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ESG
Incremental or Radical Innovation?
A Strategic Choice With Serious Impact
By Geoff Trotter
Cannabis and the nascent industry is our once-in-a-lifetime opportunity to drive solutions to some of humanity’s greatest challenges. It’s a chance to become a major driver of business, societal, and environmental change — transformational change.
Be it an ever-increasing need for energy, insecurities around food and resources, the burgeoning degradation of our ecosystem, or facing-up to the realities of climate disruption, we need innovative solutions. It is becoming increasingly clear that we will require a new suite of products, services, strategies, and tactics to address the underlying business models that frame them. If this is the winter of our discontent, then more than ever, we will need to innovate.
Throughout my career, innovation has been at the core of my work. In my early career I was involved in product innovation. Later, I was involved in market innovation as I moved from established markets in Europe and the U.S. to developing markets and economies in Asia and Latin America.
In recent years, my focus on innovation has centered less on commerce and more on impact and meaning. Most significantly, delivering not only an economic upside for clients but a social and environmental impact for stakeholders, a.k.a ImpactAlpha.
I have used and referenced many models and frameworks that outline an approach to organizational innovation. The Organization for Economic Co-operation and Development (OECD) outlined four types of innovation: product, process, marketing, and organizational, which I used extensively in those formative years.
More recently, I have relied on Greg Satell’s version of his four types of innovation: basic research, sustaining, disruptive, and breakthrough. I believe these frameworks may be relevant to your own innovation needs. I have also found them useful should your innovation needs require delivering success beyond an economic impact, to deliver social and environmental impact as well.
No matter the innovation framework used, it has become clear to me that innovation falls into one of two types: incremental or radical — and the choice is a very strategic one.
At Regennabis, we often say that our community is “incrementally driving transformational change.” There’s no such thing as an overnight success. Whether in music (The Beatles), sport (Serena Williams), or in business (you/your company), we all know there have been many hours fine tuning a set of skills, capabilities, and products or services in order that they are finally realized. The same can be said of impact. While impact may appear sudden, it is near-always the result of a persistent focus on knowing what impact goals have been set organizationally along with the unbending application to deliver them, incrementally. Understanding this truth serves the “Impact Innovator” well.
In business, and especially so in the cannabis industry, the ability and agility to innovate is critical. Yet to deliver innovation beyond only an economic impact (commercialization) and to deliver a social as well as an environmental impact is paramount.
Key Takeaways
Models for innovation have been around for a long time and have stood the test of time.
Innovation should no longer be singularly focused on commercialization but on creating a more inclusive society and doing less harm to the planet.
Radical innovation may well play out, but through an incremental approach your organization has a better chance of hitting the front — and staying there. ❖
Photo: iStockphoto.com
INNOVATOR OF THE YEAR
A National Standard
By Jessica McKeil
According to current predictions from market research firm BDSA, the U.S. hemp and CBD market could hit $20.5 billion by 2025. But, the highly variable landscape from state to state threatens this potential growth. This regulatory fragmentation must be resolved before the market reaches the forecasted 40% compound annual growth rate.
Now, however, the dispersed regulatory puzzle pieces of the U.S. consumer hemp market may be coming together, thanks to the team of scientists at SC Laboratories, Inc. (SC Labs). Inspired by a request from an international retailer, SC Labs has pioneered the first-ever national hemp testing panel.
With more than a decade of expertise in Oregon, California, and Colorado (pending), SC Labs is an industry leader in education, testing methodology, and consumer safety. In a recent interview, Alec Dixon, co-founder and director of client relations, and Josh Wurzer, president and co-founder, discussed how these foundational principles formed the basis of the hemp and CBD testing panel — solving the fragmented nature of the American CBD market for the first time.
Very few states are exactly the same. There is no broad consensus.
As many hemp and CBD manufacturers have discovered, the regulations governing CBD in one state don’t easily translate to another. Dixon explained how “each state has its own really unique take on how to regulate cannabis and hemp.”
From Dixon’s experience, with the increasing acceptance of these products, “we’ve seen this growing interest, especially on the hemp side of various sized clients, who are really interested in selling products that can meet and exceed stateestablished guidelines in all 50 states.”
