Large scale manufacturing of industrial hemp derived products and the secret to producing 10,000 KGs

Hi everyone and welcome, I’m sure
everyone’s a little hungry but I think this is gonna be a good talk and then
we’ll proceed to lunch. So thank you Sean for the introduction. We’re really happy
to be back here. We’ve been in business now just over a year and we’ve learned a
lot this past year about the market, about new products that different
formulation companies are producing and are really excited to be back here. So, the demand for CBD is obviously growing in the United States. It of course offers
very distinct advantages when compared to traditional opioid medicines and
several events have happened in the past year where you see states sort
of going against pharma companies and different medical journals and clinical
studies now linking prescription drugs to many deaths. So, people are looking at
CBD as a very superior alternative to these opioids. Of course it’s non
psychoactive, not addictive, all of the good things that were talked about in
the last panel. And there’s multiple medical benefits and we’re looking
forward to the days that clinical studies are allowed and there could be
proper research done on CBD. There’s also growing agency support where you have
organizations such as the World Health Organization,
you know approving CBD and different grassroots organizations and recently
was Mitch McConnell, the Senate Majority Leader who plans to introduce a bill for
legalization of industrial hemp. So a lot of exciting things are going on in this
industry and they’re all helping us processors to become even more
legitimate. Just a little overview about Kazmira,
so we are one of the leading suppliers of THC free CBD oil in the United States.
We also make isolate as well but the product that we’re most known for is the
THC free CBD oil. We were actually the first company to put this true THC free
oil out in the market a few years ago. We’ve recently expanded our facility
size. We now have a 200,000 square foot facility that we do
processing with as well as storage of hemp. We utilize a state-of-the-art
purification technology that allows us to make the THC free CBD oil but also
other oils that have various terpenes in them as well as different cannabinoids
depending on the hemp feedstock that we receive. As Sean pointed out,
we have many engineers that work for us. We have a couple of PhDs, some master’s
students, a lot of bachelor level chemical engineers and scientists. And
Pulak and I come from a background of process engineering, so we’re very aware
of what type of learning needs to be done for process engineers and what type
of exercises we need to teach our engineers, in order to be more efficient
at their jobs. We have all the required permits and licenses to operate in the
state of Colorado. So, this would be the CDPHE food manufacturing license. And
we also have ISO 9001 which is a quality management license that’s given to any
and all pharmaceutical companies as well as oil and gas companies, which were both
had experience in. And this really shows that the company cares about tracking
batches and quality management standards. Last year we did plant 240 acres of industrial hemp in Colorado. We’re planning to do more this
coming year. So, we have a couple of contract grows going on. We’re very
excited about what’s happening in the farming industry
as far as different varietals of industrial hemp. This is a picture of
part of our facility we have Class 1 Div 1 facilities. So, what this means is
essentially stands for explosion-proof facility. Now pharmaceutical companies
and oil and gas refineries all operating with equipment have facilities in this
type of environment. So, if you ever go to a facility, where you’ll see all of the
electrical work outside of where the equipment is inside the room, this will
designate that it’s Class 1 Div 1. And this is something really important that
we talk about with many people who are interested in entering the industry with
supercritical CO2 extractions and light hydrocarbon extractions. You need to be
operating in a safe facility that’s rated for that technology and that is
Class 1 Div 1. We’re working on our GMP compliance right now. And of course we
have EPA permits and this is necessary for any and all companies that are
working with solvents. Because you’ll ultimately have hazardous waste that
you’ll have to deal with. So, this is also something that we talk to companies
about looking for doing processing is getting EPA permits as well. Now just an
overview of our process, we’re able to take industrial hemp in different forms
that would be the powdered form. There’s also sticks and stems. And
through this industrial hemp we extract and make an extracted juice and this
differs of course based on the feed stock that we get. So, we can have higher
CBG for instance. Last month we had a high CBC feedstock, so that was an
interesting product from there. And from this extracted juice we go into our
purification technology which again allows us to make products such as
isolate, such as THC free oil as well as THC free oil with different potencies.
