Shift by Alberta Innovates

The three Rs of the hemp (r)evolution

May 26, 2021 Shift Season 2 Episode 9
Shift by Alberta Innovates
The three Rs of the hemp (r)evolution
Show Notes Transcript

In this episode we talk with Fred Pels from Gaia Grow Corp, Usukuma Ekuere from Canna Stream Solutions, and Andre Sinclair from TruExtracts about their partnership around an innovation destined to shake up the hemp and cannabis industry.

Bios

Fred Pels, co-founder, president & director of Gaia
Fred previously oversaw the establishment and expansion of the Green Room as a leader in medical cannabis supply, industry best practices and education about the cannabis industry itself.

Usukuma Ekuere, co-founder of Canna Stream Solutions
Dr. Ekuere has a PhD in Plant Genetics and an MBA focused on Tech Commercialization.

Andre Sinclair, facilities operations manager at TruExtracts
Andre manages the s
et up, licensing and operations of their Calgary and Regina extraction and processing facilities for Hemp/CBD and Cannabis/THC products and derivatives.

Company backgrounders

Gaia Grow Corp
Gaia’s main business focus is farming Industrial Hemp for Medical Purposes on its owned land in Lamont County, AB  and elsewhere.

Canna Stream
Canna Stream has a patent pending on the chemical extraction and fractionation of Cannabinoids and monoterpenes from cannabis flower and biomass using a solvent system that is significantly more efficient than ethanol.

TruExtracts Laboratories
Created for high capacity extraction to meet global demand, TruExtracts is one of Western Canada’s largest cannabis and hemp processors. 

Introduction:

Zero waste is an ambitious goal for any business. But when you're in the hemp and marijuana industry, where reports have suggested that for every one kilogram of finished sellable product, there are eight kilograms of waste. Well, it's a significant statement. Our next guests are from three different companies coming together to revolutionize the hemp and marijuana industry. So sit back and welcome to Shift.

Jon Hagan:

Today on the show we've got three individuals are going to be chatting with us about their companies and about some big news that's happening in their respective industries. We have Fred Pels from Gaia. We have Andre Sinclair from True Extracts, and we have Usukuma Ekuere from Canna Stream. Gentlemen, welcome.

Katie Dean:

Welcome.

Jon Hagan:

Why don't we start off with Usukuma? Would you like to tell us a little bit about what Canna Stream is?

Usukuma Ekuere:

Absolutely. Thanks for having us. Canna Stream is a company that we formed, basically, there's four founders, Krista Leicht, John Vidmar, Behzad (Benji) Ahvazi, and myself. Basically, we had this idea that "Hey, there's so much cannabis waste out there." And so essentially what we think of ourselves as we exist to make the cannabis industry more sustainable, because we'd like to up cycle its waste to produce novel products. And that's how we started. And alongside that is we thought, "Hey, we're going to deal with waste. We need to find some leverage in order to be able to get the most out of this." And so we delved in to try and to explore getting a nice extraction protocol that could be really competitive in the market. And we believe we have this now.

Jon Hagan:

Okay. So dealing primarily with cannabis waste byproducts. Now, Andre, how about you with True Extracts?

Andre Sinclair:

We started out quite a while ago, about a year and a half, as a bunch of people. When some of our partners had a grow out in BC, big 25,000 square foot grow, and it kind of foresaw the industry moving towards extraction and 2.0 products. So we started looking for a space and we found probably the perfect building in Calgary here, was an ex-Schlumberger oil field laboratory, about 15,000 square feet. It just had a recent renovation, beautiful equipment. They spared no expenses. So we took over that space and it's been a long haul. We spent about a year outfitting it with all the security requirements for health Canada. And now we have a C1 rated extraction room, which is explosion, fireproof, flameproof room and four processing rooms. So our model is kind of doing extraction and then also having the production space to do various products in here. And so the synergies with Canna Stream of course are huge, as well as Fred Pels and Blackhawk.

Jon Hagan:

Excellent. Now, no spoilers. So we'll get to that in a bit. Now, Fred, why don't you tell us a little bit about Gaia?