Wurzer confirmed that “it’s generally not the state’s responsibility to regulate on such a granular level the specifications for every type of nutraceutical sold within the state.” However, in other consumer sectors, like cosmetics or nutraceuticals, direction comes via a national regulatory body. With federal CBD regulations slow to roll out, states have largely been left to their own devices for hemp consumer goods.
To complicate matters further, it’s not as simple as adopting a regulatory framework from another sector — say cosmetics or the food industry — and applying it to hemp. Hemp is already formulated within a wide range of consumer products, from nutraceuticals to beauty products to foodstuffs. The regulations governing the safety of one doesn’t always work across the board.
No Shortcuts: A Methodical Approach to a Nationally Applicable Testing Panel
SC Labs began working on a comprehensive list for the first truly national hemp panel in the spring of 2021, after a request from a large multinational supermarket. Aiming to bring a line of CBD products online across all 50 states, the retailer needed guidance on current testing standards. How could they bring a hempderived product to market and ensure it would meet all available consumer safety standards?
On the surface, this seemed like a simple task: identify which states even had requirements for hemp-based products. But, as SC Labs quickly found out, it was a massive undertaking, requiring a dedicated, full-time researcher since
its inception. The initial phase of the research process uncovered the fact that nearly 50% of states had relevant guidelines.
The second step proved significantly more complex. SC Labs then began the process of systematically reviewing each state’s requirements for the specifics. For example, what were the detailed regulations, what tests were required, and what were the requirements for those tests?
Finally, layered on top of each state’s hemp and CBD testing protocols are the state-level laboratory licensing and accreditations, which also vary from state to state. A lab working in Maine may not meet the accreditation and licensing standards of one in Colorado — meaning the test results also wouldn’t translate well.
Every state may have started from the same place, but as SC Labs discovered, each tended to add a bit of local emphasis, a different layer of administration. Researching, compiling, and analyzing a puzzle of regulations was no small feat.
Dixon spoke to several notable curve balls. He detailed that California “took a really progressive approach in how they were goingto be regulating microbiology in cannabis testing.” On the flip side, Colorado was the strictest for pesticides in hemp, while Connecticut focused on mycotoxins. In Wurzer’s words, “Very few states are exactly the same. There is no broad consensus.”
The Comprehensive Quality Assurance Test Package for Hemp
SC Labs worked with this vast accumulation of data to distill it into a set of requirements that would work across the country. The end result? The Comprehensive Quality Assurance Test Package. The panel covers five distinct categories, plus a final foreign material inspection.
Cannabinoids:
The detailed panel tests for 15 cannabinoids, including the main active ingredients: CBD and THC. Minor cannabinoids and manufactured cannabinoids, like Delta-8, are also covered.
Chemical Contaminants:
The panel tests for 104 chemicals, including pesticides, miticides, fungicides, herbicides, insecticides, plant growth regulators, and other chemical residues.
Microbiological:
The microbiological requirements include testing for mold, yeast, and other living pathogens, including specific species of microorganisms linked to adverse health outcomes. Mycotoxins are also included here.
Water Activity:
An in-depth water activity component measures water content in relation to the risk of mold. Specific formulations can lead to greater risk, depending on ingredients.
Heavy Metals:
The heavy metals panels cover the big four: lead, arsenic, mercury, and cadmium.
Testing requirements for microbiological contamination include testing for mold, yeast, and other living pathogens, including microorganisms linked to adverse health outcomes.
ISO accreditation and meets quality testing standards from organizations like United States Pharmacopeia (U.S.P), American Herbal Products Association (AHPA), and American Herbal Pharmacopoeia (AHP). In addition, it has also passed necessary state-level certifications (required in Colorado).
Will SC Labs comprehensive testing panel finally nationalize the American CBD market? With consumer safety and product quality top of mind, this is genuinely the first-ever nationally applicable hemp testing panel, designed to work across all markets.
As products start hitting shelves across the country — proven via the robust panel developed by SC Labs — the next evolution of the U.S. hemp and CBD market may well be upon us. ❖
Finally, A National Solution for CBD and Hemp
This single panel meets the hemp and CBD testing requirements for all 50 states. In addition, it has received
Highest Honors Insights From 2021’s Sustainable Leadership Award Recipients
By Patricia Miller
Cannabis has the potential to save the world. It takes pollutants out of the soil as it grows. When harvested, it can serve as fuel, food, or fiber. From hemp textiles to biofuels to building materials to medicine, its versatility is virtually unmatched in the natural world.
