can separate those two things. In some markets, that's allowed and other markets that's not allowed, but traditionally it's just better to put quality biomass in.
Right. Right, right, right. So there's no purification necessarily. There are tools out there, but they're not necessarily economical.
Yeah. They're extreme. Now we're getting into molecular chemistry at a very precise level. So also it takes a very sophisticated operator and traditionally, a lot of solvent.
Right.
Other solvents.
Yeah, yeah, yeah. Cool. So you've got to start with good quality material-
Always do.
I guess. So thank you for explaining. That it's really a very useful overview. Maybe you can just briefly explain why it is preferable to extract or not necessarily preferable, but why there's such interest in extracting this versus using the whole plant.
Well, I guess it depends on the market again. In recreational markets in California, there's a whole bunch of different consumption methods that consumers seem to prefer. Vape products, clean vape products in a legal, without any type of additive can be a very safe and clean and simple. You can just carry that in your pocket. You can use it as you wish.
When we get into medical markets, it's even more complex because physicians are far more comfortable with, "Take two, call me in the morning. This gel cap, this tincture, this patch." Whatever those dosage formulation pieces are that they're more comfortable with, than "Hey, buy some flour, roll it into a joint and smoke it. Get enough." But it's not traditionally how they're used to putting out medicine, and it's not traditionally how patients would want to consume it. Anyone with some respiratory illness may not want to smoke anything. They might want to take a soft gel or use a tincture or a topical. So all of those products require an extraction step.
Right. So it's a really useful tool to manipulate the active compounds into a preferable delivery method, depending on the use case.
Now, once you concentrated it as well, and we've tested potencies, we can more easily control the dose to make sure that there's a consistent dose each time.
Right. Yeah. That, too. that makes a lot of sense as well. I guess it's a level of control, isn't it? Plants are inherently ... They're subject to so many variables that the consistency is difficult.
Absolutely.
So, yeah, this makes a lot of sense. Cool. So you, at the beginning, highlighted that there's three main methods of extraction, and let's see if I can remember them. Hydrocarbon, butane, that sort of thing, ethanol and CO2. You guys mainly do supercritical CO2 and a bit of cryo-ethanol.
Yeah. So, our patents and our focus, we are the global leader in CO2. We also make cryo-ethanol machines. There are a number of ... That's a, I don't want to say a simpler technology. It's a more prevalent technology because it's just you're taking a solvent and you're putting it over a plant material. That can be very, very beneficial, and it certainly has a use, but again, it goes back to what product are you making.
Cannabis is a very new market, but it's agriculture. It's consumer products. It's contract manufacturing. So if we look at other industries, if we look at the perfume industry, for instance. When high-end roses are grown harvested, and they're sent to a large CO2 extractor in grass, Switzerland, and that product goes into a Chanel number five, or something along those lines.
Whereas mass production, they might buy a lower quality rose and they extract it with ethanol and then it goes into perfumes and more of a mass scale. Both of those can be very, very good businesses. It's just a matter of what input are you putting in and what output are you looking to take out? That's really going to determine the best extraction methodology.
Right. Okay, cool. That's really useful, suiting your market with the best and cost efficient method. If it isn't a huge and long, long answer, are you able to briefly say what some of the pros of each of the different methods are?
Well, yeah, no, absolutely. For sure. So CO2 definitely selectability. So we could in our C02 equipment, which has very wide operating parameters, we could be running trim. Low quality trim, hot high pressure, and you get through it quickly. Then you could take the next run. You could be doing flower and you could run that cold and get a broad spectrum. So, and everything in between.
Right.
Traditionally CO2 is going to be very high CapEx. The equipment is very specialized. It operates at a high pressure. If you're buying CO2 equipment, make sure that it's fully certified to pressure code. You're buying it from a manufacturer who has a material traceability for EOGMP, all of those pieces are extremely important.