Fred Pels:

Sure. So Gaia is a publicly traded a hemp cultivation and upgrading company. We initially started as a cannabis grow application to health Canada. And as the industry matured, I saw the over supply of cannabis production coming in Canada, and we decided to pursue our hemp license exclusively. We planted just shy of 1500 acres of hemp, had a successful cultivation, but quickly realized that the approved genetics through health Canada at the time were lacking in CBD quality. Our goal was always to try and attract CBD. We then partnered with a company called Integon who have a unique milling technology that is able to upgrade biomass through its technology to up to 300% increase in CBD. We thought that was pretty neat. So we partnered with them, and really finding the solution to the inefficiencies in the hemp and cannabis space has always been our motto. And that's what led us to this partnership with Canna Stream and True Extracts.

Katie Dean:

This is so interesting. And before we dive in, I just want to make a couple points of clarification. So Fred, you mentioned an oversupply of hemp and some inefficiencies. What do you mean by that?

Fred Pels:

I mean, we started looking at the cannabis cultivation side of things and within number of licensed producers that were approved and in Queue, we quickly identified that it wouldn't be viable to build a $20 million facility and enter what effectively looked like a saturated market. So we didn't want to deploy that capital into a facility like that. Instead, we chose to deploy it and cultivating hemp on a large scale. And that's what we did. And then we saw the requirements of health Canada for their genetics, which generally are low yielding, CBD genetics, both due to the climate in Alberta and also the list of approved cultivars. So we planted what we thought would be the most successful crop and moved forward from there.

Jon Hagan:

Okay. And your eight acres that you grow the hemp, that's in Alberta, correct? In Lumberton.

Fred Pels:

Yeah. Well, they're in throughout Southern Alberta. We contracted some land that was optimal for hemp cultivation in Alberta.

Jon Hagan:

Okay. Now I just want to bounce a quick question off of Andre. Andre, when you were talking about True Extracts, you had mentioned approx 2.0 products. What does that mean?

Andre Sinclair:

Those are basically edible and consumable products.

Jon Hagan:

Okay, great. Thank you. So now we have a basic understanding of what the three companies do. And the big news here is that the letter of intent that you got, I signed, for Gaia to acquire Canna Stream and True Extracts. What does that mean for the cannabis and hemp industry?

Fred Pels:

A storm's coming. We're here to change the way cannabis companies look at their biomass, both going into the extraction equipment and coming out of. Usukuma might be a bit better of a person to elaborate on that. But for me, again, looking at all the wasted product inefficiencies in the industry, it's a much needed solution that I have been looking for for a very long time, and fortunate enough to run into some like-minded individuals here. And it really is going to be an industry shift.

Jon Hagan:

Can you give us a sense of what sort of wastage we're talking about prior to you guys diving in there and starting to address that? What sort of waste does the industry produce? Is there a number?

Fred Pels:

For me, in the hemp space? I will say that we cultivated around 4 million pounds of hemp in our first crop. Out of that 4 million pounds, about 200,000 of that is CBD rich material. So to give you an idea the output remainder is massive. Finding revenue generating streams and value adds to that, was paramount because it represented the vast majority of the product that we produced, and that infrastructure doesn't exist until now.

Jon Hagan:

So this is huge. This is a huge, significant move forward in the industry. So just so I'm clear your first cultivation, when you pulled all the hemp out was 4 million pounds of hemp, out of that, you had 200,000 pounds of usable product?

Fred Pels:

That we knew what to do with.

Jon Hagan:

That you knew what to do with, right.

Jon Hagan:

So now with Canna Stream and True Extracts coming on board, you guys are going to be able to take that balance that you didn't know what to do with and do something with it?

Fred Pels:

Correct.

Katie Dean:

So Usukuma, what's the plan with this waste, then?

Usukuma Ekuere:

The plan is essentially to use all of it, all of this waste, the way Benji and our group likes to talk about it, we want to make sure we have zero waste. So all the flower that has all the cannabinoids and all that, we'd like to extract and use accordingly, and all the biomass left out of that we also have use for. There are lots of byproducts we can make down the line that we already have plans for. And we're already in development trying to get these things straight. So, there's so much excitement around this. And we've also gotten a number of encouraging conversations with a number of LPs that are really looking at us with interest.

Katie Dean:

Can you give us an example of a few of those products that you're talking about?

Usukuma Ekuere:

Oh, certainly. So for instance, from the biomass, there's a specific thing we're talking about right now where some of that fiber can be used to make coffee cups, the lids of the coffee cups that are usually not biodegradable, but we can basically make, some of that fiber can be used towards producing things like that. There's clothing that can be made. There's a lot of the material is actually has anti-bacterial properties about it. There's really so many different things that can be made using it.