Yet, despite its wonderful properties, the legal industry is gaining a reputation for being unsustainable. It is Cannabis & Tech Today’s mission, in partnership with Regennabis, to prove the cannabis industry can be sustainable, eco-friendly, and a valuable tool in the global fight against climate change.
To showcase the brands embracing these ideals, Cannabis & Tech Today launched the Sustainable Leadership Awards. Now in its second year, these awards serve to highlight the great work happening in the industry.
Even one small step in the right direction can inspire a cascade of followers. The companies that won this year’s awards are acting as leaders, demonstrating that responsible growth is attainable.
The Sustainable Leadership Awards include nine categories. This year, there were three categories for which Cannabis & Tech Today and Regennabis did not award a winner: SDGs, Social Impact, and Event. While the applicants in these categories are doing good work in their respective fields, the advisory board was not presented with enough data to support their applications. Both Cannabis & Tech Today and Regennabis look forward to receiving more inspiring applications from industry innovators next year. To hear more from this year’s winners, visit www. cannatechtoday.com/SLA2021.
Photos: iStockphoto.com
Energy Conservation
The 2021 Sustainable Leadership Award for Energy Use is awarded to Glass House Brands. The company began using DYNAGLAS panels in its 350,000 square-foot Padaro greenhouse, reducing energy consumption by 20%.
The company commissioned a study of its operations from cannabis energy consultancy group Seinergy comparing energy use at Glass House with average greenhouse and indoor cannabis cultivation operations. It found the average indoor grow uses 262 kilowatt-hour per square foot of flower (kWh/SF). The average greenhouse grow used 134 kWh/SF. Glass House’s average was 13 kWh/SF. BDS Analytics reported Glass House Group’s consumer brand, Glass House Farms, was the top-selling flower brand in California in July of 2021. For a large brand to demonstrate such a high-level of energy efficiency sets a powerful example for the rest of the industry.
Cannabis & Tech Today: How does the company plan to further reduce its energy consumption?
President and Co-Founder Graham Farrar: What we’re most excited about is the technology and efficiency that we expect to take a giant step forward at our new 5.5 million-square-foot facility. The amount of sunlight there is even better; the greenhouses are even more efficiently designed for using every ray of sunlight; the water capture systems are even more efficient; there’s a huge solar field; there’s gas power cogeneration on site; and there’s a robot window washer to keep the glass clean to maximize our light transmission.
Sustainable Packaging
Diamond Packaging is being recognized for its commitment to sustainable leadership in the field of packaging. The company’s Greenbox Sustainability Initiative was created to research, design, and implement more sustainable packaging solutions for the cannabis industry.
In 2020, 97% of all the company’s packaging was created using renewable or recycled paperboards. It uses wind energy for 100% of its electrical energy requirements. As of 2014, the company achieved “Zero Waste to Landfill” status. Diamond Packaging aims to reduce its energy and water consumption, plus emissions, by 2% per year for the next 10 years.
C&T Today: How is the company using technology or innovation to become more sustainable?
Director of Marketing Dennis Bachetta: We address these challenges through a continually evolving focus on packaging product safety and improved environmental attributes, including designs, materials, methods, and recovery/recycling waste streams.
Diamond developed its Greenbox initiative to research, design, and implement more sustainable packaging solutions that address challenges of the cannabis industry. The core of the initiative — designs, materials, and methods — represents a comprehensive approach to packaging that minimizes environmental impact throughout the supply chain.
Innovation in Sustainable Technology
One area begging for innovation in this sector is drying and curing. The process involves plastic storage tubs, rudimentary hanging racks, a rotation of glass jars and timers, plus an HVAC system to dehumidify and provide precision temperature control. The process can take weeks or months, depending on location, and is energy intensive.
Cryo Cure, a cannabis technology company, is offering an innovative alternative. Its proprietary technology freeze-dries flower in 12-14 hours, saving weeks of drying in a dehumidified, temperaturecontrolled environment. Mildew and degradation during the drying process can result in crop loss, wasting natural resources. This innovation saves energy and natural resources which might have been wasted on improperly cured crops.
