In Seattle, technicians at a SoRSE Technology lab are staggering the times they come in and out of the office to get raw materials or spreading their hours over multiple shifts. Some of the company's chefs have shifted to making prototypes in their home kitchens to continue developing CBD products as interest in infused food and drink increases during the pandemic.
A recent report from New Frontier Data predicted there could be almost $3 billion in U.S. cannabis product sales in 2020 as consumers quarantine. To take advantage of this growing market, SoRSE Technology, a supplier with a water-soluble emulsification process for CBD, is changing up its typical methods with its lab work and partnerships.
"We're still trying to do what we can given the circumstances," Michael Flemmens, vice president of technical business development at SoRSE, told Food Dive. "We are still manufacturing, we're still producing product, doing development, it's just taking sometimes a little bit longer time to get it done or just a more creative way to get it done."
Flemmens told Food Dive the company is facing challenges since they are still working on many ongoing product development efforts and they like to be in front of prospective and current customers.
"Not being able to sit across the table and compare notes on which beverage tastes better or what topical feels best, we try to send samples to five or six different locations so everyone can get on the phone and then try to do it," he said. "I think we've been smart and tried our best to pivot to at least keep going the best we can."
While Flemmens said its chefs have had to use their personal kitchens as a testing ground, a strategy that other ingredient companies have also turned to during this time, safety is paramount and all protocols for manufacturing products are still followed.
Flemmens said his company is relatively small and nimble enough that they can have people parse their way into the office, but large companies that house their product development in a gigantic office building just don't have access to the materials and equipment they need.
Some companies have come to SoRSE and said this is the right time to do development since employees aren't distracted by a lot of other work activity — and interest in cannabis continues to grow.
Formulating and partnering
SoRSE Technology is a CBD, hemp and terpene water-soluble emulsion supplier for food and beverage manufacturers.
"We try and take a product or material that would not be water-soluble and turn it into a platform that allows it to be water soluable," Flemmens said.
Since the company first started in 2016, he believes that first-mover advantage has allowed its technology to mature and develop complicated formulas before other competitors. For example, companies that want to put CBD into sparkling water need to think about how there's no sugar or viscosity, but with an all-natural juice, there are complexities with the sugar and pectins that all play a role in the stability of the beverage.
"There's never a silver bullet and anyone who says that their product works in every situation and in all levels and in every environment is just a good salesman," he said.
Flemmens said people in the company have worked in different regulated markets in the past, from the food ingredient space to drug companies, which has helped bring experience to their roughly 30-person team.
Many people jumping into the space now don't have that requisite experience and struggle figuring out the technology and all the factors that go along with it, he said. When formulating products with CBD or THC, companies need to think about shelf life, stability and the effect of the pH.
Flemmens said younger CBD ingredient companies want to tell clients that products would have one-year shelf-life, and although companies can model that with accelerated aging, the best way to prove that is with real-time data. SoRSE, which raised $5 million last year to continue growing the company and its technology, says it has had that time.
"If you get to 10 months in your shelf-life stability and it falls apart, you have to go reformulate and you have to start the clock again," he said. "We've had years worth of stability data and have been able to tweak formulas and test new formulas and improve formulas."
SoRSE partners with companies who license its technology. In December, SoRSE Technology announced a major manufacturing and sales license agreement with Canada-based Valens Company. The agreement grants Valens a license to produce, market, sell and distribute products made with SoRSE's proprietary emulsion technology to markets in Europe, Australia, Mexico and Canada. The company is allowed to produce and sell its portfolio of branded products, including some its top infused beverages: Happy Apple, a cannabis-infused apple cider, and Major, a cannabis-infused fruit drink.
Space still faces regulatory hurdles
Canada, where Valens is producing products with SoRSE's technology, started allowing some cannabis-infused items, including edibles, beverages, topicals and extracts, to be sold in stores last December.
Flemmens said Canada has a mostly unified approach with essentially the same rules across all the provinces and territories, while the U.S. has allowed states to do their own approach.
"It is a very interesting thing because every state has slightly different twists and turns. So I think Canada looked at some of the good and bad things that went on in some of the early markets in the U.S. and drew from their experiences. But I do think it's an interesting test case for national legalization," he said.
Even though reports show CBD entering products at a rapid pace in the U.S., federal regulation remains a gray area. Hemp and its derivatives are no longer classified as controlled substances since the 2018 Farm Bill, but the FDA's position has so far been that cannabis can't be sold in conventional foods or supplements. There was a public hearing on the substance last year, and the FDA stated in November it could not conclude that CBD was Generally Recognized as Safe.
"It's actually probably one of the most challenging parts of the space right now just because there is no clear defined path for the FDA," he said. "To complicate matters, the FDA seems to be leaning toward a broad spectrum product and the EU at least is leaning toward an isolate-based product. So we may have this situation where eventually as things become approved in different countries, you may have to make one version of the product for U.S. distribution and another product for European distribution."
Some companies in the U.S. are not risk averse and are willing to launch a product into the marketplace now, but others are doing all the development efforts behind the scenes and waiting until the FDA greenlights it, Flemmens said. Some are even more cautious and don't want to waste time on development until it gets approval.
"There still remains some stigma associated with CBD, and they worry that if you're an established brand that you might damage your brand or your reputation so that some companies are starting up shell companies or startups to try and do the development because they see the demands, they just don't want to be directly associated with it right now," he said.