Katie Dean:

We had a researcher, his name is Yan slasky, he's with InnoTech, on not too long ago, and he was saying that there's over 500 uses of hemp and hemp byproducts. So I'm assuming the waste that you're talking about fits in there, right? Like that's the connection?

Usukuma Ekuere:

Yes, very nicely. And we know Yan very well.

Katie Dean:

Oh, you do?

Usukuma Ekuere:

Yes, very well.

Katie Dean:

We're big fans of Yan over here.

Usukuma Ekuere:

Very enthusiastic person for the industry, for sure.

Jon Hagan:

But there's the challenge there. So you can make all of these products, but now you need to find a market or a producer to take this biomass and create these coffee cups and create edibles. Where does that not happen?

Fred Pels:

Well, the extraction side of things is where True fits, and I'll let Andre go a little deeper into that. And that's where we would create the cannabinoid products. So anything that's CBD or THC infused, to the distillates and isolates as well, crude oil, these are industries that we're well integrated into and have the ability to deliver revenue from almost immediately. The secondary process would happen in Gaia's Lacombe facility. It is a just shy of 5,000 square foot processing area, where we effectively decorticate the plant to separate the straw, the CBD rich material, and then through the undergone milling process enrich, or re-dry the product to get the increase in cannabinoids. And then those are sent to True for extraction using Canna Stream's highly efficient method of extraction, which then further appreciates to our bottom line. We have higher profitability and the efficiency of the equipment is on par if not better than ethanol extraction and we're carrying much less cost.

Fred Pels:

So the fiber, the separation of that initially happens at the milling facility in, in Lacombe. And then after that, any waste from the extraction process is also then reprocessed. So the environmentally friendly approach has always been paramount for us. And the Canna Stream guys always tell me for every one kilogram of finished cannabis product, sellable product, we have eight kilograms of waste, which is just not acceptable. It's become a very significant problem for the industry as a whole, and created a ton of inefficiencies and left a lot of value on the table in this industry. And for us to be able to capture that, again, is an industry game changer.

Katie Dean:

Absolutely. And what I'm hearing is that coming together, these three companies, is really what is helping this hemp industry grow and move forward. So I want to take a minute and just talk about what does the future of the hemp industry look like for Alberta? You guys are clearly the game changers here, but do you expect more people to come on board? Is this something that you're going to be working with more people on? What are your plans? What do you project for Alberta? And maybe, Andre, you haven't spoken very much, so maybe I'll direct that to you.

Andre Sinclair:

Well, I'll touch on that and a bit on the waste aspect as well, because right now there's millions of pounds of hemp biomass, kind of sitting and rotting and fields. They've tried to grow it and it just hasn't hit a percentage high enough to be viable. So with Canna Streams and their efficiencies in their process, we can take that type of biomass as well as waste biomass that has gone through traditional extraction methods that still has some cannabinoids left in it even, it's that efficient.

Andre Sinclair:

And when we run it through the machines, also, you're talking about a reduction in heating costs, chilling costs of inputs for the extraction process. So there's less waste in that respect as well, directly an inverse kind of, of how much energy is now. The industry itself is... There are more people coming on board, but there's pretty well just narrowed down to one kind of extraction method, which is just ethanol. Un-infringed, there's CO2, and some rosin presses and things like that. But as they come on board, everyone's going to start to look for these sorts of efficiencies and how they can lower costs. And I haven't seen anything to date that compares to this.

Katie Dean:

Can you talk a little bit more about that solvent and that extraction process then? So you're saying that typically you use ethanol. And so, what are you guys using instead of that?

Usukuma Ekuere:

We can't disclose the actual solvent just yet. Partly because there's intellectual property pending on it. But, we do have this validated and it is quite a neat system. And as Andre just alluded to, this would mean we could do a lot more and at a much more efficient way and reduce costs. So, I'd say it's a game changer really in the industry.

Fred Pels:

What we can say is the reason why it's more efficient is ethanol needs to be disposed of. The ethanol solvent in itself becomes a waste product in every ethanol extraction facility that currently exists. The Canna Stream Solutions solution is reusable. And we've seen that create up to a 500%, I think you can use it five times, we've proven that it can be reused up to five times. So, that creates about a 500% savings in the solvent alone.

Katie Dean:

Well, that's great. My next question was going to be, is this solvent environmentally friendly? And you can use it five times over. So clearly that reusable ness is there.

Jon Hagan:

You guys are really taking this "Reduce, reuse, recycle," thing seriously.

Katie Dean:

Yeah, no kidding. I'm a little bit mindblown here.