Now, once you own that machine, then your consumable is carbon dioxide, which is very, very inexpensive. So CO2 is traditionally high CapEx, but very low OPEX-
Right.
... and ultimately gives you huge flexibility and customization, no matter where the market goes. You're future proofing your business with a CO2 extractor, in my opinion. But I may be a little biased.
It's a good longterm investment.
Absolutely. But when you look at ethanol, for instance, it's a readily available solvent. You can put some biomass into your extractor, and it's going to be a much faster extraction with hot ethanol. You're going to pick up everything. Fats, waxes, chlorophyll, CBD, THC, and then you have to remove that solvent out of the process. Then you have to separate or winterize or filter.
With cryo-ethanol, which is very, very cold ethanol, we're going to pick up far less fats, waxes, and you get a broader spectrum. So that can be a very good extraction methodology as well. We see a lot of large commercial processors, almost putting both in side by side, so that trim to topicals, we're going to run that down this line. Vaporizer cartridges or high end medical tinctures, we're going to run that higher quality biomass through the CO2 machine. So there are pros and cons.
The con on ethanol is, as one of my director of sales says, CO2 is expensive now, and ethanol is expensive forever. Because you're going to be consuming that solvent forever, plus you're going to have a biomass that's now. So once your extraction waste is still going to have some solvent in it. So it's not like you can throw that into a compost pile or something. Yeah. So in some markets, there's lots of taxation on ethanol. In other markets, there's destruction protocols or hazardous waste pickup, or you have to look at all of the variables depending on where you're located.
Then hydrocarbon. So hydrocarbons are by nature, a very, very powerful solvent. So a quick blast of butane over product will actually extract very cold and very quickly. So that's why it gained a lot of traction and in California, and in a lot of United States markets. The only challenge we found with that is the solvent is so good that now you've got hydrocarbon bonded to the oil.
Right.
So then you've got to put it in a heat and vacuum process called purging, which is going to separate those two. Now, when it's done in a controlled environment, you can remove all or close to all of the residual solvents. However, it's not always done in controlled environments, unfortunately.
Right.
So having residual solvents is a risk. The flammability of ethanol, and especially butane, is going to require that you're putting those into class one, division one rooms. So basically explosion-proof rooms with fire suppression. So dangers of working with those two solvents is much higher than CO2, which is an inert gas.
Brilliant. Thank you so much. That's a really good rundown on the pros and cons there of those three methods. Is there another method? Is there cold pressing? Either way, but is it necessarily industrial?
Yeah, so there's a lot of really interesting craft extraction methods. There's ice water hash. There's rosin presses, which just, they use a ton of pressure and some heat, and you basically squeeze out all of the value. But those, when I say craft, they can make some really amazing products, but traditionally you're not getting 90 or above percent of the available cannabinoids out of that product.
So it would be like if you grew grapes for wine and you only pressed out half the juice, that would be very expensive wine. So there is a place for them. They are very interesting extraction methods. However, I don't know if you'll see them in the commercial market in a large way, any time soon.
Yeah. I had the great fortune to me, a guy called Frenchy Cannoli, known as the godfather of hash. In the summer. He's a known as an artisan hashmaker, and the love and tenderness and care he puts into getting the resin out is amazing. But obviously he wouldn't necessarily be able to scale that to industrial levels.
You know what? I think there's going to be a very exciting place in the market for craft producers.
Oh, I totally agree, yeah.
There's thousand dollars bottles of wine. There's $9 bottles of wine and there's a market for both of those. The market for the higher end stuff is going to be much smaller, but of course the cost of goods to make those products are going to be much higher.
Yeah. Yeah. Yeah. I totally agree. Also, I think that's why there's going to be domestic cultivation all around the world. It's not just going to be on the equator. I think there's going to be some interesting little craft things going on in each country.
Absolutely.
That's a really good rundown on extraction. I've certainly learned a lot from that chat. Can you tell us a bit more about what Vitalis do? So you make these huge machines, but do you guys offer consultancy services? This sounds like a very complicated type of setup for any kind of manufacturing plant.
