In this edition of "Rising High," The Fly conducted an exclusive interview with Paul Crage, chief executive officer, Kris Marsh, chief scientific officer and Rafael Bombonato, chief compliance officer of Green Scientific Lab Holdings, a multi-state provider of cannabis and hemp testing technologies and methods. Here are some highlights:
CANNABIS TESTING: Green Scientific is a Davie, Florida-based company founded in 2018 that performs cannabis and hemp product testing to help cultivators, manufacturers and retailers stay compliant with state and federal regulations. The company, which currently tests marijuana in Florida and Arizona with hemp clients nationwide, aims to ensure that only the safest and best products reach the hands of consumers. “We’re one of the first three companies in Florida to be approved to test marijuana in the state and earlier this year, we became fully-licensed to test in Arizona,” Crage said. “We have new locations in New Jersey, Michigan and Illinois, in which we’re currently going through the licensing process, and we have expansion plans to enter additional states focusing on the largest marijuana markets with the strongest testing requirements.” He said Green Scientific’s process begins by receiving samples from clients, which are then tested to analyze cannabinoid potency, terpene content and contaminants like pesticides, heavy metals, residual solvent and microbials. “We use our innovative testing technologies and methods in our state-of-the-art facilities so our scientific team can produce reliable and accurate data,” the CEO said. “This data is compiled into a report called a certificate of analysis, which gives the client important information about their sample.” He noted testing, analysis and release of data all have to be done in a timely manner, because a quick turnaround time is very important to clients. “There is a huge tech component to our company for this process to work efficiently,” Crage said. “We created our own Laboratory Information Management System. My original partner and co-founder, now chairman, Mike Richmond, has an extensive data and software background and he’s created this amazing LIMS system, which gives us flexibility to manage the data and automate and streamline our processes.” Clients can use the platform to place orders and access reports, he said, while Green Scientific’s team members have access to the system in all the company’s locations remotely. “Our tech makes it easy to adapt into markets with their own unique requirements and ever-changing regulations,” the CEO said. “This gives us a huge advantage over the other labs that are using out-of-the-box LIMS systems.”
COMPETITIVE EDGE: As competition continues to increase in the cannabis space, the CEO pointed to the company’s scientific team as a key factor that sets Green Scientific apart. “We have an amazing team and that combined with our technology, our processes, our compliance, really positions us well,” he said. Marsh added that the space is becoming saturated, with labs conducting a lot of the same testing due to requirements, but Green Scientific has an edge as the company has taken time to develop its test methods. “The way that we test these products, that’s considered intellectual property in the space because there are no standard reference methods,” the CSO said. “Labs are only as good as the scientific investment that they made in their testing protocols, testing procedures and SOPs. We have some of the best people in the industry working in our laboratories and we’re constantly improving our methods and processes.” Additionally, he cited the company’s LIMS as another key differentiator. “Our LIMS is two-facing,” Marsh said. “It is internal for our use, but there is also a customer facing portal that allows customers to easily place orders and track different trends in their samples.” He added transparency is also another aspect of Green Scientific that differentiates the company. “A lot of cannabis labs may not have all of their testing quite dialed in and optimized and they’re reluctant a lot of times to talk to their clients about key details of the testing,” the CSO said. “We talk to our clients about their testing in detail and we invite groups for tours. We’re highly focused on the customer service aspect of testing, because we believe that is something that is lacking in the industry.”
MICHIGAN FACILITY PERMIT: In March, Green Scientific announced that it received its temporary marijuana facility permit in the City of Ann Arbor. The company completed the build out of its 9,950 sq. ft. facility in Ann Arbor in January 2022 and received its certificate of occupancy in February. The Temporary Facility Permit is the first step to receiving a full marijuana facility license by the state of Michigan. “That is basically the beginning of the licensing process,” Crage said. “We should be open and operational some time in Q3.”