Jon Hagan:

It's so cool to see and hear. So now, as the unification of these three companies moves forward into the future, what does it mean for Alberta in terms of job growth and diversification of the economy?

Andre Sinclair:

Well, I think this building kind of is perfect. I always tell people "From oil to oil," we used to be the black oil, and now it's the cannabinoid oil and it's the perfect facility for that. I think being a oil province with research facilities all over, we're kind of in a good spot here for testing and just processing in general.

Katie Dean:

Well, and I know, we often talk about Alberta being the oil and gas province, but we started out as farmers. And I know that we export, I think it's $11 billion annually in agriculture products. So do you know how much of a chunk hemp will take, or hemp products, cannabinoid products will take off of that?

Andre Sinclair:

Well, I can speak to what the extracted revenue potential is on the biomass that we have right now, not counting all the uses. Around, we did the calculations on half of it, which we have ready, it's about 124,000 pounds, ranges between seven and $11 million from this facility alone. And that's not including the byproducts, that's the repurpose material we'll then go to. So, in comparison to the 11 billion, it's a small chunk, but we're also just one small ground up facility as the infrastructure continues to get built and the demand for hemp-based products increases, and the equipment and manufacturers start coming to a place like Alberta, you're going to see that grow significantly.

Katie Dean:

Yeah. And I had asked the same question to Jan Slaski and Aaron Barr from the Canadian Rockies hemp corporation, the same question. And they said, like, "Hemp is still such a new product. It's still kind of new to the industry. So we don't know all the potential it has in terms of dollar amounts. We just know that there's so much potential in terms of product."

Usukuma Ekuere:

Sorry, what I wanted to say is what we do know though, is there's a huge interest in more environmentally friendly products that are being created. And part of this collaboration or this group of companies is basically that to produce products that are more environmentally friendly and products that would last much longer probably, but are more good for the environment. In addition to that, yes, it's a young industry, but because Canada is essentially a world leader in cannabis, we think very strongly that this could be precedent setting almost in establishing this sector and it's just growing. So it's only going to get bigger.

Jon Hagan:

Where do you guys see yourself in five years?

Fred Pels:

Well, definitely North America wide. This solution works so well, and I'm basing it solely off of the cannabis and cannabinoid extraction side. My confidence stems from that because the market in the states is very competitive, even on that. Now it's pre-federal legalization with only state regulation. There's a lot of capacity down there. And if you can come in with a competitive advantage, you can own some of these large marketplaces very, very quickly. And we're talking about billions of dollars potentially just on the extraction side alone.

Fred Pels:

And the ancillary products that stem from it, again, my comprehension of it compared to the team in Canna Streams is still very small, Benji would be the guy to talk to, he's very certain on the ability to generate revenue, on low volume, high dollar byproducts of the repurposed material that it's so eyeopening. And creating a business that helps an industry get lifted, a young industry like the hemp industry, if we can make it commercially viable, that is the key to growing it exponentially. And the technology is the start, the infrastructure to take advantage of the technology immediately comes after. So once we launch, I hope the world, but right now I know for sure you'll see us across North America within five years.

Katie Dean:

So you just said "When you launch, so do you know when that date is?

Fred Pels:

As soon as these guys sign the paperwork.

Katie Dean:

As Fred like slides over a pen. So we had a pre meeting a little while ago, and Fred, you mentioned that you are actually a lifelong entrepreneur. So how did you get interested in hemp and in this industry?

Fred Pels:

Well, it's a tough question to answer, because when I first started in the cannabis industry, I saw a need for a product that people wanted access to, but couldn't find it. And I put my helmet on and went to war with naysayers. And initially, it was trying to get access to people who weren't healthy and wanted cannabis to treat their ailments. I think I was pretty successful. I was one of the key stakeholders in the whole legalization process. And through that, visiting the vast legacy market infrastructure in cannabis, you get to see where the real money is and where potential can lie. And the hemp infrastructure and lack thereof was the key reason that many people ignore the market as a whole. And I really fell in love with the plant, its ability to be grown North America wide, currently, legally.

Fred Pels:

And so, it was kind of in tandem with the desire to legalize cannabis and expose a new industry that had been unjustly suppressed for quite some time and still is in many parts of the world. It was a chance to spawn a new industry. Like it only happens once a generation, and I was really attached to that dream, and I still am. Hence my crazy hours and travel schedule, but it's worth it because I see where it is. You know, you asked me five years, I can darn well guarantee it in five years, this Canna Stream technology will be the industry standard in North America. Now whether a new infrastructure gets built in other places, it's just a matter of how fast we can grow. And that's always been the vision.