Yeah, it can be. When we were buying equipment, it was an extreme point of frustration for me, where as the financier behind a lot of those, you'd ask, "Well, how much is the machine?"
"Oh, it's 175,000. Oh, but then you need a pump and that's 60 and then you need this and then you need that." It was always frustrating to me that they'd give you a price, but it didn't include all of the things you needed to make it work. Oh, you want the wheels with the car? Oh, you want the doors with the car?
We took a different approach where we price our equipment with all in, all the pieces you're going to need, warranty, consumables, onsite assistance training. All of that stuff is included and we've invested very heavily in having a robust ecosystem with in-country spare parts, overnight support, 24 hour customer service, all of those pieces because downtime in this industry is very costly to the producer. But in medical markets, downtime could potentially affect a patient. That's really where I don't think that's acceptable.
No, no. That's great that you take it to that level. What are you guys doing ... This in inherently feels very R & D friendly, or not friendly, but it's key part of what you do. What are you looking at in terms of innovation? Is it increasing yield, lower cost, sustainable solutions?
You know what? We've made a commitment to not get into the processing industry. So we have R & D processing facilities and relationships. But we'd never make a competing facility to sit next to one of our customers because our ability to have a wide open relationship conversation, and we can power multiple competitors in our market. In fact, we do, and we can help them all with innovating technology that removes their bottlenecks.
So our relationships and our customers are our greatest sources of inspiration and innovation for our R & D teams. Then as those bottlenecks emerge, we're really here to solve those with industrial technology.
Great. That's really good. Amazing. You must just get the most incredible view of the world market.
It's been very interesting. As someone making an Epidiolex or Sepidiolex product, going down the clinical trials routes with less than a 6% variance and all of those things for drug identification number, the bottlenecks and challenges they have are extremely different than someone in California, who's making half a million vape cartridges a month. But they also absolutely, I always encourage people getting into this market. There is no one who is processing or growing cannabis that you can't learn something from, no matter how different their business may be from yours.
In the extraction world, grinding is always going to be a messy process. So if it can be in its own room with its own air handling system, then that's just better for cleanliness, better for consistency and less contamination, and all of those things. But even the simplest pieces, there's patterns that you're going to see.
Yeah. Yeah. I think it's great advice. I think it's always learning really. There is so much to learn. No one knows everything in any space, but particularly cannabis. Yeah, there's tons to learn from all different parts of the ecosystem. Cool. Well, thank you, Joel. I won't let you escape before I ask my customary last question, which is, what did your parents say when you told them you were starting a cannabis business?
I've always been highly entrepreneurial. Vitalis was my ninth startup when we put this together.
Oh, wow.
So they certainly, I would say skepticism and definitely lots of questions. But they were very interested in the possibility in what we sell. Starting out, I eased them into it as well. We were a landlord to a legal facility. Then we got into plant food business, and then we started a cannabis private equity fund. Then I went in head first. So I would say they were very welcoming and open to it. Then when I started shutting down my other businesses and focusing a hundred percent on this, I think the skepticism ... I almost went through two waves of, "Are you sure about this?"
Yeah. It's just a phase. He'll get over it.
Exactly. I've never worked so hard in my life, but I've never had so much fun. It's been amazing to be at the forefront of the industry and really meet so many of these incredible people.
Yeah. That's great. Great. At the Vanguard and doing some great stuff and really helping out a lot of businesses in the space. So well done to you.
Thank you very much. Yeah, I appreciate it.
Cool. Well, thank you, Joel. That's been really, it's been super helpful. I often do these shows based on what I want to find out more about. So at least you've got one person that has learned a lot today, but I'm sure my audience will love it, too.
I love it. Reach out any time if you've got any questions. I'm happy to chat. We can talk extraction all day, every day.
Brilliant stuff. Thank you, Joel.
Take care.
Cheers.