The most common one that we produce for our customers is the 80 percent THC free
oil. And this is produced using our
purification technology. So we ultimately, you know we’re vertically integrated
because we’re able to control the quality all the way from the industrial hemp
feedstock to the final product. And we believe that this is what has made us
successful and has allowed us to continue scaling up each month, is
because we follow those quality management standards. And it helps our
company just to be more organized and have your goals, you know just more
organized. So I’m gonna hand it to Pulak now, he’s going to talk to you about
different technologies available in the industry that are used for extractions
right now. As well as a bonus of how to make 10,000 kilos a month. And the
reason we included this slide in our talk is because we get calls every other
day now for production of that scale and we sat down this week and kind of looked
at, you know what that would be. So for anyone interested in making product at
that scale, please, you know please listen to Pulak and he’s going to teach you
guys. Okay everyone, so you know Priyanka has
kind of given you an overview of Kazmira in terms of our production
capacity. The technology we’re using. The other component of this
presentation is really focusing on, what are the different technologies that are
out there that people use to make the you know the CBD products and so the two
most common ones you see here are the supercritical CO2 as well as the light
hydrocarbon extraction. Right, so, those are very popular there and I think
there’s a few folks at the conference here who have brought some of their
units that have these characteristics. And at high level you know the thing
to focus on is the operating condition. So, you can see that they have very high
pressure requirements as well as various swings in temperature, right. So, what that
does is you know 5000 psi is very there’s a lot of pressure, right. So, what
that does is, they can extract out the other cannabinoids using
these different technologies but it also has some downside and that ends up being
usually you lose some terpenes, some other cannabinoids that may not come out,
there’s some yield loss and the yield loss can add up, right. And so especially
when you’re trying to make isolate what happens is you start with these
technologies and then you do some distillation to try to get the CBD out
from the other chlorophyll, another plant matter that you found in the extracted
oil from these two different technologies and that just adds up over
and over again especially when you’re trying to go to CBD isolate. So the yield
ends up being you know 30% 20%, which means if I put in
100 grams of CBD into the Machine, at the end I’ll probably get out 20 grams
of CBD isolate and the rest of the material is of course has a lot of THC,
right. So, it becomes very difficult for that to go anywhere and that’s
where you know you see a lot of swings in being able to scale up these
technologies. Okay so here’s the slide that Priyanka mentioned you know, what
does it take to make 10,000 kilos? Pretty popular slide looks like per
month using some of these technologies. So, what we did is you know as engineers
we focus on the assumptions, what does it take to get to that you can see that you
know, the goal is to produce 10,000 kilos a month and then if you just do
some rough math, you know this is back of the napkin math. You have let’s assume
about 5 to 6 percent CBD in the hemp which is pretty garden-variety,
usually industrial hemp is lower. I think they may have mentioned that if the talk
before but you know you would see 3 to 4 percent. The stuff that you’re
seeing in the market are really high-end 10 to 12 percent that ends up being
much more low volume because it’s the genetics are much harder. So, if you
assume about 6 percent hemp and assume 30 percent yield that’s about 14
million pounds per year that you have to process. 14 million pounds,
pardon my french is a shitload. So that causes, I mean just imagine 14 million
pounds needs to fit in here. So what the takeaway from here is, if you know
everybody’s getting into the industry and then that’s very exciting but I
think it creates a lot of hysteria, where a lot of folks start believing that you
know 14 million pounds can be housed in a very small location. So, what we come
across every single day is being compared with other you know other
manufacturers who may not have the right facility size to accommodate 14 million
pounds. let alone make 10,000 kilos. Okay, so, just at a high level what are
the different market opportunities that you see and why this industry is, you
know really blown up. Last year the place we were at was much
smaller. This is incredible to see how much it’s grown and it’s very
exciting. So, a lot of these facts we got from, you
know from Sean himself and a few other folks that we know but a high-level
there’s 10,000 thousands of pounds of acres that were grown in the United
States for industrial hemp farming. Of course we haven’t talked about how much
is for seed, how much is for CBD production that’s a different
conversation. And then we have various application 50 plus end applications for
these products. In fact, we just tried cookie dough with CBD that was pretty
damn good. And then you can also see, you know these different applications
from nutraceutical to pharmaceutical applications to everything in between
for CBD. But the biggest thing that we see is a lot of opportunity for
innovation. So, the biggest thing we see is the opportunities for innovation and
I think for us as a large scale producer, the biggest one is going to be yield,
right. We have to find a way to get the entire industry to increase the yield
amount because that’s really really important. Otherwise you’re just losing a
lot of the CBD and in lower value add oils that, you know you end up having to
dilute and it just dilutes the entire CBD itself, right. Because you end up just
diluting it, you don’t get as much of the benefit of the CBD. And then as
industrial hemp increases in demand, it’s going to create more of an agricultural
commodity, right. Eventually it’s gonna get there, what that means is you
have to be able to farm it at large scale like you do corn and other
commodities. And what that does is to get to that
level the CBD percentage in the hemp it will be lower. So it’ll be 2,3,4,5 percent and you have to find a way to extract that. That’s much more
difficult than farming or than extracting some of the high-end CBD hemp
that you see right now, that’s 10 to 15 percent CBD, right. It becomes much more
difficult because you have to concentrate and then you have to purify
to a much more difficult level, the CBD concentration. Okay
and then of course the simple one is automation, you know, you need bigger
tanks, you need piping, you need all that good stuff to me really make it a
world-class operation for the whole industry from a purification and
extraction standpoint. You will see more genetics coming up of how do we increase
the plants, how do we increase the cannabinoid content. Of course there’s a
huge demand for CBC and CBG and CBN. All those different cannabinoids that are
found in the plant and we will see increased demand for that and of course
that will create its own niche industries. And a very important one is the equipment right that you’re using so, as Priyanka mentioned the equipment
is rated properly. It’s in a actual facility and is used to do the job that
is meant to do and not something different. And then the last point
is we’re creating a lot of hemp, right. All the hemp that’s left over, what
are you gonna do with that? So, at Kazmira we actually make hemp
pellets out of it and have some you know contracted out some farms that are
horse farms or PACA farms that buy the pellets, well we just give it to them but
they use it for bedding, right. we can’t feed the cows yet, right. But we give it
for bedding and that’s quite popular they like that a lot. And then just a
quick plug for Kazmira is that we just introduced actually from a product
standpoint, what are the innovations that are out there.
We just introduced a water-soluble CBD product that is about 5,000 milligrams
of CBD in a 500 milliliter bottle, Which is quite incredible. Usually we
see, you know 5 to 10 milligrams in a bottle. So, we’ve developed that
concentrate that can be easily dispensed out to many different
organizations. Ok, so, just want to thank you all for attending our talk. We’re at
booth number 12 but we’ll also be at lunch. If anyone has any questions and we
always invite anyone and everyone to come visit us at our facility. We’d love
to talk to you about the hemp industry. however, you want to get involved, we’d be
happy to discuss that, so, thank you.


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