C&T Today: Why is sustainability important to Cryo Cure?
CEO and Co-Founder Tracee McAfee: Sustainability is important to Cryo Cure because we believe that all areas of cannabis need to realize the importance of our carbon footprints. Cryo Cure’s entire process is energy efficient and saves cultivators from excessive bills that normally comes with curing.
C&T Today: What advice would you offer cannabis entrepreneurs looking to make their operations more sustainable?
TM: The best advice is to be smart about the technology that is out there that can make everyone more sustainable — and talk to your peers.
ESG Standards
Environmental, Social, and Governance (ESG) standards are metrics analyzed by investors as non-financial factors that play a role in a company’s opportunities for growth or failure. In 2021, Green Hygienics Holdings published its first annual ESG report.
It is the first industrial hemp company in the United States to publish such a report using the Sustainability Accounting Standards Board (SASB) framework. As the largest USDA-Certified Organic Hemp for CBD farm in North America, Green Hygienics Holdings commitment to ESG is a significant step toward creating a more sustainable cannabis industry.
C&T Today: What advice would you offer cannabis entrepreneurs looking to make their operations more sustainable?
Corporate Communications Officer Heidi Thomasen: Consider implementing sustainable practices right from the beginning. We set forth with a USDA Organic certification when we began so we didn’t have to change processes midway, which was helpful. Also consider moving forward with Sustainable Development Goals (SDGs) in mind as guiding principles and familiarize yourself with SASB industry standards so you have a guideline for what elements of your business you may need to record and report for future ESG reporting if you choose. This will also help you set forth on efficient and consistent record keeping right from the beginning.
Heidi Thomasen Founder and CEO, Ron Loudoun
Sustainable Stewardship
Recipients of the Sustainable Stewardship Award should demonstrate a commitment to sustainable practices that serve to better their communities and create a stronger cannabis industry. Ilera Holistic Health (IHH) launched the first THC and CBD products in the state, in conjunction with license partner Southern University. It also advocates for expanded treatment options. It is incorporating recyclable packaging and compostable potting materials into its business model, as well as water reduction strategies.
IHH developed a multiphase Emergency Preparedness Plan to accommodate the region’s erratic climate. It is also identifying new treatment modalities for patients with autism spectrum disorder, adding to the increasing body of research around medical cannabis.
C&T Today: What advice would you offer cannabis entrepreneurs looking to make their operations more sustainable?
CEO Chanda Macias: The best advice on sustainability that I could offer to any cannabis entrepreneur is this: know the community you are trying to serve. By understanding things like the people, the climate, the regulatory structure and more, you’ll find unique opportunities to be effective and responsible. There are also some general good practices that I’d recommend for entrepreneurs everywhere to increase the sustainability of their operations. These include identifying environmentally-friendly options like using recyclable packaging and compostable potting materials, conserving water by capturing and recycling runoff from plant watering and feeding activities, and, in sunny climates, look for ways to harness solar panels to offset carbon-based energy sources.
Water Conservation
In the cannabis industry, irrigation and sanitation account for the majority of its 2.8 billion gallons of annual water consumption. Sanitation, such as rinsing grow tables and sterilizing equipment, uses water which is often allowed to drain untreated into the environment. Geomat, a water recovery system, is helping curb that waste.
Its EPA- and OSHA-approved system collects waste water from the sanitation process and filters it through aerated holding tanks to be reused during the next cleansing process. A Geomat water case study from an indoor cannabis cultivation facility found that of the 35,100 gallons of water used each year to clean and sanitize the grow’s equipment, the company’s Geomat system recycled 31,590 gallons of water for later use.
C&T Today: How would you like to see the cannabis sector evolve as far as sustainability is concerned?
CEO Al DeChard: Controlled environment agriculture is amidst a revolution and is poised to be the most significant new market category to emerge in a generation. I would like to see all new cultivation facilities and existing farms try to leave the least environmental impact and become a LEED standard for this growing industry.
As the cannabis market continues to thrive and reach closer towards federal legalization, I believe companies and communities in the industry have the opportunity to make a difference by establishing and adapting sustainable and efficient practices in all aspects of cannabis.