LIMS: In a May shareholder letter, Green Scientific announced it was in the final stretch of development for its new proprietary LIMS, which includes features like artificial intelligence, real-time turnaround time tracking, digital batch downloading and real time audit logs. Marsh said the company is in the final validation phases for the software and expects to roll it out into laboratories by mid-June. “A primary benefit about our new system is that it’s faster,” he said. “It allows us to move data, to process data and to release data for our clients in a much faster way and that will contribute to lowering the turnaround time even more so in the future.” The CSO noted the new system also has additional checks and balances. “It’s very difficult to release data without it being reviewed by several people and without going through a strict review and release process,” he said. “This is really geared toward the future, where we think very strongly that we’re going to see federal legalization or descheduling of marijuana.” Marsh also pointed to the system’s audit logs as a key factor of the system as audit trailing procedures will come into play if and when the FDA steps in. “Any changes that have been made have to be tracked in the system and logs, that’s a huge feature,” he said. The system will also make Green Scientific’s laboratories entirely digital, reducing waste and clutter as well as transcription errors, the CSO said. “There is a much more user-friendly interface, that is going to be reflected on the lab side as well as the client side,” he said. “There’s an analytics dashboard that will be included that allows things like trending and automatic flagging and there’s a lot of smart features in there that really take the guesswork out of it and make the entire user experience more streamlined.”
TESTING STANDARDS: Testing standards for cannabis and hemp can vary state-to-state and Bombonato said its very important for operators to be proactive on the regulations. “The regulations around the marijuana industry are constantly evolving and it’s the same thing with testing requirements,” he said. “It’s honestly challenging to keep track of all these changing requirements, but it should be a priority for both the businesses involved and the consumers as well.” Changes in regulation may affect a company’s ability to sell product so having team members that are constantly monitoring the updates could be beneficial, the CCO said. “It’s rare that a regulator or a state regulatory body is just going to implement a change without notifying the public,” he said. “Being part of the meetings and signing up for newsletters is helpful. When businesses are following the regulatory updates, it’s much easier to put a plan in place ahead of time to evaluate processes, raw materials, ingredients, nutrients, additives, processing aids, manufacturing devices and equipment.”
CORONAVIRUS: Coronavirus has impacted many companies in the cannabis industry globally and Marsh said he believes the space showed resilience throughout the initial onset. “During the beginning of that period there was actually some huge growth as people turned to some kind of relief for whatever was ailing them physically, mentally or emotionally,” he said. “That was sort of a testament to the industry.” The CSO said as coronavirus evolves, he thinks the industry is poised to be “recession-proof” and thrive in difficult times as cannabis is a medicine in many ways. “As a testing laboratory that’s good news for us,” he said. Bombonato added the pandemic also highlighted the need for more safety and health protocols to be put in place. “A lot of people became more knowledgeable and cared a lot more about safety and quality of products in general,” he said. “We’ve seen with the pandemic, some other types of industries reach out to us to see if we could perform testing on their products as they are now more concerned about product quality and safety.”
LEGALIZATION: In April, the U.S. House of Representatives passed the MORE Act, a federal marijuana legalization bill, by a vote of 220 for to 204 against. The House previously passed the bill in December 2020, however it was not taken up by the Senate. “A huge part of the Act would be to make it easier for banking to support cannabis industries,” Marsh said. “Right now, at several of the large banks throughout the country, they are not really getting near cannabis businesses, including laboratories.” The MORE Act would allow operators to operate with more ease, he said, without as many roadblocks. “If we were able to clear that aspect of it up, it would make it easier for cannabis producers to buy and sell product,” the CSO said. “That would translate to an easier time for patients buying products and potentially cost savings. We’ll have to see what the Senate does with that bill.”
