A Three-Pronged Effort for Success
San Luis Obispo, California is the home of Emerald Scientific, the first company to dedicate itself to the sale of scientific equipment exclusively for the cannabis industry. Its pioneering efforts have led to it hosting the Emerald Conference, which has grown since its inception to become a largely influential way of connecting various players in the industry. The company also runs a twice-yearly proficiency test which is now standard procedure. Cannabis Brightline spoke with Emerald Scientific President Wes Burk to find out more.
Since the founding of the company in 2013, Emerald Scientific has been one of very few companies that distribute equipment solely to the cannabis industry. Over the last few years, more latecomers are jumping into the mix, but Emerald has a vigorous head start. It has 12,000 to 14,000 unique products on the website, putting it far ahead.
In 2014, Wes and partner Ken Snoke looked to the cannabis industry because it was exciting. There were changes happening, and the pair recognized tremendous opportunities. Ken comes from an analytical background in immunology labs and began to contemplate opening a test lab.
“He thought there would be a great demand for that, but also realized that the scalability would be a huge challenge. As he dug deeper into that analytical side of the cannabis space, he saw that the existing analytical labs were not present, and there were not many professional labs,” says Wes.
There was a real struggle to get access to quality products because big scientific equipment distributors like Thermo Fisher and VWR would not sell products to these testing labs. This has not changed much since because many of those suppliers are publicly-held companies that do not have the appetite or freedom to participate in a federally illegal market and are concerned how that might affect their responsibility to shareholders.
Wes and Ken saw this as an opportunity, and in 2014, they went to the Pittsburgh Conference on Analytical Chemistry and Applied Spectroscopy, also known as Pittcon. This big conference is built to link scientific product distributors and manufacturers. Wes had conversations with some of those manufacturers about the viability of what Emerald was proposing.
“We were a distributor completely dedicated to the cannabis industry. Would that provide an adequate buffer for you to participate and get access to that market, to have an intermediary satisfy your concerns about stigma, and/or even illegality associated with that market place? The answer was a resounding ‘Yes!’” says Wes.
Anyone with whom Wes spoke wanted access to that marketplace through a distributor, and that is when Wes and Ken came to believe the concept would fly. Early on, at Pittcon, they had the good fortune of meeting a professor from Pennsylvania State University who had been performing research within the cannabis field for many years. Wes and Ken sat down with him and pitched the concept.
This professor saw comparisons to another industry with which he was involved fifteen years before. It was a small industry but was growing rapidly, and so it created a proficiency test for analytical labs because one had not previously existed. A technical conference was built around what was learned from the proficiency test, and it made for a strong brand.
“That is how the concept for Emerald was born. The plan that we executed was, and still are, the three critical components to our business: the scientific distribution of technical products, the running of a biannual proficiency test for the industry, and the Emerald Conference. That is how it all evolved,” says Wes.
There are two reasons that analytical, quality assurance labs need to participate in a proficiency test. To be an ISO-accredited lab, they must participate in proficiency testing, and it is preferred that the proficiency test be structured as an inter-laboratory comparison proficiency test (ILCPT).
“In most states that have a regulatory framework for either medical or recreational cannabis, it is also required to go through a proficiency test. Participation is required for any of the major testing market segments that a lab participates in. For example, a lab might do potency, residual solvents, pesticide screening, or mold and mildew testing. They would be required to take proficiency testing in all those categories,” says Wes.
In 2014, when the Emerald test started, no one was running such a comparison test, and, apart from Emerald Scientific, that is still true. It is undertaking the spring round of testing presently. There are two tests per year, and 113 laboratories, from eight countries, take over six hundred tests. The first year of testing in 2014 had only fourteen labs, two of which were universities or regulatory bodies, and only a handful of states were involved, so the program has really grown.
Wes sees this testing as a real asset to the industry. It empowers Emerald and the users with analysis of a large data set. When the spring round is completed, all the participants will submit their results. A grading occurs, and each lab can see how it performed compared to the other participants.
“They know their secret code or lab identifying code, but the data is anonymized, and the other participants are not known. They get to see how they performed against a standard deviation. We think it is a valuable asset,” says Wes.
Obviously, testing is needed for regulatory compliance and certification, but the data also tells a story that can be shown to the consumer and advocacy groups. The reality is there is still speculation about whether there is real science being practiced in the cannabis space. There is an obvious evolution from 2014 to today as far as analytical labs and how they are performing.
The cannabis industry is in its infancy, with participants having only four to five years of experience. When Emerald dipped its toes into the conference space in 2014, it was under the impression that there were other cannabis shows out there, but these were mostly consumer or lifestyle events.
“These events weren’t focused on science and certainly didn’t draw from or attract high-level professional scientists. We saw a demand and a need for it and put the first one together in 2015 in San Francisco. We had one hundred people with ten sponsors/exhibitors, so it was a relatively small show and a one-day event,” says Wes.
Emerald Scientific worked hard to ensure the content was highly technical. Back then, the quality assurance sector of the industry was fiercely competitive, and there was much debate about methodology.
“We were able to join the best minds in chemistry and analytical science in the cannabis space. A clear willingness and hunger for collaboration started to percolate at the conference. We recognized that the best thing we could do as a contribution to the industry was to facilitate that collaboration,” says Wes.
This has been the primary focus of every conference since 2015. The conferences have grown substantially, and this year’s conference in San Diego had close to eight hundred people. The exhibition floor, with space for sixty sponsors and exhibitors, was sold out eight weeks prior to the event.
Emerald Scientific is now seeing results from some of the collaborations born at these conferences. It looks forward to working with some phenomenal scientists and getting to the point where data is being presented at the Emerald Conference, from the alliances started here. It has become meaningful, significant, and has changed the landscape.
The effects of a lack of standardization and the illegality of cannabis under the federal government cannot be understated. Banking, for example, is a huge issue for the industry. Emerald Scientific is often referred to as an ancillary company as it does not encounter the cannabis plant. Despite having nothing to do with the plant itself, the company has had issues with the federal oversight.
“One would think we would not be at risk or exposed to any of the challenges that the rest of the industry has relative to access to banking. That is simply not the case. We have accounts that were randomly shut down, with funds seized, and we are not even a direct plant touching organization,” says Wes.
An incredible amount of money is coming into the industry yet this is just the tip of the potential investment iceberg as most money cannot enter this space until the banking issue is solved. “Once that happens, and if there is any correspondence with re-scheduling or de-scheduling, that would open the doors to institutional money, and there will be a flood of investment in this space that I don’t think many people have even imagined,” says Wes.
For organizations like Emerald Scientific, this has been a bit of a double-edged sword. It has seen annually, seventy percent growth on average over the last four years. The situation has arguably afforded the company a bit of an opportunity to build a brand without the same big competitors that it would be building a brand against in a more traditional marketplace.
“There is so much opportunity and money when big institutions come in and start legitimate clinical research. It’s going to be exciting, so we don’t think that years of sustained growth rates are unrealistic. That kind of growth is attainable over at least the next five to seven years,” says Wes.