Katie Dean:

I love that. And I actually want to ask the same question to both Andre and Usukuma. How did you guys get started in this hemp industry? And Andre, maybe I'll pitch it to you first.

Andre Sinclair:

I've also been a lifelong entrepreneur. And I came down to Calgary back in the internet boom. Chased that, and had a few different companies, and ended up with a home building company. A friend of mine reached out through LinkedIn, out of the blue, after book 10 years, just about a year and a half ago, and just asked if I'd be interested in coming and meeting some people that were thinking about setting up a facility in Calgary, doing extraction. And over the last year and a half, I've just been so excited by the industry and the potential of the industry and the people in it that I've pretty well gone full-time into this.

Katie Dean:

From home builder to Hemp, I love that. And Usukuma, what about you? How did you get started in this?

Usukuma Ekuere:

So my background is in plant genetics. I have a PhD in plant genetics and worked in research for many years. So I've been very familiar with plants. And then I got a business degree where I basically transitioned into the business side of science and had a company that was looking at international markets, did that for a number of years. And then when I heard the cannabis act was coming and basically things would become legal. I thought, "Hey, I have all these experience in plant genetics and science. I could use this in this area." And then as I started exploring the possibility of maybe pitching it in my little expertise in this, John, an old colleague of mine, who's also a co-founder of Canna Stream, said he was involved with a cannabis company, and this is how I got in.

Usukuma Ekuere:

And then once I was in, it became clear to me that this was a really interesting market with a lot of potential, because it was young with lots of possibility. And we worked at the company we're at, and that didn't pan out. And then this iteration of it, the Canna Stream Solutions part of it is, I guess, our 2.0, where we thought, "How can we be involved in a way that it was different from the traditional grow op but adding real value based on knowledge and experience?" And this is what we thought to touch.

Jon Hagan:

It's really cool to learn origins stories like this. And there's so much potential with what you guys are doing. I was absolutely floored by what you said earlier there, Fred, about the 4 million pounds and all of that waste. I'm so proud to hear that it's Alberta companies that are working on this, and we're eager to see where you guys go in the future. And please, before the ink is dry on those signatures, reach out to us because we want to get out and we want to shoot some footage. We want to see the facility that Andre has over at True Extracts. I understand that's, as he's described, it's quite big and quite cool. And I think just so many opportunities. We're eager to follow.

Katie Dean:

One more thing. I wanted to ask about the value of being in Alberta. And if you guys plan on always staying Albertan, or if that is something that's on your mind at this early stage?

Fred Pels:

Well, for me, Alberta's home, always has been. Born and raised in Edmonton and I've been in every small town and city and, network-wise, it's very difficult for us to find such a great place to do business. I was thankful to find Andre and Usukuma and both the teams through connections in Alberta. And we also have a little bit of cost competitiveness operating here versus south of the border. And for me, I don't see any reason to move.

Usukuma Ekuere:

I would completely second that. For me as well, it's home. I mean, I've been in Canada 21 years and all of those years it's been an Edmonton. So yes, Alberta is home and it's been great here.

Andre Sinclair:

Yeah. And I was born and raised in Edmonton. And as I mentioned, moved down here during internet boom, and Calgary has always seemed to attract a certain type of entrepreneur. There's a really good crowd here and I myself have no intention of moving.

Katie Dean:

So do you think that Alberta is ready for this type of agriculture shift?

Fred Pels:

I think Alberta, I know this is a podcast for Alberta Innovates, but Alberta is an innovative place. We've been solving problems here out of the fact that our climate is a little different than most people in the world. And our population has been a lot smaller. We've had to do more with less, more than any other place that I can think of that has a large populous group. So, naturally, I think Albertans are thought leaders and problem solvers. So, that's the best way that I can answer that question. Is Alberta ready? I think they're always ready.

Jon Hagan:

Well, guys, this was a real pleasure. And again, as I said earlier, really nice chatting with you all. Great to learn about this new innovation and we're eager to watch you guys grow and develop and conquer the world.

Katie Dean:

Yeah.

Fred Pels:

That's right.

Jon Hagan:

Shift is brought to you by Alberta Innovates. We can be found online at shift.albertainnovates.ca or via email at [email protected] On behalf of everyone here, I'm Jon, have a great day. Until next time.