CHALLENGES: When asked about the largest hurdles facing the cannabis testing space, Marsh noted a lot of the science used in environmental testing has been challenging to apply to cannabis. “It’s a difficult material to analyze, it is very watery but it also has oily components,” he said. “It is difficult to test so one of the biggest challenges then is that operators, especially the large multi-state operators who are expanding across the country, find difficulty in consistency from laboratory to laboratory.” Operators may take their sample to one laboratory to test it and then another in the same neighborhood and get a completely different result, the CSO said. “That’s obviously frustrating when you’re trying to scale a several billion dollar company,” he said. “Consistency from lab to lab is key and that’s partly why we decided to expand to certain states to help our large partners.” Marsh cited falsified results as another issue that has plagued the testing industry in hemp and cannabis. “There’s a lot of pressure or bias to have a certain result,” he said. “For example, cannabis flower typically sells at a higher price point depending on how much percentage of THC you have in the flower. There are a lot of unsavory players out there in the space who will switch the results just to make a sample pass or inflate the THC numbers artificially.” Most MSOs want to know exactly what their sample is and do not want to be lied to, the CSO said, as they are building out abilities and processes that are incredibly precise. “They need precision testing results like we can provide,” he said. “There’s a lot of potential risk for them to operate and a lot to lose so we want to make sure their operation is protected and in good hands.”
OPPORTUNITIES: As the cannabis sector develops, Crage said he sees the biggest opportunity in expanding Green Scientific nationwide. “There is going to be some consolidation in the lab space amid challenges in this industry,” he said. “There’s a need for consistency and there is a need for labs to be able to handle these big MSOs’ volumes.” The CEO said every location Green Scientific builds is roughly 10,000 sq. ft. “If we have a big producer, we won’t have bottlenecks in their turnaround time,” he said. “The big opportunity is to expand nationwide, go through the consolidation process and be one of the biggest MSOs of the lab space.”
OTHER CANNABIS/PSYCHEDELIC STOCKS: Publicly-traded companies in the space include Acreage (ACRHF), Akerna (KERN), Aleafia (ALEAF), Atai Life Sciences (ATAI), Awakn Life Sciences (AWKNF), Audacious (AUSAF), Aurora Cannabis (ACB), Ayr Wellness (AYRWF), BC Craft (CRFTF), Body and Mind (BMMJ), CanaFarma (CNFHF), Cannara Biotech (LOVFF), Canopy Growth (CGC), RIV Capital (CNPOF), Chicago Atlantic (REFI), Columbia Care (CCHWF), Compass Pathways (CMPS), CordovaCann (LVRLF), Clever Leaves (CLVR), Cresco Labs (CRLBF), Cronos Group (CRON), CV Sciences (CVSI), Curaleaf (CURLF), CURE Pharmaceutical (CURR), Delic Holdings (DELCF), Delta 9 (DLTNF), Entourage Health (ETRGF), Fire & Flower (FFLWF), Flora Growth (FLGC), FluroTech (FLURF), General Cannabis (CANN), Goodness Growth (GDNSF), Greenlane (GNLN), Green Thumb (GTBIF), GrowGeneration (GRWG), Harborside (HBORF), Hemp (HEMP), HEXO (HEXO), High Tide (HITI), Innovative Industrial Properties (IIPR), IM Cannabis (IMCC), India Globalization Capital (IGC), Indiva (NDVAF), InterCure (INCR), Wellbeing Digital (KONEF), Khiron Life Sciences (KHRNF), Lowell Farms (LOWLF), Lotus Ventures (LTTSF), MediPharm (MEDIF), MedMen (MMNFF), MJardin Group (MJARF), Neptune Wellness (NEPT), NewLake Capital (NLCP), Thermic Science (ENDO), Organigram (OGI), Planet 13 (PLNHF), Relmada (RLMD), RYAH Group (RYAHF), Sproutly (SRUTF), Stem Holdings (STMH), Small Pharma (DMTTF), Skye Biosciences (SKYE), Sundial Growers (SNDL), Sunniva (SNNVF), TerrAscend (TRSSF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Trulieve (TCNNF), Tryp Therapeutics (TRYPF), Valens (VLNCF), Verano Holdings (VRNOF), Village Farms (VFF), Wesana Health (WSNAF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).
